tv Squawk on the Street CNBC August 20, 2018 9:00am-11:00am EDT
price target on the stock to $19 5 per share from $308. it's, of course, now below that already. it's not blelow the bottom part after elon musk said funding going forward for the deal but that's proposed. make sure you join us tomorrow now it's time for squawk "squawe street." good morning and welcome to squawk on the street i'm david faber along with jim cramer for the entire week for these markets. european markets are also ahead of us, as they are every single day, i've noticed. and they're strong, as you can
see there. of course, perhaps result of, well, china/u.s. tensions. >> yeah. >> we saw it play out on friday. tensions getting a bit cooler playing out in the markets, as well ten year note yield interesting story in the journal today about what the fed will do in terms of how they're going to actually map out maturities they want to continue to hold once they have done selling but there's a look at the ten year note. >> it can affect the yield curve themselves. >> do they go shorter term they kind of keep it from the treasury itself. crude oil at the bottom there. you can see wti. >> yeah. >> no bottom yet. >> yeah. >> a lot of people felt at 75 it was obviously going to 100 the longer term is clearly positive for oil there's not as much drilling everybody is worried about
inventory. we want to think we're important, but we're not we'll get to the road map this morning we have a triple headed negotiation on trade to talk about. it's a big week for tariffs and the president's agenda plus, a double down on the sparkling water. pepsico buying sodastream. and tesla stock moving lower again. we'll have more on elon musk from some analysts, including a notefrom jpmorgan. as for stocks overall, they're on track to open higher after the s&p and dow posted a sixth positive week. the nasdaq snapped a two-week losing streak. it could potentially pave the way for more significant talks it did help the market on friday. >> we need some talks.
the chinese are going to put a tariff on the u.s.-based cosmetics. the guidance reflects the possibility that happens otherwise the stock would be soaring for estee lauder i'm saying up 10. >> it was that good. >> it was that good. >> you don't believe it was a response by the market as a result of the fear >> yeah. >> that would hurt. >> yeah, you know, the stock is down and the stock has been going up. i think we realize, wait a second that guidance is by no means -- they delivered an amazing quarter. in all aspects this conservative look if they honestly do put tariffs through. and then what will happen is, i believe, they'll have to lower the price of the cosmetics these numbers reflect a lower
price. to get underneath. i know it sounds silly to talk about skin care and tariffs, but this is the thing that happens. >> without an doubt. we have pointed out many times and you said the growth is very large extent, has been focussed on china and the success that have market where, by the way, they've been for a long time. >> yeah. remember travel. all those duty-free places those are fabulous places to catch the consumer again, it's the chinese consumer but again the stock is doing well the numbers are great and people are realizing wait a second that guidance is only conservative. it probably will not do that otherwise the guide up would have been huge he's a genius. >> right. >> it's large.
estee lauder, congratulations. >> let's go over the other names that are used more as proxies for china trade war. boeing, alibaba. >> right. >> how do you approach them with two of those names i mentioned had a nice day on friday. >> right. >> but this is going to take months to unfold. >> yes uncertain stuff. >> it lowers of what you pay on cash flow of boeing. one out of every plane goes to china. of the new planes. the idea, again, why this is such a, you know, compelling theme from the news point of view is there's a belief that will they be able to take that demand, you know, there's demand you can shift it the biggest conversation how the heck can i get out of china and how fast can i stop manufacturing there and go to cambodia can i go to thailand get me the hell out of china because i am going to hurt
whoever the person i'm making this stuff for when you get a situation like target this week, they want to ship everything out that is made in china you know, this is something, by the way, martin franklin saw coming when he shifted to mexico, which is cheaper cheaper than china. >> when he was -- >> the head of -- >> yeah. a bit of a visionary there. >> yeah. >> but what you have is a behind the scenes move that i've got to tell you, if you're the chinese, you have to be concerned because it is like, you know, i'll speak to a company that is in apparel they'll say, listen, jim, we're out of there in 18 months. we have options now. we can shift everybody can shift. they will. if only because they don't want to hurt the companies they're supplying. now the chinese government may say listen we're invincible but how invincible when you have work forces all over the globe that are cheaper than china and
you stay in china because you didn't want to lose that market. it's a double-edged sword. it's happening everywhere. >> you are concerned it's an important point to make. you're hearing it from a number of different executives. it takes how long? >> 18 to 24 months to move almost everything. >> when you do you make the decision a lot changes in our world given how quickly things move. >> i'm thinking the whole idea three months ago i would say, well, no you know, there's going to be some comprise. now the dialogue is hey listen maybe we're wrong to be in china to begin with. maybe the government doesn't protect us. >> the willingness to give up the market you can't give up the market if you're apple, for example. >> suppliers to department stores they say hey guys. i see you still sourcing china i want that from vietnam
i want that from thailand. it's a good choice they can't go to president xi and say listen can you mitigate the problem i have with the large department stores in the world. it's a main job. >> you made the point, jim it's been the case for many years, in fact, it's cheaper to manufacture some other countries. >> much. and yet many of these corporations have decided to maintain that relationship there because, why because they want to still be able to potentially sell into the chinese. >> yes yes. it's not like mexico where they make it easy this is a real -- and you have to move big supply chain, it was easy to go to if you're gm or ford ford wanted to open in mexico for the cheap labor. but what is happening is you're getting the phone call no china. okay even our customers don't want china. our customers are looking at labels david, this is a nationwide phenomena. >> yeah. >> the man who is our president
has been able to make many things happen against china. many more than anyone thought. >> and you've been supportive. all along. consistently so. [overlapping speakers] >> overall it will create a deal of tumult some say i spoke to elizabeth warren last week i had the same view since i was on kudlow and cramer larry was anti-tariff. i was always pro free trade and pro fair trade they're two different things fair trade, we feel that the chinese cinchly don't play fair. my stance is not only not new. let's talk about a deal this morning. pepsico continuing to diversify away from soda they're acquiring sodastream it's $144 a share. in a statement the ceo called
the combination an inspired match. today's announcement is fully in line with that strategy. 119 million termination fee. just going over a couple of other things here. nobody sees any real issues. >> i do. >> in terms of hsr. >> not in terms of hrs. >> what issues do you see? >> i spoke to the cfo of pepsico and it's not immediately additive but expected to be over the years. true collaboration it's about the healthy part of their business obviously, david, it's the sodastream recon figuruated. there's a guy by the name of danny burnback he's the ceo
he's a bomb-throwing -- he's a little toobin like from dollar shave club and danny did a commercial not that long ago where he basically said that you should be ashamed if you bought bottled water from the supermarket. ashamed. it's a good additive he has said, david, on our own air that bottled water is a huge marketing scam it's interesting to see how they meld the cultures given the fact that sodastream has been anti-plastic you make it at home. it's a different channel, david. it's almost as good, i think you have to advertise. amazon, facebook, twitter, which they will. is it the twilight at of the plastic bottle you throw in a landfill >> let's hope so we're running out of room. right? plastic straws is great but i think bottles would be better.
