Transcripts For CNBC Squawk On The Street 20140725

So were watching that closely. Take a look at the tenyear note yield, which this morning is down to 249, below 250. Well talk about that as well today. As for europe, heres how the picture is setting up. Mostly red on the board for the most part except for spain is in the green, one of the few bright spots over there. Our road map starts this morning with amazon shares, down sharply premarket after posting a wider than expected loss, while continuing to spend on new products and technology. Starbucks beating the street. A live and exclusive interview with Ceo Howard Schultz coming up. In another exclusive interview with cnbc, president obama weighing in on Companies Looking to cut their tax bills with overseas deals. And visa falling premarket. Were going to explain why. How about amazon . Reporting a much wider than expected Second Quarter loss of 27 cents a share. This as the Company Continues to spend on new services, technology and products. Amazon predicting further losses in the current quarter. Meantime, revenues rose 23 in line with consensus. Jim, there was talk going into this report that investors were growing frustrated, that they were losing patience with mr. Bezos to grow profitability at amazon. Now they report a wider than expected loss. What is your take . This was a horrendous Conference Call. People are fed up. I mean, even the bulls who were trying to get good things out of the company couldnt get what they wanted, growth margins were actually better. This is the company saying, you know what, with we dont even care what you think, were going to do whatever we want. And ive got to tell you, think people are getting tired and want to start instilling some discipline on the company. I mean, at one point, i was almost surprised they didnt say, you know what, we did really badly and so what . This was an in your face, we dont play by the rules, we do whatever we want. My friend one of the best notes was from wolf research, from Aaron Rubinson who said they used the word invest 33 times but not a single reason why we think the investments will pay off. At one point, they say, growth margins are good, they say, it doesnt matter, i had a lemonade stand, 1401 cromwell road, and my mom thought the growth margins were important. Is this a case, jim, where you want to scream out, you know, jeff bezos, are you listening . Why isnt he paying more attention, why doesnt he care more . Because it is pinkie on the brain. The guy wants world domination. It doesnt matter. He doesnt care. Invest, invest, invest. It just look, they have at a certain point they will have to either take over the world or just give up. And theyre going for take over the world, scott, and they dont care whether the analysts like it. I dont blame them. You know what, in the end, buyers, the big momentum buyers, theyll come right back. Why . Because, you know, they still had 21. 6 Revenue Growth, it decelerated from 22. 8 in the previous quarter. They did a better growth margin. But as far as im concerned, this is just you own this stock because you like the company. I cant come up with any valuation reasons. They raised the price for prime. Even more people subscribed. It is a love service. And this is one of those where i love the service, i own the stock, and that is that linkage is not going to be broken. Do they raise prime enough to offset the shipping costs, which are hurting badly, right . It is costing them more than they would have thought, i think, to ship these goods to you or me or whoever else, in the two days they promise under amazon prime. Right, well, theyre lowering the cost of the amazon web service, but and theyre not making up in volume. You know, the big joe, we make it up in volume, theyre not making it up in volume. And it just i dont know. Im very frustrated with it because ive got to tell you that it was inexplicable, an inexplicable quarter. How could they decide that it just in the end, this is what i wrote this morning, in the end, this is a company that doesnt deserve to sell at these prices because it is such an imperfect security, it deserves a discount to where it is, because it doesnt play by the rules. And thats fine. You dont have to own it. But dont ask us to own it and, you know what, theyre not. This is basically this is a why do you own us . Let us go do our thing. I guess as an investor you have to make the decision as to whether you believe that all of this investment that bezos is doing is going to pay off down the road. Yes. Thats the only way to decide whether you want to buy the shares here or not. Down the road means now it is india, theyre talking about spending. Theyre spending in china. Theyre spending everywhere. And they dont really care about what they make. And they have got tons of money and it is just just it is irrelevant whether you like them. It is almost as if they are a private company and theyre just saying, you know what, we dont care what you think. Were just going to do what we want and were not even going to explain it. There was a moment, the only real substance i got out of the whole call is that japan raised taxes during the quarter and that caused japan the retail sales tax, that caused japan to be weaker and that may have been why there was a rapid desell ration. They dont want to tell you could you tell us what you do . No, we dont do that. How is electronics doing . No, we dont break that out. How is it in europe . No. They dont break out anything. You cant understand it. I suggest that you just watch david fabers documentary. I know david is not here, but that at least tells you what they do. They dominate. The fire phone goes on sale today. They dont mention it. It is going to cost us some money. The analysts are just besides themselves, i think, because they cant take it anymore. So bezos doesnt give a damn what the analysts think. Not at all. However, if investors start fleeing en masse, does that give them a smack across the face and wake them up . No, no, i dont think so. I think hes just it just doesnt matter. I dont think he cares. Honestly. I know they do these stock appreciation, people are paying stuff, but i think this is look, this is kind of necessary. It is necessary for us to do this. And dont get in our way. And you know what, hes over time, revenues are amazing. 100 billion in revenue, but cut price in amazon web services, is that competition that did it . Theyre not going to tell you. They are unhelpful. So in the end, you have to default to i like the product. I like the way they do business, because you simply cannot make evaluation. I cant. Most people they would say, they would agree with you, i love the product, i love going on amazon. I love buying the stuff there and getting it within two days. But thats not an investment decision. Facebook, google, apple. I love all their products. I think theyre amazing. And, by the way, they make fortunes. They make huge amount of money. And they spend a lot innovating just like amazon. Theyre spending a lot too. Amazon doesnt care. It is incredible. I would rather invest in the river. At least i know the direction. How about starbucks reporting fiscal Third Quarter earnings of 67 cents a share, beating wall street estimates. U. S. Comp sales rose 7 . Helped by demand for new breakfast and lunch items and teavana iced tea. For 2015, starbucks expects eps growth of 15 to 20 . Well have a live and exclusive interview with starbucks chairman and Ceo Howard Schultz later on this hour. This is a good quarter. What is that all about . It did run into the print. Second, they did not guide up big. So you have the piece that controls, cautious guidance. Listen, i talked back and forth, small position, at my old hedge fund, which i dont have and dont shore and dont do this and dont do that and dont come on tv and say im going to destroy this company. Who are you referring to . I dont know. I would go 77 bid for a million shares. Just hit me. After they hit me, i say 77 bid for another million. This is what its about. This is a Great American company, it is coming down. Why . Because people say, coffee prices, theyre only 67 . This is the kind of moronic thing going on since the bottom where you see great quarters and people flee. And then this is not amazon, by the way. And then a few weeks later say wait a second, the stock is down for the year, and they have 22 earnings per share growth. Im just going to own the stock. Im just going to own it. May i suggest to people just own this is a stock that, remember, we had the big momentum pullback and all these names that had run a lot, starbucks got caught in the wind of that. Nike was caught in the wind of that, starbucks, and under armo armour. You go over to the under armour quarter you got what people are hoping starbucks would do, we blow the number, we do this. 7 u. S. Comps is blowing the number away. This is not Dunkin Donuts. Technology forward company. 