Transcripts For CNBC Closing Bell 20170616

Getting through as many as we can. Its a jampacked two hours. Why niles shorts amazon on the back of the deal, and former walmart ceo, bill simon, why walmart has more to worry about other than amazon. Bill miller, a bull on the stock, and talking to him about valeant, and alexander accosta reacting to President Trumps comments on cuban policy lets get to it we have details of the amazons deal to buy whole foods and what it means for rivals. Mike, this is a little bit of what it means because ramifications have many, many ripple effects, but the deal to buy whole foods makes it amazons biggest acquisition to date, and one thats royaling grocery and retail stocks. Amazon says it will maintain the whole foods brand with the ceo and cofounder somedaying at the helm, for now. The overlapping is high already, and the stores are are located close to many amazon distribution centers, which is an interesting point the partnership certainly arms whole foods with logistics and data expertise, and amazon gets 460 stores and know how and fresh grocery. So much, amazons locations are experiments, and analysts estimate amazon fresh is small whats it mean for other Grocery Retail players when amazon airs a category whether its books, video, streaming, or Cloud Computing, it plays to win meaning it pushes prices lower. Whole foods is working to shed the whole paycheck nickname as they expand offerings at lower prices amazon gives it the financial power to get there faster, threatening other players like kroger and walmart running thin grocery margins and likely ups the possibility for other consolidation in the industry. Walmart is the Worlds Largest retailer and grocer saying the customers look for shopping experiences thats providing everyday low pricing and a mix of channels to meet their needs. We feel great about the position with more than 4500 stores around the country and fast growing ecommerce and Online Grocery businesses the bigger concern from analysts is if amazon begins to use the whole foods stores as distribution or pickup points, lowering the cost of the last mile giving shoppers, again, another option to get their packages faster or in a way that may be more convenient for some of them, say, driving on the way home from work kelly . Yeah, absolutely, stay right there. A deeper dive into the deal today, and, in fact, went into whole foods a little bit away from here in manhattan to see what customers think about the deal heres some of what they had to say. Hopefully it prices can be a little bit more competitive. Youre on amazon prime and get groceries delivered. I will switch over. I love whole foods, its better than fresh, and the stock went up they absorbed it for nothing looked like a great deal i have three very young kids, so logistically its tricky to shop with all of them, so i hope it makes things better, yeah do you like coming to the store with your mom . Amazon this morning announced they bought whole foods. Bolt. Whats that mean . That means they know nothing about organic food they will give us horrible quality. Theres no reason for them to buy this terrific establishment. Yeah. He was not happy about it. More he was in the minority. I feel as if they are on board with the deal. He said hed shop in another market post nine is here. Welcome to you all, and, john, let me begin with you making the point that in the u. K. , they have three times the Online Grocery penetration than we have here, so, you know, is the u. S. Going to catch up to that quickly . Well, the u. S. Could catch up to it, but for amazon, weve been saying for 18 months that grocery is the biggest user path to greater Revenue Growth. The largest Retail Market in the u. S. And globally. In the u. S. Its a trillionthree market. This deal makes amazon the number five grocer in the u. S. We think they are number three by 2022, and it really, you know, accelerates pretty quickly their footprint in grocery, so, you know, we are bullish on the deal tom, from an investers point of view, if theres some complexity involved, obviously, in running this business its a lot more of a physical real world moving stuff around amsons already in there, but its going to bring head count up by 25 . Are you concerned . Is it a good return on capital a gambit by amazon jeff bezos is a a great capital allocator, one where this supersedes intention. We talk about the story of the death of brick and mortar, but now we have to change the story, right . They are doing reverse, going back into brick and mortar, one area they couldnt do it alone online if thats the case, youd think all the grocery names respond positively because, wait, theres so much value in the businesses, but now everybodys dumping everybody else whats that tell you when they move into your neighborhood, youre in trouble. They attack margins. They will get price competitive. Dont think Grocery Stores is where they end think of the things they make. Brick and mortar owned by amazon is bullish, and not owned is bearish in the short term, yes. Amazon has new distribution now, and for the existing plays, its competition. Kelly, i think this speaks tots whole idea that you have to have both. Weve been talking about this for some time. I dont want to use the word omnichannel anymore. It doesnt matter. You have to have both. Consumers want the option to buy online, pick up in store or buy online and have it delivered, or i dont want to bother online, i want to pick meat for myself and put it in my own trunk you have to over everything. There was a good point that he thinks this actually might have been a result of amsazon what walmart did with jet. Com and thought, oh, they have a physical presence, going after an innovative digital retailer maybe we need to do the opposite superreceivering the customer is right, something they prized, and bezos pushed for with the company. This is more of a distribution play an a retail play. They are getting into the grocery business, of course, but longer term or near term, real play here is all the real estate locations, the ability, then, to sameday deliver amazon goods on top of groceries, and thats what they are going after and building out and flying into here more than the groceries he also better hope hes able to improve the store and store performance, some of the most expensive real estate you can find in fact, whole foods is known as having very high end locations, not particular about how much they pay in rent theres the whole foods reit, right, investors see where they pop up its good in terms of where hot household residents are, the first to sign up for amazon prime, by the way, now, of course, lowering that for lower Income Customers out there, so amazon goes high and seeps into the mid to lower tier customer thats really smart. I dont i foresee them doing similar things with whole foods locations as well. Again, its not necessarily like amazon stores, but store fronts, distribution centers, a way to deliver things faster to you heres the performance were talking about for the supermarkets this week kroger is down 30 , sprouts down 15 , and weis down 10 . Targets down 10 . This all in one week so, tom, just going back to the issue, scout mentioned this this morning on air, saying, you just gave amazon entry into the weltiest households and centers in the world this is a frightening day for every retailer thats not amazon and in the future this is seen as the beginning of the end of traditional retail do you defend traditional retail further here we would. We see the death of so many things amson got into retail, walmart still exists, right . Now they get into grocery. Youre going to be youre going to have high end, low end, middle is going to be squeezed, and, as you said, this is amazon getting into a business they were already in, and they realized we need the bricks and mortars. Kelly, i argue with my old professor and say actually you dont necessarily gain the shoppers because i really believe based on data i have seen that you already have a big overlap, meaning if youre a whole foods shopper, high probability youre an amazon and more than likely than that an amazon prime shopper that was true, mike, with the people we spoke to in the store. I asked them, are you a prime member it was at least three quarters were sure. If nothing else, they have more data about them, which whole foods didnt john, Bigger Picture with the dominant tech companies. It seems as if maybe the look at grocery as a tremendous end market that amazon feels it has to attack or other Companies Looking at transportation, mobility, it seems like whats left for the enormous companies is human stuff, but hard stuff down the road, is that going to be an issue for the stocks i didnt really get the question, but one thing i would like to add is for prime prime is the driver of amazons business, and they could do things like they are in their bookstores, offering discounts for members, 460 locations theres about 52 million prime households in the u. S. You know, this is a Good Opportunity to further that penetration of prime, and prime, you know, members buy, you know, with the most frequency and across the most verticals, and last thing on grocery, househ d households in the u. S. Buy groceries five times a month at least. This increases amazon, which is a huge factor i feel like its five times a week john, showing this on the screen here, that s p put amazon on watch negative unhappy with the fact this is financed with debt, saying its leverage approaches one and a half times is that something youre concerned about here i dont think its a big concern at all the companies are positive so, yeah not a big deal at all. Its not like they are buying whole foods as cash flow negative so i think its fine its totally fine. Jeff knows how to work the market, always has i dont see that an issue necessarily either these days, aaminus is still good especially in retail. Yeah, exactly might be the top of the list right there. Thanks, everybody. Thank you amazon is one of the largest position in legendary bill millers Opportunity Fund. His take, and in honor of fathers day this weekend, his son is going to weigh in as well we have bill miller iii and iv you see the dow, almost exactly flat too, s p similar. You do have the nasdaq and the small cap russell under performing again yeah. 6153 nasdaq well off the record highs, dow and s p below that as well closely watched Hedge Fund Manager dan niles why hes shorting ams shorting amazon next also ahead, what snaps decline to the ipo price this week could mean for the ipo market youre watching cnbc, first in business, worldwide. The power of 100 of the worlds top companies. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . 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Following the news of the day that amazon bought whole foods, and look at impinj, they make radio frequency chips used for management of groceries, in other words, the things youre checking out with, the companys last quarterly meeting, the ceo told amazon joined an alliance it runs to promote radio frequency tagging. Speculation there about further deployment across whole foods locations, michael, pushing shares up today. One of the few positive ripple effects in the deal thats true shares of whole foods itself surging after amazon said theyll buy the grocer for nearly 14 billion whole foods, in fact, above the offer price of 42 a share worth noting. Traders dont think its the end of the story, but lets bring in tech fund manager dan niles on the phone. He says after the deal today, hes shorting amazon, long walmart. Dan, whats the thesis here . Caller yeah, i mean, i think this is a great deal for amazon. Look at the history. Amazon got into grocery back in 2007 it took them six years to open the next amazon fresh in los angeles in 2013, and this deal shows groceries are hard you need physical locations. So if amazon was up and walmart was up and grocers were up, say, hey, there is value to the physical location, i would have no problems with it, or if all the stocks were down including amazon because this is a low margin, hard to do business, then no problems with it, but, to me, look at walmart, i go, amazon bought 461 locations. Walmarts got 4500 areas for distribution in food, and they got 11,700 stores globally im looking at this saying, well, walmart grew ecommerce 63 last quarter they believe that is accelerating amazons actually responding to walmart. If you remember, walmart dropped prices on january 31st from 4 the 9 to 5 its not a coincidence that amazon weeks later dropped Free Shipping to 45 this is the first time you have seen walmart being able to draw any blood against amazon, and its a good move for amazon. I think they have to do this, but, you know, investings about riskreward. It makes zero sense that amazon gets in retail, good for them. No value to the guy with the most retail distribution on the planet dan, i understand your case for walmart, but why the short on amazon . You know, what kind of price are you looking at a short for a couple bucks, or is this something you hang on to thinking its a couple hundred dollars overpriced caller yeah, i mean, amazon, again, its not an isolation its tied in with walmart. To some extent, depends how the stocks move together thought about it differently, you know, amazons expected to grow their top nine this year at 22 . The stocks already up 32 for the year, so unlike other name, and well talk about facebook later, you know, this stocks already up more this year than expected Revenue Growth for all the years, so its get r more expensive as we go now, and thats where i have a problem with this. This is going to get more competitive. We have not talked about the fact that some other Companies Like aldi is coming into the u. S. , so this space will be more competitive, not less, and, you know, jeff, obviously got amazing distribution, incredible what hes built, but at this valuation and increase in the stock price doesnt make sense to me relative to walmart. Dan, you mentioned facebook out there. Of course, amazon is lumped in with facebook, with google, you know, essentially all of these kinds of big Virtual Software based companies. Seems to me am ason is a little different in terms of just the nature of its business and just its not just code, right . This business is all about kind of messy stuff like warehouses and pushing stuff around is that part of the thesis why amso amazon is looking rich here caller 100 right. This gets them into the the physical ownership of retail space stores, et cetera. Its this business is ugly. Its hard. Theres a reason why the, you know, the these companies before today were all getting murdered, because its not a good business, more competitive, especially as you have a little bit of product inflation, you know, squeezing margins, and, you know, for amsazon, if you look at this saying, hey, its great, were not dealing with the physical location stuff, its all with the internet, that just changed for you today im surprised its stock is out of whack with the rest of the space because its good for the guys or its bad dan, yeah, can i ask you again about, you know, the kind of short youre doing here again, because to short a company like amazon is a bold move im curious, talking short term or longer term or talk about where you think the price is going and where you would exit the trade . Caller yeah. I mean, i guess id be a fool if i told you i know where the price is going you also think about it in terms of, well, whats the market doing, right a lot of these stocks have gone up on the fact that its going up, so theres been a lot of momentum what you see starting last friday is a lot of the names are rolling over as well, so, for me, its a portfolio, and thats the way i think about it, so to answer your question, im looking at more of these prices starting to converge, and dont forget, this is not in isolation. Were long facebook. We love facebook unlike amazon, where you got Revenue Growth of 22 and stocks up 32 , with facebook, revenues are expected to be up 3 the39 this year and stocks up 30 . You argue its cheaper as we go unlike amazon. Were also long google these are part of portfolio stocks we say wed rather own facebook and google, and in this case with amazon getting into physical retail, which is really messy, we dont like it at this level relative to the other two, and in which case, i can go to sleep tonight and go, i dont care if the market goes down 5 tomorrow because my view is that those two stocks will hang out against walmart, aldi, kroger, and its a mess. To play devils advocate, its inflation armageddon, and walmart is the company to fight the war right now. Caller completely correct. Thats how the markets taking it, but why . If it was so easy to do, they launched their first entry into this in 2007 with amazon fresh in seattle took six years to open a second store in 2013. Now they got major markets, but this is difficult to do. Maybe he gets through this with no issues, but i think i think this space has been sold off for a reason over the last year, and this puts them right into the thick of it you know, if anybody innovates, hes shown he can over the years, and well see i dont think its a great margin business any time soon. Gets you into an 800 billion category, which they needed to figure out at some point, and i think they finally bit the bullet saying, you know what, we have to buy the retail locations, but, to me, theres value to retail locations, and if you can use it properly and walmarts growing, and, you know, ekmecommerce by lev rami the Food Distribution and, you know, 12,000 globally almost, theres value to that. Thats all this is its not i love amazon. You need to see our house, so many boxes come every day from them, and its going to go one with the purchase of whole foods because we shop there now, but, again, its valuation versus reward yeah. We got to go, dan, but 950, 900, 850 . What, you know caller you tell me where the s ps going to be, and ill tell you where the stock goes thats all right, if the s ps at 2500 and amazons at, you know, amsons going along with it, do you stop the short caller well, ill put you this way amazon under performs regardless what s p does. Thats how i see it and facebook should outperform. Maybe that answers the question differently, but thats what we are looking for. All right dan, thanks very much. By the way, walmart trading up 1. 80 from the lows of the day people think its coming in for value plays there. Well see. Thank you, dan. Dan niles there. Amaz amaz bill miller coming up, and his Portfolio Manager son is going to weigh in as well. Also ahead, snaps drop to the ipo price this week scaring otr companies hoping to go public thats coming up next. Dynamic performance, so you can own the road. Tracktuned handling, so you can conquer corners. Aggressivestyling, so you can break away from everyone else. Experience the exhilaration of the bold lexus is. Experience amazing. Steve, other than making me move stuff, im here at the Td Ameritrade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Welcome back, closing at the ipo price, and today, bob, bouncing up a bit. People talked it up earlier enough to quell the concerns . No. What we know about the ipo investors in the last year, is they become hypersensitive to valuations they are not going to pay inf t inflated numbers everyone wants. They are not doing it. When you drift down the ipo price, they say, oh, see, this is a concern, maybe were paying too much for that. You got a problem theres not a lot of Companies Going right now. The Energy Companies with oil at 45, they are not going public. No. We have an issue of them floating out there all this stuff going on with uber, that is not helping ubers valuation. Its a Company Specific story, but, no, it affects everything its interesting. Its in peoples heads about disrupted tech are they disrupting themselves as much as anything else, right . Maybe valuations come down privately, whats that mean for ipo valuations yes we had a company today that price terms, Enterprise Storage Company Going public in a couple weeks, 8. 