why you're talking about about a wholesale revolution. >> by the way, when we grew up they didn't exist. somehow we managed to stay hydrated we managed without water in plastic bottles. >> i don't know, david we're trying to -- >> i had a punch that little can of hawaiian punch. >> did you dilute the grape juice like my mom did? >> by the way, they're paying 19.12 times 2019 enterprise value. that's a hefty multiple. now the point is, the business is growing they had a strong quarter. >> it was 25% a year. >> goes up about 14% they're paying a fairly hefty multiple here. i understand there were no other buyers it came to fruition very quickly. dis despite the fact when you came on-air in december of 2016, he said it was about not sltakig
carbonated drinks home well, you don't want the killer product to be under the same -- i think they'll make it so it's a sodastream i'm saying danny is out there saying carbonated, yes flavored nobody wants that. don't buy water. remember the apple feed is a big business, david. >> it is. >> it's got a market cap. >> 167 million. >> it's a great hedge because younger people my daughters they have a bottle every now and then they get mad at me i don't carry that bottle. >> you should. that backpack doesn't have any room. >> no. this is clearly a nalge bottle in this show what does it say >> i know.
there's a lot of things. >> your first reaction no plastic bottles. >> yeah. >> there's that thing in the pacific ocean that is twice the size of texas floating around. >> i saw you -- >> the great garbage we don't need it people look around new york and look what is an trash bin. it's all that. >> i surrender. >> 35 or 40 years ago i didn't have it. >> i surrender to the acquisition. >> excellent after picking on elon musk's tweet earlier this month, shares of tesla they lost almost a quarter of their value this morning we've got a call from jpmorgan that is putting additional pressure on the stock. of course, we'll fill you in another look at futures as we set up for an open at the nyse we have more show for you after this
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funding to take the company private appears to not have been secured. i guess in terms of from my advantage point having done reporting to this prior to going on vacation last week and having done it for so long, the whole thing seems odd. it was surprising to me how gullible, to a certain extent, analysts were. this guy said, well, when a ceo says they have funding, i believe it to be the case. so many other well-thought of investors out there really want to pencil this out and believe it's possible. now, as we've said, traditional lbo. no but this approach that they're talking about, you could at least make an argument it's something that might get done but the idea that the saudis will pony up the necessary money to get it done, even though the hybrid approach to taking it private seems hard. >> yeah.
>> and, look, i think we've got to stay focussed on going this following note, which is that tesla does appear to bring the private transaction. we believe such appears much less developed than earlier ensued. >> yeah. it means the analysts don't know anything it's not like they're doing any real reporting they follow what we tell them or what the company is obligated to tell them as a result of the disclosure requirement the special committee is pursuing it in the more typical way at this point. do they we think they invest in the wrong company? david, i read let's talk about reporting and the power. jim stewart went to see elon musk david, the man needs to be placed -- that was so evident.
jim stewart is -- >> one of your dear friends. >> yeah. and the piece is about a man who is self-destructive, a man who needs help now, obviously, i'm not saying he should be fired i'm worried about the guy. jim is worried about the guy how can you not be worried about the guy? >> neither one of you are from the medical profession or the ability to assess -- >> no but we're -- >> your point would be that given what you're hearing from the board of directors and acting as a fiduciary for the owners of his company -- >> the whole thing seems like fiction after jim stewart. >> i know. >> this is not mccarthy.
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apparel has been the quarter all the apparel companies. you know ralph lauren. it's been really good. and michael kors was good. i would point out that foot locker reports on the 24th so these actual both of these may be a way to get ahead of some positive north american verbiage coming from foot locker they didn't want to be behind that david, work harder we engineered the whole company. people that think it could happen wow. >> wow is right. our earlier conversation about china and tariffs. where do they manufacture most >> they sell a lot in china. i don't know the current -- >> yes it's been unabated the sales have been strong in china. it's the north american market
that helps them. >> a lot, for example, the platform on alibaba. that's why you see weakness in that stock. >> i still -- people want me to say shouldn't we buy alibaba alba b it can be affected by a tweet. >> we'll have reports later this week. >> yeah. you don't seem concerned about the numbers themselves. >> they should be caring tremendously. >> yeah. we got an opening bell to get to in about five minutes. we'll talk about the broader markets and talk about netflix i was gone for a week. >> the stock is down. >> oh, my gosh
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deep into august things tend to get a bit quieter this time of year. >> the m & a no real big deals. >> right. >> but i find is the president certainly makes things interesting. i'll tell you someone else, rob. they're saying there's a lot of analyst chatter he's making a mistake buying what is only going to be controlled canopy. david, you and i talked. i think it's a very, look, buy back and there's a lot of risk now associated with it and the negative research. but canopy is the only real solid way to play cannabis remember canada legalized. the world is going that way. >> is the ceo saying what is the business i'm in and where is it
going? why is that wrong [ applause ] [ opening bell ] >> they won't stop ringing the darn bell. i look and say, david, how can people be critical of rob sands when he's thinking about the future and look at sodastream what does it say about carbonated it passed. the flavored. >> we'll briefly detour to the opening bell.
