Transcripts For CNBC Squawk On The Street 20170808

Of edged up yesterday. Jamie dimon am i too early in that promote . Yes, you are permeant yesterday, you got me all confused. Im all over it theyre producing a lot, but theyre not but they dont have the pipelines. Lets get to the road map this morning. Well get to oil but for now, were going to talk markets. The dows win streak is at 10. You saw their futures are looking, at least for a lower open plus, Michael Koors and ralph lauren delivering some upbeat news you got that right, upbeat for the Retail Sector. Both of those Companies Beat the estimates of the analysts. Follow them. Koors up a lot cbs coming in better than expected but they lowered guidance, so the stock is down. Basketball, ad sales. Oh, i thought you meant cvs no. Oh, you have to say channel 2. All the time on the trading desk, you never use the term cbs. You say ive got 50,000 channel 2 to buy too many people bought cvs and that stock is down never use cbs for cbv. Okay. And Charlie Victor was not. It was down it not only posted a ninth Straight Record close, the s p 500, the important one finished monday with one of its own its now up in four of the last five sessions. And we have a very strong market on our hands yeah, we do a little bit at a time. And still that way for a long period of time yaed westerday was aerospacea and google has been strangely absent although of course it gets bold today because people dont like to see google down now its alphabet. They should change it back. Ill talk to ruth. It will will remain nothing, like everybody else i ask her about. But thats okay. Its business. One day to the next, i wouldnt assume your viewpoint has changed when it comes to the Broader Market no, with it hasnt. Those were the old days, david i do an intermediate term look at the market these days intermediate is how long . Six to nine months. So you are relatively positive yes, i am in the first year of a president , inaugural year, if youre upin the first six months, youre never down. Youre never down never down. Thats a stat for you. The Obama Presidency over the eight years, quite a bit he did come in right near the lows thats my friend ken fisher did that work. Im not going totake it myself i usually like to take it myself, but i like ken thats important because usually those stats are ee looes loosive. Is to so thats it, we dont have to worry for the next three years . No. The seven weeks now are the most lets say worrisome of the year as far as ive been in the business well, august and september are typically i listened yesterday, those statistics, theyre not good months is what i picked up. Exactly right theres a lot of mutual fund selling, you come back from europe tends to be weaker. That was the old days. But the dollar is different this year i dont want to go down that pooth. Too negative all right lets get to some specifics. You and i enjoy that yes, we do. Are you still going to script im going to stick with the script were going to talk about koors and ralph lauren you use tap and koors too many people have bought molson coors when they meant to buy kors sameso he will store sales were down 5. 5 thats all right. But at this point, anything like that is viewed as a positive ralph lauren is ahead in view of expectations despite a decline in comps, new management there look, gopro, okay what does that have to do with ralph lauren . Fit bit, ralph lauren where are you going im just trying to be dramatic michael kors, they were all supposed to be bad some stocks have gotten oversold here people have given up on companies. Ralph lauren shortened the supply time. Kors is merging with jimmy toecleavagechu you werent particularly happy about that but im saying the narrative is changing. After all this time weve been sitting here talking about the death of the mall and narrative these are all suppliers to the mall, okay and ralph lauren closed the stores and closed some of the jou jo outlets. These companies arent just sitting there getting their heads beat in. Theyre doing things what are you doing there . Its better when you do this to me. When the camera is off and youre talking to someone im on my phone trying to find things out typically. Oh, its research. Okay twoyear basis comps at kors improved sequentially, down 13. 3 from down 14. 4 . So this is where the market is yes, yes, it is. Okay. Okay it is but you believe its a turning point. Thats whey thought no, i am saying that the suppliers were driven down by amazon the kind of rubric of amazon and perhaps it did make sense. Some of these suppliers are doing great things on amazon pvh, look at that stock. That stock is red hot. Theyve tamed the channel. How have they done that what does that mean . They were very forward looking. They realized you cant just rely on macys maybe macys is oversold but you cant just rely on the Department Stores if youre a supplier pvh, look, no one is going to name their dog after pvh no, theyre not on kors again and the jimmy chu deal, they expect to be thats what i meant revenues in fiscal 19 numbers. New momentum at kors is what youre saying. I am saying new momentum. I am fought saying john is my idol i am saying you should start thinking about john idol the ceo. The chart the did tell you that, and i know youre a chartist you know i am a chartist. So what do we make of retail overall . Because i do feel as though the cloud is lifting. And bemoan the death of retail and the mall being in such a tough place then, of course, we look at Simon Property group, owner of all these malls, not too bad there are tenants continuing to pay high square rents. We have a kors or a lauren which has a decent number. Target had a decent number target is tougher youre not as i thought target was decent. No, im worried about food. If it has food, i am concerned costco, 6 , nobody cared target has food. So walmart, youve been all over positive on that. Walmart is being price competitive. They can afford to do so they have that Balance Sheet suppliers are doing better individual mall stores, childrens place doing fabulously because gymboree is failing. This morning, they say its time to buy foot locker because amazon is not eviscerating them. Thats the final it got crushed. Thats the final point. But you have to do some work during the break because i have time everyone has written off the nordstrom deal oh, yeah. Youve written it off, too . No. You know, the special committee is still waitinging. They got their special committee right away how special is it very special. Double special they got them together right away they have their advisers and theyre just sitting and waiting. Waiting for what the other shoe to drop