40 of the people in china are part of the rewards program. New soda, teavana, technology, sandwiches, new formats, beer and wine, drive throughs. And no one cares. They care about the price of coffee, which, by the way, is not Howard Schultzs first rodeo. I bet it is not even half a cent per share. They have been able to manage those costs better than most, right . Please. If any company has learned how to manage rising commodity costs, it is schultz, right . Starbucks. This stock goes down, and everyone just says, this is one of those these are funny, wow, something must be wrong. I spend im insane, i spend about four hours on this thing trying to figure out what was wrong. And i conclude that the market has decided that it doesnt like starbuck and thats when you pounce. And this year, when you have these selloffs of really good companies, they tend to come back. And i dont know if starbucks is going to hit 75 first or whatever, but if you want a perfection quarter, give it to you at starbucks. Interesting change of sentiment. This is a stock that everybody loved and now people are being more nitpicky. It is nitpicky. But i went through every piece of research and all the research is kind of the same. The research is, like, listen, were rising our price target and it is terrific, but they didnt give us the guideup we wanted. Maybe was it conservative . Look, sometimes you have to say i like it. I felt this way about when facebook reported the previous quarter, scott, and it went down and i came out here and everyone just said, hold it, facebook is down, it must be bad. I said, no, facebook is a buy. And people then it went down 3 and jim cramer on twitter, i was hung in effigy, they run old tape from 1996 of me doing something, which is fine. I love it. I love it. Hey, hate me, love me, dont ignore me. But i will tell you that this is one of those moments where you say, okay, the market is wrong, let it come in, though, you buy the 77, the market is wrong and talk about it two months from now. The cfo made interesting comments. We can ask schultz about this when he comes on with you in a little bit. Continue challenging economic and consumer head winds in many markets around the world where they do business. I dont know if people are taking that theyre taking that wrong. Europe is coming back. The european numbers were good. 7 u. S. Comps is rather extraordinary. Two new stores in hanoi, joint store in colombia, talking about despite the size, pentup demand for starbucks demand continues. When does he get the credit he deserves . Look at the longterm chart. Look at every single one of these dips over the longterm when howard was involved. There was a ceo in the interim, nice man, i wont knock him, because the guy was really nice guy. But this is the kind of quarter where people at home are saying, wow, there must be something wrong. Cramers in the pocket of howard. Whatever. There is the tenyear chart. I said you got to buy it. Everybody said im washed up, you dont know what youre doing. Then the stock drops to 70. 69. I said, buy it. He just he likes the triple venti cup no. I like the company. I like the numbers. I like the 7 comp. I like what theyre doing in china. I like what theyre doing globally. I like the new hours. I like the stock. I like theanagement. But it is a sell . Huh . Anything else you like . Well, i have to tell you, i do like fizio. I like teavana. Oprah chi. Youre short oprah if youre short howard. Im short oprah. Im short 78 offer for no. Sometimes you just have to say somebody is wrong. Listen, sellers, i know you think youre so brave, youre taking profit. Take it and go buy baidu. Buy it when it is 40. Ill take two up to 250. Ill bid 250 for 2 billion baidu. Sometimes you are to say they give you a chance and theyre giving you a chance. Sorry. All right. No, not sorry. A live and exclusive interview with starbucks chairman and Ceo Howard Schultz is coming up. You dont want to miss that in just a little while. Also, grubhub is up more than 30 from its april ipo price revenues at record highs, the ceo matt maloney on whats working for the online food ordering company. People like that there. There is a stock you want to go longterm. Food delivery company. That was a seamless transition. I like it. Look, grubhub has the momentum. They got momentum. People like momentum. Howard doesnt have momentum. Hes antimomentum. Oh, please. There are the futures. Dow industrials with an implied open down 50 or so points. The s p, another intraday all time high yesterday. 27th of the year. Unbelievable. More squawk on the street live from the New York Stock Exchange when we return. Chines will be sprayed to be made. And making something stronger. Will mean making it lighter. One day, factories will work with the cloud. One day. Is today. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. President obama speaking out about u. S. Companies looking to reduce tax bills by striking deals with overseas firms. Here is what he said last night in an cnbc exclusive interview. This is basically taking advantage of tax provisions that are technically legal, but i think most people would say if youre doing business here, if youre basically still an american company, but youre simply changing your Mailing Address in order to avoid paying taxes, then youre really not doing right by the country and by the american people. Jim, now, he didnt say unpatriotic. But he didnt have to because he said Everything Else that meant the same thing. I felt that my interview with secretary lew, the treasury secretary, i think he basically did say were unpatriotic. Look, everyone knows this is ridiculous. There is great commentary on squawk, everyone knows the republicans hate the democrats so much that this is the nose that gets cut off to spite the face. And we all know that when you go look at these companies, where they really are, and they tend to be on a couple of streets in dublin and switzerland and in swiss towns, you know there is no company there and, but mark cuban said the right thing, look, were here to make money for people. Im not here to say its right or wrong. I know its wrong. We all know it is wrong. The goal is to find the companies that do this. Cuban is so good. If i own stock in your company, and you move off shore for tax reasons, im selling your stock. There are enough Investment Choices here. But the stock goes up. Then your goal is to get rich. But the government should have stopped this. I told jack, knew him from college, i said mr. Secretary that this is one where i think you got to do what has been done in a lot of times, which is the irs starts rulemaking procedures and said if we see it is just a mail drop, you know, the irs is very powerful. The only court in all of america where youre guilty until proven innocent, which is remember it is the opposite in all the other courts. And the irs has much more ability. Theyre hamstringing the irs. The irs could do this. They could say, were analyzing it. If youre just a mail drop, were not going to cap you. And they wont do that. And theyll claim they dont have the right. This is like when tim geithner said, we dont have the ability to stop lehman, it is the u. S. Government. They have the ability to do anything they want and they should stop behihiding behind t. The irs should start rulemaking procedures and say, jim, thats not possible. Ill say, you know what, thats what you always say when you dont want to do something. There is a Biotech Company this morning, jim, that i wonder how theyre viewing the president s comments. Mylin, doing their deal, they get downgraded at citi today because of the uncertainty over the transaction closing. So good luck. Youre dealing with capital. It is so dysfunctional. Does it really matter . You want to bet against capital . Mylin is run by the daughter of senator manchin, right . A lot of people trying to get senator, will you call in . He said these things are wrong. He wants to do these inversions, like a lot of other people, the ceo. Well, you know, i dont know. Look, it is obviously wrong. The president was right. Everyone knows this is wrong. But that doesnt mean a thing in washington. Thats why at least the irs has the ability to do something and stop saying they dont. Im tired of that too. Im tired of the Justice Department running over the banks too. Ill throw that in there even though i know the bankers are bit. Im tired. Im not tired of doing the show. Were just getting started. Amen. You okay . Yeah. All right. Howard schultz in a mad dash are coming up after this short break. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. As long as ive lived in iowa, strauss blue danube playing White Chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. All right, welcome back. Were about six minutes or so before the opening bell. Time now for cramers mad dash ahead of the market open. And were doing letter v. Yeah. All right. First, let me say that Charlie Sharf, the ceo is a brilliant man. You can say, yes, they beat the quarter. Theyre saying internally, listen, we have currency issues. Here is what you need to know. Every time the stock has gotten hammered, you should buy it. I like it to get more hammered because there is a quote that was in the call from the cfo. Overseeing a sustained economic recovery there are no signs yet of acceleration, either domestically or internationally. Charlie comes on, very much in flux, and there are, what i regard as being, yes, unusual head winds. In other words, visa is in nomansland right now. I would love to tell you go buy it. But this call made you feel like, well, wait a second, maybe the world is too uncertain. They do, like, here, were not doing argentina. Im the only country that they depos didnt list of the trouble spots is north korea, which i dont think they take visa there. Visa is everywhere or is that the other guy . It is everywhere you want it to be. It is a tough quarter to get your arms around. Let the stock come in and then pick it up. The Conference Call made me feel less certain than i think charlie wanted us to feel. Sometimes Conference Calls can boldon you. Sometimes Conference Calls make you step back. This was a step back Conference Call. Sorry, charlie, in reference. I want good taste. I dont want visa to have good taste. I want it to taste good. Visa could be a wait on the dow off the open, the reason why the dow there it is. Some struggles off the open. Speaking of, the opening bell and exclusive interview with starbucks chairman and Ceo Howard Schultz is coming up. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Youre watching cnbcs squawk on the street live from the Financial Capital of the world, where the opening bell is set to ring in about a minute or so. More on the earnings front, jim. Deckers beat. There is a footwear refresh. Footwear stocks down for a long, long time, coming back. Deckers is good. Sketchers is best in show by the way. A remarkable quarter. Dsw is cheaper now after what im hearing from the different companies. And i like the footwear business after being away from it. Dont forget, under armour, major call, footwear. The driver there. Yes. Then pandora, which is down the competition. Down 10 or so. It is finally there. The competition is just there. Dont forget, sansa was qualified, google and beatz is a good acquisition. Pan dodora forecast is light. The competition is tough for pandora and the cook wants to be in there and they pulled back the music in a big way. I dont want to be pandora. I didnt know if you were talking about armstrong or cook. Im closing the box on pandora. Youre watching the opening bells and the s p 500 at the cnbc real time exchange. Here at the big board, advanced drainage systems, maker of thermoplastic corrugated pipes celebrating the ipo today. The nasdaq celebrating its ipo, El Pollo Loco well interview the chicken chains ceo. Last quarter was profitable. I like the food. I love the business. I wouldnt open a Mexican Restaurant if i dont like the business, but chipotle has got remember, chipotle had 17 comps. These guys have 7. Lets be careful, but it is profitable. Markets are open as we said. The dow will be under a little pressure here. I have a stat for you here. It is courtesy of the spoke. They do good work over there. Yes, they do. 68 of stocks in the s p 500 are trading above their 50day moving averages, raising the question of whether now they are getting ahead of themselves. 