7 million trends, about half the valuation of a couple years ago. People said, oh, you see, they are giving you a hard time about the valuations, so we have 100 unicorns out there, and everybody says where are they going to come . Look at these issues and say, uhoh, we either are going to be forced to go public and take a haircut like others have done, or just stay private as long as we can it creates a lot more issues by the way, june has been quiet overall. You know, we had a great start to the year, and june so far is quiet. I think some of it is these valuation issues well, one more look at that 17. 59. Bob, thank you p very much by the way, snapchats biggest users, ms. Kim kardashian west speaks with us in the next hour of the show how social media helped her build her empire, michael. Yes, we had a chat, kim and i, thats later. Right now, though, sue has a news update. Heres whats happening at this hour, everyone. Form german chancellor died in his home, known for reuniting germany after the cold war hes the longest serving chancellor holding the post from 1 19821998. He was 87 years old. A special meeting underway at the United Nations in new york aiming to ban nuclear weapons. Today, the mayor of hiroshima voiced hopes for abomb victims to see an end to these arms. Two escaped accused of killing two guards are now in court. They were both captured last night following a car chase with police just south of nashville and mcdonalds and the International Olympic committee ended the long running sponsorship deal three years early. They want to focus on different Business Opportunities and priorities the Partnership Began 41 years ago in 1976. Next years winters olympics is the final set of games for mcdonalds. That is the news update this hour back downtown to you that was all the talk in london they had a huge mcdonalds yes i remember that massive never got in there, but the lines were crazy yeah, yeah, sure. Exactly you wonder whether or not this is going to be a good move for them or not, but i know. It is part of the entire repositioning of the brand, although, thats a huge platform, olympics, though, i dont know well see. The biggest all right, thank you, sue. You got it. Coming up, investing legend, bill miller reacting to the s n,er, d eangith hiso too, stay with us swing. Lked intoy huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac the power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia welcome back, President Trump in miami today rolling back some of president obamas opening of relations with cuba Michelle Carusocabrera is in the Little Havana section of cuba with the latest michelle reporter were here because thats where he made the speech, kelly, full of anticastro rhetoric, promising a largely cubanamerican audience his policy to cuba would be very different than president obamas. We will very strongly restrict american dollars flowing to the military, security, and Intelligence Services that are the core of the castro regime. They will be restricted. Reporter treasury released details how they hope to achieve that american companies, businesses, individuals prohibited from doing business with military owned companies in cuba. Well, in cuba, thats nearly everything, hotels, restaurants, all kinds of stuff, so future deals likely will be squashed unless companies do them with individuals. However, at the same time, treasury also said anybody already doing business in cuba was essentially grandfathered in, so the cruise lines, airlines, marriott managers of hotels there, we presume all those businesses can continue their operations another change, its going to be a little tougher for individuals to go. Under president obama, individuals were allowed to selfcertify they were going on a peopletopeople or Culture Exchange to cuba, get on the plane, and go. Thats not the case anymore. They have do travel with a travel company that has license to do peopletopeople tours back to you guys all right Michelle Carusocabrera in miami, thank you very much for more on what this means for u. S. Business, lets bring in eduardo, member of the nonpart sapp not for Profit Organization the cuba study group. Thank you for being here thank you, mike. Will the move Impact Business or on travel, and is it a good idea well, first of all, in terms of impact on business or travel, tha thats unknown the implication as far as i can tell is left to regulations to be adopted by treasury, and the restrictions reimposed are actually in one sense modest is it a good idea . No its a terrible idea for all kinds of reasons, not the least of how does this advance u. S. Interests, and, secondly, hows it help the c cuban people for 55 years, there were crazy policies that absolutely did nothing to help the cuban people and to go back in that direction is not going to help you came here from cuba at age 11, is that right . Yes i left cuba at age 11. I was sent to school in the u. S. My parents moved to argentina, but in effect, in the u. S. 1960. The policy similar to what we did with russia or north korea, when they oppress their people, we dont do business with them although its not helped the cuban people, but in a way, thats the point, to show by saying this is the reality of the regime that youre living under, why is it a bad idea to leave that in place to make the point that the regime is oppressing its own people . Because it will not help the people its as simple as that its not in the past currently, it will not help the people in fact, it will hurt the people when you are are standing in line and limit resources, people who are hurt are those in the back of the line, not the front of the line, so to compare the sanctions that we have against north korea and russia that have everything to do with International Threats and international stability, that has nothing to do with the cuba of today its about internal issues and the policy that many cubans favor is one of engagement and opening up, really the best way to encourage change and help the cuban people where do we go from here . Is there a path towards potentially going back to what the Obama Administration attempted to do, or are we just kind of status quo waiting regime change there or Something Else well, not to get too detailed or boring, but hes only done three things that i can tell first of all, hes said at the u. N. Were going to continue to oppose any measures that against the embargo, so thats continuing rhetoric at the u. N. Meu. N. Me secondly, prohibiting peopletopeople exchanges that just means you cant travel individually, check the box that says im going to interact with people you have to go in a group. People say, thats worse because a lot of the groups are organized by the cuban government or at least taken around by the cuban government what good does that do the third and most lets see what it means, hes prohibited National Transactions with government entities, but language says that this proportionally benefits the government at the expense of the cuban people or private enterprise or disproportionally at the expense whats that mean yeah. Can you stay at a hotel 49 owned by the government . I have no idea well see. Enforcing these provisions, good luck that means someone wants to go into a restaurant thats owned by the cuban government and all the sudden, you violated cuban law . You have to keep records for five years imagine you go to cuba, take all the receipt, put them in the drawer so somebody can say, show me the records makes absolutely no sense. At least the good news is that the things that were rolled back were fairly modest the rhetoric is not helpful, and the whole thing is just a step in the wrong direction other than that, i dont have a strong opinion other than that, its fine. Eduardo, thank you very much for weighing in. My pleasure the only son of cuban immigrants, al ander accosta thats in the next hour of the show amazons proposed purchase adds fuel to the fire that its time to look at potential antitrust issues when it comes to big tech and big deals. Much more on this next uh huh. I switched to tmobile, kept my phone everything on it oh, they even paid it off wow yeah, its nice that every bad decision doesnt have to be permanent now you can ditch verizon but keep your phone. Well even pay it off when you switch to tmobile. 