in the Shoe Department . Theres like a million shoes in that Shoe Department i am watching from the Nordstrom Family who needs obviously some help, from pe to help fund that and its nowhere to be seen as of yet if i were in the Nordstrom Family, id be cashing out but whats really interesting is what you said about the mall operators. Property stock has been on fire. Because when a mall when a Department Store that has a long lease goes under, they reconfigure and they bring in a new guy. They pay more its only when you dont put up new stores lining tanger did concern me theyre not putting up new stores its hard to say its been on fire when its down this year. You just doused it. Its a slow burn hey, listen. The papers came out in favor of forest fires today in the science times. Yeah, makt, i did see that story. Mannequins fires are a very good short story yeah climate change, too, that doesnt seem particularly good just an obscure literary reference. No, im aware of that, actually its young men and fire. And they could not outrun the fire so what did they do they made a fire geez. Theres nothing i can stop doing other than shopping. You get me. You get me sometimes i can stop you with shopping. Planned, panama how about wyriki bakery the bakery doesnt exist yreka, basically, is a palindrome so i went to wyriki with my daughter palindrome is nonexistence still to come, intel is cleating its deal and calling it an acquisition to accelerate the future of autonomous driving which we have a lot of questions about. And were going to be able to ask a few of them of Brian Krzanich later this hour also ahead, Jp Morgan Chases chairman and ceo who has that interview is it you . Though. Is it me . No. Is it will terrorist . Yes. Ill jealous of everyone. Wilfred frost will have that exclusive interview. Another look at futures as we quickly head to another quick break. Were back on the other side with a lot more on media when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. For years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Cbs, channel 2 here in the new york area, reporting better than expected Quarterly Results and sales were up led by the ncaa mens Basketball Championship cbs expanded its streaming services has 4 million now between cbsn and show time. Meantime, disney is going to release its Quarterly Results after the close today. And our good friend, bob iger is going to join cnbc at 4 00 eastern today. There he is. Interest i have to tell you, i was on that Conference Call. Les moonves, i call him more moonves. What a great quarter the mayweather versus mcgregor, price increases high single digits, 54 series, final four taking up 7 the thing that i really, really liked about this thing, this is a veiled netflix its got a netflix feel. 54 programs. I know they have transferred transformed to a certain extent the company from being the most reliant on advertising to so many other revenues. 60 40 nonads. And or air to the likes of a netflix and the other providers. Right this has become an enormous revenue source, of course, license and fees they get retrans, they get reverse comp theres so many different ways and now cbsn, 5. 99 a month, i think. I know. And you get showtime obviously. You mentioned this fight coming up, mcgregor, whatever i love showtime theyre going to offer that to nonshowtime subscribers over the top. One would expect that would help had them. Yes they didnt break it out. They have 4 million total between showtime streaming and the cbs and streaming network and they get to get it to eight over time. These over wreers. Yes but i think theyre ahead. Something youve been saying over and over again, which is ive been saying hey, listen, google, youtube, alphabet is going to come in and take sports programming. He dropped the bomb that i always forget. They have the ncaa mens finals until 2032, david. Right moonves thought about this issue with well in advance of everyone else. Ive got to tell you, im very impressed. Now, colbert has been very strong no m a, not going to buy cnn and it wasnt that long ago that there were at least they were being forced in a sense to consider possibly getting together with viacom moonves didnt really want to do it no. And Sherry Redstone backed away from having interest in it, as well. And, therefore, it didnt happen there was some research out last weaken curving it, given the scripts discovery deal what we know is this fastly changing landscape but one would assume, given how well cbs is doing, you can understand why they would make a decision and say, no yeah. They have something theyre buying and we believe we are obviously clearly more highly valued than viacom and were not willing to pay a premium but they have something theyre buying which is . Cbs stock david and i calculated 650 million shares five years ago. 410 now. And theyre buying this man puts his money where his mouth is thats true although the criticism of that and overall the media has been great Free Cash Flow againive businesses that are constantly reducing the flow and that is the only way they get the bottom line going up is a result of on a per share basis, jim, because the Growth Opportunities are not there. Do you remember how much stock i do. Brought back at such higher levels that didnt help anybody it depends on the franchise theres a great mrern, david, a Great American who bought that stock consistently and drove his stock up and it turned out to be his stock was undervalued. Do you know what that Great American was of course i do yes. Who jeffrey buchus. Yale graduate, i believe he would be the man disney after the bell, iger will be on, Julia Boorstin usually does that interview. We would love to have him back in the morning if he wants to join us. Yeah. But it was a couple of years ago, by the way, that espn thing started. That was two years ago they put up that release. Sometimes you have to speak softly and carry a big stick if they hadnt issued that release, i dont know that we would know about the decline it was a peak. They are going to bring the ocho, though he. Were going to have espn and the oshao at least for a short period of time are they dodge ball. Have you ever played trampoline dodge ball . No. But that sounds like a concussion waiting to happen you have to have real skill for that no kidding. Well see what disney reports and we will be all over it up next, well have jims mad dash as we count you down to the opening bell lets give another look at futures, as well it would seem for the lower open, that dow hasnt had that kind of streak isnt what is it , 1959, right . Eisenhower, great man. Were you even alive then . I guess you were important than your health. So if youre on medicare or will be soon, you may want more than parts a and b heres why. 