74 of those are in tech, which everybody seems to love. Well, look, i think that red flag or no . Are we due for a pause . I dont know. There are certain segments of the market that are hot. Aerospace. And that has just hit a complete wall. Those stocks are going down every day. It is case by case is what im saying. Old tech came back big. Intel, microsoft, microsoft is still very cheap. And im a believer in amy hood. And i say amy hood because shes the cfo. And shell do something great. I think old tech is doing well because there has been the the pc has come back. Thats why you see tech doing so well. The pc has made a comeback. So, no, i mean, those stocks are selling at 12, 13 times, not expensive. I think you go case by case. Some things you look at the sales force workday quadrant, those stocks are still well off their highs. So i come back and i say, lets do an individual stock because it doesnt help me to do broader, because the market is not trading like an etf anymore. It is not. You would make the argument as well if you look at industrials or discretionary, that thats where the value is. Right. Industrials have been going down. Almost every single industrial that is reported is going down. And caterpillar emblematic of that. Thats why i say, it is like are we due for a correction . I dont know. There are big corrections happening underneath is what im saying in some areas that were very loved, and it has been a rolling correction this whole time. They are whole segments of the market that are completely, completely left out. Look at your stocks, decide whether theyre cheap before you look, the Fastest Growing area of the economy right now is oil and gas. Are those stocks too expensive . I dont know. Every time i say they are, someone buys one, someone merges one. Exxon, they need to buy another company in the area. What im saying is, look, lets be individual, make decisions not on sectors, qualcomm yesterday down hideously. Hideous. Because of chinese squabble. But is apple broadcom was up on the flip side of that. Got rid of a division. Got rid of the division thats been killing them. I just want to go case by case. Thats all i want to do. Lets go by one case and pull up amazon shares. Those are the ones that are going to be most in focus off the open this morning. And it is not a pretty picture for theyre turning. 12 . Just to recap what we were talking about before, they had a wider than expected loss. You said it was terrible. I just dont like it when you just dont care. I mean, you know, this is like bezos not carrying about what the street has been yelling about now for, you know, the better part of six months. People are giving them a pass. Then they started to speak up and say, you know what, enough is enough. I think every time they invested a dollar, they then had a dollar and a half in sales. They have been investing, investing, investing and they have not gotten a return of late. They have not gotten dividends of late from their investments. And thats why the street is turning because theyre saying, li li list li listen, youre spending all this money, wheres the beef . They said, wow, were spending fortunes and this isnt paying off. He decides to turn off the spigot, only spend money where it is necessary. Stock goes from 22 to 35. Amazon needs to come up with a strategy, which says, listen, when we invest, this is the return we get. But they dont even want to they dont even want to talk about it. They dont care. It is okay. They dont care. Theyre like a team, all right, because you and i love sports, theyre like a team that, well, look, you know, we pack the house every time what does it really matter, right . We fill fedex stadium, does it really matter . Why did you bring up the redskins in that whole thing . Because im dan snyders closest friend. Not. We have an nfl owner by the way on later on squawk on the street. We do . Who do we have . The owner, mr. Khan, the owner of the Jacksonville Jaguars. Well, we play them the first home weekend. There he is. First on cnbc, shahid khan. You know what it is called when you play the first home weekend . A w. How did you guess that . We dont want him to cancel. No, no. Very fine team. The jags are great. You know what jag stands for. Just another guy. Thank you, adam shefter, for that. There is this other story we havent gotten to yet. Thats gaming what is going to happen with fox and time warner. Okay. Rupert raises more cash. That has people asking whether hes going to raise his bid along with the new cash he got. He will. And, look, he raises 9 billion by selling the division to another company he has a lot of control over. But i think that this is one of those, i had last on peter mccauselan on, the ceo of air gas, they got a bid from air products, he went and got three different bankers who said if this company were left alone to its own devices, theyll zget te stock up much more. Two years later it is at 100, the bid was for 70. If you stick with bukus, ill do some ill do a piece on this next week. Bukus is not an entrenched guy, sitting around like he works for tell dar and gecko comes in. My money is on bukus, like on david pie from there is a guy that wants to destroy a company and make it a i forget his name. But hes, like, alo life. Herbagan. Youre not talking about bill ackman, are you . That was a presentation of all presentations. The mother of all presentations. If he had kept his mouth on and gave the presentation now i have to check where herbal life is today. Problem bob pisani is on the floor this morning. We heard the gong. There is a sizable crowd here too. We just opened advanced draining at 16. 05. A teek for ipos, a disappointment as well. They do pipes. Theyre pipemakers. We were talking about 17 to 19id ended up pricing at 16. We had a huge number of ip oxs that priced in last 36 hours basically all below expectations. Quite a disappointment. We had eight of them. Six of them priced below Price Expectations including the one just now, advanced drainage systems, one priced right at the low end, and another one priced at the high end. Now, by the way, the one that priced at the high end will be on the nasdaq this morning, put up the full screen for this, 6 below the price talk. One at the low and one at the high end. The one that is priced at the high end in the last 36 hours is El Pollo Loco, fast casual, thats pricing today over at the nasdaq, 7 million shares at 15. The price talk here was 13 to 15. And theyre essentially a they occupy the space that chipotle has occupied for a long time. The word is fast casual that everybody uses. They grill the chicken in front of you, in front of an open fire, in front of the customers. It is a very hot space. And i think it is not an accident that thats the only ip o in the last few days that priced above expectations. We are going to have a huge week for ipos next week. 22. I had to call around to make sure i was right on this, seeking to raise 6 billion. This is one of the biggest weeks in the last 15 years. We had this a lot. A lot are biotech there is one enormous one coming next week and thats synchrony. It is the former ge capital. Theyll sell a good chunk of former ge capital, 15 of that, this was the largest private credit card issuer in the united states, it is the largest private credit card issuer in the united states. Do the math on this, 125 million shares, 23 to 26, thats 3 billion deal. In a deal with 22 companies at 6 billion, half of all the money is that one particular company. Be careful, this is going to be only 15 . They have a lot more coming in the next year or so. I want to point out too by the way, the one interesting earnings report, stanley, black decker, they increased the guidance. Thats why the stock is trading on the upside. Stanley works. I see that firsthand every day. Ipo 22 next week. If youre sounding the alarm a few weeks ago about what was happening in the ipo market, look at it now. It is the gong show. You dont want supply. These deals that dont work, be careful. Theyre going to price lower on the range, reminds me of capital one in the right spot, but at the same time there is too many deals, too many people at the beach or going to training camp. Probably getting their Morning Coffee right about now or tea. Up next, it is coffee and tea time. A live and exclusive interview with starbucks chairman and Ceo Howard Schultz when squawk on the street returns. [ female announcer ] theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Starbucks okay, moving lower, despite beating street on earnings. Some people say conservative guidance, some say it played out, it is too rich. Lets look at what is next for the coffee giant. Howard schultz, founder, chairman, ceo of starbucks, howard, thank you so much for coming on. Jim, thanks for having me. What a great quarter for the company. Lets talk about it. 7 u. S. Comps, Pretty Amazing number. You talk about the idea that there are many places still all over the globe where you could have more starbucks and yet we get muted reaction. Sometimes i want to say, howard, i think the stock is wrong and the company is right. But im going to give outfloor to explain what is going on at starbucks. Lets bifurcate the stock from the company. I think it is two separate issues. In terms of the company, a 7 comp number in the u. S. On 6800 stores is just a stunning achievement. You go it china, i just came back from, another 7 with Stores Opening up with the highest unit volumes we have seen