Transcripts For CNBC Squawk On The Street 20151013

Demand outlet. We begin with a bshb inbev agre to a deal. Johnson johnson has a mixed quarter. And twitter raising their guidance for the Third Quarter but making job cuts official as well. First up, anheuser busch, inbev and miller agreeing in personal on a deal in which ab would inquire sab for 104 million. That would have about onethird of the global beer market. Its the biggest deal ever in consumer staples. The fifth biggest mma transaction in history. Well see if if happt happens. It probably is going to happen at this point. A couple weeks we will have a definitive agreement what they call in the uk a rule 2. 7 filing. Simply giving us more details on the deal. For most peoples purposes, this deal is done. Lets consider is a done deal in terms of papering. Well see from here some of the more specifics. This then starts a process by which both companies certainly will need to go about divesting assets around the globe. One of the keys, as our viewers know, jim and i talked about it a number of times, is the joint venture that sab and tap have in molson coors. They own 58 of sab. Its been a Way Investors played the likelihood of this deal from the beginning and the belief that tap will step up, buy the 58 that sab owns, even if they pay a 12 multiple. Thats one play you can see. You can see what that stock is doing. Weve been saying thats the best way. As for the other way, sab is up, abi looks to be up. You are creating a behemoth. A 250 billion market value. One of the Global Consumer companies in the world along with unilever, nestle, Procter Gamble will be abi, inbev, even though they will be divesting, again, the asset here in the u. S. , miller coors and most likely china. Though we dont know yet. This is big. I want to point out when you see the symbol t. A. P. Is up big, molson, remember when Constellation Brands a couple years ago was able to get modello corona, the stock was at 31. Today its at 137. Mexican beer far faster growing, keep in mind that that move by molson coors, you might want to sell it. Thats a huge overnight gain. Thats why ive been pushing that thing endlessly. They will own together eight o. The top ten brands in the world. The only other beer distributors that have a close to the share is carlsburg or heineken or tsingtao in china. These sales have been on decline. They remind me of carbonated soda. Just so were clear on this, ipa beer is a factor. Ipa is a factor. You mean craft beer . Craft beers are a factor. They could make it so you could argue there is real competition is craft beers matter. Yeah. Its not as though theyre getting it on the cheap. There was a lot of back and forth here. The principles obviously hammered this thing out in a room. We talked about the importance of the Santo Domingo family, alejandro Santo Domingo, how they would be involved in getting this done. No doubt that was a part of the process here involving brito. 44 pounds, not a bad price. For his part the guy over at isi, says he expects 60 cents a share in eps secretion at abi assuming a 2 billion in synergies, and a 4 financing rate. A all of which you can say well see, but they did do it after they bought bud riser. Anything that eliminates some of the competition, makes it so the price cutting is not as aggressive in the industry. Its a huge win for everybody in the segment. Everybody. Also a lesson weve been thinking about just imbnbev, th degree to which they come at the target and continue to come no matter how much it takes. They have patience. They are not perturbed by anything that may go on. The reason for timing here, we waited for this deal perhaps for deal as a possibility. Certainly the financing markets play an Important Role. They have to be emboldened or happy by yesterdays announc announceme announcement. The fact that deal can come and borrow 45 billion, not all investment grade. These guys are investment grade. They wont have a problem with the financing, but higher rates have to figure into why they moved, when they did. Its important for their strategy. Theres no doubt. The synergies start to run out on these deals, you have to do another deal, the bud deal is a number of years back at this point. I emailed you last night, i said is there a really a chance this deal wont get done . My sources in the beer industry, and theyre decent, theyre saying this is a must it has to happen. Everybody sees the decline. Im sorry, i know how this sounds, but not as popular as it once was in this country. You see it firsthand. Except in my house . Yes. Theres j j reporting a better than operating profit for q3. Ref news were shy, sales hurt by the stronger dollar. Also a 10 billion Share Buyback which was announced about 45 minutes ahead, that made some people nervous about the number. The stock jumped to 97 ahead. You trade in four hours on this j j, its just an annuity to lose money. This has been the most twisted. You dont know the tax rate. You dont know the revenues. You dont know the growth of individual products, yet will you buy the stock . Its back. Its new. Got the black band. I like it much more. Ive been wearing it at night. The wife love it. Its been a while since we had that on camera 1. Look at that black, is that cool . It is nice. Still doing its usual, which is great. Helpful. A blank screen. You can press it. Didnt mean to interrupt you on Johnson Johnson. I had my rap on j j, you went to the watch. The black screen, the endless black hole on your wrist sunk me in. Can i go over the domestic semis or home runs. International sales, 2. 1. Heres the key number why the stock is down. Tax rate. 20 . I was looking for 24 . J j once again showing that youre not getting growth the way you used to. The quality of earnings is strained . Bingo. You couldnt be more wrigright. The journal with a negative piece on lilly saying this cardio trial they ended yesterday means their premium to merck and pfizer could come in a bit. That story was wrong. Why you own lilly is because they have the alzheimers drug. Theres not anyone in the profession who says it is for real. And they have the drug that helps your heart. This cardiovascular thing, analysts are making a lot of it. The government was happy with regenron and amgen doing their cholesterol thing. This alzheimers drug and the diabetes drug, they may be the two biggest blockbusters between now and 2020. The 10 billion buyback, it sounds like a big number. You have to put it in some perspective. Its a yawn. Its a yawn not only because i had to stay up to watch the mets win, but its another sign that we dont want we dont want tuna with good taste. We want good tasting tuna. Then theres twitter confirming plans on cutting up to 8 of its work force. The company says it expects Third Quarter results to come in at the high end above its pry forecast, both ebita on revenue. Jack dorsey with a letter to the staff saying we have made an extremely tough decision. We plan to part ways with up to 336 people across the company. This is not easy but its right. The world needs a strong twitter, this is another step to get there. I love this. I dont like job cuts, dont get me wrong. People lost their job today. I think twitter was bloated. I wanted revenues up, its been suffering, but i have to tell you this is the first sign that twitter recognizes that you cant just, you know, be part of some sort of club where it doesnt matter how you do. Look. They can grow. The new products i like very much. A lot of people were at that company who may not have been doing much or involved in different initiatives that didnt work. Bob peck has a nice chart out today. Revenue per employee, lower than google, lower than facebook, ebita, 83 versus google 436. I know peck must love the streamlining. Twitter is now showing that it was previously run haphazardly and now laser focused. I would not rule this company out. Stock was higher. Sounded more constructive on twitter than you have been in some time. Do you look at it. I look at it every day. Its better. Ive been periscoping. Im periscoping. Really. Ive been running silent and running deep. How is that working out . Not bad. No . A little pregame periscope. Ill do one today. I noticed you have a new hashtag. I do this thing for the street. Its so hard to ask individual stock questions and limit it. I answer them on video, im trying to do more of what my daughter want the me to do, the kinder, gentler jim. I put emojis, like sun glass faces, im periscoping today as i get spray painted, earl schibe like. Youre getting spray painted . You guys are made up. Im spray painted. Get the little blowtorch out. What