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Thithis is the new new york. E . Withthink again. . We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov whole foods and amazon popping on news amazon buys whole foods for nearly 14 billion. Is that signal the tech giant and others like it are too powerful tech editor is here, kim, good to see you you know, interesting, part of the sub text of the deal, and the markets reaction to the deal is that a company like amazon is so powerful, so rich it just does what it wants and go into various industries and disrupt them in an instant way do you think this is going to be something that hangs over big tech for a while or just, you know, look, this is not app antitrust question right now . Both, to be honest. Youre seeing a lot of the biggest tech companies, talking amazon, google, apple, facebook, and microsoft to a certain extent are seen as having a ton of power in the market their stocks are soaring they have an enormous amount of wealth they are moving into a lot of areas of commerce. With amazon, in particular, you know, it started a long time ago dabbling in the ebook market. A market now dominated 70 of the market and slowly moved into other areas of retail, but its recently started to really focus on the grocery market, and that has been what its doing now with the purchase of whole foods. This is going to allow it to move into not only the brick and mortar space, but also really deepen his ability to break into the grocery market that its working on, and that is where the antitrust and competition enforcers out there are starting to just take notice and say, well, these companies are so big, they do have a lot of money. They do have a lot of power. A lot of consumer loyalty, to be honest, that they are able to use that margket leverage to moe into areas, and is that concerning for consumers and competition in markets where there is some concern they will disrupt it just like amazon did for the ebook market, for example. Yeah. Its quite clear that for right now, amazons share in the grocery business is small. Combining amazon and whole foods, youre talking less than 2 of the whole Market Grocery is 5 online now, kim, but it feels like its the deal that gives people in washington fuel, and we know how the president feels about amazon and jeff, and i dont know if thats Just Campaign rhetoric here, but the e. U. , meantime, launched antitrust fines against google, and microsoft beat pacman with its a. I. There is a sense that, you know, big tech is kind of taking over. At what point is there real pushback in the u. S. Well, i think to your point about the eus action. They have been tougher on the companies, not only google, but facebook has come under heightened scrutiny from eu regulators for how they use their consumers data, and if they use their dominance in one market to impede competition in another market, for example, and so alawyers i talked to said tha people are starting to take notice in the u. S. Of the eus increased scrutiny of the regulators, and when you have someone like donald trump in the white house who does have some more popular leaning concerns about Huge Companies and the impact that can have on industries and jobs specifically, it may have an impact theres more conversation about this that a year ago we were not seeing michael, good to emphasize how good it is for the consumer at the same time it is ironic most antitrust law protects the consumer, yet Companies Give it away for free or make it cheaper, kim, and now its maybe going to be too powerful well see where it goes, kim hart, tech editor, thank you very much. Thank you coming up, bill miller and his son are going to both weigh in on the amazon whole foods deal stay tuned for that shortly. We have 12 minutes before the bell you see the dow just turned green briefly. Rest of the market just about flats for the week as well retail, no surprise, weighing on the market, and by the way, auto names too, more on that in a bit. Ordinary, common place, routine, these are words that are cinnamons for davids rom acnyof the week to be shared with us right after this you totanobodys hurt, new car. But there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do . Drive threequarters of a car . Now if you had Liberty Mutual new car replacement™, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. With Liberty Mutual new car replacement™, well replace the full value of your car. Liberty stands with you™. Liberty mutual insurance. Less than ten minutes until the bell sorry, i stepped on you there. David and his acronym about the market what do you think . Well, our friend janet yellen, the chair of the fed, basically emphasized steady as she goes in the wednesday afternoon remarks. Sure. Normalizing policy, beginning gradually, ever so gradually raise Interest Rates, and think about reducing the size of the portfolio, Mortgage Backed securities and treasury backed securities so in the normalization, o is oil and opec its been sloppy at 44. 75 right now. Down 17 on the year libya and nigeria have been overproducing, so inventories continue to climb, and those shale drillers in the United States have gone from 1. 4 Million Barrels a day production on their way to 8. 6 Million Barrels a day. A million, michael, and kelly, going out of the country, and, nor, r is recovery, one of the pillars in the country right now. Recove recovery, low Interest Rates, and the lack of excessive bullishness other than the Technology Space only 32 bulls in the latest American Association of individual investors poll. Norm macron on the move. Theres 577 seats in the French Parliament theres the second round of voting sunday. Hes got a majority. We hope hell be a Ronald Reagan for france, and, therefore, for europe norma asia, steady. China had a fixed as set investment retail sales and industrial production, basically steady, not up, not down, good for china. The l is low Interest Rate as, low inflation, and low dollars, which does help profits and helps exports big day to watch is tuesday, Morgan Stanley Capital International makes a decision whether to include china and shanghai a shares in the emerging market index. Now, this has been spot on, but what about the elephant in the room here, this amazon deal for whole foods. What just your knee jerk reaction, thoughts on it i want to say to everybody, happy fathers day, go out and shop, go out and shop in the whole foods and bring home some bouquet of flowers for your spouse and your children even though youre the dad, go do that. On the serious note, i think you see private label batteries, private label diapers sold amazon, so in this big great country called america, when people get too big, theres also a reaction i would be very careful as what the popular reaction to this is going to be. We are competing with the chinese version of this as well. And so we dont want to vissuate or weaken our great global champions here, and so we hope it goes out well ive spent a nickname for whole foods was whole paycheck, and ive spent my whole paycheck there many a time on the breakfast bars happy fathers day david, thank you very much. Happy fathers day to you as well. Well be back with the closing countdown in a minute. Yes, and then after the bell, long time amazon shareholder bill miller and his son will be here to discuss the giant and the healthy chain, whole foods youre watinchg cnbc, first in business worldwide to anticipate. Experience the lexus rx with advanced safety standard. Experience amazing. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Its not just a car, work sfx its your daily retreat. The es and es hybrid. Lease the 2017 es 350 for 329 a month for 36 months. Experience amazing at your lexus dealer. With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Start trading today at etrade. Com before the bell, dow up 19, bob is here with me, the story today, amazon buying whole foods, they continue to trade above the 42 bid, at least theres a chance traders think somebody else comes in for a higher bid, but tons of collateral damage. New lows in retailers, target a new low, dollar tree, Dollar General at new lows, krogers at a 52week low now, and observation earlier, paying 14 billion for the company, of course, for whole foods, and yet their market cap was 16 billion. Did they get it for free well, you know what they want to have. Do the math on it new highs on a number of financials, even though the yield curve is flat. They still want to buy banks they are still in travelers, and insurance, and bank of new york, and all at new highs obviously, nothing thats bullish on the banks have really come through sure. They want banks higher. Thinking they would point out industrials close to a new high, quietly a strong group as well, bob, thank you very much remember, a lot of volume exactly floating off the close thank you very much. Good weekend, bob. Thank you ringing the bell here at the big board is a new ipo, and nasdaq, winners of the entrepreneurship startup challenge. Heres kelly for the eksecond hu of the closing bell. Thank you, michael. Welcome to closing bell, im kelly evans, the dow about at a record close here, a gain of 22 points, turning positive in the final minutes here huge volume we expect on the close. Theres a lot of options explorations among other things going on good enough again for about a tenth percent gain in the dow for a record of 21382, eight points above the closing high from earlier this week s p 500 added less than a point. Watching that, of course, as everything shakes out here, but looks like 2433, which is below the 2440 High Water Mark the nasdaq still 150 points below the alltime high close from june 8th, and it dropped a quarter percent today as well as the russell, which closed at 1406 and still about 20 points off the high mark forget small caps there the biggest story of the day is amazon buying whole foods. Coming up, long time amazon investor bill miller is here with his son to discuss whether jeff bezos made the right move here and what he reads into it, and joining me today to talk about all this is cnbcs market commentator, michael santolli. Jessica is here checking in from the information. Great to have everybody with us. Michael, what whudo you think obviously, the huge story is the amazon and whole foods, but the way markets reacted was, again, in character. It seems like a net negative for anybody that touches grocery and retail the market treated it that way, but then it didnt fall apart all together you had the rest of the market hulled in there as usual i think the markets feeling a little bit of a tough congestion period after the fed raised rates and changed its posture, but in regigeneral, its flat, sideways rotational action is the rule carol, what about this deal i love this deal. Phenomenal deal. I remember when amazon was public, i loved it then, love it now. We owned it for many years i work with clients with over 100 million, and we like to choose long term multigenerational plays. This is a stock that you can put in your grandchildrens trust, they will thank you, and you will pay