>> by the way, don't forget, elliot got involved there. >> yes that's right. >> it's involved in so many things we can spend a show discussing the things that elliot is involved with. whether it's athena or going to be a decision they make on try to post dell on that, you know, the purchase of dvnt. >> common theme. be honest. be honest. >> yeah. >> athena worked and now obviously athena. >> yeah. you know, a couple of questions on sky that's another name. i mean, they just get themselves, by the way, around the globe in so many different situations remember they took on samsung. >> that was incredible the last was the most brilliant. nxpi they get caqualcomm and nxpi collapses. >> they helped some of that. >> yeah. >> okay. how about shareholders.
>> where is nxp these days >> it's below o90. >> yeah. it's the fact that without the acquisition everyone was so excited they were -- the slow down autos is baffled. they were concerned about this throughout the world because of trade wars. >> it's funny we thought that stock would settle in the mid 90s after the deal broke. >> it's unheard of we focussed on it for so long. but it's below 90. >> yeah. and that's fundamental. >> it's trading on earnings but people didn't realize that earnings would be much more than autos. anyone who sells into the auto market is getting hurt even you may argue the numbers aren't so bad. by the way, there's a good piece today. how ford can spend $11 million to grow the stock. very elaborate bottom line, i think the dividend is safe. >> at ford?
>> yes i think it's safe and i think they're doing things that are right. just like consolation. it looks wrong but, david, you get the right attorney general you get states rights to be able to have it if you go to colorado, the state can do it. you'll say holy cow. >> i wanted to come back to the constellation again. >> canopy. i do it, because, i go where the puck is. >> right. >> yes. >> i wonder where netflix is going. >> yeah. the stock was already down from the highs well below the market cap now not even close to disney. not that long ago it was $10 million almost more than disney. what do you do with stock like this that is not supported by evaluation it can't be. it's a momentum name, in that
sense, jim momentum has been negative. >> you have to wait for the quarter. i mean, look at estee lauder everyone was worried it was momentum name. and suddenly no slow down. there's an acceleration. if you look at that stock before the quarter, it was going down, down, down and suddenly we realized our worst fears are not going to be realized if there is going to be not a tariff, 150. 150. you have to know. >> so is it over is the leadership of faang over with the facebook down today senior management making rounds last week saying our margins are going to be hurt. >> yeah. 20% grower right here is fairly vaulted. is faang destroyed i think faang is doing it. >> where does the leadership come from? >> alphabet. very strong. >> wait. alphabet. >> yeah.
amazon is terrific. >> where does the leadership come from if it's not faang? if it's not technology. >> yeah. i said you had to be careful and i said they would drag it down i said there's a tremendous transition going on. we're in a pause moment and let nvidia come in and you buy is nvidia a leader not today. think you'll regret it i think you'll regret it and walmart. >> we called it waang last week. >> yeah. saying don't buy our stock wasn't that what facebook was saying don't buy our stock. you should think about other stuff. did they say you should think about other stocks
maybe you should think about alphabet is it one of those things? geeze. what a disappointment they suddenly realized the perils of what they were doing. >> the selling of your name. >> yes. >> alphabet hasn't had its day yet. many people believe youtube is not what it should be of cleaning itself up. >> so sodastream is up on that deal going to be acquired by pepsi. >> alibaba is on the move. people feel happy days are here again between us and china i'm waiting for a tweet. >> alibaba is still down. >> how about a tweet. >> no tweets.
>> they're more focussed on the investigation of bob mueller david, i think that the acquisition is important. >> the sodastream deal >> yeah. kimberly clark said they're going to put on -- if proctor hits the price and the price of oil goes down the gross margins will be fabulous. >> that's true yeah that's true. >> i was looking, sorry, at the press release about the offer that has been made to acquire china buy logic products i mentioned it briefly and you know what the company does i have to admit, jim, i'm not familiar with it. >> i know because the s&p includes it in the chart book. >> it's a consortium of bank of china, group investment limited,
cdh investments. they say they have a highly confident letter from goldman sachs for the financing. >> right. >> and they say it represents it's $118 all cash offer they came public with it they came public because they would have had to filed 13 d apparently there was ownership among the group that would have had a show they own more than 5% so they came public with it and are going to, obviously, pursue it hoping to get to a definitive agreement from china buy logic products more for you there. >> now, david, i just listened to that. what i kept thinking was if elon musk actually had lined things up, this is the kind of release you would have gotten. >> yes. >> we all know it's unusual the way mr. musk chose to
communicate the idea of taking tesla private. he kept using quotations many of us assumed we looked at tweets and talking about a traditional go private that this, proposal, this consortium with china biological products is structure a lot of his shareholders converted from public to private. and then still the need to have a huge investment. not debt but equity from the third party or a number of sovereign funds lead by the saudis, apparently, according to mr. musk. >> yeah. the analyst community suddenly realized maybe there wasn't as much meat on the bone. >> yeah. behavior is hard to keep track of it. you know, david, there's another time we would be talking about
how you can't text and drive. >> yeah. >> but this is, obviously, behavior that is very hard to process from the point of view, say, a company that's why jpmorgan devastated. >> yeah. >> holy cow, david ph let's see what he does but medical leave is not so far fetched after that piece i'm not a doctor. >> it's loud and clear what you said you believe -- well i changed your wording, to a certain extent. >> you did. >> yeah. do it. >> it was an astonishing article. if you felt away about elon musk there's no way you can feel the same it's an article that said look out. this guy get him help, please.