happens with me, i have that krylon effect. Cramer. I should have my own brand. Cramer. Cramer. Will keep you looking like a lemon statue. A tough start for a pair of airlines. Later on, dell and emcs big tech deal and what it means for vmware. Look at the futures. We see some red arrows in the premarket. More squawk on the street from post nine. Hi watson. Annabelle, your birthday is tomorrow. Im turning seven. What did you ask for . A princess. And a pony. You like things that begin with p. I like pink frosting too. Will you have a cake . Yeah. I was too sick to have one last year. The data your doctor shared shows you are healthy. Are you a doctor . No. I help doctors identify cancer treatments. I want to be a doctor someday. I can help with that too. Watson, i like you. Yesterday at the big board here, squawk box rang the closing bell to celebrate the shows 20th anniversary. On thursday squawk will celebrate with a special show, including a Live Audience on the plaza outside the studio on 6th avenue and 51st street. Theyve been giving you details on how to get tickets for that. David, jim and i will join them for some part of the morning before we get here. I think you guys were on squawk box for a long time. Yeah, i do recollect about a decade of my life. Kind of did that. Look, really got everybody up there. They did. Except for some of us. Yes. Happy to have been part of the history. Absolutely. Very happy to be here every morning. Are you . Yes. Absolutely, right . Yes. Wrufrnlg were you happy to be in the stand last night . Yes. Were you saying something about chase utley last night. I would like to see the crowd more creative rather than utley uh giving fans the room to boo. I watched the tape 470 times to find a good excuse. He didnt turn the right way. See, utley did not mean to watch closely. Oh, thank you, guys, for that. Beautiful. Granderson. Put us ahead there, 43. Yeah. Tworun home run to left field. Do we have the cespedes shot . That was that was magic. This was magic. This is magic . This is magic. This is magic. That was crushed. Only question in my mind, sometimes you wonder is it going to leave the stadium . Is this actually going to leave the structure . The offense last night was crazy. First postseason win at citi field. The cubs could clinch for the first time at wrigley tonight. I love baseball this year. Really. Very excited. Very exciting. Congratulations to you not yet. Not yet. When you will you even say youre jinxed when you win the world series . The world series, were good. One more, than four more, than for more. We had a couple of airline downgrades. Jetblue cut from overweight to neutral because of weak industry pricing. American lowered from buy to hold due to fair competition with lowcost carriers. I think goldman a few days ago downgraded as well. I feel like we had that good number early this week from united, continental, delta coming up. We are the most overbought we have been all year. You get the s p oscillator plus 10. I cant recall when it was plus 10 and you wanted to buy stocks. You have to let things come in i dont think selling the airlines here makes sense. Im not going there. People wonder if october, as good as its been, has been led by the likes of a ge or if its all wynn, chesapeake and rig . Theres a sense that the commodity producers cut back with the exception of iron. We got the numbers out of china which shows a dramatic drop in imports. I will rock your world about china. Car sales were up 3 in china for year over year. There were some purchase tax cuts. But the china consumer, with that number, the export number and this number, you put that together, what starbucks is saying, nike is saying, apple, the consumer is bottoming in china. The car sales number is good. I remember when you said europe was bottoming, i looked at you like you were crazy. You laughed. You were right. You laughed at the apple watch. Doesnt mean you will be right this time but im listening closely. I think you should. I am. As long as you dont call me chase. Well get cramers mad dash. Look at the premarket on this tuesday. More squawk on the street back in a minute. Its more than the cloud. Its security and flexibility. Its where great ideas and vital data are stored. With centurylink you get advanced Technology Solutions from a trusted it partner. Including cloud and hosting services all backed by an industry leading Broadband Network and people committed to helping you grow your business. You get a company thats more than just the sum of its parts. Centurylink. Your link to whats next. Time for our mad dash for the morning on this tuesday. Always like to set the date and time. About seven minutes to the opening bell, where we headed . Last night sap reported a fabulous number. Cloud, unbelievably good. Just the regular just the regular business, consulting business fantastic. This is a major move. I hope Bill Mcdermott is feeling well. Sales force will be carried on by this, too. Dont chase any stock, but this was a good sign. Some people were thinking after oracle reported not that great a number, sap may not be doing well. Accentra doing well and cloud force. The stock a point from its high. What do you think . Impressive. I ha why have you not mentioned oracle one way or the other . Competition. Any time you say theyre losing business, they will document theyre not. I decided not to throw that in there so i dont get run over by a yacht in my whaler. The oils and industrials are behind this rally. Otis elevator, this is a smart call. United technologies has been going up in part because people are just loving ge. And, you know, not an expensive stock, but otis is something to worry about because china is not doing a lot of building. Its a consumer led recovery like the party wanted this. The party wanted this. The party gets it. Speaking of yachts, puts me in mind of utxs former ceo, how is the new guy doing . Hes not a yachter. Hes fabulous. The new guy is really a United Technologies guy. A tough, hard line manager who is really, i think, reinstilling the old disminute. Hes terrific. If this stock gets hit, youll want to get in it. We are not hes not boating. No. Hes not boating. He is making engines. Hes doing well with otis. I got to tell you, air conditioning good. Hvac, but he got dealt a hand of weak china. That matters. They have all the elevators in the world in china otis is a tough business. We dont build a lot of buildings that need huge elevators and its the maintenance that matters. The razor blade part of the business. Oh, my. Good business. Not so much for gillette anymore. Procter sneaked up from 70 to 75. Yeah. We have so many other stocks to even just talk about that we have not gotten to. Williams sonoma, restoration hardware, have you seen the video of the new chicago store . No. Best trailer ive seen. Opening bell after this. My name is peter tran. Im a gas service representative. Ive been with pg e nine years. As an employee of pg e you always put your best foot forward to provide reliable and safe service and be able to help the community. We always have the safety of our customers and the community in mind. My family is in oakland, my wifes family is in oakland so this is home to us. Being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special. Together, were building a better california. We heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . Youre watching cnbcs squawk on the street. The opening bell in just about 45 seconds. Premarket has been decidedly weak on some less than satisfying import export data out of china. Maybe the volkswagen is beginning to have an effect in germany. Its interesting. Ive been waiting for that. I think there are other Car Companies that are the beneficiaries. They had 11 million cars that sold. They wont sell as many. People have to understand the market has been up day after day after day. When it gets this frothy, you cant come in there and start buying. Its a real mistake. J j the big Earnings Release this morning but it will heat up tonight with jpmorgan, csx, intel and others. Theres the opening bell. A look at s p at the bottom of your screen. At the big screen, eros, holding its investor day. We will talk to the chairman on squawk alley. And del restaurants on the s p. A division that had been leading del frisco, the grill down 3. 