for college a guest told us he was short amazon because of the valuation. Look, its an incredible runup why are you confident its value for the long tierm . They understand where the consumers are going, online purposing, a combination of high touch and quick delivery, and everybody else is scrambling to catch up they have the footprint. They have the Customer Service they have prime service. They are fantastic dennis, im not sure the deal is, lets not let ink dry. First of all, amazon said its buying whole foods, but they are trading above the price. By the way, we remind everybody we talked see if we have the sound about other bidders not long ago lets go back and briefly remember that. Jab, they are supposedly expressing interest in whole foods. Explaining why this appointment, and i think it makes sense to think about whole foods as having a backstop yeah. In the takeover, not just from that essential buyer. Dennis, the paneras ceo on the board of whole foods, now that they sold to jab, another suitor to look at here what do you think here about how this may all play out . Oh, i do not expect panera jab, a wellcapitalized company, but nowhere near the market fire power of amazon. They can pay cash, stock, whatever they want, so either they have to raise the bid a dollar, just doesnt matter to amazon given its financial resources. Michael, yeah, i was going to say, raise it 10 . Whole foods trades nowhere near the highs it hit on the stock years ago. Right well, and it is not performing in the way it was years ago either again, lets remember, whole foods agreed to the price. Now the shareholders hold out for Something Else the people we spoke to quoted in the wall street journal hope for more, but whether its a 5, 10, the big scheme of things, it does not matter all right i want everybody to take a quick listen i went to whole foods nearby in man hat p today to ask customers about thoughts on the deal this is what they had to say this morning, amson said its buying whole foods oh, really . Oh, cool. Oh, my gosh why would they . Twoday delivery for free thats great. You get to leave with your groceries and check out, like, with amazon prime rather than at the cash recommendation steer. I love whole foods, always will i have kids, so they like to go to the store, and i make sure i pick out exactly what they want see, if you dont have to go to the store, thats easier, order online i dont know. Im old school we dont want them. Its a terrible day for america. Its a terrible day for me family were crying that the quality will go down, that that it will never be the same the quality i like amazon, but what do they know about fresh fruit . So, jessica, bringing you in on this. In a way, there are a lot of skeptical users of amazon pantry and is this not the best way to kind of say, look, you can trust us, and you should go online right now, place your grocery order. Its going to show up. Youll be happy with it. You know, amazons been trying to get in a big wedge in the Online Grocery delivery business, and in my estimation, this catapulted them giving them distribution centers, inventory, and thats a big battle right now in the internet sector between amazon, google, a whole host of startups, so from that perspective, i think its very strategic to the extent that whether people like going into a store now, reality is they are going to be going less in the future online is just easier. Amsons a big, big player instantly. Jessica, let me ask you, too, does this now make google, who has a little bit of a delivery option, i think, in uber, doing delivery, who are the other players who now think about emulating this model and looking at beaten down grocery names so the race between the big guys, basically boiled down to google and amazon already, and i think this gives amazon a big leg up because, again, its about distribution you need stores and relay points to actually deliver things quickly. There are a host of startups, instacart, postmates this deal is bad news for them now amazon has inventory and the distribution carol, anyone else you pick up on the back of this deal . Who are your favorites broadly speaking in the space . Well, i e dont really love the space. I dont like grocery space because the margins are small and they are all struggling. Stay with this deal, frankly theres no other combination thats the winner this will be i like to buy the winners. This is a winner clearly the markets conclusion we talked yesterday about all these companies with this strongest strategies, and the greatest sponsorship by the market are essentially crushing prices and making it good for consumers. Right you have a deflation boom going on right now, and its hard to see what gets in the way. Interestingly in cvs, walgreens, people say if thats amazons gain, theyre not going to buy the guys, but disrupt them change the model. Correct Convenience Stores on the back end dennis, where does that leave the shakeout that feels it has to continue across traditional retail space i love the shoe leather reporting there, kelly, so cool, but the emotional response of people there, emotional connection, largely positive in the piece, some negative, but amazon makes a difference for people, and they feel a response to it, and i just dont think were people feel the same way about macys feel the same way about cvs. Its not a stretch to think the world wee see and step out into today in 2017 will be drastically different. Before we have to move on, dennis, it was suggested earlier by scott of nyu that kroger, other grocers should be in board meetings tonight to decide whether to mount a counter offer for whole foods or come up with a Strategic Response whats your thinking on that they could go after it, but know amazon has the wonderful ability of being a sniper from the outside of the industry. Okay, take whole foods find well buy cvs or walgreens in some ways, it doesnt matter. They made the philosophical commitment and exercise it in many ways. All right thats perhaps the biggest statement of all thank you for being here, dennis, carol, and jessica really appreciate it more reporting from you, kelly, i loved it. No, i do too, actually. Thank you for saying that. Everyone was so nice, too, that was great. Walmart and target are hit hard today on the back of the deal. Lets bring in former walmart u. S. Ceo bill simon in a first on cnbc interview, bill, thank you for joining us hi, kelly, how are you . I just want to begin by asking you what do you think this means for walmart how are you doing well, i think this is a big, bold, dangerous move by typical bezos. He took a great brand and brought it in. Its not going to be easy. He picked a segment of retail thats maybe the most difficult, grocery, fresh, and premium. You have to be really, really good, and whole foods was in trouble to start with, so theyve got work to do i think it really demonstrates his commitment to get in brick and Mortar Retail and food in particular, and that cant be good for anybody selling food right now. Bill, if ammazons going to grocery in a big way, do others go online in a bigger way like the retail deals announced they have been active in the space, will continue to be, but they have been more incremental than transformational. This was a transformational move by amazon in the space walmart has to watch their flank, a big deal in retail, leidl, opening first ten stores in the southeastern part of the u. S. , and thats already a very, very aggressive food market, and low end, you know, walmarts got to watch for that too. Work is cut out for them bill, one way to read amazons move with whole foods is it stays in line with the idea that amson has a focus on the higher end premium part of the market that kind of shopper now, its unknown whether amazon thinks they can just broaden out the whole foods brand beyond that, but do you think that leaves that much more room with walmart with the tremendous footprint all over the country that essentially is big enough for all of them . I think youre right. Walmarts very strong, and, you know, very national in their footprint and following, particularly in the middle and low eer end of the economy, ver, very strong, and not a direct competitor with whole foods. This move wont have a big a move on walmart as costco, you know, publics, those guys feel this particular move the commitment, if this is an indication of amazons commitment to get into grocery and into fresh in a big way, thatll make everybody stand up and take notice. For the near term and medium term, walmart listen just fine giving them time to figure it out. Bill, if were moving in especially the millennial cohort moves into more Online Grocery delivery, walmart is piloting an initiative to allow employees to drop groceries off on doorsteps on the way home. Should they be doing more of that does that require a lot more hiring is that expensive . How does that impact ability to offer low prices well, thats an Interesting Development that i agree with you. Im not sure thats going to scale. It might be an efficient way where sort of schedules aligned to deliver the last mile, but i dont think itll be big enough to scale to make a meaningful difference is there anything else they can do to make a bigger difference then . Well, i think so. I think they are working on it you know, the efficiency and never under estimate two things, amazons innovative capability and walmarts logistics and product capability walmart moves boxes better and faster than anybody on the planet, and once you got that moving in your favor, theres an opportunity to always take pennies and basis points out of your model and get it to the customer in a much more efficient and faster, capable way, and i think this test with employees is just another sort of a probe point in that, but their supply chain capability is world class. Yeah. Its about to be tested in a big way on the world stage bill, thank you so much for joining us on such a a fascinating day. Thats bill simon, the former u. S. That it is, thank you, glad to be here former ceo of walmart bill miller and his Portfolio Manager son take on the internet giants purchase of whole foods and President Trump scaled back relations with cuba today adding restrictions to travel and business dealings. Coming up, discuss the potential fallout for companies doing business in china with the labor secretary, alexander a costa we want to hear from you. Youre watching bc, rsincnfit business worldwide e ] i used to be one of the worlds most feared hackers. My friends call me hack daddy. [ evil laugh ] but then cdw orchestrated a Network Transformation using cisco Digital Network architecture. Allowing scalability and providing fast, comprehensive security from intruders like me. Luckily i found a new calling. Faster. Security transformation by cisco. Just run. Run like you know how to run. It orchestration by cdw. So, how are things cartheyise . Youre fired [ screaming ] its time to get back on top. Were going back to villainy. So bad so good that im so bad. [ maniacal laugh ] dont try to fight the feeling of somethin thats so organic. [ pop ] despicable me 3. Rated pg. Heres amazon, up 2. 