there's guy that needs help. it's typical to take time and take time. he clearly doesn't want to do that the board needs to say after reading the article, maybe you can take back the article. but after reading the article, we're concerned about your health we want you to be around for many years so if this is i think it's a moment. >> he needs sleep, at the very least. i say it to my 16-year-old. >> as a guy that got three hours. >> you're bizarre and i don't understand how you're on the planet. >> my father slept two hours. >> something in your dna allows you to do it. >> most of us need eight hours of sleep a night maybe more. >> i love jim stewart but the
last thing i would do is call him and break down in front of jim and say i'm not going to have to do that. i like my life but let's keep it in front of us. >> by the way, did you see the letter from arian huffington to elon she's talking about studies about 17 to 19 hours without sleep we begin to experience cognitive impairment. >> in college -- >> this is not an attack on you. >> i didn't sleep between wednesday and thursday. >> you're not a model for people to follow on the sleep thing. >> missing a lnight of sleep is big deal missing five nights is a big
deal. >> for me, it is i talk about what people talk about. they talk about the so-called decline of nvidia. that's ridiculous. and they're talking about the idea that and is gaining share against intel in a way that is breathtaking. >> he responded to the letter and you see itthere. remember, david, you can try to quote the intel ceo and try to get to the bottom of this. >> no, i can't [overlapping speakers] >> this is a weakness of intel that people aren't -- that he said people aren't talking about. and is taking share.
there's no doubt about it. that's how the stock went up at a time when most of the -- >> you're just it's like i don't know if it's unrequire -- requestioned or not. >> netflix, david, you crushed it >> i had nothing to do whatsoever the stock is only 62.37% this year. >> retail, david it's brick and mortar. >> it's amazing. >> that stock was 50 cents from the all time high. they have a huge number of j.c. penney the balance sheet has been doing tremendous work. we have to be careful if you own the bonds. >> yeah. >> and you did the initial j.c. penney refinance remember that? >> yeah. how do you remember that
>> that was a great piece. you broke it around quarter three. >> how do you remember that? >> it was 2.7. so i think that j.c. penney is somebody you don't want in a mall but retail is back. good morning, bob. >> new highs in merc a good start to the day. global markets doing better. take a look at the global markets. finally a bounce in china. shanghai istwo-year lows last week it's right in the middle of the range now. the dax over in germany an awful month for europe in general. they're bouncing a little bit. brazil and latin america was down for the month
the chinese internet stocks are bouncing a little bit. utilities were strong last week. a little less defensive. there's a little bit worrisome the semis are not bouncing at all. that's been the issue. the overall story is still the u.s. is the place to be. our outperformance was noticeable on the month. even last week the s&p was up fractionally the world outside the united states was down. the emerging markets were down it doesn't matter. this is my whole point the u.s. outperformance matters it's the rotation story that matters in the united states we had utilities they tend to prop the market up
when other sectors are weak. even industrials had a fairly good weak overall. this rotation is why we're only 17 points from the s&p 500 i mentioned retail names, we had a tremendous outperformance in the last month or so these are all at least 52-week highs. if you want to look how we are overall the market internals what i look at most carefully is advanced decline stocks. it tends to go down a few months before the market tops out we're in new highs, essentially. buying power the way to look at it stocks advancing with the volume and the points gained that's buying power and selling pressure is the opposite stocks declining this is a old lowery trick they have been using for 80 years
it's hard to say there's any kind of imminent downturn. you want to watch the rotation stick near the highs for the day. dow up 91 points 17 points the new high on the s&p 500. david, back to you. >> thank you, bob. let's get to the bond pits now and join rick santelli good morning. >> good morning, david we're drifting a bit in treasuries and some extent the dollar index let's check out an 10 year note. you can see they dropped a bit we' where? around 283 it's interesting on the one-week chart. it was the interday low on wednesday and so far the interday low today we spent a lot of time in the 80s and the 90s. this market tends to like to go sideways many are paying close attention to see if it holds this range. we look at bund yields they're hovering around 30 basis points this chart starts about a year and a month ago.
it's very interesting chart because it shows us that it starts to trade under and close under 30 basis points. it's something to pay attention to as has 120 for the uk. in chart starts in november. on the italian side, completely different story, of course it isn't that yields are moving lower. it's that yields are moving higher in response to the spread is many buy bunds and sell the italian 10-year hoovering around 308. the dollar index is up a bit as i look up at the board let's keep in mind it's a lot like treasuries. it failed at 97 on interday basis. it's 96. these are lofty levels market reprices that this would occur. we want to see how far this correction goes. david and jim, back to you. >> okay. thank you, rick. coming up former new mexico
governor bill richardson served the u.s. energy secretary and u.s. ambassador to the united nations. we'll talk trade ahead of this week's low level meeting china and the u.s. squawk on the street will be right back it can detect a threat using ai, and respond 60 times faster. it lets you know where your data lives, down to the very server. it keeps your insights from prying eyes, so they're used by no one else but you. it is... the cloud. the ibm cloud. the cloud that's built for all your apps. ai ready. secure to the core. the ibm cloud is the cloud for smarter business. secure to the core. it's pretty amazing out there.