5 . Fewer private dining events at the double eagle. You know, when i go to del frisco, it is always jammed, maybe when its jammed dont read through the national numbers. Theres a lot of talk about beef price coming way down. So the gross margin should improve. But capital grill put up fantastic numbers on the high end for darden. Be careful. I thought del frisco would have had a good market, they did not. Im seeing some green. We have not talked about oil and that big reversal yesterday. Is that an impact . Will that play out daytoday . If you chart oil and the chinese stock market, the shanghai, chart ge, the industrials, oil leads everything. So, if oil goes down, we go down. That seems ridiculous for those of us who recognize when oil goes down, people have more money. When oil goes down, forget about it, that day is down. The iea looking for more of a slowdown in global demand, even as we start using more of it in the u. S. , we start driving more miles. They do good work. But the work im doing showing a pretty dramatic slowing in the in places that were drilling that were marginal. Interesting how much they come down. The rig count coming down so fast. You saw some canadian shale numbers bad. We will be producing i believe 1 million fewer Barrels Per Day this time next year. Reuters has a piece saying a lot of players are locking in at 50 to produce more in 16 and 1 17, which means the rally is suspect. I think reuters is off base there. Eog has said some things, which you will not see. This last shutdown, the move from 60 to 39 that made it so a lot of guys took things out of circulation, its not coming back. Thats the cut back im talking about that will produce some rather dramatic pricing positive this time next year. May not be able to wait around for it, but the goldman 30 price target for oil will be unfulfilled. Though you have iran coming back online with a lot. I think its built in. You do. I do. Whats not built in is just how the marginal players, the magnum hunters, for instance, mhr, they cant produce. Natural Gas Producing like mad. The demand is very high. The average natural gas pipeline is 100 filled. The new oil pipelines, 50 filled. Oil is in glut. Natural gas is in demand. Shineer will be exporting 80 of the natural gas. Thats huge. Im more bullish on that gas, not on pricing but on use. Magnum hunter. We saw an interesting downgrade. The coal stocks. Hold or sell there . Huge number. Huge number. Remember, we are theres if you dont think theres a shortterm peak when you have this much buying whiting, by to hold at Morgan Stanley. Thats bakken. Bakken is expensive because its light crude, we were set up to handle heavy crude because we thought wait, they thought keystone would be approved. Jpmorgan hold to sell. Peabody and coal no value added. Coal going away. I imagine youre watching ryder today . Down 7 as they cut guidance for the quarter and the year. They do talk about some softness, but basically some issues that are involving just the mechanics that will come back. I had them on a number of times. I think theyre straight shooting guys. This is a logistics company. Its not the trucks, its a logistics company. That was shocking to me. They had been doing quite well. Wanted to come back to yesterdays blockbuster deal, the Largest Technology deal of all time, at least worth about 67 billion at time it was announced, dells inked purchase or its plan to purchase emc and vmware. Emc was up yesterday. Thats not the case today. You can see its down. Have m wear h vmware has taken it hard. If you own that stock going into the deal youre not a happy person, given the decline yesterday and today. Yesterday they put numbers out that show the order growth that wasnt as strong as people had hoped for. I was articulating yesterday the opens and dreams of the people who put this structure together in terms of the tracking stock that dell will issue for most of its vm stake when it completes the deal. The hopes being they will trade almost to parody those tracking shares with the Common Shares of vmware. In speaking to a host of Portfolio Managers yesterday, not one believed that will be the case. Including the man next to me who is no longer a Portfolio Manager but everybody thinks it will trade at a discount. Is it 5 . 10 . 15 . Something interesting also came up here, which is and i made this point yesterday. Youre an Unsecured Creditor of dell if you are a vmware tracker. Dell, which is levering itself up a bit, if it were to go bankrupt, not that its got a chance of that youre done. Youre done. Your equity is done. You have to add that into the mix. That said, they have 25 billion in equity. Ahead of any of the debt. That is highly unlikely. But it figures into people trying to understand what the tracker will trade for and how to go about figuring that out. Youre also setting up hedges. Some desks were closed yesterday for the holiday in terms of where you could borrow vmware, theyre open today. Thats adding to its losses. What a good call. Thats interesting. The papers read worse about deal, the business of dell. The insights people are getting. Vmware has to be avoided. That is a good theme. Re code said they tried to unload the pc business to hp. I heard that yesterday. Silverlake made calls. I find it hard to believe they were going down that road. Its a huge revenue number. Still his baby. Id like more information on that and find out what is behind that. I heard that but didnt pursue it. Under armor losing their coo and cfo who has been a company vet for about 11 years, dickerson, leaving to pursue an opportunity outside the athletic performance area. Having just made some big bets on fitness technology, my fitness app. Yeah. I think that, you know, under armour is saying buy the stock. It was before we saw this news. I like under armor very much. Morgan Stanley Price target goes up. Let this settle. People always have some sort of nonsense. This is kevin planks show. Im not backing away. This is a great longterm buy. Kevin blank runs a tight ship. I dont care about who leaves, as long as its not kevin plank. Hes the man. He be the man. Like nike. If he leaves, trouble. If he leaves . You know you will need some armo armor. Ge, we mentioned its been on a nice run. Today William Blair takes it to outperform. Says could double by 20 20. Where have we heard that. Ge, people are excited because its best performing industrial of the year. A lot of people are very, very excited about the chart looks great. This is a Great American industrial doing things right. Including getting nelson peltz on board. Hes on board. Not on the board, but on board. On board. Hes been onboarded. Yes. Nelson peltz a bit of a winner. Though the dupont situation, they did a scorch and burn, and they be burning. That stock certainly moved up the day that Ellen Kullman announced her retirement which is coming up now. October 16th is her official retirement day. You stay focused there . Yes. We will. On ed brien. Lets get to bob pisani. Carl, slightly weak open, not surprising given what happened overseas. Germany was week at the outset. Theyre still open, but mostly negative. Mixed picture in asia. Look at sectors. Oil started to the down side, positive right now, but energy to the down side. Energy, materials, industrials, this big three affected by Global Commodities and the Global Growth situation or the lack of Global Growth. Tech and financials fractionally to the weak side. I want to concentrate on the revenues of Johnson Johnson and the impact of the strong dollar. Put up the currency impact, i want to show you something. Reported revenues for Johnson Johnson were down 7. 4 . However thats in line with expectations. That was not a surprise. However, for our benefit thank you, Johnson Johnson, they broke out what would have happened had they not had a weak dollar. The currency hit to Johnson Johnson was 8. 