since we have started. Then we look at the European Market where, as you know, we and many other people struggled for years, we have turned that completely around. And then you look at the opportunity we have with teavana, not only to open up successful teavana stores, but elevate the tea category at starbucks. And why thats important is that our average unit volumes in our existing starbucks u. S. Stores are going up because we have been able to enhance our core Coffee Business in the morning peak as well as the important opportunity of creating new need states and new opportunities for day parts in the afternoon with refreshment with teavana, with fi fizzio and food attachment. All of that is threaded into the leading position we have in the globe with regard to global payment. Thats just the beginning. So this is a story go ahead, jim. Im sorry. I think some people are saying all these things, fizzio, teavana, the new technology, the sandwiches, 24 hours in some places like china, new formats, beer and wine, they cant move the needle versus the fact that 40 of your coffee is on hedge for next year. I dont even understand that argument whatsoever. Lets talk about moving the needle. We grew the company at 11 for the quarter, on a base of 4 billion in terms of the sales of the company. We said, Going Forward, well have double digit eps growth and double digit growth on a base this year of approximately 16 billion. There is no company in our industry, no peer group of our scale doing anything like that, with regard to coffee. I dont i cant honestly understand why people are continuing to talk about that. We have said for the for at least a year and a half now despite the rise in coffee prices that we understand the cyclical changes to this and we will navigate through it and there has been no change whatsoever to our guidance with regard to coffee or commodity prices. Lets now go back to the stock price and the company. When you have 7 growth in comps on our base, it would just be irresponsible to give guidance Going Forward that we can maintain those kinds of numbers. So instead we say midsingle digits on comps, best of class when candidly you look at mcdonalds or Dunkin Donuts or other companies trying to compete in our space. We are winning. And were winning around the world. And when we look at the growth of the company, were building a great Enduring Company and we are in it for the long game. This is a long story, we have longterm growth ahead of us. And this is just the beginning, still early days for the growth and development of starbucks. Lets talk about American Companies in china that are in the food business. And you. What are you seeing with your company, versus what has happened to a couple of the people in the fast food business from america and china. I probably spent more time in china than any other ceo in our industry. And i was just there last month. First off, the big news about starbucks in china is we have 1300 stores, we have been here for 16 years, and the real breakthrough for us is our core customers today are chinese and were beginning to breakthrough on the morning ritual. Our success to date in china has been without the morning ritual. Once that comes, the volumes and the success of the company is even going to be greater. Lets face it, china is a difficult nut to crack. We have been able to do it through the values of the company and the relationship we have with our employees, the families, and the government. But from time to time, there will be issues, food safety is the number one issue for any company doing business in china, with regard to food, and we believe that we have done it the right way. I cant speak to what is happening with mcdonalds and others, with young, those are great companies. We on the other hand feel as if the wind is at our back and our China Business is in the instant stages you combine that with latin america, europe, the success were enjoying in the u. S. , this is a growth story. And in our business, to have 7 comps on a base of 1600 stores is really unparalleled. Howard, one thing you talked about on the call you talk about digital related investments and youre talking about they could be profitable. Last night, visa was on a did a call, Charlie Sharf is talking about active conversations that hes having with both technology and Financial Services that they are going to do mobile payments, theyre far ahead on everybody else, they are already lined up with a lot of different retailers. Pizza hut, neiman marcus, live nation, staples, and theyre ahead of everybody. I think hes saying theyre ahead of you. Well, let me you know, i love the state model of missouri. The show me state. Let me show you, we have got 6 million transactions a week in starbucks, in term of mobile payment. That there isnt a company in america perhaps in the world that is doing a million transactions. We are taking an extremely thoughtful disciplined approach to how are we going to leverage mobile payment and specifically stars as currency. Were engaged in very high level discussions with blue chip Tech Companies and Financial Services companies. And at the end of the day, were going to make the kind of decision that will speak volumes to our ability to be a leader in this category and hopefully over time monetize the opportunity that we have, that will be to our core business and will be profitable as the stand alone opportunity. Thats not a promise. That is an expectation we hope to achieve. I think the story of starbucks, since we have been public in june of 1992, has been to try and build our business for the longterm, in terms of the street, whenever possible, under promise and overdeliver and build a Great Company by sharing success with our employees, being a great Corporate Citizen and building the company with respect and dignity to all our constituencies. You are absolutely playing, i think, upod here, underpromise, overdeliver. Excellent, howard. I would add one thing, you say, i think this is an important opportunity to make the statement. Food at starbucks, i think we could all admit for many, many years was a weakness and challenge for us. Why should i believe you getting food right now . I said on the Conference Call candidly food for many years at starbucks was not our strength. I said today, unequivocally, today, starbucks, the advantage we have with the opportunity with acquiring la boulange is giving us fantastic quality food. Our people are proud of it. Customers are responding. Food sales are up significantly at starbucks, not only in the morning day part, but this is really important in the afternoon and evening day part with fizzio and teavana, were seeing food attached. People are coming to starbucks, not only for the integrity and quality of coffee in the cup, but also for food. The last thing i would say is, i said this on the Conference Call, i think it was lost, we are building flag ship stores, iconic stores in the genre of nike town and apple all over the world and these stores are proving to be significant drivers of high volume profitability, shine a halo on the brand, and we have a flagship store, new concept coming in fiscal 15 i think will knock peoples socks off. Howard, it is scott wapner, nice to speak with you again. Youve never been shy, clearly, with expressing an opinion about a hot button political issue. And on the heels of our exclusive interview with the president yesterday, im wondering if i can get you to wade into the debate over the tax inversion issue, which certainly seems to be heating up. The president making the argument that it is almost unpatriotic for a company to do these kinds of deals. I didnt see the interview with the president , but, scott, with all due respect, i didnt come to talk about politics with the president , i came to talk about starbucks. This is what i do every day. This is my responsibility to our shareholders and customers and ive never been more excited about the future of our company. All right. Thank you so much, howard. Look, i think that you did a great job in the quarter. The stock doesnt recognize that, but it will, and, by the way, can i say what youre doing with the Schultz Family foundation, 30 million to help veterans who come back, maybe that is something we should talk about next time youre on, because i know how passionate you feel. Thank you from americans for what youre doing. Great to talk to you. Thank you very much, jim. Thank you, scott. Thank you. All right. Up next, stock trading with jim. Squawk on the street will be right back. R broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . 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Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Go to comcastbusiness. Com checkyourspeed if we cant offer faster speeds or save you money well give you 150. Comcast business. Built for business. Time for cramer and stock trading. What do you like . Spencer at spencer rascof, most tweetable ceo. This is one of those deals that drives me crazy. Everyone is saying that it is done deal. Im talking about zillow buyi i trulia. He was talking about wiping trulia off the face of the earth, two paper town, the other paper goes out of business and zillow wins. It is a different kind of tune now. Maybe they should merge. We dont know. We havent heard from the man. Ive been telling him to announce the deal on twitter because he likes twitter so much and come on mad money or here and flush it out a little. But 27 of zillow stock is short. Short a lot, 60, 70, or 80. Both stocks keep going higher and if they do this deal, it is just game, set, match for them. It is as if they are amazon with a profit. Friday night on mad. Game plan for next week. I love earnings season. Just it is time. It is playoffs. Playoffs . Playoffs. It is playoffs playoffs. Not even some people think of it as practice. Not a game. Practice. It is the playoffs. Coming up, grubhub ceo matt maloney, squawk on the street will be right back. [ male announcer ] people all over the world know us, but they dont yet know were a family. Were right where you need us. At the next job, next adventure or at the next exit helping you explore super destinations and do everything under the sun. 12 brands. More hotels than anyone else in the world. So wherever you want to be, whatever you want to do, chances are were already there. Save up to 25 and earn bonus points when you book at wyndhamrewards. Com. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. He cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Amazon, the tech giant falling sharply, having its worst day in nearly three years after wider than expected Second Quarter loss. Find out what you should be doing with the stock today. Then, president obama weighing in on tax inversion saying theyre not good for the u. S. Well bring you more of that exclusive interview. And grubhub delivering big gains after its Second Quarter results. The ceo will join us live in a little bit with just desserts. And as we mentioned, shares of amazon sliding this morning. The stock is on pace for its worst day since october 26th of 2011. Down 11 at this hour. Amazon reporting a much wider than expected loss of 27 cents a share. Eric sheridan is an analyst with ubs and joins us now on squawk on the street. Eric, good morning. Good morning. Thanks for having me. B of a says the company has gone too far with its multiple Strategic Initiatives. Do you agree . Not too far. We believe they continue to invest and thats a smart thing for the longterm. The problem is it is putting pressure on numbers in the near term, and amazon is the stock that unfortunately does not have valuation support. So as investors look out and try to value the company by any traditional measure of ebitda, they struggle to find where to step in and buy the stock for the longterm. So we think it is range bound at these levels. It is hard to see, eric, even where the costs are going here. Their biggest cost, of course, their fulfilling of retail orders. The second biggest cost, the acquisition of content rights. A lot of investors were surprised to see that cost is high, how will we ever be able to gauge this success of that and when. Well, youre going to be watching for it in terms of continuation and growth in their media business. And stickiness of their prime base. We recently put a survey out in the field that showed is that prime subscribers want more content, faster delivery, so amazon has set the bar high for customer service. So customers continue to want more from amazon. If they succeed at this, you should see a reacceleration of revenue. I think the second frustration for investors is they see all this investment and the rate of Revenue Growth continues to come down. Well, and one of the areas that they had been counting on Revenue Growth was, of course, cloud, thats reported in amazons other segment. They had to cut prices in some cases up to half of the existing price and we did see Revenue Growth slow in a big way there, eric. Is that an area of growth for amazon, that is going to keep slowing . Well, it is still an area of growth. It is going to likely grow at lower levels and now you have competition. Over the last six months, both dpo google and microsoft launched competitive products and have been aggressive on price. Amazon had to respond to the price actions of their new competitors. And as a result of that, we saw revenue miss our estimate by about 10 in the Second Quarter. It is going to take another year before they lack that impact while they spend heavily against the initiative for cloud computing. It is nothing new to raise the question as to whether investors are going to stick with the investment. If you look at the Gross Margins, Gross Margins are at a record high, arent they . Around 30 . So the underlying state of the business is very strong. And i wonder if the next inflexion point is not actually to rerate some of what theyre doing, notably the web services operation, the shift into the cloud where theyre taking on obviously reducing prices, but taking on microsoft, taking on other players, really quite successfully, doubling the usage over the course of the last year. That potentially is a standout for the future. Isnt it . It is. We are bullish on their standing in cloud computing. Now, keep in mind, it still is a small percentage of the overall revenue of the business. While it is growing fast, aws is still a midsingle digit revenue contributor. This is a large Ecommerce Company at its core and one that continues to take growth profit and invest it back in the business to grow. What investors want to see is gross margin dollar reinvested back in the business yields a higher rate of growth. I think thats what is giving people pause today is there frankly are a lot of internet stocks that trade at much healthier multiples than amazon does that are growing revenues 20 plus. Eric, how do you model a company when the ceo doesnt really care what you think or doesnt really give a darn about what anybody on wall street says for that matter what investors say about becoming more profitable. Bezos is going to do his own thing whether you or anybody or any investor likes it or not. Well, i think jeff is looking out for the longterm as opposed to the shorter term. The way we look at the company is lay out all the Strategic Initiatives and try to do our best to lay out how that framework plays out. There are areas today that arent even running through the pnl that we had to make assumptions about, such as amazon fresh, which is in two markets today and could be in as many as 30 markets over the next five years. So the initiative which would pressure margins further is not in numbers today. Dont you admire the man, at least it is a growth company. Well, longer Term Technology companies tend to be rewarded for longer term thinking and investing in their businesses. So i cant fault them for that. Our issue is more the continued pressure on profit does turn the valuation debate to the fore. And thats where investors have turned, frankly over the last 12 to 15 months, except for a very small period of outperformance at the end of last year. Eric, longterm growth aside, the guidance for next quarter is dismal. Should investors sit out until we see q3 and then potentially weigh whether to get back in. I would not be a buyer of the stock today. We believe you need to see either faster Revenue Growth or more discipline around profits that would allow you to value the company on normative metrics and get more constructive. All right. Well leave it there. Eric, thanks. Thanks. Eric shaeridan of ubs. President obama sitting down with steve liesman, talking about tax inversions, saying Companies Using that method are not doing right by their country. Steve joins us now from hq with more on this fascinating interview, steve. Scott, thanks very much. The president s strategy here, twofold on the issue of companies, u. S. Companies being bought out by smaller foreign firms that are going to change their tax address. First, president obama wants to change the law, but second, hes using the president ial bully pulpit to Shame Companies into engaging in inversions. I think most people would say if youre doing business here, if youre basically still an american company, but youre simply changing your Mailing Address in order to avoid paying taxes, then youre really not doing right by the country and by the american people. At the same time, the president supports legislation that would raise the threshold for not paying u. S. Taxes to 50 Foreign Ownership, currently 20 . He wants lawsuit to be retroactive back to may and supports a stand alone antiinversion bill. Thats opposed to making it part of a broader tax reform bill. Thats a big political issue. I ask the president why he had not put as much president ial muscle behind tax reform as other policies like health care. He said he had, but the congress had not acted. He insisted his Administration Stands ready to push for an overhaul of the u. S. Corporate tax system. Were eager to make it happen, invariably it takes some time to work through a big tax reform piece of legislation. When Ronald Reagan last did it, back in 86, 87, about a year and a half long process. Now is the time for us to get started. And i think that people should expect that this administration will be four square behind it. Most of the political analysts say there is no chance on tax inversion, no chance on tax reform, especially during the obama administration, but the question is whether both democrat and republicans have seen enough of a threat with the inversions we have seen to the u. S. Economy and the tax base from Companies Moving overseas, they feel compelled to do something despite what is clearly, simon, a toxic political background. So there may be some hope here. You have created an awful lot of heat in the last 24 hours. Stick around, so president obama claimed congress for no action on tax reform. Is Congress Really to blame . Lets bring in senior contributor larry kudlow. Withcan i say one thing, i tweeted this last night, i dont know if you saw this, i didnt say this on the, a you ga air, fine interview. You asked not only all the right questions, but you followed up on the economy. You crossexamined. Nice job. Coming from you, larry, thats high praise. Well, i mean it. I watched it. I rewatched it on the computer last night. Lets stop slapping each other on the back and start doing start mixing it up. All right. Look, you know, i have two objections here i want to start out. Number one. I thought you might. When the president says that these companies that invest dont pay any taxes, he is wrong. I want to make this a technical point, but it is very invert, ye full u. S. Corporate tax rate on income earned from sales in the u. S. , which is the bulk of their can i respond very quickly to that . Very important point. I want to respond quickly, which is that senior white house officials in the briefing concede that point. What they say is that there is intracompany pricing and debt created between the subsidiary, the u. S. Subsidiary and the Foreign Ownership and that that debt is used to offset against foreign corporate earnings, u. S. Earnings to bring down the u. S. Tax level to virtually nothing. In some cases. Really, really rare. Youre talking about a very small handful, frankly, of Tech Companies. Can i cut through what the product of this may be. Do you think it is possible that there could be a short piece of legislation. Not even after the midterms, not even the start of next year. Look, the