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Remember, Medicare Supplement plans help cover some of what medicare doesnt pay. Youll be able to choose any doctor or hospital that accepts medicare patients. Whether youre on medicare now or turning 65 soon, its a good time to get your ducks in a row. Duck quack call to request your free decision guide now. Because the time to think about tomorrow is today. Time for a mad dash on this tuesday. We want to go back to the permian. Yeah. Pie your near, pxt, they reported a number, david, that shocked people i mean shocked people. It was at 169. It has not stopped falling i mean 163 it has gone down to 129. Today, Deutsche Bank gets out of the fallout shutter and says its significant hadly oversold. Steve fold puts his head up from the trench and says its significantly oversold david, if this stock turns, then the group can turn but right now, the group has had it i know. We talked about this yesterday and i haveto say afterwards i was trying to understand exactly what the argument for was for why its had it. Youve been speaking very positively about the permian for some time. Mainly because its the cheapest place to produce a lot of stories about how frankly theres that theres not as much oil because the shale that is true, but thats ridiculous. The problem is distribution. You cant get it to where it has to go because even though in texas theres a lot of pipelines here, here, here, but not all of them go here where it would be exported and not all of them will go to natural gas markets in mexico where it could be used meaning what . Theres a lot of backlog here, maybe more than anybody else but theres not pipes. What do you do you cant take the nat gas out of the ground without a pipe david, they are using trucks do you know how much that raises the price . Trucks theyre using anything they can, but they dont have pipes to where the refineries are so oklahoma right here, the panl panhandle in this is louisiana this is where my daughter lived. This is grand aisle where they did true detective you have so many talents. Yeah. Theres a tarpon Fishing Contest right there. Nice. Big prize so unclear whether we get the turn that youre talking about no. Today you have to watch. If they bounce, then everyone tomorrow comes out and says its time to buy eog. They had the best quarter. It was tainted by pioneer. So watch eog thats the tell. Lock pioneer they had a great quarter theres no reason for that stock to go down eog sfwlrchl eog all right eog. Did you like my california is here. I love your map i may frame one of them. The opening bell is just a few minutes away by the way, brian is gngoi to join us. Well have that after the bell hey gary, what are you doing . 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Talk to your advisor about a brighter financial future. You are watching cnbcs squawk on the street. The opening bell is going to ring about half a minute from now. This is typically where i turn to you and ask what the key to this market is i have some guesses, but then again, im often wrong so what is it . Theres a dog a dog a dog that answers to a name. It doesnt answer to the name stop talking to my wife and the name is nvidia nvidia, when it goes up like two, three before the market opens, it tends to reverse so be very careful and i think it might today because were speaking to someone who is closing a deal on mobileeye. And mobileeye is bent on up ending nvidias hammer lock on cars so those who want to buy my dog up to now a sense, my dog will roll over very quickly and you can buy it very temperamental. Nvidias market value exceeds 100 billion now what was it selling at in 2015 when the price earnings floeblly i dont know. Six it turned out to earn much more than people thought. It was the greatest bargain of our time six times earning. Jason is one unbelievable manager and i like that stol stock very much. I like it more than my dog its not as hungry the opening bell here at the nyse over the nasdaq, time and technology is developing Cancer Therapeutics from multiple super attempts values, making a valiant effort to go high he speaking of bill ackman, you may have something here. But now the stock is up huge from when bill ackerman sold it. They are ahead of planned to get rid of shortterm debt i dont like the company, but i like what joe is dont valeant has had quite a move over the last three months yes, yes, it has. Still down about a quarter of its market value over the last 12 months. Yes were people shooting against ackman since he sold it so low or was he just tempermental . It was not a welltimed sale, it would seem. He was never going to get back to near anything he just wanted out they sold at like nine, didnt they . A little higher that was my story, but i forget the price you are noting the success. Im praising joe papa for coming in there in a situation where people were worried about the debt and hes chipping away at it. No large asset sales at this point still. Right he thinks he can pay down 5 billion by 2018. Thats impressive. If that is the case, it would be impressive. Not as many as what Brett Sanders is doing and jamie rubin has it in for that stock the question she asked on the Conference Call, i thought i was suboptimal thats all right for an analyst to be aggressive on a Conference Call. She said most of the beat and raise was from Interest Rate no it was because of new products wlets say you wanted to sort the stock. That zen was great you would love that question are you saying she should go for the shorts no. Where did you draw that conclusion i dont know. What did mr. Saunders say last night that got your attention . David, millennials, theres 3 Million People would use they own the face, allergan right now, 3 million but it looks like the 30 million in their sample want to use it why . David, when you take pictures, theres only so much that beauty ands ta and estee laur can do. If youre going to look your selfie best, you need botox. The numbers are up, you want to buy the stock. Its as simple as that. David, everything i say about selfies is right estee lauder fabriceo freda, he is the man who coined the term, said that people will pay a premium because they care about how they look david, this is about instagram, its about snap, its about selfies. So younger people are going to start to use botox . Yes and sculpting. I cooked well, i cooked some. I sliced the steak okay. Well, you grow the vegetables. I think thats important yeah. Instead of doing trampoline volleyball, well do trampoline beat your head in with my zucchinis. That would be something. What else, david what else we mentioned mr. Ackman in relation to valeant. But we should mention him in relation to the news story at the moment, adp, Automatic Data Processing in which he did file last night a 13d although his ownership, its interesting, hes done it all through derivative transactions. But hell settle them. Its an enormous position. 