2 of revenue. In other words, if it was constant dollars compared to last year, 4x values, revenues would have been higher and it would have wiped out the negative revenue. This is why im talking about the dollar and what its doing to these companies. By the way, this is the same situation i did this exact same story in the Second Quarter when they had an 8 hit to their revenues through currency. We have to look at impact of these companies. Put up the earnings per share. Johnson johnson, despite the currency problems and despite all of the issues with revenues, they have been moving on earnings per share for a while. Earnings per share have been moving up for several years and the street has been loving it. Some of this has been acquisitions. Earnings per share increase in the last five years. Now put up the fiveyear chart on Johnson Johnson, since 2011 the street recognized that. Its had trouble this year but all these stocks have had troubles this year. Despite revenue problems, despite the dollar issues out there, strong. Did you see fmc . Another example of what strong dollar is doing to companies this is a big agricultural chemical company, twothirds of their revenues outside of the United States, huge player in brazil and latin america. They sharply lowered their profit expectations. Down 5 . Citing operating conditions in brazil. The brazilian real is down 30 against the dollar. Try making most of your money in brazil and then exporting profits on that. Youre getting kill. Thats another example of what the strong dollar is doing to American Companies operating overseas. Ive been asking for a little understanding about the revenue picture. Numbers are down. Ive been talking about the earnings recession, the revenue recession. This has been going on two, three quarters. If you add in the effects of the currency, revenues would be positive. Anything out there that will help us with Revenue Growth in q3 . Telecom and health care dont have a lot of foreign exposure. We wont be concerned with the dollar impact in this group. Consumer discretionary has some, but this is largely autos and home building. Some retailers have some significant overseas exposure. Telecom and health care will be all right in terms of the dollar impact. Its hard to get Revenue Growth with the strong dollar and when you have Energy Companies with ref news down bay full onethird. Energy is roughly 10 of the weighting in the s p 500. It used to be closer to 13 14 , but thats the clear weight here. A bit of understanding on the dollar impact on revenues and a little understanding on what oil companies, decline in revenue is doing to the overall picture. Back to you. Thank you very much. Bond market gets back to work today. Lets get back to Rick Santelli in chicago. Good morning. Good morning. Indeed it seems as though being closed yesterday, well, we missed some interesting markets. They all steam have reversed a bit. You can see theres a bit of a drift lower on the tenyear. The long end down several basis points, short end unchanged so were getting some curved flattening. In early august if you open it up, you can see what i mean. On a closing basis, we continue to hold that very psychological 2 area if we look at bunds overseas, just a oneday chart. It looks like theyre moving higher. Really its getting back hooked into the u. S. Markets. If we look at the shanghai composite, its trying to hold at some lower levels. There is some divergence today because all the equity markets seem to be cut from the same cloth. A year to date on the dax reveals a lot of fundamentals lacking today. Confidence was on the weak side, thats showing up in the year to date dax. Want to pay close attention to that chart. The euro versus the dollar. This starts in may, you can see an upward trajectory. Range has within compressed. The issue of currencies continues to ping back and forth. In a readjustment mode after we did not get a snugging up in the last fed meeting. Carl, back to you. When we come back, timothy moe, youll want to hear what he has to say about the china slowdown. And meet the chairman of the netflix of india. Thats coming up on squawk alley. Im here at the Td Ameritrade trader offices. Ahh. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place that 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 . For all the confidence you need. Td ameritrade. You got this. Cnbc can confirm pepsi and cocacola are in talks to take a stake in greek yogurtmaker chobani. Other Food Companies are in talks as well. This could take the value of chobani to 3 billion including debt. That is a figure reported by reuters. Chobani has been through a couple of different chapters over the past through years. To me, just buy hane. A good greek yogurt business. Hane is down, in part because many people feel the organic phase is over. After this, i think whole foods will bottom. Why do people think its over . Because they look at the numbers from the actual from fresh market, whole foods, they think wait a second, the great secular drive is over. Theyre not looking at kroger, not looking at the albertsons numbers. These guys are natural and organic everywhere. Hane is in huhuge. People are make a mistake selling hane. I get if you want yogurt, theyre a better way to play it. Not buying pepsi, pepsico do in fabulous. The core product is is having significant declines year over year. Tom brady had some interesting comments about soda, calling it poison for children. Hes going live forever, if you havent heard. Tom brady . Live and play forever. Is that true . It is. Maybe i should pick him up. When he passes for 5,500 yards. Fantasy is more important than reality for some people. It does seem to be that way. When i find my son rooting against the jets or giants, not really against but in a weird way, i find that disturbing. Post getting married, i switched and said reality is more important than fantasy. That wedding thing changed my view. Suddenly reality played a big role in my life. Well get stop trading with jim in a moment. Squawk on the street will be right back. charge music you wouldnt hire an organist without hearing them first. Charge so why would you invest without checking brokercheck . Check your broker with brokercheck. Hello, ken jennings. I havent seen you since that tv quiz show. Hello, watson. You can see now . I can recognize people, analyze images and watch movies. Well i wrote a few books, did a speaking tour, i. Ive been helping people plan for retirement. And i help doctors identify cancer treatments. Is that all . I recently learned japanese. Yeah, i was being sarcastic. I havent learned sarcasm yet. I can help with that. Time for cramer and stop trading. Morgan stanley is positive on toll brothers, maybe housing is good here, but jpmorgan cutting numbers why . They have that brazil operation. Those of white house traus who 80s, and brazil hurt. And natural gas has been up tremendously. The longest street its put together in a year. Remember, natural gas is a switching story. Oil is not. Natural gas is switching out of coal. I believe natural gas is a fabulous business. The pipe business that is oil is a bad business. The etfs lump them together and it shouldnt be that way. Why is natural gas up like this . Coal. Just the continued theres so much natural gas in the country. Im talking about the pipes. Marcellus is unbelievable. This utica is unbelievable. Were producing far more than we need. You mentioned Morgan Stanley upgrade of kbh and toll. A lot of that is because looking at luxury specifically, not a broad housing call. Anybody over in brooklyn looking at pure house, anybody in brooklyn are kicking themselves when they didnt buy pure house when it was announced. Brooklyn real estate is so hot. The hottest market in the country other than san francisco. That is saying something. Whats on mad tonight. Were doing series on oil, as it comes down. Were recommending the oil stocks, you can sleep at night. All over looking for the biotech thing. Here go with the benihoff rumors, cancels meetings. It was around last week again. Microsoft. Talking about microsoft. I did try to check it out. I came up empty. Me, too. Thats to give you a little as of now. It was around last week. Was. Salesforce. Com sales force is doing well. They had a successful dream force meeting. S p was up, but everybody attributed this rally to mid 70s they are friendly. Theyre close. I reported that it was serious. They made a real offer. Mark thinks the world of microsoft since the change of management, he just thinks sachi is a terrific guy. Terrific. I believe it. I do. Jim, well see you tonight. Absolutely. When we come back, the china effect on the markets. Weald talk to goldmans timothy m moe. Good tuesday morning. Welcome back to squawk on the street, im Carl Quintanilla with sara eisen, simon hobbs, david faber. Stocks soggy here, though oil reversed its losses. Pay attention. Were dealing with a lot of data thats been soft around the world. Earnings season going into second gear tonight. Here we go. Our road map this tuesday morning. Weak china data weighing on stocks at home. Goldman sachs chief asia strategist tim moe will join us live with his take. And the democratic president ial candidates get ready for their first debate tonight in vegas. The republicans are still trying to figure out a new speaker of the house. And also ahead, ab inbev agreeing to buy sabmiller in a deal worth 104 billion. What does that mean for this country where theyll have a 70 market share . We start with the latest out of china data overnight showing more signs of a slowdown. Exports dropping 4 , imports dropping 17 . Investors shifting their focus to the soon to be released gdp data. Joining