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good morning, and welcome back to squawk on the street, david favor back from vacation let's take a look at the markets, about a half an hour into trading dow and s&p continuing their run, but still, the dow is up 8 points, nasdaq underperforming all of last week, closed the week lower and today, technology, not having a great day, down another .10 or so of a
percent. our road this hour begins with a deal pepsi buying a sugar stream as the company continues to shift away from sugar. what both companies are saying about the deal and a rough road as elon musk prepares to take tesla private. plus a massive devaluation and wage hike in venezuela, a detailed look at the staggering numbers straight ahead let's get straight to the deal news of the morning, pepsico announcing at 2:00 a.m., that it's biuying soda stream fo $2.3 million $1.30 a share but that's because there's been a monster runoff in this stock over the week and a half two weeks, over the 30 days average, it's a 30% premium. pepsi, though, could have gotten
it a lot cheaper a few years ago, when soda stream dropped as low as $300,000. this is a company that's turned around its business with its stock price. as to why now after so many years of rumors and partnerships and speculation, i talk ed last night to hugh johnson at pepsico, he said whthat soda stream management felt from their part that the culture fit was right after a few years of working together more information i can tell you on this deal, soda stream is set to run as an inspected company this deal was put together rather quickly, in fact it happened in a matter of weeks.
and often when it comes to deals, you hear about cost synergies, not much to speak of here they think of it as a growth synergy and pepsico. pepsi is entering the home beverage market, the dyi market that really doesn't have a lot of players and soda stream was a big player and flavored water is growing faster than even bottled water, and pepsi. but also markets that soda stream hasn't even entered yet. >> they're paying quite a multiple for it. roughly around 19 times ebida. if they pay the growth stream they put up last quarter, it doesn't look that expensive, but if they revert to the 14%, 15%
they have seen recently, it's a high multiple. >> it's a high multiple. but it's an additional product line of growth as jonathan said, it's an incremental growth driver for the company, they have their individual growth product. soda stream has pretty high market share when it comes to the sparkling market though it's fragmented a lot of the imports are doing well in this company like the peligrinos, pepsi is doing better than it has in about eight years or so. but it's a small deal for pepsico, it's a cash deal. and it's indra nooyi's last deal >> this was then under ingenuity, her kind of initiative to get this deal done
because people are going read into the strategic implications. >> and wondering if there's a new strategy because of a new ceo. interestingly, the incoming ceo is the one in israel yesterday getting the final workers of this deal done but when i talked to hugh johnson, he said that this fits in with nooyi's option, taking out the sugar. beyond the bottle is the straw that pepsi talks about reusable bottles >> soda stream has been -- has marketed themselves in that way. >> it environmentally friendly >> as an alternative to using plastic waste. >> plastic is not in right now
>> is this another channel to sell pepsi syrup >> they have no plans to put the pepsi brands into these products they tried that in 2016 when they quietly rolled it out the plan is all in for sparkling water and some of soda stream's flavored sparkling water, which is just growing very, very fast right now. >> sarah, thank you. meantime, markets are mixed this morning, a little bit of a difficult to the up side on the major averages, the dow sitting at its highest level since early february oppenheimer steve investment strategist john stolts is here this morning we have had the highs set in late january do we take from that that the
market is resuming it's upper trajectory, or it's hard to get back there, and it's offset by some of the issues whether it's tariffs or anything else. >> what the market is telling us is that it's been there, done that and got the t-shirt what it's telling us is that it's going to climb the wall of worry, both economic and corporate. i think we're not done with this yesterday, you've got economics are the key driver of revenues and earnings, you've got a situation where you have challenges from this tariff business, but the likelihood of some kind of at least good evidence -- movement towards a resolution, will likely support stocks in the months ahead. >> it feels really headline driven, john we just got a whiff of the chinese coming into the market
and the worst fears are over, right? >> it's what it is, the current environment, that appears to be the response, but the market also seems to have an underlying message that when it looks at the world, this costs china more than it costs the u.s., and as a result of that, there's likely to be some kind of resolution ahead. >> bill, you've been looking and talking for a while now for some kind of a rotation in this market, a look at the glamour tech stocks into the more valued areas. you have seen a little bit of gestures in that direction, as maybe something to be concerned about, saying, oh, the defensive stocks might be working here for a little bit of comfort. so how do you view the shifts under the index so far >> thanks for bringing that up, because what i thought about this morning when i got up, this is like 2015, when you go back to 2015, the health care stocks
were the hot groups and the hottest of the hot stocks in the health care group, was pharmaceutical, followed by mylan and tiva, now four years later, the market survived a huge correction in the health care group in '15, '16, and '17. what are we doing now? valiant is called tesla. so can this market with stand the re-enactment of a risk-reward relationship i think that bob pisani's presentation today was a very good picture of how do people behave when they go from no risk-reward relationship, and then they go back again. and the netflix and the teslas
aren't getting a bid >> i don't remember mylan and tiva ever having the kind of potential earnings growth that tesla and netflix does the growth stocks you're talking about are what i don't get the comparison >> the attraction to the netflix and the teslas and the amazon is all about money they're going to make five to ten years from now, that extrapolation of faith and hope and confidence in spectacular leadership the valiant thing was all about confidence in a man named pierson who was running that company and these businesses are all about the confidence people have in those leaders and right now we have one being taken down right now in front of our eyes, and that is what reminds me of what happened in 2015.