predominant view and you got a lot of democrats who want this, is tax reform. Instead of pushing American Companies out, bring them back, make them tax competitive. May i say, with respect to the idea that Congress Wont help, dave camp put out a broadbased tax reform plan. It aint perfect, but the president didnt do anything. Max baucus, he got so frustrated that he basically resigned his seat. And made him ambassador to china. You can go all the way back, all the way back to simpson bowles, four or five years ago, they had and the president doesnt talk about it. Isnt it a possibility to break away from broad tax reform and have a small piece of surgical legislation that raises the requirement for Foreign Ownership in 20 to 50 . No. Why . Barking down the wrong tree. Heres whats patriotic. Keep american businesses here with incentives. We have a crazy tax code. We have the highest tax rates of all of the main countries in the world. Why . Why . Get it down to 20 , all right. Make it so you can bring the foreign money back home for a small fee. Lets say 5 repatriation. Give them full cash expensing and what youll have is job creation. And, by the way, here is the key point. Corporate tax reform is not just for the big guys. Small businesses that are subchapter s and llc should be allowed to convert to the lower Corporate Tax rate. All right. This is what happened in 1986. So what im saying is can we please create jobs and growth at home by backing american businesses, not punishing it . Thats all im asking. The president has never engaged on this issue. This economic populism is an Election Year ploy. Thats all it is. Quick political question, are there is there any fallout, ramifications from if the president is able to bring this to the floor. It may not get to the floor, certainly in the house the republicans will keep it from getting to the floor. But is it going to work okay for republicans to vote against an antiinversion bill or is there fallout from that . I think their view i spoke to i spoke to the Republican Senate once, a few weeks ago. Steve morris spoke to him two days ago. Their view is jobs will be created by helping american businesses. And what is so interesting is studies show when you lower the Corporate Tax rate, the biggest beneficiary as much as 70 goes to the wage earner. Wages and benefits go up. Corporations dont pay corporations collect taxes. They dont pay taxes. I understand really well the points youre making, but i live in this world. What i do know is that obama may be about to have a very Strong Political point against the wealthy that hes making again. And thats how hes it is unpatriotic. Thats what i said. It is what i said. This is Election Year populism, you know. You didnt create that business. We did. Hes trying to go after ceos. It wont work. The issues in this economy look at the last poll. The issues in this economy, growth, jobs, obama care. This other stuff is nothing but a side show. At the end of the day, american businesses deserve to be competitive worldwide. And let them stay here. And thats going to be the overriding view. Larry, come back often. It is good it see you. Larry, thank you very much. Larry kudlow. Steve, congratulations on a great interview. Thank you, both, for joining us. Thank you. Up next, grubhub seeing big gains fresh off its ipo beating Second Quarter expectations. What has investors coming back for seconds . The ceo of that Company Joins us live for a first on cnbc interview coming up. Thousands of employees ra y rallying outside a supermarket today in support of an ousted ceo. Well explain the upset at the new england retailer later on. Squawk on the street right back. Toffee in the world. Its delicious. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Bulldog oooh bulldog mattress discounters 197 mattress Sale Television announcer get a serta mattress, any size, for just 197 each piece when you buy the complete set. The 197 mattress sale. Bulldog oh boy Television Announcer . Is ending soon. Mattress discounters grubhub delivering fresh returns since the ipo in april, the stock jumped 11 after reporting record Revenue Growth and forward guidance. This one priced at 26. So you are 9 higher, 10 higher, return of 35 in a little over three months. Joining us is grubhub ceo matt maloney. Matt, good morning. Good morning. Tv advertising seems to be working for you then. Yeah, there is a tremendous opportunity. Were investing heavily behind t i think you can see that in our growth of active diners which was very dramatic increase over anything we have seen in the past. One of the reasons youve beaten expectations, youre up above 14 . Because youve moved seamless on to the auction sort, which basically means if a restaurant is willing to pay you more commission, it gets higher profile, do you worry that longer term that could deter some customers who think that theyre seeing perhaps not best restaurants higher up, but just those that are willing to pay you more . No, actually, what we believe we have created is a much more efficient marketplace that be what was there. So by allowing restaurants the flexibility to bid for their orders what that creates is restaurants that want to service the diners more or better. How do you keep those diners coming back for more . Because one of the only negative things that critics found in this quarter is that revenue per diner was actually down. And im just wondering are you going to have to depend on getting more users on to your site and more restaurants and Higher Commission or do you feel that you can finally start to get users and diners to continue to order on grubhub . You know, it is a tremendous opportunity. So it is 67 billion spent annually on takeout and were on track now to process 1. 7 billion this year. So we have a long way to go before we have to start worrying about can we add more diners or not. In terms of the decreased revenue per diner that youre pointing out, with our aggressive marketing all across the country, were diversifying a way from a lot of users and major metro areas and specifically new york and corporate. Youre going to see a little bit less. But these are still great diner and were building them so aggressively that were really in the position to take advantage of this massive opportunity, which really has first mover advantages. I love, matt, the fact that you mentioned that 67 billion total spend on independent restaurants which i know youve been talking to the investors about. William blair crunched the numbers on that. Theyre saying, look, if you get 13 , 14 commissions through the industry, youre looking at 8. 8 billion and just 2 or 3 through that process. So the rollaway is absolutely huge for you guys. The question is, how do you get there . What happens to the competition . Do you need a bigger partner . Well, we are the largest were the largest person doing what were doing right now. Nobody else is doing what we are doing at scale doe midwest ab d. Were in 700 cities across the country, 30,000 restaurants. Our biggest challenge is communicating to people in all of those markets across country that we are already there. Were so much better than the paper menu, were already in your market, go ahead, try it. It is a great growth story. It is a great growth story with a market cap of less than 3 billion. Clearly people must be talking to you, whether you confirm it or not, about acquisitions. Tell me what youre doing behind the scenes, how are you going to guarantee you maximize shareholder value along this journey and in the inevitable m a discussions that i assume people want to help you, whether that be google or amazon . Were focusing on innovation. Were looking at the space saying what can i do to bring more transparency and control to diner and bring more orders to restaurants. We believe that if we just execute on that, day after day, week after week, quarter after quarter, were going to provide were going to build as much shareholder value as we can. If an m a conversation comes along, well have it. But were focused on building the market. Were the innovators. We made it, we created it, were going to keep driving it home. Thats what open table did. I see youre aggressively going to invest in more it professionals within the company. Exactly what open table did. It upped it game on technology with the ability to pay in restaurants and thats the reason the priceline bought it. What technically do you want to do that you cannot do at the moment . Where are you taking this innovation . If you look at our restaurant platform, were in the first inning. There is a lost innovation we can do to make takeout easier and more efficient on the restaurant level. If we do that for restaurants, and we engage all of our restaurants digitally, that means that the diners have a clear line of site into their orders in the kitchens. Wouldnt you want to know when youre food is being prepared, done being prepared, out the door and on its way . We have to keep innovating and pushing that technology forward. Good to see you, matt. Thank you very much for your time. Matt maloney, ceo of grubhub live from chicago. Thank you. When we come back, billionaire and owner of the Jacksonville Jaguars shahid khan tells us why hes spending more than 60 million to put a pool in the jaguars stadium. And thousands of employees rallying in massachusetts today in support of an ousted ceo. We have all the details on that. Squawk on the street will be right back. Thats keeping youe healthcare you deserve. At humana, we believe if healthcare changes, if frustration and paperwork decrease. The gap begins to close. So lets simplify things. 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Get a complete vehicle checkup only at your ford dealer. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were streamlining an algorithm. Were going public [cheering] the fastest inhome wifi for your entire family. The x1 entertainment operating system. Only from xfinity. The street. Check out shares of visa which are getting hit in the Early Morning trade here, down 4. 