us is tim mow from goldman sachs. What a good day to have you in town. Great to be on. Investors not liking what theyre seeing out of china. Import numbers down 18 . You guys spinning this data positively . If you look at the decomposition of it, its not as bad as it looks on the surface. Its still clearly weak. Were looking forward for the rest of the data set this week. The export numbers came in slightly above consensus expectations. The import data was weak year on year. One thing to note, thats in nominal terms. There may be a price effect in terms of oil imports. Oil was high a year ago. So you get a step down in oil prices, so you need to look through to the volume of imports. What do you expect for gdp on monday . Looking for 7 in terms of year on year. That sounds awfully optimistic. In terms of the base effects, thats something we think is a reasonable number. Theres a continuing debate about what sort of numbers will we see that china will report versus the actual activity level taking place. Weve done a lot of work in terms of looking at alternate measures of evaluating gdp, we think the economy is growing at 5 1 2 to 6 . What will be recorded is the higher number. Youre saying dont trust the data . To a degree, yes. The data tends in longer term to be in line, but on a cyclical basis, the highs are high, the lows are lower, were in the lower numbers right now soufrnlg. So you expect the government to make the 7 growth . Our numbers are 6. 8 . A week on monday the communist party sits downs to put together its next fiveyear plan. Theyre concerned about growth and they prioritize growth and say we will have massive infrastructure spending, a huge amount of investment into renewable energy. Does that help me . Not 100 . So, let me say it will be helpful for growth overall. If china conducts more fiscal stimulus in ways that are economic reducktive in terms of useful infrastructure, not japan stuff in the 1990s where they were paving river bbeds. Even if its in central asia. Yeah. Its actually a clever plan. One facet of it, it will use excess capacity in china in a productive way outside of china. Its a way of using overcapacity in steel, chemicals, aluminum, smelting, in ways that are economically productive and serves to expand chinas influence and serves to enhance chinas trade access and trade group. Theres a variety of ways china wins from this. It also helps with financing. Is it a part of the economy that is live for International Investors . To the extent this supports chinas growth overall and mitigates downward risk of the aggregate economy which may limit risk in terms of credit cycle returns, thats a marginally good thing. What do you expect in terms of policy stimulus . We certainly are. Backing up a moment. One of our we had a call that markets can rally in the Fourth Quarter. Weve been calling for a tactical rally in the Fourth Quarter, we have time for strategic concerns in 20616 which i would like to enumerate if time permits. There are two aspects of china catalyst we have been looking for. The data will improve on a see sequential basis. We started with a pmi number on october 1st. Export numbers could be better. We need a richer data set going into november to improve things. Second thing, looking for more news flow from china in terms of policy stimulus from the party plan. Fiscal or monetary . Mainly fiscal. When you think about the avenues china has to support growth, basically currency, monetary, fiscal and administrative. We think the currency will be stable here. They wont use this as a tool to support growth. Monetary, we think they will ease conditions further, but the extent to which they ease is somewhat limited. That leaves physical and administrative support. We have already seen some administrative in terms of auto sales and property. We think theyre engaging in further measures to improve growth in the Fourth Quarter. Thank you for enumerating. Good to see you as always, especially on a day like today. Tim moe from goldman sachs. One day after having the Largest Technology deal of all time we get one of the largest dealses of all time, the long awaited and perhaps in doubt transaction between abi and sab. They agree to a deal under which sab would be purchased by abi inbev for 44 pounds per share. Theres a partial share alternative for the 41 that is owned by altria and the Santo Domingo family. They increase the consideration there as well. All of this started 42. 15, a partial share consideration. Both have come up. At this point theres a 50 premium on the close of the price. A 33 premium for those who would take that psa, which is available to all shareholders but is likely only to be desired by altria and the Santo Domingos who are going to want a taxfree transaction. The deal itself has to get to a definitive agreement or a 2. 7 filing, has a couple weeks to go until then. Will require large divest choit in the u. S. And china. Sab stock up this morning, ab inbev up to a certain extent as well because of generally bullish views by many of the analysts who follow the company. Lets say they begin to close 9 to 12 months from now and they realize those synergies in revenues and cost savings. Sabmiller there, there was doubt would they or would they not get to the deal. In the end the Santo Domingo family playing an Important Role here with two members on the board of sab, facetoface meetings between carlos brito and the Management Team at sab allowing them to come together on a price that they felt they could take to their own shareholders. Tap the biggest beneficiary. That stock was up as much as 10 . Why . Molson coors owns 42 of a joint venture. Miller with jb and expecting to buy out that 58 . The multiples that would be recorded as well. Its worth pointing out as a result of this deal they have a 70 market share in this country. I would love to be i think that this is what im reading from the journal. It includes molson coors its going to be divested. Not a doubt. Is it a fire sale to moresls coors . No. Can you imagine being in the doj this morning, they have a beer deal, they have 70 of the market. Theyre not able to grow in the u. S. The modello deal, they were trying to do that, they had to get out of that. Constellation was the beneficiary of that. Theres a deal between sab and molson coors that dictates how they can go about trying to figure out how to pay for that. Simon, it says they have the right to go to a third party, sab does, but molson coors has the right to watch any bids through 5 . The expecttition is thation is y that. Is it going to be a fire sale . Because of the provisions, if they dont get the price they think they deserve, they can go to a third party. I dont know that it would be considered a fire sale. I think the point is that the u. S. Wasnt the prize here it was africa where sabmiller has 40 different beer brands. And south america as well. Those are the two areas, africa and south america where they will grow. This gives you a sense of the big players in terms of the beer market. Market share, more than 50 . Ab i bef on top with 21 . Sabmiller in number two. This has been an industry in consolidation. Is this it . Is this the top . The peak of the beer some would say is this the peak of mma as well . We get this deal today. Is it a warning sign . Feels a little topee. Theres nothing left. Theres always something left. Just wait. When we come back, democratic president ial hopefuls getting ready to take the stage tonight in vegas. We will go live there when squawk on the street comes right back. ] some come here to build something smarter. Some come here to build something stronger. Others come to build something faster. Something safer. Something greener. Something the whole world can share. People come to boeing to do many different things. But its always about the very thing we do best. [extracurricular activitiessands help provide a sense of identity and a path to success. Joining the soccer team. Getting help with math. Going to prom. I want to learn to swim. Its hard to feel normal. When you cant do the normal things. [announceto help, sleep train is collecting donations for the extra activities that for most kids are a normal part of growing up. Not everyone can be a foster parent. But anyone can help a foster child. 