>> john, if we just stick with that 2015 for just a moment, what the other stocks were telling you is that they were floating away and actually outdoing the growth stocks emerging markets were suffering, global indexes were down 20%, and we had an earnings recession here in the u.s. is there anything of a similar nature that's happening right now? because the global index has vastly under performed right now. >> the international indexes are really reflecting the fact that there's greater risk in international markets both developed and emerging as a result of their very intense exposure to exporting to the u.s. so anything that disrupts that, like a trade war, but yet, going into all of this, what have we had? we had a global economic recovery, that was beginning to become fairly pronounced on the back of a sustainable economic
expansion with up side risk. so we can't help, where we are now, very different from 2015, we don't see it. and in relation to tesla, it's not a tucker, it's not about elon musk, it's about the automobile i don't even open a car because i live in manhattan. but anybody i know that has one of those loves it. i don't think it disappears. >> what about the u.s. economy that you just mentioned, the fact that we have seen this growth better than expected in the last quarter we're all asking how sustainable is it to see 1.1 growth after last quarter how sustainable is it after the rest of the world is slowing, especially emergingi inmarkets. if you look at china, if you look at their markets, it doesn't look like they're accelerating >> but that's because of some of the machinations the government is doing in china, whether it's tightening or loosening
depending on the given day what's happening here, this is all related to the trade dispute, the slowing we have seen internationally has very little to do with anything other than that. >> how it impacts us >> not a heck of a lot, especially if we get some kind of resolution, or something towards resolution, that is material, resolution to the trade issues, and we would expect that you're going to get a pop-up in the emerging markets and the developing markets in a sense of greater confidence. i think it was last weekend, we had good numbers out of germany, the economic numbers, it's not over if anything in the u.s., i wouldnd swoul wouldn't say that our growth is robust, but it's still way above than we were before. >> thank you very much, john and bill, appreciate it. when we come back, the road to going private, former nasdaq
ceo robert greifeld will be with us to talk about what's there. and we're going to get the big movers of the morning, from este lauder to tyson foods. yes it's a very big morning, don't go away. that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab. if you don't like their answer, it's absolute confidence in 30,00or it isn't. arts, it's inspected by mercedes-benz factory-trained technicians,
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another move lower this morning, as the sec has reported looking into elon musk and members of the company's board after that take private and funding securities tweet from musk almost two weeks ago you also have jp morgan who took its price beat to back before when the talks started, it's 305, it had been 308. nasdaq's chairman and ceo bob greifeld, jbob, nice to have yo there. >> if you were running nasdaq back then and saw these tweets, just from a disclosure point of view, given of course that was an important part of the role there of nasdaq as well. what were your thoughts and what are they now >> certainly a tweet is a regular fd eligible disclosure so that is not the issue the issue is the content of the
tweet and is the content willing to stand up to scrutiny in that it's a statement of fact under the normal sec disclosure requirements >> that funding secured comment again. >> yes, i think that is the key point, and that's a knowable fact which will come out through whatever discussions and investigations happen. >> now put your head on back, because your ceo did its share of acquisitions which it has certainly pursued some. do you think it's something they can pull off >> i think the first question is what problem are you trying to solve? i remember talking to a ceo of a company that had been public, was taken private by some of the leading private equity firms he said, bob, the difference now is when i was a public company,
i reported quarrterly, when i wa a private company, i had to report monthly if you go private, you still have to answer to your investors, you still have to answer to them in a somewhat different way but you still have to report just like you do in a public environment and in the public market, in amazon's case, in elon's case, and biotechnology as a whole is continuing to think about investment opportunities offense the long-term. certainly tesla has been the beneficiary of investors in a public market context, thinking about the returns in this context, over not a quarter, not a year, but over decades >> set as a ceo, pitched his share of ooipos this is a company that's been able to raise enormous amounts
of capital even being a public company, but his focus seems to be on the shorts, any advice there given that you ran a company for a long period of time that were shorting the stock? >> i would say this, but as a public company's ceo, you're always going to have people who believe in what you're trying to accomplish and others who don't. and they should be entitled to express their negative viewpoint to short selling, and you're sitting there saying ing what do what you do is focus on your job, you do that day by day, and then the answers will reveal themselves in time and i would say that if you expect every person to believe your thesis, or your investment story, the stock would shoot to the moon, but that's not going to happen.
>> elon musk tweeted that at 12:48 p.m., the stock wasn't altered until 2:08 p.m., so there was a window there, but should have stock have been alted earlier? >> i am a former ceo, so i have no knowledge of what happened or why. i'm sure they responded as quickly as they could, but i have no inside information on that >> i think the what problem are you trying to solve is more broadly, when you're talking about the containing the scrutiny of public markets, you have companies no longer doing quarterly reporting, we're trying to make things easier for
ceos who are getting valued better and getting paid better, i'm wondering what we're going here in terms of disclosure tran transparency and interaction with other companies >> i would support the changing of the reporting period of six months you to understand as a ceo you're working for the investors, i think those people are entitled to get a report from you every three months, if you're a small company maybe you have a separate set of rules, but to answer to investors every three months is fair, and i don't think it's a burden on the company and i think it somewhat reduces volatility on the stock, because if you're reporting every six months and there was a marked change in your business quality during that period of time, then certainly investors will be very surprised and/or shocked six months later so i support the evaluation of
the issue, i would say my conclusion without knowing exactly how they're going to do the valuation -- i also don't want to conflate the quarterly guidance which i think is misguided with quarrterly reporting. i think quarterly earnings is a fair report card you give to your investors four times a year >> during the course of your career, bob, and certainly mine as well, we have seen the holding periods lengthen dramatically according to how long they have owned a particular security. there's not much talk about how you engender an ownership that extends over a long period of time and there's a legion of ceos that i have talked to that would love to have long-term owners is there, but how do you actually encourage it, if not
through, sort of different reporting, how do you go about creating those long-term investors who are with you through thick and thin >> the quarterly reporting and building a long-term investor base i think is separate and you can definitely argue the fact that long-term investors like to see quarterly reports. when i was at nasdaq, they were particular reporting was about 100 years for the stocks they hold and i gleed with that. but let's not forget that the loir long-term is a series of short-terms. with respect to the mutual funds, i would rivefer you to t fact that they're trading activity has to reflect that but that's only part of the
discussion there but with respect to having long-term investors, it's a process and it takes hard work, your investor relations department is absolutely critical and the commitment to top management to meet with the investors on a regular basis and treat them as the owners and treat them as the people you work for is an important part and an important plank in building that long-term relationship >> bob, appreciate your insights this morning thank you. >> thank you for your time when we come back, trade war negotiations, former energy secretary and ambassador bill richardson will be with us as delegates from the u.s. and china get ready to meet. and venezuela getting ready to de value it's currency.