5 , still below the 1,000 mark pushed through a few weeks back, but higher on news the ecommerce giant is buying grocer, whole foods, but according to tech investor dan niles, this move may not be good for amazon and what he told us in the last hour of the show why he shorted the stock caller this is part of a portfolio of stocks, and wed rather own facebook, own a google, and in this case with amazon in physical retail, which is really messy, we dont like it at this level relative to the other two. Those two stocks will hang much better than amazon that now is going head to head against walmart and aldi, et cetera. Amazon is one of the largest positions in mr. Bill millers Opportunity Fund talk about Restoration Hardware, by the way, and joining us now is bill miller and his son, bill miller iv. Not a lot of people with a fourth, by the way, thats unique unique, i have a son who is the fifth, and we just call him five how long are you going to keep this going . Up to him i wanted to name his younger brother the fifth, but my wife wouldnt let me do that. I wanted the George Forman thing going. Exactly anyway, you are here at post nine exclusive ahead of fathers day weekend. Great to have you here, especially today, bill, you pounded the table on amazon and jeffs leadership for so long. What does the whole foods deal say to you well, i think the markets got this right in the sense of amazon put about maybe 3 of the shareholder value at risk, 34 , and the market marked up last i checked at 3 , so the market thinks its a good deal, value creating, and indicates amazon is serious with the business they have been experimenting with a wide variety of things, but this means they are in it for the long haul. Its a huge category fits what amazons strength are, the low margin business, so, you know, Technology Makes a huge difference, efficiency makes a difference, whole foods has a high margins grocery business, and the other thing you know, jeff is one of the worlds great capital allocators, and what this means is he knows hes highly confident they earn above capital on this one. Interesting you describe that business as matching low margin business that he traditionally does well in giving everyone a sigh of relief any other industry they have not penetrated yet, this is a wakeup call, and furniture, they are starting to get into, Financial Services they dabbled with lending on the platform, health, if they look into that in a bigger way, anywhere they cant go well, i think, you know, his strategy is to be wherever they think they can they have a competitive advantage. They earn above the cost of capital, and he loves giant markets and big profit pools in terms of the aggregate profit pool and loves above all high margins they can disrupt like Cloud Computing to be a big leader right i wonder, though, if youre incrementally getting to the harder stuff, not just low margin, but complexity of obviously 3 of the market value is not a big deal financially speaking, but just the idea of its a big physical footprint, its a different business. Overtime, does that become an issue for you . I dont think so. I mean, you know, again, they are highly experimental, and i know when they were first introducing the grocery stuff out in seattle and the guy who was then running it wanted to expand it, i think, to l. A. Or san francisco, and jeff didnt want to do it because he said, we have not provenhere once we prove we make money, well expand it. Now they are convinced they are an important force in the business you are a fascinating portfolio. Some years it feels your portfolio is everywhere you want to be and then the next year, its income plays. Theres synergy there. When you look at the income opportunity now, this is the fed raised rates, but traditional plays are less attractive in this environment well, back to the rate question, kelly, i think that was a really interesting and unfortunate decision actually. I think neil cash car is the only one who got that right this week right and Larry Summers Larry Summers, hes not on the fed, but, yeah, one of the most ironic things about the decision, janet said dont overreact to one data point, talking about inflation over the expectation rate, right, but the fed over reacted theres been one measure preferred measure inflation hit the target, one of the of 60 readings they hiked rates aggressively and told people not to overreact. They are well served to step on the brakes and see what happens here where does that leave you in terms of positioning for the income strategy, we are prosicyclely positioned its unique strategy were positioned for improving economy, improving environment which should correlate with rising rates, hopefully at a slower pace. Yeah. People have been comparing that exact posture of yellen saying were not going to forego this idea of normalizing rates just because inflation remains below the target to what greenspan indicated in the late 90s, not standing in the way of productivity evolution is that not applicable here in the nonrevolutionary world where we cant sit and wait for inflation. The risk is asymmetric to the extent they hike too fast and sent things downward, economy gets worse, its way bigger risk to go in a deflation environment than it is to let the economy run hot, see real wage gains, and see things improve. Flipside is what amazons doing. Talking to sprint offering a year of free wireless, and the fed, economists call the latest readings too, mike put it if we see this Massive Technology deflation, does that mean its a different kind of a worry or less a worry than, you know, it would be if this was 2008 and 2009 and prices fell substantially . Worry in terms of what . For the fed for the fed you know, i think i agree with bill and Larry Summers that the fed seems to have a normalization feddish. Its not clear what normalization means in this environment when you got the tenyear at 2. 15 yeah. So i do think the restoration effort, and i think the fed, you know, again, i cant see any risk to the fed letting wages run too high they know how to stop this its difficult with the zero lower bounds to figure out what to do unless you do what japan does and buy stocks in the open market to do so. Talk about other names you have this year valeant, bitcoin, okay how good a year its been . Do you have the latest numbers well, Opportunity Funds up 13 . Bills fund up 10 , i think, and junk index up 4. Hedge fund up over 30 bitcoin was the largest holding, not because we made it, but because it went up so much selling out of that now or, i mean nope. We think long term in this what was the number you told me . The total stock of currency outs in the entire world, 31 trillion okay. Okay. Bitcoins market cap is 37 billion. So bitcoin could still go up ten times from current level and only be 1 of the currency in the world. This is just a speculative play, though, basically saying we think a lot more people buy and use i guess if you use it, its legitimate, but sounds like a case of we expect more adoption of this opposed to value in it, or maybe there is well, you are seeing increasing adoption, but that argument has been made when bitcoin was at 10, 1,000, 500, so who knows yeah. That and the other crypto currencies have been a speculative blowoff here with the initial coin offerings like the ipos and stuff like that, but it is that whole area thats a True Potential disrupter and true innovation in money we have not seen that in thousands of years yeah. And the other thing is that bitcoin is not a threat to the yen or to the dollar its very much a threat to the venezuelan, argentina, all the countries that use currency to inflate their ways out of problems or seize peoples assets this is a way that provides reli relief to people in that environment. When japan, i think it was beginning of april, made it a currency, that set off that last move, but russia said theyre going to consider doing the same thing in the next year or so, and i think thats the kind of thing you get broader adoption, its going to be you cant help but help it a couple more quick things before we go valeant had a nice rebound how much more value to you see in a name like valeant yeah, i think we first talked about valeant a year ago on the show in the 30s at the time, and that was clearly wrong its 12. 5 here yeah. Interesting thing is in the last year since joe papa came on board, they did everything they were going to do, so the asset sales, a billion dollar sale last week, maybe 3. 