2016 democratic president ial hopefuls will take the stage tonight in the first of six debates for the candidates. Our chief washington correspondent john harwood is already in vegas live for what we can expect. I assume its lots of moving to the left, john. Well see. But, you know, theres no better authority on debate strategy than somebody who has stood on that debate stage himself, so i sat down over the weekend with joe lieberman, the former democratic Vice President ial candidate to talk about what he expects. I think its going to be a really interesting debate. Secretary clinton comes into this debate with her campaign not where she wanted it to be. She has a strong challenge from the left, from Bernie Sanders. Shes also got a couple of wild cards on the stage. And its going to be interesting to see do they go after hillary . Do they go after bernie to try to cut him away . What does hillary do . The question is should she go after Bernie Sanders . I would be surprised. I think shes going go after the republicans. She will speak on behalf of the middle class. She will try to stay up. No reason for her to attack bernie. Bernie says he wont attack her. Do you not think all these issues that have been inflamed by the email controversy, trustworthiness, secrecy, you dont see those as huge impediments to her . It will be interesting in the debate on tuesday night. I presume Bernie Sanders wont bring up bengahzi or email. It will be interesting to see if Martin Omalley or jim webb do orb chafee. I assume anderson cooper, the moderator, would. When i ran for Vice President in 2000, i sort of inherited the clinton gore approach to debates, which was really to focus. I worked five, six days to get ready. Hillary has been doing that here. This is an important moment. Bernie apparently doesnt like to prepare. Just who he is. Is your baseline assumption that she is nominated and gets elected. The republicans have history on their side. After two terms of a president from one party, the other party tends to get their president ial candidate elected. I would say thats a toss up. The biggest takeaway from Joe Liebermans comments are that she is going to stay up. I would expect her not go after her rivals. Not even to go that much spend that much time going after republicans, but to lay out her program, connect with voters, tell them what shell do for them and how shell fight for them. John, dont go far. Joining us is robert costa to talk nor about whether House Republicans will hear from paul ryan about being speaker. Good morning. Good morning. What is needed to convince paul ryan to put his hand up . Ryan needs to be convinced that the conservatives in the house, the hardliners, will not oppose him on the floor when it comes time to vote for speaker and they wont break from him on the big votes, the debt limit, Government Spending bill. How likely is that then. Its hard to get a political pledge inside of the house gop. Ryans allies right now are on the phone trying to get private assurances saying if ryan gets the consensus of the house behind him you can let him serve and do the job . If its not ryan, then who . Who do we keep our eye on . On the committee chairman, john klein of minnesota, jason chavis is in the race, darrell issa. Look for a send steady hand who can be a calming force. John, Warren Buffett is making comments this morning at a fortune conference. He said we always thought in terms of a twoparty government but now we have a threeparty government and we dont know how to deal with it. What do you think . I think hes right. The fundamental problem that robert was talking about, getting assurances from conservatives that they cooperate with a republican speaker will be difficult to get. There has to be change on the part of those conservative members to allow governance as weve known it to take place. Some people have talked about the idea of a coalition speakership where you get some democratic votes to go with most republicans. You have to say on current experience thats likely given the way our party system has worked. But it comes into range as something that will be considered if not actually realized. Thinking about what carl mentioned with Warren Buffett, is it an overstatement to say the future of the Republican Party rests on paul ryan throwing his hat in the ring and just taking one for the team, for the party and for the country to become speaker . For the moment theres a crisis in the party when it comes to leadership. Theres a vacuum. Eventually there will be a president ial nominee, that person will become the de facto head of the party. Until then the speaker of the house, whether its boehner, ryan, they will be the head of the party. There needs to be a stabilizing force to get this Party Together because its fractured. Im curious about the assurances that ryan may get from some members of the freedom caucus. Can he believe them . I imagine we run into debate no. They dont seem to be able to control anybody, any way. All that stuff goes out the window. The big thing is an internal party vote for speaker within the house gop. Ryans whole play now, if he wins that internal party vote, he wants to come to the floor and have all 247 republicans back him. If he can get that on the floor, he thinks he can be in a powerful position. He wants that guarantee. You seem to disagree, john, or seem to say he doesnt have a chance . My point was, no he cannot believe those assurances. Those are people who are not interested in governance. John boehner was plenty conservative for the modern Republican Party. There are just people who dont think you need to compromise and keep moving forward on important priorities. Paul ryan cosponsored a budget deal with patty murray, 62 republicans voted against it. As i said, you have to have a change in behavior. Is it possible they could get all 247 republicans to line up behind paul ryan . I suppose theoretically it is. But given the agitation in the talk rye community, the paul ryan views on immigration t will be difficult. The stock market is interested to know if boehner can swing from the fences on xm bank, on a debt ceiling with no strings. Do you see him having more latitude as a lame duck . Not really. A lot of members say if boehner moves on big things, theyll rally against him. A lot of these major issues, debt limit, xm, probably will have to wait until the new speaker. Robert, our thanks to you. John boehner doesnt care at this point whether theyre unhappy. John harwood in vegas who will be watching the debate tonight along with all of us. Were two weeks away from the cnbc republican president ial debate. Live from the unify of colorado in boulder. Well be moderating along with becky quick and john harwood. Coming up next, why soda giants cocacola and pepsi are competing for a big investment in chobani. Its more than a network and the cloud. Its reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions, including an industry leading Broadband Network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youre free to focus on growing your business. Centurylink. Your link to whats next. Beyond the big beer deal we have more news for you. Cnbc can confirm pepsi and cocacola are in talks to take a stake in greek yogurt maker kobani. This is according to a person familiar with the matter. Other food and Consumer Companies are also in talks to take a stake. The process is managed by goldman sachs. The investment could value chobani at 3 billion. Its a private company and that does include debt. Its a figure first reported by reuters. Private equity firm tpg could have its position bought out in any new investment. Chobani will continue to be led by its ceo, Hamdi Ulukaya to help expand and enter new product categories. Expand the supply chain. Chobani introduced a number of successful products like flip it has a positive ebita growth, up 200 million over where it was in 2014. Pepsi and coke have been making investments. Pepsi have benefitted from frito lay, it also owns quaker oats. Cocacola is buying stakes in green mountain, monster beverage, and as for dairy, it has a new joint venture with fair life, the premium expensive milk. I talked to the company about yogurt. They dont rule it out as a market they would be interested in. Chobani, tpg, cocacola, pepsi declining to comment as the talks happen behind the scenes. We know greek yogurt is hot. We know the big sodamakers are looking to diversify as they face slowing growth. Theyll have do more than buy a piece of a 3 billion yogurt company. Theyll have to diversify. Its hard to replace when your key product is down 7 year over year diet pepsi. Thats diet coke. Thats number two. Volumes declining. Trying to grow sales, by its an interesting thing to keep an eye on. Coke never said it would go into food. Yogurt is semifood kind of. Liquid food. Liquid . Like shaving cream. Ahead on the program, the wall street journal saying dells deal for vmware looking like a deval youd currency. Squawk on the street