8 of the companys stock. A huge company. After initially indicating an august position where he would propose five directors, including himself, and was taking aim at the ceos job and was clear and made clear in conversations with Carlos Rodriguez that mr. Ackman last thursday indicated no, he would not be going after a majority of the board and then last night went after only three directors, which was somewhat unexpected on the adp side, given they had been led to believe that he would be looking at least at four, but most likely five and now he came with three himself, mr. Unrue, who is 68 years old, and a miss hagan who is 71 years old, both of whom have decent experience interestingly, jim, next the thursday were going to hear one of those long presentations from mr. Ackman in which he shares all of his thoughts about about why this is a company that hes focused on but what i understand is the focus is not on capital return,ite not on m a opportunities. So there might be some down the road for this company. It really is running the business better and getting margins up he believes that the company has gotten fat, essentially, has benefited from secretary ewe lar tailwinds such as complex regulations. This is the biggest Payroll Processor in the country and that has added staff, its revenues have gone up and that simply doesnt make sense for a Technology Business that should be able to benefit from scale. So one would assume that will be part of his presentation im sure there will be a lot more to it early betting here says this is going to be a tough fight for him. I listened to Lee Cooperman yesterday on scott wapner halftime he said this is a high touch business you need these people. He also mentioned that its outperformed paychecks which is his rival. I thought he made a lot of good points at the same time, when ackman buys stock, people follow. Thats not necessarily as good as say when try and buy stock. No. I think it is interesting that the try and foxy fight over one that we know, of course, our friend. Nelson. Nelson is trying to attain focuses on margins and cross control. Dan loeb, active it, conversations, what is it focused on cost, margin the activist play book is different than it was a few years ago when it was much more focused on divestitures. The best one, david, is nxp Semi Conductor elliott where when they go above the offering price, david, this is a takeover, obviously, from qualcomm wow. But they did some number people have been putting numbers together it is so much cheaper than some of the others in the cohort, it got taken out too low. I mean, i have to tell you, the work thats being done away from elliott says that they are giving it away rick clemers, a really good ceo. Did you know what youre doing . Youre fanning the flames. Yeah, i am. I have a Conference Call tomorrow for action alerts club members. Interest rates at 19 times earnings analog devices, these are both an loc analogs. Here you get 15. Well talk about that on tomorrows Conference Call we have a lot more to talk about auto nxpi. For now, we have to make time for intel. Lets get to bob pisani on the floor right now. Oh, were going to go right to intel. Sorry, chip. Why dont you take us there. Okay. Now, the acquisition for mobile eye, mentioned on the Conference Call, it was going to close early and this is intels way to boost the companys autonomous driving efforts. This is a really important david, this is all about Machine Learning its all about autonomous driving. Its all about the future. And thats why im so thrilled that were going to have a ceo of intel, brian right now. Great to see you yeah, jim, its great to see you, too, on such an important morning. Absolutely. Brian, i want you to put this in context. Mobileye is a Market Leader in what david faber, who is here, and i think may be the Worlds Largest market which is Autonomous Vehicles. But there arent a lot of people in mobileye and you did pay a high price, 15 billion. How can it be rationalized and what do you think awaits intel well, you know, we look at it as mobileye as being the leader, jim, in the Computer Vision side of autonomous driving. Intel is also the leader in the brains, the part that competing that drives the car. And together, together we believe we have the most Innovative Company delivering autonomous driving out into the future its really delivering power, performance and cost to our customers. So when we look at it, we look at it as a huge market that were going to approach here its a 70 billion market that we can go and approach now with autonomous driving, with what we see as the best solution out there. Okay. This year, tesla and mobileye had a very public spat mobileye was not happy with tesla. Amazingly enough, given the love for tesla, mobileye decided it wanted to go forward on its own. Nvidia came in and in a much quicker way than expected was able to start production, 90 days, and now they have a big ecosystem. Is there room for mobileye, intel and nvidia and what share can you take so we truly see ourselves as the Market Leader as a result of this acquisition when you take a look at the combination of mobileye and intel and you look at it just on either a raw performance or a performance per cost, you see us as the leader now by putting our two technologies together. So we see us as taking share and winning in this market i think its important you do point out costs. A lot of people feel nvidia chips cost way too much. Are you able to come sizably underneath them . I know there are a lot of Car Companies that feel like nvidia gets too big a piece of the pie. Yeah. So not only do we you know, when you take a look at it, you really want to take is a look at things like teraflops per hour many of these cars will be electric and cost. We have to look at all three of those. When we look at all three of those, we absolutely are the leader we believe we can give them the best performance for the lowest cost and, you know, win that share. Mr. Krzinch, its david faber. We think about success, we think about its ability to fly into what was the burgeoning demand for pcs from the 90s into the otts give me some sense of how you see Autonomous Vehicles evolving is it going to be similar to that are they going to be on the road in the next five to ten years . When will they be