8 billion they want to be at 5 billion by february of next yearment they hit the numbers, quarterly numbers, set guidances, you know, guidances, commitments, and we believe they start to grow next year, and i think when that happens, the stock, you know, from here, ought to be up 50 in 12 months sticking with it . Oh, yeah. I dont have a different view on it than a year ago which was over three to five years, its a 60 stock. Apple, quickly, call options performed well this year what now for apple as far as youre concerned apple trades now close to a market multiple on this years numbers, highest its traded at in a long time, not net of cash, just gross that seems to be, to me, a fair value for apple in the near term you know, i think, you know, Warren Buffetts right that its a popular way to think about it as a Consumer Product with a very high loyalty among consumers, and, you know, there are not many apple iphone users who want to waits for the new android to come out and rid the iphone its priced above amazons offerings but Higher Quality you like it here . Yeah, we own it, yeah final question, Restoration Hardware i didnt realize you had that. Explain that one we bought that right. Give colleague, samantha, credit for that she saw that stock was 100 two years ago, and then 30 when we went out there, and thats when we started buying it after that because it was very clear that all of what they were doing, the almost all the problems would be done at the end of this year, and then they would have a clean slate, and, again, they are going from 7,000 to 8,000 square foot stores to 40,000 square foot stores, and those are going to be humanly not going to get amazoned no, in fact, Gary Friedman said out there that actually the berkshire tried to buy them before they came public. No way. Yeah. So they own Nebraska Furniture Mart and know how these huge stores are profitable. Worked out well. How are you celebrating fathers day good question yeah, how because is this going to be consistent with your market calls too . You still have time to think about that guys, thank you, both, always a pleasure love being able to talk. Thanks for having us. The bill millers, really appreciate it. President trump announced changes to president obamas cuba policy. The changes now imposed and potential impact on Companies Looking to do business in cuba when we speak to alexander acst ayituscoa. We created the ripple the doughnut in a doughnut in a doughnut. Right away, it was a success. I mean, it really took off. What people dont know is that it all started with points from my chase ink card. I bought the ingredients, utensils, even custom donut cutters. Wow all with 80,000 points. What will you create with your points . Learn more about the ink business preferred card. Well wait. What did you think about her . Morrow. Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading Companies Lead with digital. This is a story about mail and packages. And its also a story about people. People who rely on us every day to deliver their dreams theyre handing us more than mail theyre handing us their business and while we make more ecommerce deliveries to homes than anyone else in the country, we never forget. That your business is our business the United States postal service. Priority you welcome back, President Trump in miami today announcing his administrations policy on cuba in effort to maintain diplomatic relations but restrict travel from the u. S now that im your president , america will expose the crimes of the castro regime and stand with the cuban people in their struggle for freedom we do not want u. S. Dollars to prop up a military monopoly that exploits and abuses the citizens of cuba. Joining us more to talk about how the policy changes impact the u. S. Relationship with chub is Alexander Acosta. Welcome, and thank you for being here good afternoon, kelly the first question we have here is how do you think the policy changes will affect regime change or improvement of conditions on the ground in cuba well, today was the start of regime change in cuba. The president made it clear that he and america stands with the cuban people these policies are designed to change cash flows away from the regi regime, away from the military, and send them directly to the cuban people, and that is important so that we can empower the cuban people to begin the process of change from within. We had a guest last hour who said, and hes a cuban immigrant himself, said he opposes this because when conditions get tough in cuba as a result, the people in the back of the line suffer the most. Why is this the right thing for the u. S. To do well, it is the right thing, and President Trump carefully calibrated his new policy. He rejected the previous administrations policy, which opened up cash flows to the military and got nothing in return, and said you can go ahead and interact with cuba, but you have to do so directly with the cuban people, and cuba wants our money. They need to allow their people to open businesses, allow their people to have freedom, allow their people to run those businesses so u. S. Dollars can go directly to the benefit of the cuban people thats how you begin regime change and, mr. Secretary, turning attention back home while youve been in miami announcing this, amazon made a bid for whole foods. I dont know if you looked at it yet, but do you have concerns about the job impact this could have in this country well, you know, if you look at jobs in this country, were at a really historic point our up employment rate is 4. 3 , the lowest its been in 16 years. At the same time, though, we have more jobopenings than weve ever had since weve been keeping track of the job opening data we have 6 million open jobs in the United States, and so our problem here domestically isnt do we have enough open jobs. Its do we have a match between the skills that workers have and the skills that are demanded by those open jobs. That mismatch between skills available and skills required is why just this week the president announced a new program to focus on work force skills development. Its called the apprenticeship model. Right the president s directive will focus federal efforts on bringing apprenticeship model out of the Building Trades where its been very successful and expanding that to all industries yeah. You know, is there anything that the federal government can do for uber drivers, for example, one rapidly expanding labor pool, where they would appreciate some benefits can you encourage, you know, people like that to maybe streamline the way they record tax income or have some advantage when it comes to acquiring Health Benefits that puts them on even foot with employees in the private sector . You know, thats a very important issue. If you look back at 1995, there was a survey, and only 10 of the work force was using alternative employment methods 2005, only 10 today, its more than 15 use alternative employment methods, we have not updated labor laws labor laws still assume the old employment model, and so its something that we really need to lock at and work with congress because more and more individuals are using different types of employment models yeah. Time question, you guys able to focus on priorities with the Russian Investigation going on absolutely. You know, just this week we announced new focus on apprenticeship the president s here in miami to announce the new cuba policy we are focused, and we are getting a lot done all right we appreciate your joining us today as well. Thank you labor secretary Alexander Acosta tough road for snap just above the ipo price, and one of the biggest users, Kim Kardashian, why she thinks highly of the social Media Company although investors have been fleeing apple takes another step to develop original content at the expense of a potential rival all the details for you next its what busch is known for. What are you known for . Oversharing. In fact, i have this thing. Nope. Nope. [sfx buschhhhh] e trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade theres nothing traditional about my Small Business. So when it comes to technology, i need someone that understands my unique needs. My dell Small Business advisor has gotten to know our business so well, that it feels like hes a part of our team. With one phone call, he sets me up with tailored products and services. And when my advisor is focused on my tech, i can focus on my Small Business. Time now for a cnbc news update with sue. Hello, kelly. This is whats happening this hour, everyone an update on the condition of majority whip, lead surgeon saying hes in the hospital for a considerable period of time and require more operations on his hip. He says the prognosis for an excellent recovery is a good possibility. Congressman scalise was injured in wednesdays shooting rampage app a baseball game protocol a jury finding Minnesota Police officer innocent of manslaughter he killed a black motorist last year at a traffic stop over a to the. He said he had a gun and thats when the officer shot him. The girlfriend streamed the shootings aftermath live on to be bill cosbys lawyers want a mistrial as the Sexual Assault case enters the fifth day. Yesterday, the jury told the judge they were deadlocked, but the judge said try again Los Angeles City hall lighting the bat signal in honor of the late actor adam west. Hes best known for role as batman in the 1960s tv series. The signal at that point was used by gotham city to summon the superhero. Thats the news update back to you. I met adam west once you are a lucky lady. I know, i know. Its just his voice was exactly the same as batman, and i it was it was weird seeing him in, like, street clothes and not the bat getup, but he was a very nice guy may he live on in that space, thank you very much. You too have a good weekend. Nestle sold the candy portfolio so someone will soon own the bar. They are doubling down on healthy, making it one of the few brands higher today. Doubling down on healthy, and overseas, they keep kitkat overseas theres a lot of nostalgia involved and its local, does not travel borders others swept by the amazon story. Could be valuable apple hired two executives from sony to build out the tv programming business maybe they are going to go it alone here as much as we talked about big deals today. Or participate in some way. These two guys are going from the Entertainment Division of the Consumer Products company to the Entertainment Division its not that different. Also, youre not behind if you just start now every single year, you create new content. You are just equal with everyone else like netflix. Always want the next hot thing. Exactly apples chance. U. S. Open is underway in wisconsin. F ar from the original owner o the course and about his quest to host the elite Golf Tournament when we come back the . I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . 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Experience amazing. Thithis is the new new york. E . Think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov u. S. Open is jurpunderway i wisconsin. The original owner bought the land in 2001 and dumped 26 million into it with a dream of hosting the open fast forward to 2009, the owner sold it at a loss before hosting the tournament as its owner. We are in wisconsin covering the open and is there with aaron hills founder. Dom . Reporter all right, kelly, a great setup piece for what happens here, and we are with bob lang to talk about what the story is behind erin hills bob, a lot is made about your investments in the properties at erin hills tell us what it was like to put the deal together and what it was like to see that kind of move away from you well, the deal together is, i think, you have to go its not the deal itself in the end, but it goes back to the beginning when i decided that i was going to build a golf course for the u. S. Open, which goes back as far as 2000, and then the deal of it was my own in which i bought the option on the parcel for 432 acres, the same one designed a routing plan on, and it was not until i discovered within a couple months that the 14th present 14th and 15th hole were not a part of the property thats when i went on this journey to, number one, meet a neighbor, talk her into selling me four acres. Found another neighbor, bought 14 acres, so now we have the current 18 holes,but took thre parcels to put it together what was the thinking of putting that money and land together what was the thinking behind it . What was the ultimate goal there . Well, when i started doing that was in 1999 i just wanted to biuild a great golf course. It was not until 2000 at pebble beach that the idea hilt me about the u. S. Open, and thats when it all started. I had the 14 and 15, i had the other 16 holes, on 432 acres, then i went on the journey, i looked up the other land where the houses were, and i didnt want to see houses next to a golf course, and im a builder i was a builder. Reporter as you talk about hosting a a championship like the u. S. Open, how much pressure did you feel or how much pressure was there around that a lot is made about whether or not the usga had a hand in the way things developed again, thats one of the things people talk about here. Usga, and mainly with davis, he did not put any pressure he did not ask me to do anything he didnt over encourage me to do anything. As a matter of fact, the first time we met is when he came out well, we first met for two minutes, but when he came here on the 10th of august, we walk around, of course, for a little over four hours i thought we were going to do jeep rides bob, i want to walk. Well, when it was over, walked back to the jeep, and during the course of the conversation, ron whiten and i started picking up, you know, they like this so when were standing back by the jeep, and i felt positivie i, i said, mike, i want to build a u. S. Open golf course. Caught him off guard, but he said, you know, bob, this is one of the best pieces of land ive seen for a golf course we at the usga are more conservative he said, wed have to see it first. I said, i totally understand i dont expect anything from you. Reporter this is interesting, again, so much to the story here well talk more about this in the future as well, but right now, kelly, with the u. S. Open the way it is, i can tell you from being at the course all day, a spectacular property, and, of course, bob lang put it together, and, of course, now, hosting the u. S. Open. Guys, back to you. Applaud his effort in so much he went through for that dom, thank you for bringing that to us, and nine miles of walking, thats a huge course, thats what the guys are doing out there. Itll test fitness for sure. Thank you, guys, again, appreciate it. Coming up, Kim Kardashian says why shes bullish on snaps future although investors bet ait it wel right back. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Its been a rough week for snap, a little bit of a rebound today. But up next, social media queen Kim Kardashian weighs in on why e sticking with snap. Stay with us deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley. Snap trading right at its ipo price of 17 as we draw concerns about the future of the social Media Company, but michael caught up with an avid snap chat user Kim Kardashian west she was telling a different story. A somewhat different story. I asked her about the different platforms as she sees it twitter, instagram, all the rest when it came to branding, heres what she had to say. Accumulation of every social media platform is super important and i think you just, it is time consuming, but if you really want to build your brand, you should use different platforms. I mean like click through, it shows that facebook is really prominent. Snapchat shows i think a little more of your deeper life, so if you are creating product and you want to show people behind the scenes and in the factories and picking out colors and formulas and stuff like that, snapchat is really good for. That i think instagram is really good to show is progress show the product show the physical product, key things announce things. Twitter i think is great to have a conversation with people to really engage and listen to people which is really important to hear what people want and have that conversation back i love those four platforms. Those are the four that i use, its just like proven to me have been the most beneficial in brild i building a brand and listening is so important. I cant stress that enough. And on snap chat, you mentioned that that seems valuable for showing some of the process behind the scenes. Is that a platform you think will have momentum right now theres a lot of questions at least here on wall street as to whether in fact there will be continued engagement with users . I still love it and use it and i, you know, it took me a minute to get on it, but once i did, i was completely hooked and i do see now there is Instagram Stories, so that is one platform you can go to and share both i just started using Instagram Stories him but i am a big snapchat fan i do love the app. I do use it all the time i love the filters i love just i love even using that as my camera. So i am a big snapchat fan and i hope that people still stay engaged. Now im sure its early in the game before you have to make decisions like this, but im asking this maybe from my own personal use what do you think you are going to use as guidelines for your own children when they begin to become engaged on social media do you have any sense of that at this point i literally think of this all the time i talk about it with my sister i think the most important thing is having boundaries and setting boundaries when i was growing umm, i know its like im dating myself, there wasnt cell phones, but i couldnt have my pageer or we couldnt be on the home phone past a certain hour. So i think whatever works for your family, boundaries are definitely important because i personally dont think that kids should be sleeping with their phone i dont do it. When i come home, i like to be super engaged with my kid. I know theyre way too young for social media, but i want to start a routine at a young age that social media is amazing, its fun, its great but it cannot, you know, you do have to have boundaries. Okay. First of all, that was fanttastic second of all, i hat a light bulb moment over the last couple days here on cnbc. She said there is a big force social Media Company and cal lum yesterday was saying he wanted to use those and make the process easier maybe cramer is right, maybe he or she need to pick up the phone and synchronize what you are doing across all four. Thats right. I was fascinated how much of a science she has it down to she clearly thought about it what each is good for, how it can benefit her. I asked her, too, could she give somebody a playbook and say this is how you do it, this is how you become a social media brand . She was saying, i could do that you have to be authentic she has an advantage of a tremendous amount of recognition that she enjoys. You are so personal the kardashians, the images we were showing. I think this is a light bulb moment for me. Before the brand, ultraperfect. Boundaries,als, however ironic you feel it is for her to say it the idea is not giving into it altogether. Listen, you guy versus to figure it out every day. As long as they can watch closing bell. I can now. Thank you so much that does it for closing bell. Fast money starts right now. Thats right, kelly, thank you live from the New York Times square, i am Brian Sullivan in for mellissa lee welcome to this furious lat money tim, kyren nothing feinerman and gorgeous guy adami im new. Tess lab has been on fire the tech anything that correctly called the brakeout now says, get out apple taking a big step to beef up its tv business s. This netflixs Worst Nightmare . Gene munster says so he is here to tell you how tight