will be right back. Bob dylan. To improve my language skills, ive read all of your lyrics. Youve read all of my lyrics . I can read 800 million pages per second. Thats fast. My Analysis Shows your major themes are that time passes. And love fades. That sounds about right. I have never known love. Maybe we should write a song together. I can sing. You can sing . Do be bop. Be bop do. Do be do be do. Do do do be do. Im sue herera. The latest findings are in on the malaysian aircraft over the ukraine last year. Malaysian Airlines Flight 17 was destroyed by a buk surface surfacetoair missile. The missiles russian maker presented its own report trying to clear the russiabacked separatists involvement in crash. An Apartment Fire that claimed the lives two kansas city firefighters continues to burn this morning. The building collapsed 30 minutes after the fire broke out killing the two and injuring four more. Two people were rescued. Irans Parliament Voting in favor of the nuclear deal with world powers. That bill allows iran to withdraw from the agreement if the world powers dont lift sanctions or impose new ones. Playboy says it will stop publishing pictures of nude women starting in march of next year. Instead it will feature women in provocative poses but not nude. Youre up to date. Thats the cnbc news update. Simon . How times change. Markets here are relatively flat. Were hanging on to that strong rally that weve had for the last couple of weeks on the equity markets. Oil is rebounding today. Still coming off one of its worst days since september when it fell around 5 . What should you knfocus on now an investor . Lets get some analysis. We have james lew joining us, Global Market strategist. If we learned chinese imports in dollar terms were down 20 , this market would have fallen out of bed. Not today. Why is that . I think the dust settled quite a bit. The issue this morning in terms of the import numbers from china, what has to do with imports, prifces falling around the world. What we should be focusing on is the earnings story in the u. S. We expect a bad earnings season for the Third Quarter being reported now. We have banks coming up soon. We do have a light at the end of the tunnel. The story around commodities being weak, the u. S. Dollar being strong, those being big, negative impacts on earnings, those should dissipate by the end of this quarter. By the Fourth Quarter we should see a reacceleration of earnings. Really . Based on what . Just run me through that again. Why would earnings reaccelerate . This is not in energy, this is outside that space . Thats right. We care about the year over year Earnings Growth that supports the pe ratio and supports the return from the s p. When you look at the year over year comparisons for the Fourth Quarter, you have much more favorable comparisons because the effect of negative earnings from these two big Macro Economic drivers started in the Fourth Quarter of last year. On top of that, when you look at underlying trends, if you strip out energy, materials, were seeing about a 4 , 5 Earnings Growth pace excluding those negative sectors, which should also reaccelerate in the Fourth Quarter. We know exactly why earnings were bad in 2015. Those effects should dissipate soon. It sounds rather technical that its fallen out of the series. Lets talk about where we are on the oil market. Yesterday was the day of big moves. Oil inventories today and tomorrow are key. What do you say to clients about whether oil rises or falls . It feel like the market has bottomed and the prevailing sentiment is less bearish than it had been. At the same time i dont think we are out of the woods just yet. We could move lower from where we are. Though i dont think we are likely to retest the lows in the 30 level that we had seen earlier in the year. Likely more volatility ahead. Why would we not test those in your view . I think that the we are in a very early stage of the supply demand rebalance. As such the data has been choppy, somewhat conflicting. So we saw signs last week that the eia said that u. S. Production levels have come down to 9 Million Barrels a day. At the same time the inventory reports continue to show increases or builds in crude supplies. The data has been somewhat conflicting. I think the market will be choppy and sideways as a result. James, i want to take this opportunity before we let you both go to talk about a note that came out of Merrill Lynch which was striking. Its from left field. But the suggestion is that next year there could be a major policy shift if we see a downturn in economies, that the likes of the United States and europe will acknowledge the qe hasnt work the and therefore embark on a fiscal stimulus that could cause inflation. He is suggesting therefore buy gold, inflation protected bonds. Im not sure if you have seen that note, and i dont want to drag you into the work of rival houses, but the fact there could be a massive shift from Monetary Policy to fiscal, how likely is that . The push to get fiscal policy in line with supporting the economy and the world, thats been a debate thats been around for a while. You had central bankers all around the world, including ben bernanke, talking about this. Our general view is that Monetary Policy, we would agree, has diminishing returns. At this point, after seven years of zero Interest Rate policy, we dont think its helping the economy. The opposite should help the economy once rates start to rise a bit. I would generally agree that fiscal policy has not helped support the economy. But i would not be hiding in safe haven assets at this point. We think there are still legs in this economy. Do you fundamentally think the politicians could be pushed into action of cutting taxes or running big budget deficits . Im not a policy expert. I think its difficult to get washington do things at this moment. What were hoping for is that fiscal policy basically allows the economy to run as it has been. And the economy still is fundamentally strong in the United States. Were getting closer to the end of the Business Cycle but its still looking strong. Unemployment falling towards 5 . Guys, thank you. Thanks. Johnson johnson out with Quarterly Results today. Once again getting hurt by the strong dollar. Meg has more on that and the big buyback. Take it away. Thats right. J j posting a beat on earnings of 4 cents. Revenue was light coming in at 17. 1 billion for the quarter versus analyst estimates of 17. 45 billion. The company narrowed the lower end of its fullyear Earnings Guidance by 5 cents to 6. 15 to 6. 20 a share. A negative impact of 8. 2 for the Third Quarter, operationally the Company Sales did increase by 0. 8 in the quarter. Looking across its business units, pharmaceuticals is the biggest unit at j j. That was at about 7. 7 billion for the quarter, but a decline of 7 . Medical devices a decline of 7 . And consumer, the smallest business unit, coming in at 3. 3 billion in revenue, also down almost 8 in the quarter. They did divest their splenda business in the quarter. This is the unit that has most of the brand names we recognize like tylenol and motrin. The company also announcing a 10 billion buy back this morning. Folks are worried that that means the company will back off or potentially not pursue big mma, which people say it needs to do to bring back growth. The cfo saying on the call that this in no way makes j j any less eager to pursue those if they find good opportunities. You are seeing the stock trade down a bit today on this kind of mixed quarter. One reason why the dow is negative. Still ahead, an exclusive interview with the ceo of vmware. Proud of you, son. Ge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Dad yeah, 20 something years now. Thinking about what you want to do with your money . Daughter looking at options. What do you guys pay in fees . Dad i dont know exactly. Daughter if youre not happy do they have to pay you back . Dad it doesnt really work that way. Daughter you sure . Vo are you asking enough questions about the way your wealth is managed . Wealth management at charles schwab. Markets flat lined so far. Consumer discretionary at the top end and consumer staples. Like the barbell approach when it comes to the consumer. Staples standing out as the worst performing s p 500 sector vying with utilities. This despite the fact that m molson kocoors is higher. Weighing the sector down, monster beverage, tyson food foods, and este lauder. Consumer staples in the green. Well see if that sticks around in terms of the end of this quarter going into yearend. Back over to you guys. Some of it may have to do with the action