more of the vehicles on the road than not . You know, david, i think its a great question and i think a lot of people get confused theyre looking for this date where im going to go from a car that i have to drive myself to this fully all ton muss vehicle. And thats not the way that transition is going to occur youre going to see, like youre seeing already, is more and more autonomy coming into the car and youre going to be kind of, you know, walked into this slowly as the Technology Advances but also as people and the Car Companies become more accustom with this. So youre going to see what you see to now with Adaptive Cruise control and lane change management then youre going to see, you know, the ability to drive what we call from entrance to exit on the freeway. Autonomously and it will slowly migrate into suburban areas and then eventually into downtown areas and large metropolitans. So youre going to see that. Youll start seeing some of these cars hitting the road as early as 2018 with the mobileye and intel solution and then youll see that progression all the way through. And i think its going to be, you know, the 21, 22, most of the guys are talking about that, most of our partners are talking about that kind of time frame before you see that fully Autonomous Car, what we call level four and five, in that time frame thats what were currently planning for but within the next decade, i would expect you think were going to have many fully Autonomous Vehicles on our road, both urban and suburban. My two daughters children will never learn how to drive. Thats going to be the future, i think. Youre not going to need that. And yes, absolutely. By sometime mid to late next decade, the Autonomous Car is going to be the car that you want its going to be electric. Its going to have long range. And its going to be autonomous. And if youve driven in one, and ive gone on five, six, sevenmile drives already. Once youve been in one and youve experienced that freedom, you dont want to do it again. And its its so much more pleasurable. Couldnt agree more been if in one really terrific. You can tell it to go to a place, just knows where to go. Brian, data center overall, very solid. Incredible amount of money that youre making in a declining pc market but something i know its difficult to talk about. Ive known you for a long time im going to try it. Theres a fight between qualcomm and apple. Apple is making a watch. You have great Wearable Technology i think this could be terrific for you. I think that apples iphone and ipad modem business could be terrific for you i know were not supposed to talk about that particular customer but lets just be lets just kind of play make believe. Is there not a possibility that a giant company, maybe the Worlds Largest, would be switching a lot of business toni tell from qualcomm because of a spat with qualcomm and the superior technology of intel so, you know, here is how i look at this, jim. Weve invested a huge amount of effort into the modem business to become an Industry Leader as a technology what were seeing is customers becoming more and more interested in our modem and us gaining share in that process. So i think absolutely over the next few generations youre going to see us continue to gain share in our modem but its because of our Technology Leadership and the great engineering that intel has put into that modem. All right and when we see the modem business, you look at Autonomous Cars, these will be connected. So as the transition occur toes 5g, even more important the modem business becomes as a part of this integrated solution. Youre a great diplomate as well as a great executive and ceo. Thank you this is something to talk about. Apple does not really care for that so intel track record, mcafee sold a majority stake at a lower evaluation sometimes people say losing share. How do we know that youll be a good steward of a mobileye acquisition . So, remember, first we turned mcafee into a really winning business it was growing and making good Free Cash Flow and we think well get the rest of that investment back over time because we still own 49 al at the ra has gone right into our deal pieces that we originally presented to the board. And so we think our performance has been very, very good now, we would learn with each one of these, mobileye is going to be very different you can think of it as almost a reverse integration. Were going to take our autonomous driving unit and merge that into mobileye and the cto and chairman of mobileye is going to be the lead hadder of our overall project and report directly to me. And thats, you know, some of the lessons weve learned is make sure you have the best leader on the planet and make sure they have the direct attention of the ceo so that the changes that need to be made, both inside the company but outside, as well, can occur quickly. One last question and unfortunately we have to be quick. Advanced microis suddenly back in the picture theyre doing cpus you use their cars for mining bitcoin. How did we let them get back in the equation, brian . Our competitors are constantly coming at us, jim its because were in a great business were Market Leaders, technology, and price, performance. And so weve always got competitors coming at us in this way. Youre right and it has been resurgent. Thats a competitor we know and we know how to compete with and well compete with them like we do with all of our competitors well come back at them. You saw we are releasing our core i9, 12 and 18 Core Products you know, were going to come back right away with performance and cost advantage that really delivers to our customers. Excellent, Brian Krzanich, ceo of intel win appreciate you coming on. Its my pleasure to talk to you. Thank you lets get to Rick Santelli and get a check on the bond market from the group in chicago. Good morning, david if we look at one week, you can pretty much see everything you need to see. We popped up from the low 220s on the jobs number friday and virtually weve been holding the gains. Today, all maturities are very close to unchanged or one basis point higher as in the long end. If you open the chart up to june 1st, you see there the low yield closed the year, 213 i believe it was the 14th of june thats the yeah now from that low to basically the low yields and the low 220s its a good support zone from last friday. Foreign exchange seems to be the epicenter of what volatility is left in any of the sectors and if you look at the euro versus pound for one week, you see thats can lagz of priescala. There were no policy changes, maybe none on the horizon. You can see how the euro gained on the pound if you open the chart you, its at the best level since october and that is of last year keep an eye on it. If it starts to take out more to the up side, it extends the comps. Lets switch themes. If you look at the dollar index since the beginning of 2015, what youll see is now we are at and have taken out some very key bottoms over a long stretch of time go back one more year on that chart to january 2014 and you can see how much grend grououndi with very little trade even the wall street journal is finally acknowledging the weak dollar and the perception of weak dollar in the future could be one of the issues that helps things like stocks and commodity prices, jim and david back to you. Okay. Thank you, rick. Coming up, timing ceo Richard Battista is going to join me on his companys results, the cost cutting plane that he unveiled squawk on the street will be right back duncan just protected his family with a 500,000 Life Insurance policy. How much do you think it cost him . 