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perfect curveball as a strike. >> it was a shocking number. it was such a flop >> it sure was it really was. u.s. and chinese delegates preparing to meet, hoping to cool tensions on trade, with additional tariffs set to go int into effect. meantime, the clajoining us nowr new mexico governor and energy secretary bill richardson. nice to have you back, ambassador >> thank you very much, sarah. >> do you buy this idea that china is suffering a lot worse than we are, their economy larry kudlow said was in terrible shape and they have to come to the table to make a deal
that's why we're getting optimism in the market >> i went on your program when the president imposed steel and aluminum tariffs on china because of their technology -- it has bad trade implications in my view, soybeans are plummeting, but also what happens if china starts loosening sanctions on north korea? what if they really start undermining our policy with north korea because they're upset in addition to the fact that we welcome the president of taiwan into the united states. those symbolic acts really upset the chinese. so i'm concerned, even though i'm a free trader, and i'm concerned this could lead to something not very good.
>> i know that's an area of expertise for you and i know you have been there a number of times and since the president has linked negotiations with china and north korea. what's the status on where we stand with north korea and how helpful china's been >> china has been helpful, but they're starting to loosen sanctions, north korea has not delivered on their pledge to w dew -- denuclearize. they have sent remains of military from the north korea war. on denuclearization, they're very slow, they haven't taken one step yet i'm concerned about that, but one of the reasons they came to the table is that china put a
lot of sanctions on north korea, north korean workers couldn't bring money in after all, 90% of all commerce that north korea gets goes through china. so they've got a lot of leverage, if they get upset at us on this trade war, china does, and over this taiwan visit into the united states, they can put some real, real negative spin into our policy with north korea. so i hope these tensions cool and we get into serious negotiations >> governor, you mentioned that it seems china has leverage on that front in terms of negotiations with north korea and there's also a way that we have to engage with the chinese authorities that's sort of sensitive and the chinese won't take that well but what about their trade leveraged economy and their pain threshold isn't infinite on our trade actions, so maybe there's
just one sided leverage in some of these disputes? >> look, you're right. my concern is in the strategic area i think the trade issues both countries can survive them all dhoethough i worry what's happening to our agricultural sector, and i think the agricultural community doesn't go down that much, that's not an affect on the agricultural community. but my concern is that china will retaliate on these strategically important things to us. that is my big worry right now >> if the president gets a win on nafta, which members of the administration have hinted about, things are going really well, if he gets that win, does it make it more likely or less likely that he's going to be very aggressive with china and go through with the proposed additional tariffs on imports?
>> the way the president negotiates which i don't always agree with, is going to make it more likely that he will go after china full blown and that really concerns me. now gets nafta settled is really important. because there's a new mexican president, we have to start off well nafta is good for the united states, it's good for canada, it's good for mexico they have improved it significantly, it's now more digitality oriented. they dealt with a sunshine issue, the auto issue, positively so let's get that put away in a positive way but the worry that i have knowing the way the president goes about negotiating is that it's going to provoke instead of negotiating a trade war with china. that's my worry. and i worry on the strategic front with china more than i do with the economic front, which i think both countries can survive, but not pleasantly.
>> governor, participants obviously in the marketplace, not just in stocks, but those in general, and certainly those who run companies as well are looking for a sign, something that will tell them one way or the other how this thing is going. what would will either positive or negative, but something you would stop and say that's a clear sign point that's either real trouble than we're in now or things having turned better >> obviously negotiations are going to start again with the chinese. i would want the president to make a statement, not a straight negotiator, not a commerce secretary that they're scrapping, that said, okay, let's find a way to resolve our differences. although i don't like the president's tweets, maybe something that says, look, let's get this relationship back on track. a phone call with the president of china, to say, hey, let's have a summit, although i worry about the president's summits,
to try to cool things off. ithink that symbolic, positive diplomatic gesture with the president is needed. otherwise i think we're headed towards a trade war and that's not good. >> is all this helping or hurting republicans in the midterms >> i think it's going to hurt republicans. you know, their base is the agricultural community, the iowas, the midwest, and the ag farmers are hurting, prices are going down, i mentioned soybeans i think with mexico also, unless we resolve that, nafta really helps agriculture. but that base where the president has those very strong seats that he wants to maintain in the midwest could be in jeopardy so i think the sooner the better for the whole country. i care about the country, of course i'm a democrat, but i want our trade surplus to come back, i want us to be strong
internationally competitive and getting into trade wars is not the way to go. >> governor bill richardson thank you for your insights today, from the governor of new mexico, energy secretary and u.n. ambassador. let's now get to venezuela, a country getting set to devalue wages. >> yes, banks in venezuela are closed today as the leadership tries another round of what they call economic reforms. there was a massive devaluation of the official currency exchange which is 95%, which is basically an acknowledgement that the real rate is much lower than the new rid currently the largest bill is a 100,000 bolivar note a cup of coffee is said to cost
2 million bolivars and they're set to raise international -- the serial like border crisis with its nations, which millions are calling the -- the government clings to socialist beliefs of price control and also state control of resources in the meantime "wall street journal" is facing criticism on its highly valued venezuelan -- those reports are held by goldman clients who would have bought them when gold man purchased them from the central bank >> all right, michelle, thank you. as we head to a quick break, let's check on the major averages at this hour. dow's going strong up 95 points, thanks in part to nike in that
double upgrade dow is up 93 points, the nasdaq is lagging as it lagged all week last week. "squawk on the street" will be right back that water could do. we called usaa. and they greeted me as they always do. sergeant baker, how are you? they were on it. it was unbelievable. having insurance is something everyone needs, but having usaa- now that's a privilege. we're the baker's and we're usaa members for life. usaa. get your insurance quote today.