5 . The Credit Card Company Processing Company beating its Third Quarter earnings estimates after the bell yesterday, but also cut its full year sales forecast. Visa citing declining cross border volumes among other things. Visa is accounting for around 63 points of the 100 point drop in the drou ow so far today. Guys, overall, those two big companies, visa and amazon, accounting for bigger proportionate losses across the board. Back over to you guys. And amazon representing 95 of the nasdaq losses to those two companies. Youre right, representing most of the Market Action today. Thanks. Youre looking at live pictures of thousands of employees and supporters rallying in front of a Market Basket supermarket in tewksbury, massachusetts. It is in support of ousted ceo arthur demoulas, in a feud with his cousin, also named arthur demoulas. The company is holding the company is holding slated to hold a meeting this holding a meeting this morning, rather, to decide on whether to reinstate the ousted ceo in the midst of millions in losses and, of course that public outcry. You can see those employees are making their thoughts known, guys. Ahead, Rupert Murdoch looking to consolidate in europe to free up 9 billion towards his pursuit of time warner. Would regulators ultimately block that big a deal . More on that after the break. E financial noise financial noise financial noise financial noise could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Go to comcastbusiness. Com checkyourspeed if we cant offer faster speeds or save you money well give you 150. Comcast business. Built for business. Welcome back. Rupert murdoch making headlines this week. Youre looking at the markets now and the dow nearing low of the session, down 103 points. The s p down about 5 points. Remember, amazon and visa making up most of the losses on the s p. Amazon comprising most of the losses on the nasdaq, which right now at this hour, an hour into trading, down about 15 points. Rupert murdoch making headlines this morning. Bsky buck s making an announcement. They expect to use the proceeds to help with the takeover of time warner which rejected the offer. Our next guest has a new column exploring the regulatory issues that that combination would present. Jim stewart, cnbc contributor, New York Times columnist, is here. Good morning. As you put on your lawyer hat for this article i enjoy this. And, you know, there are so many regulatory issues here that nobody really wants to talk about, not even time warner. Big Media Companies dont want regulation, but we have a qui gi nation of two direct competitors proposed, fox, time warner. This is not a comcast nbc, these are direct competitors. It would take the Hollywood Studios from six to five, the major tv producers from five to four. So i unearth this old quote that points out one of the main goals of competition in the media space is to preserve the diversity of opinion. And i think this doctrine has got to be unearthed again when look at big media deals. Others would say there is a difference between news and entertainment. And the combined company as murdoch has put it forward would see cnn spun out or sold. That should appease the regulatory issues. Why wouldnt that be be the case. Why is entertainment how do you draw the line between information, news, entertainment. Hbo makes all these documentaries, huge number of documentaries, many of them opinionated with political views. Who what is john oliver . Is he a comedian . A news guy . I mean, what is Stephen Colbert . I think it is very hard to divide this simply into news and entertainment. It is all one big thing that shapes the cultural discourse in this country. Thats why i think diversity of ownership, diversity of opinion is so vitally important to this democracy. Does it even get to this point . To that point . Does rupert raise his offer, do you think . Raising more cash today would suggest perhaps he will raise his offer. There have been other suggestions obviously he might. Yes. I mean, ive never known money to stand in his way. So i dont think thats ever going to be the obstacle. I think the big hurdle may be regulatory and this is going to generate a firestorm of attention. It is not because Rupert Murdoch is politically conservative or has a controversial past, thats not the issue. It should apply to anyone when youre starting to see ownership, which based on recent market share, one company would have about 40 of the market for future films and 20 for tv production. If you narrow it into, like, broadcast or premium cable channels, those numbers go off the charts. Were getting into a serious point of concentrated ownership. These people are very, very well connected. Extraordinarily well connected. Do you really think it would come down to the federal Communications Commission or the antitrust division. Who has a broad circle. I think the fcc no doubt about it. Do you think theyre likely to stand in the way of somebody like murdoch with all the friends he has, as was demonstrated in the uk . Maybe not. I mean, they havent had the guts to stand up for any of these yet. No. But i think there is a growing chorus out there, some people i quote in my column who are saying, please, it is time. It is going to be too late. Another one or two of these mergers and the game is over. So old school. I know. Justice black, the opinion, 1945, and i thought my god how things have changed. But hes probably rolling in his grave at the prospect of this merger. Is a post packing scandal rupert more politically damaged now from a regulatory standpoint than previous to that incident happening . No doubt. They never stuck anything to him. It never reached that level. Never reached him. Nothing reached murdoch. Didnt reach rebekah brooks. She was exonerated. But perception and the reality may be in this case are two different things. I mean, certainly there are those who are never going to forget that very issue. And im just wondering post that, if that has any impact whatsoever from a regulatory standpoint. Somebody i stalked to in washington said about murdoch, said, look, half this town hates him. That was true before the hacking scandal, but the hacking scandal just adds a little extra fuel, certainly resonates with the public. And thats a political arena. Im not really talking about that here. Congress will have all these hearings. Im talking strictly regulatory issues which should not be a partisan issue. This is market dominance and information, it often back in the nixon administration, this was a prime republican issue. They thought it was controlled by liberal democrats. I think it should focus on the importance of multiple ownership in the media space. Old school media views this side. You have a novel idea for amazon. I got this idea for amazon. The cfo comes out and says, were not focusing on shortterm profits. Thats obvious. My idea is, come out and say, this is my suggestion, come out and tell us, investors, just one quarter say, we are going to focus on shortterm profits. We want to show we can make money if we want to because people are starting to wonder, is this like the emperors new clothes go on here, spend, spend, spend, some day you make money. Go through there. All you have to do, just step up and shock us with a profit one of these quarters to show you do have some market power. I know investors would like to see them do it. Dont know if they will. Then if he they go back to being believers again. The pot of gold is somewhere at the end of the rainbow. Jim stewart, New York Times, thank you. Lets go over to seema mody. The fast casual style restaurant chain El Pollo Loco going public here on the nasdaq under the Ticker Symbol loco loco. It priced at 15 a share, raising 107 million in its ipo. Currently trading well above its offer price, up about 24 last time i checked. If youre not from the west coast, you may not have heard of the restaurant. It has 400 locations in five u. S. States, primarily in california. It generated 80 of revenue from the Los Angeles Area last year. The company does compete with chipotle and analysts say the company El Pollo Loco be has been able to benefit from the growing hispanic population here in the u. S. As well as increased demand for Healthy Fast Food options. So El Pollo Loco, an ipo at the nasdaq, up about 26 today and i know you guys will be talking to the ceo coming up shortly. Yes, seema, were looking forward to that. Thank you very much. There is steve sather, the ceo of El Pollo Loco coming up. Up next, bringing the man cave straight to the football stadium. The Jacksonville Jaguars are spending 60 million revamping their stadium in an effort to lure back fans to the game. Will it work . The owner of the team will be with us live right after the break. Squawk on the street right back after this. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Youre looking at pictures of thousands of employees and supporters rallying in front of a Market Basket supermarket in tewksbury, massachusetts. The rally outside the new england grocer is in support of beloved but ousted ceo arthur t. Demoulas, embroiled in a 40year feud with his cousin, arthur s. Demoulas. The companys meeting this morning to decide whether to reinstate the ousted ceo. That in the face of much public outcry that you can see right there as well as millions of dollars in losses. In some instances, emotionally charged customers taping receipts from competitors to Market Basket windows after not shopping at Market Basket and going to competitors. So certainly a heated situation. Just north of us here in new york. He wants to buy the company, well see. Up next, a battle of Million Dollar homes on cnbc. This time, you control the winner. Stay tuned to vote. Which home is the best bang for your buck . Place your vote for the winning home. Go to cnbc. Com vote right now. And get ready to start voting. E. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Offe[b ll rings]31st. Time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from td ameritrade. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Cnbcs popular Million Dollar home competition is back. Six homes are battling it out to see which one is the best bang for your buck. This time were looking at reclaimed homes. Yes, each home was originally built for another purpose, like horse stable or even a mill. So heres how the game works. Two 1 million homes face off and First Time Ever were going to have you pick the winner. This is the live vote. And you can vote as many times as you want. So get ready, and go to cnbc. Com vote. The winner will move on to the next round and the loser in this show will be eliminated. For this round we have the winner from round one, the mill mansion up against a new contender, the fixer upper. This. This former flower mill sits on 3 3 4 acres it is listed on the National Historic register and recently functioning as a bread and breakfast. Inside the 6,000 square foot home, many pieces of the original machinery remain alongside modern appliances like these authentic brain funnels, now lights, inside this enormous commercial grade kitchen. This property has three bedrooms, one full bathroom and two half baths with wide open floor plans. Across floor levelour levels. This detached guest cottage used to be the hog house. In the early 19th century this waterfall powered the mill. Today, it adds to the peacefulness of this farm country property. This Historic Stone mill for 1 million. Okay. This house is a fixer upper. It is over a century old. Sits on a third of an acre. Italian and gothic touches in the eclectic heart of the city with access to everything. The mansion has in its history been a community center, a halfway house, a dress shop, and catering facility. At one time in the kitchen they cooked up food for a famous 70s tv show. The house has been a rest home for actors, residents for vaudeville and circus perfo performan performances. The home has been nicknamed the elegant manner as room after room converges into a seamless hall but needs extensionive renovation. 999,900. Wow. Joining us now is dolly lends. We learned that the mill mansion is in upstate new york. Where is thei isfixer upper . I assume on the west coast. On west coast, it is in the hot spot of l. A. , in the center of town, four miles from staples center, 12 miles from santa monica beach. So really right in the middle of the hence why it is so expensive given how much work it needs. Theyre not really it is a cool place. Third of an acre, 6600 square feet. Needs a lot of work. So not really Million Dollar homes each because the second one will require. Another million. And having to deal with the landmarks issues, so when you redo a house and have to file with the landmark commissions,s that a nigthats a nightmare. It sounds like the one in l. A. Will be more difficult to sell. Difficult, but once you got it done, you really have perfect location, right . It is all about location, location, location. Remind us how the markets compare. L. A. Versus upstate new york. Well, upstate new york is very slow. Very slow. You know, unemployment, challenging to get comps, challenging to get any data. Thats how slow it is. Where l. A. , you know, constant moving, going, story. I think, look, for my money, l. A. Is the better bet. Im not picking, though. So i hope the voters chime in and pick. I lost on round one. Theyre voting right now as we speak. And theyre voting for the one in upstate. Really . Again . Wow. They like that upstate house. Any details that would be tough to get rid of given it was a catering center, community center, anything nothing negative. It is all positive. Everything about the house except the work required and the challenges of landmarks are very positive from a location to the grandness of the rooms to the large lot. The taxes are a little on the high side, but it is l. A. Close to staples. Visually, i guess when your just looking visually, the mill is visually spectacular. When i think the viewers are saying, visually, i want that one. And they have. Live voting closed. You can see, people voted for the mill. Wow. By 60 . Yet again. Sorry, jane. Hey and you can catch round three in power lunch where the winner, the mill will now go on against a new location. Wow. Thanks. Thank you. Good to have you back. You, too. Thank you. Still ahead on the show, re code weighing in on amazons big loss coming up on squawk alley. Well be right back. 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Introducing the sleep number bed with sleepiqtm technology. It tracks your sleep and tells you how to adjust for a good, better and an awesome night. The difference . Try adjusting up or down. Youll know cuz sleep iq™ tells you. Only at a sleep number store, mattresses with sleepiq start at just 999. 98. Know better sleep with sleep number. The lows of the day are down. Obviously reached a fresh record on the s p 500. Inched higher. Interesting with all the geopolitical concerns, which we havent had time to mention in the last hour given the corporate news, were basically stalling at these levels and unable to break higher substantially through, of course, one would hope s p 2000. Which has to be the next big target for people. Visa is a wait on the dow today. Really, the story and the stock of the day will be amazon. Probably from here until the end of the day given what happened with earnings. The fact the stock is down double digits and people are still wondering whether jeff bezos is going to ultimately care about profitability or not. Somebody sitting at home, a simple choice. Isnt it . Do you want a growth stock . What hes given you, a classic growth stock, still 30 underlying margins or do you want a value play . Amazon is not a value play. Complicated for analysts to value and ascertain what a price target should be, for people at home, a binary decision. People look at technology in general. Not gist amazon as the stock especially old tech. Microsofts of the world, intel done well, wondering if those stocks are getting expensive. Data thrown around the street that suggests that twothirds of the s p stocks are trading abovt 50day moving average. Maybe a role in why were stalling out. People having a difficult time finding value in the market and figuring what to do on friday, with the geopolitical stuff going on you dont know what will dwell over the weekend. The greatest risk, not to be long of the market. Said this last week on friday, actually to be short. In case something great happens over the weekend and youre blown out. Doesnt necessarily mean you would have to sell the market off going into a weekend like this. To be honest with you, those geopolitical risks have really not dented the market to any great extent. May not be able to move higher on them, stalled on them, but havent fallen. Still talking about starbucks today, too, simon. Certainly on the heels of jims interview with Howard Schultz today and the earnings that some people were disappointed about. Starbucks shares down more than they are now. The stock started to come back a bit on some of the comments made by Howard Schultz. Who seemed incredulous. A company able to manage those better than most, rising commodity costs. Certainly that company able to manage those, and Howard Schultz feels theyll be able to Going Forward. Bring in another experienced voice here. Art harbin joins us from ubs. What do you think of the market at these levels . Looks a little like it wants to take a rest here. Maybe challenged by that 2000 level in the s p. But it doesnt have the oomph it had as weve discussed. You dont have a broad number of new highs. Even though the s ps at a new high. The percent of stocks above their 50day moving average isnt a vast majority. So the divergences within it tells you the market may want to consolidate a little. A big data week coming next week. Certainly for now, they look like they want to rest a bit. Funny you mention the moving average. Discussing that in some respects wondering where the values are left in the market, whether theyre becoming harold eharder as the s p 500 continues to hit new highs. Yesterday, art, it was the 27th or so intraday high for the s p this year. And we havent had that many weeks this year. So its but lately it is doing it almost incrementally. Tiptoeing up an inch at a time. No vast leaps. Yesterday, for example, we had very, very narrow breadth of the market. So well see. I wonder what people will make of that at home . That looks like you could be a contrarian about it, but it looks like its actually got a safe market to be in. Volatility if it walks like a duck it probably is a duck. Well it is, but you always worry about that underlying complacency. You sglknow . When it doesnt move much. So long weve been on this trek now. Been like this for months and months and months. I agree. Having done this for 50 years, i always watch out for things that look too easy. Everybo everybodyed by the geopolitical dip. One time its not going to work. Still thinking about the geopolitics and the impact it will eventually have on the market . Absolutely. Lucky that plane that went down in mali was not the result of the rebels shooting at it, because that would turn out to be a new game, if you would, for insurgents around the world. One last quick question. High yooeield a bad week. Was that the tail wag the dog . It can be. In combination with other things, these divergences, it could well be a problem. Well watch next week. Have a good weekend. Thank you. Art cashin from ubs. Over to kelly evans. I believe the friday alley kelly is upon us. Simon, scott, art cashin, thanks. Good morning, 8 00 a. M. In seattle, washington. 11 00 a. M. Here on the east coast and squawk alley is live. Good friday morning, and welcome to squawk alley. Im kelly evans in for Carl Quintanilla and joining us, coexecutive eder of re code along with jon fortt and Kayla Tausche as post nine. Good to see everybody. First up, has jeff bezos reached the end of his leash . A much wider than expected Second Quarter loss. 27 cents a share thersz the 15 cent street estimate. This is the Company Continuing to spend on new services, ste s nods and products. Predicting further losses in the quarter and revenue rising in line with consensus. Stock down sharply this morning. The story of the morning. Eager with your whether this is warranted . Jeff bezos doing what hes done forever since he started the company. They keep forgetting he does this. Investing in all kinds of stuff. Some crazy. Some of this, this phone came out, wasnt well reviewed, actually, and this is typical jeff bezos. So the markets always shocked that hes jeff bezos. I find that interesting. You know, he just this is what he does. In order to grow his company. Gets into fights with the publishers and everythinse