100 a month . 75 . 50 . Actually, duncan got his 500,000 for under 28 a month. Less than 1 a day his secret . Selectquote. 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E right heron cnsquk le and hey, unmanaged depression, dont get too comfortable. Were talking to you, cost inefficiencies and data without insights. And fragmented care stop getting in the way of patient recovery and Pay Attention. Every single one of you is on our list. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. For years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Lets just get to it a company that has been maybe one of the best performers ive ever had cnbc meritor, what a story, trent parks, david trucks are hot, even if his cars are not. Just down there giving nvidia amd the business this is one of the biggest changes we have in society over the next ten years how about how his daughters kids will never have to learn to drive. Thats something my kids will be the last generation that does, i guess. Well see you here tomorrow. Love ya love ya, mean it a lot what did you just say love ya mean it a lot. I mean it a lot, too. That wasnt a palindrome was it . No. Wolf is not on good Tuesday Morning and welcome to squawk on the street. Im sara eisen here with david faber and mike san tilly live at post 9 at the Stock Exchange carl has the day off lets show you where the markets are trading. Stocks pulling back from those record highs, notched at the close yesterday. Both the dow and the s p finished in record territory well see if we go positive. That would be number ten in terms of record closes Consumer Discretionary is strong thanks to kors and ralph lauren. Well talk about it. Take a look at wti crude, though 49. 07. It is down a little more than. 5 the today will we get to 11 well see. Plus, bright spots in retail, but kors and ralph lauren surging on earnings. More analysis, straight ahead. And google firing an employee over a divisive memo about gender more on the silicone culture environment, coming up for more on the outlook, we are joined by Goldman Sachs chief u. S. Strategist david kostin welcome back nice to see you you have a call that the financials are underappreciated in this market why are they poised to go higher theres two reasons the first aspect is the path of inflation. And the Goldman Sachs view is that inflation largely through the transmission mechanism of a tight labor market will lead to continually tightening by the fed in 2018. And the market generally hasnt embraced that either in the fixed income or the equity market in the equity market, that would be most beneficial to the banks in particular and a lot of the financials broadly speaking why are you guys seeing inflation where others are not well, if you look at some of the surveys, looking into expectations for next year, theres some evidence that there is a path to retire inflation. And the issue is banks and financials broadly are the beneficiaries of higher rate environment, number one. And the number two is the amount of cash thats being returned to shareholders in the form of both dividends and buybacks if you think of the ccar results, they came out on june 28th, so about five weeks ago. The dollar amounts are staggering were looking at 40 billion incremental cash return to shareholders this year relative to last year and thats in the form of dividends and buybacks so a lot of those companies, investors broadly havent appreciated that in my view and thats not reflected in the share prices that would be the argument behind financials. David, higher Interest Rates coming fairley quickly, which some people say will happen if they actually start going higher, green span last week i think indicating once you start that upward movement, it happeneder more rapidly than you mie might think. Great, maybe the financials benefit, but Everything Else may not. So the forecast, my forecast, has been that the s p 500 ebb decks will rooid rise to around 400 at the end of the First Quarter and rest at that level by the end of the year markets trade about 2 to 3 higher than my forecast and the expectation is by another four or five months towards tend of the year, the expectation that the fed will be hiking next year four times will be start to weigh on the market and take that a little lower and the financials would be beneficiaries of that expectation of a higher Interest Rate david, this earnings season which has come in better than expected even more than it usually comes in better than expected in terms of results and guidance, thats that reinforced your idea that the markets priced a lot of this in . Youve had incremental upside to the markets, but not thatch during the season or is the market gathering up energy we have a strong credit market a lot of the back drop seems pretty friendly to get another run overshooting your target a little more. Clearly its overshot slightly if you think about the broad story behind the market is its been a pe multiple expansion for the better part of six year. If you look at the potential future drivers, that is really a growth story and the question is Earnings Growth, theyve come in the First Quarter and the Second Quarter both in the double digit rates of growth. If you take away energy for a moment, youre looking at basically mid single digit Earnings Growth rates which is broadly in line with a longterm strat dwi. I think that does highlight a big issue about how companies are choosing to invest cash. There are a group of Companies Investing close to 90 or 100 of their cash flow back in the business and that is setting those companies up for a longer period of growth and the key here is if you get sustainable Earnings Growth, that would lead to those share Prices Higher as