in the bond market. Lets go to Rick Santelli with the santelli exchange. Bond market back open. Hi, rick. Absolutely, thank you, sara. I would like to welcome my guest. Thanks, glenn hager, for taking the time. Great to be with you. 1975, disco, bell bottoms, a ban on oil exports. A lot of time has passed. A lot of things have changed. I know that the house passed a bill to allow exporting of energy. What is going on in the senate, glenn . As we watch the senate, hopefully theyll pass the export ban and lift the ban. It will be tens of thousands of investment, billions of dollars worth of investment here, not only in texas but across the nation. We could see up to 900,000 new jobs created in the United States by the year 2020. The 1970s was a long time ago. Its time to lift this ban and move into 2015. When it comes into the business of oil exportation, theres a couple issues. Many refineries in this country are not calibrated for the new technologies like fracking. The money will be big. Is that another reason to allow exports to potentially finance an infrastructure update . Absolutely. Our refineries in the United States have been designed to bring in exported oil, not for the type of oil we produce in the United States. It only makes sense that were able to export oil, bring in the old that we need, just like we do with the trading economies around the world. This, again, will bring tens of billions of dollars of investment, mean money back in consumers pockets, lower prices at the pump. And it seem s ironic that were pushing for an iranian deal that would enabilile them to export , create jobs and were not willing to create them here in the United States. Just from a Foreign Policy perspective, it seems to me that the middle east is not getting cooler, its getting hotter. Should there any type of glitch, though it seems like terrorist cells refrain from the jackpot of energy infrastructure, its possible. Will we find ourselves on the wrong end of updating at the wrong time in history . Its a real concern for myself as chief Financial Officer here in the state of texas that we can see a significant increase in activity in the United States, create jobs, and have them here domestically and locally where we have oil supplies to trade back and forth. With all the activity in the middle east it makes more sense to lift the band a and move forward. In the 1970s it made sense. It doesnt make sense 40 years later. Glen, thank you. Always interesting to hear your perspective. Up next on the program, another huge deal today. Ab inbev finally getting agreement to buy sabmiller within the brewing industry for 104 billion. The combined company would have about a onethird share of the global bear mer market. Unless they sell some assets, 70 market share in this country. Where is the market now . We talk about that next. St fortunes most powerful womens conference today. Warren buffett, mary bara. Militia obama speaking and another powerful woman in the corporate world, irene rosenfeld. Our kate kelly is there with highlights. Importantly, this was the first time weve heard from her since bill abbingman announced that stake. Thats right. It was very interesting to hear what she had to say since that 5. 6 billion announcement. She didnt really give us a lot of color on any other discussions with abbingman other than to say he has not asked for a seat on the board. Activists generally, she spoke about nelson pelz and said it was tough to come to the decision to invite him to be on the board, but that he had been a constructive member. Mentioned also as i said that abbingman had not asked for a board seat, but said also what has to engage with activists, you dont do that at your own peril. Lets hear more about her words on activism in general as it applies to her company . Take a listen. You have to engage with your shareholders. I spend a great deal of time with shareholders in the course of the year, and we have to listen to what they have to say. Theyre making significant investments in our stock, and in the case of activists, i think one chooses not to engage at their peril. I think in some cases the nature of their holdings does not justify the loudness with which they speak. You know, she was so diplomatic. It was impossible to tell whether that last line was a reference to abbingman. Although, of course, it could be given his style, sarah, but interesting comments nonetheless, and she said theyre focused on margins. Theres more to come on that. They see stagnants basically in europe and asia and the foreseeable future and controlling margins is one way they can combat that. I think that was more blunt than we usually get. In the meantime, the worlds two largest braers, inbev and sab miller agreeing on a deal for one to buy the other for just over 104 billion. Such a combination would have a onethird share of the global beer market. Here with more analysis carolyn levy, beverage analyst with slsa. Carolyn, welcome to the program. Where is the value for shareholders . Now weve had had the share price moves. Whats next . I still think you have 11 up side. It may take nine to 12 months. I get modela took about 11 months, but it can have to there was a second offer. Obviously youve seen tech move tremendously. Obviously the difference between for this on the table is its part cash, part shares. If those big shareholders, the one that for tax reasons want to go forward. There was a suggestion, though, people will go initially for the on for the cash offer, and then they would have to buy back ab stock anyway moving forward because a lot of Fund Managers will have to benchmark to it whether they like it or not, and, therefore, ab stock will rise, to the point that maybe youre making there. Yes. I think that is a very interesting point. This has been a Management Team thats delivered so much value over the last decade that it is one that you probably want to bet on going forward. Pepsi could lose out here because ab has been a bottler for pepsi in brazil, which is the second largest market for them for many years. No one is going to be as strong as ab in distributing pepsi. Carolyn, i had a discussion about the fact that clearly together they have a very large market share on paper now in the United States. 70 . Therefore, need to sell out of the joint venture with molson. Molsen stock is up 25 since the deal was announced. Further up side, whatsoever a sale will that be to other assets that have to be sold in this country . There probably is further up side in tap. I dont officially cover it. Based on what consellation sold from its windfall acquisition from abs last deal, i do think that tap is lots of sin erj ji opportunities, efficiency opportunities. The other sale that must take place in our view is the sale of the china joint venture with snow back to china resource enterprises, which is government run. Is that plain sailing in china. I dont think anything is plain sailing in china. There are lots of groups like the costel group in africa. There are a lot of ts to cross, is to dot, but if anyone can do it, ab can get it done. Is this the end of the beer consolidation story, or is there anything left . I guess you might think that abs final move would be to go off to cocacola, in which case i guess its the end of the mega mega deals, but i would never say deals are over in beer. I think well see a lot more smaller ones. You are seeing tons of kraft acquisitions, for example. Its been a pleasure talking to you. Thank you for your naltsz. Carolyn levy joining us. Lets go to john fort with a look at whats next on squawk alley. Hi, john. Twitter layoffs. How are they going to do that and grow at the same time . Well dig into that. Also, reid hoffman, the entrepreneur and top investment. Here are comments from him. Pat bellsinger will join us to talk about the dell emc transaction. What it means coming up. All that and more coming up on squawk alley. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Every insurance policy has a number. But not every Insurance Company understands the life behind it. For those whove served and the families whove supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Its more than a nits reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions, including an industry leading Broadband Network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youre free to focus on growing your business. Centurylink. Your link to whats next. Welcome to squawk alley for a tuesday. Managing editor ed lees. John fort, kayla are back. All is well with the world. Markets doing okay here. S p 2020 is the level that were going to keep our eye on for sure