welcome back to "squawk on the street." life from post nine at the new york stock exchange. we have a little minirally on our hands here at least for the s&p, it's pretty broad for the s&p, groups like energy, industrials, health care, all going strong, technology is the loser in the market and that's buy the nasdaq is slipping taking a look at apple, on pace to snap a five-day win streak, josh >> sarah, apple has been on a roll here, it's now up about 14% since it last reported earnings results on july 31st, and it's up nearly 30% so far this year bernstein's tony sakanagi has given us four things to look at
in the short-term. specifically in the month prior to launch, the stock has been up an average of 5.3% over the s&p 500. and he says apple appears in good position to raise prices on those new iphones that we expect the company to unveil next month. still despite those potential positives, nearly 40% of analysts do rate apple a hold right now. for some, including key banks andy hargraves, that lukewarm rating is perhaps a valuation call even if the good news is priced in at these levels you might own a piece of the iphone makers. 296 u.s. based mutual funds hold apple. 250 etfs hold apple as well. apple has a 16% weighting in the vanguard information technology etf, in terms of market value,
15% in the technology select spider fund, 12% in the invesco qqq. remember last year, cook took the stage on september 12. david, back to you as we head to break, take a look at shares of este lauder, the makeup company has a beat on both the top and bottom line it's doing well. "squawk on the street" back right after this
welcome back let's get back to the cme group and rick santelli. >> thank you for joining us for joining me this monday morning, andy >> always good to see you, rick. >> i'm going to throw you a curveball, 1992 was the last time we saw this kind of short presence according to the cft about these differing notes. but generically, what does that statement tell you, andy >> rick, there's a big short base out there, they have been looking for higher rates, granted some of it is wedged and hedged it but you know, they're still looking, a lot of the trading types "fast money" are looking for higher rates and they get them, but i think they're going to get stopped out first >> you know, it's fascinating, i
always believe congestion is important in technicals. we're at the low end of that spectrum and now the 290s are above us as counter intuitive as it might seem, are we in for a test of the 275 level before we get back over 290 >> rick, i think you're going to go even further than that, you're going to blow heads and shoulders over the 280 maybe you get as low as 265, 260. i really think that's where you're going to do >> let's look at the fundamentals, you know, we have huge deficits -- wait a minute, let me preface that, you have the 10 year caught in the cross fire, but certainly not many thought that the answer would be lower rates. could it continue or do you think by year end the amount of size being auctioned off will take its toll. >> rick, you have so much stuff
going on right now with central banks and problems in the world. i mean the chinese economy is slowing down dramatically. emg is now in bear market territory. italy is about a month away from putting in regard a horrible budget forward a horrible budget and it could blow out the european union no one is anticipating that or very few are i think it is going to continue. i think powell's speech this friday will be key in determining where the fed will go next. some are anticipating he is going to say something about slowing down, not so much the rate hikes but slowing down the amount of unwind that the fed is doing. i don't see it >> that's interesting. let me interrupt you, andy let me interrupt you for people watching, jackson hole, annual get together by the central bankers and others begins thursday in wyoming jay powell, head of the fed gives a speech friday. you think maybe there's a chance he is going to veer off course tell us why you believe that
again. >> rick, i think emerging markets is in terrible trouble even though the fed says they don't care about emerging markets, it is only time before that shows up in numbers in the u.s. you've seen it in sentiment numbers but haven't seen it in hard numbers yet i think he has to take a hard look at this and it is not about higher rates in the u.s., it is about availability of dollars in emerging market countries. and the more the fed unwinds, the less dollars available >> this is the first crack magnified by the fact that all of the central banks want to go the other way, want to start removing some of the stimulus. are we going to see more of the same are there other unforeseen, unintended issues that will be exaggerated by the receding water? final thought. >> rick, we are clearly in the area of unintended consequences.
you've had ten years of quantitative easing, and you can't think that all of a sudden you can reverse it in one to three years. it will take a long time there will be a lot of pain. get ready, buddy we're going to have some real turmoil. >> that's what we are here for, andy, to help traders navigate some of the issues as they crop up thank you for your time this monday morning david, back to you. >> thank you, rick santelli. now over to jon fortt with what's coming up on "squawk alley.." >> david, probably going to look at a new iphone model next month. does apple go higher or lower from here. a bull, bear argencongp "ua alley." u need a change of scenery?
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nike improved. and innovation is strong and they've back gaining share in the u.s. marketplace from adidas and under armor >> stocks up 60% from that low right before they rolled out their strategic plan to wall street, it seems as you said maybe these guys are chasing it higher >> they do say it deserves rerating and higher multiple than it received speaking of which, one of the main weapons, serena williams, we have exclusive with her on "the closing bell" today looking forward to talking about the u.s. open and new outfits. remember i told you kanye west was changing the athletic space. now there's a new man doing it, i call him the most important man in fashion he is joining us on the collaboration with serena. >> i'm going to watch.
good morning, it is 8:00 a.m. at tesla headquarters in palo alto, california 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good morning, welcome to "squawk alley. i am jon fortt, with me, morgan brennan, david faber joining us, kara swisher a lot to get to this morning we begin with looking at