opposed to a pe multiple expansion so you look at amazon as a case study, for Companies Investing a lot of cash, fwoogegoogle, deera number of companies. The second would be those companies, mostly financials, that are returning that cash to the shareholders and dividends and buybacks alphabet and amazon, the growth names, arent you worried that those are crowded and have already made their move higher the forecast is youre looking at 20 Revenue Growth for some of these companies over the next several years 20 per year in a market thats growing maybe 4 to 5 top line revenue. The way to think about that, if nominal gdp is growing, too, round numbers, and inflation is round number hads around 2 , that is basically nominal gdp growth, that is basically the Revenue Growth rate for more companies and these are Companies Growing four to five times faster in terms of Revenue Growth than overall sales. I still wonder though about the destabilizing impact of the rate rise that you potentially foresee next year, which is somewhat dramatic. Were talking about a market that to a certain extent seems to be helped greatly by inflows and ntfs and index funds right if that turns around, there may be a big air pocket there. The val you aation in tuatio take high level. What you have is the Corporate Cash which has been when youve seen pullbacks in different stocks so you think that comes in and makes up for buybacks . Im just saying. That would arguably be a support mechanism for why the market doesnt drop dramatically i think the big risk as we look out here is the debt ceiling and the question of what happens in other basically two months, late september, so thats a concern. Theres certainly evidence of not evidence, but items that would cause some concern but broadly speaking, theres a lot of cash on the sidelines that corporations have and they can return it to shareholders or use it to buy back their stock right or invest in the business, so two different strategies and a lot of investors are looking at these value that youre citing and say ill get worried if the credit markets tell me to worry thats usually your beacon is there any reason to think thats not reliable this time . As long as rates have the expectation of rates staying low but rates as well as corporate spreads and things certainly the market spreads have narrowed quite dramatically do you see any excesses in this market . Well, you can say that rates extremely low rate market would probably be the most obvious i would argue or i would argue that would be an extreme valuations are high on the highest end of the last 40 years in terms of most metrics but the its always clear in hindsight what the excess is looking at balances and imbalance of the economy, it seems like the economy is growing at a healthy pace right now. We always ask you about tax reform and you always say stick with the High Tax Companies versus low tax on the expectations of lower tax. That hasnt worked out continues to be a loser in recent weeks so expectation is our expectation is sometime in the beginning of next year, youll get some form of tax cut, tax reform, mostly more likely a tax cut and that would benefit those companies that have a higher tax rate. I think the bottom line question is, youre looking at whats in the market today versus looking around the corner at whats there likely to be and the idea of a higher rate environment is informing a view from a strategy perspective on why to own financials and why to own some of the companies returning their cash or investing their cash for the teacher. We got it david, always good to check this with you thank you david kostin, chief equity strategist at Goldman Sachs. Moments ago, those jolts numbers, always intriguing approximated lets get to Rick Santelli jolts is one of those names that never lives up to jolt. Its never jolting today, its totally jolting. Today, the number, they rounded to 6. 2 million on hires. Its the highest ever. It didnt update most current read, but theres nothing in the 6s in the last two highest levels have been in the last few reads, 5. 9 million. It actually was up 461,000 so you want to Pay Attention we saw this little bit of selling coming into treasuries theres three other components, but ill go over them quickly. The quits with rate was 2. 1 little change. Separation was 3. 6, little change but the headline number of job openings is truly quite staggering back to you. Okay. Thank you, Rick Santelli lets get to a developing story now on the corporate front. Google has fired the employee who wrote a controversial internal memo about women and technology josh lipton joins us from San Francisco with the latest on these developments josh thats right, david the memo violets googles code of conduct pachai saying to suggest a group of our colleagues have traits that make them less biologically suited to that work is offensive and not okay it is contrary to our basic values and our code of conduct, which expects each googler to do their utmost to create a Workplace Culture that is free of harassment, intimidation, bias and an Unlawful Discrimination google has now fired james demorey, the author of that article. Demorey did not respond to requests from krn for comment. But the engineer is now apparently scloring possible legal remedies his tenpage memo set off a firestorm here in silicone valley and across the nation he argued that innate differences between the genders at least partially explains the lack of women working in tech and some on the right are not happy at all with how google handled this controversy they are coming to his defense saying he was fired for what they call thought crime. Eric winestene took to twitter to express his opinion dear google, he wrote, stop teaching my girl that her path to Financial Freedom lies not in coding, but in complaining to hr thanks in advance, a dad demorey might be out of work, but he has some job offers Julian Assange said wikileaks would offer the engineer a job there. Sara, back to you. Proving controversial, even after that ceo responds, josh. Thank you. Were going to talk a lot more about this in the next hour in squawk alley. When we come back here, timing on the move after reporting earnings and a new Cost Cutting Initiative david speak to times ceo next plus, michael kors and ralph lauren surging on earnings that were weak but better than expected squawk on the street will be right back this is not a cloud. This is a car protected from storms by an Insurance Company that knows the weather down to the square block. This is a diamond tracked on a blockchain protected against fraud, theft and trafficking. This is a financial Transaction Secure from hacks and threats others cant see. This is a patients medical history made secure while Still Available to their doctor at their fingertips. This is an asteroid livestreamed to millions of viewers from 220 miles above earth. This is ai trained by experts in 20 industries. Your industry. Hello. This is not the cloud you know. This is the ibm cloud. Built for your business. Designed for your data. Secure to the core. The ibm cloud is the cloud for enterprise. Yours. Yours. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats up to 16 times faster than slow internet from the phone company. Say hello to faster downloads with internet speeds up to 250 megabits per second. Get fast internet and add phone and tv now for only 34. 90 more per month. Call today. Comcast business. Built for business. Time inc reporting earnings this morning that did miss estimates on revenues. This as the Company Continues to explore the sale of at least three of its titles as part of a larger turn around strategy. Joining me now in his First Television interview since becoming ceo is rich battista. Thank you for joining us happy to have you walk over you outlined some aggressive cost cutting and targets for operating income before depreciation and amortization. Why do you think you can get to the cost savings and how will he get there. A couple things just to level set it, a Transformation Program to improve cost and its a wholistic pra wholistic program. On the cost side, we think about twothirds of these costs are coming from areas of support, procurement, infrastructure, areas where we believe the company can make significant improvements and invest to improve systems and the like so i think were going to see significant savings from that. And then well look across the whole company. There will be a comprehensive program. And then on the revenue side, one of the porchbt things with this, david, is to take a portion of that and reinvest in growth were doing a million of revenue outside of our revenues. This is a big machine and a number that compares favorably when you look at other pure play growth players thats a number were going to invest in for growth and its areas like brand advertising, television, video events, merchandising, places we can take these wonderful brands and move to new platforms. There is a story many peat ya compani media companha been dealing with for some time, out to outrun the digital here, advertising revenues are down 2 but thats not going to right way right now. Right so in q2, we did have one Agency Review client for our business buy in x that, we were nearly double digit growth we also had disruption of the Company Based on speculation of sale thats largely behind us is that over and done with at this point that is time is going to remain an independent company, theres no process, that is 100 done we have great confidence in it as we mentioned today, to your point, were talking about 500 million to 600 million minimum in the next three to four years which is an exciting growth trajectory it is exciting. Some would say its very aggressive what confidence do you have that you can get there . Cost and revenue increases, but it hasnt been moving necessarily in the right direction. Whats the new pick up were the first Management Team in this company that has diverse backgrounds. Historically at time, it was publishing executives. They didnt have the experience that you need to grow these new revenues we think we have a differentiating position in the market because we have incredible scale in terms of audience we broke the top ten in digital audience for the first time in december so, a, were with the likes of google, facebook, apple and the likes. Secondly, we have direct consumer relationships we have over 30 million subscribers. And then another 120 million that reads digitally every day. Month that are direct consumer relationships many Media Companies dont have direct relationships theyve never talked to a customer they dont know who watches their programming. They have no data or insights on them we do and were going to leverage those assets and our incredibly trusted content to build new revenues so youre telling me the previous Management Teams may have said the same thing i can remember hearing it, but they didnt execute on it. We believe this Management Team has the goods to do it. Given me an example of what youre talking about people is an incredibly important franchise for you. Yeah. What would be an example of you aptalizicapitalizing on wha talking about . With people, we now have millions and millions of an audience engaging with people through this snap chat platform. A, so we have scale. Were generating nice ad revenue from it and growing. Its of 15, 16 and 17yearolds. So its a much younger audience engage, our brands secondly, in the area of video, were doing a million video views a month. Were going to do 50,000 short form videos this year. Were seeing strong robust growth there the third one is branded in native content this is a really huge growing area because of our trusted content and our great story telling, were seeing doubling of that revenue over the last year and a half and we see that continue to be probably our biggest growth engine. The last one ill mention, remember i talked about these direct consumer relationships, we announced a product yesterday called pet hero. We have a hundred million in our database who are pet lovers or pet owners and weve identified them its a 60 billion market. So were now creating a paid Membership Program that will offer products and services to that community that, to us,. Youll see other opportunities where we create new paid products and services, thats a really new growth area. This Company Never played in that space right. Finally back to cost cutting, which is where we started, you used to be known for journalism. Not used to. Thats not fair. You still are. Youre right. Thats not fair. I mean, its hard its hard to keep people employed these days, especially undergoing the stresses that you are and focus on cutting 400 million in costs how do you keep up at least some sense of Good Journalism while youre cutting o other first of all, were incredibly proud of our journalism i think it speaks for itself and we can match it up to anybody. Id say a couple of things one of the things thats exciting to people who work for our company is that Cross Platform nature that we have today which is our people who work, as we say in baseball, 52 players now. Theyre going on television. Were going to produce 40 hours of Television Content had this year for the various networks. So theyre doing television. Theyre doing events and experiences. We have some of the biggest live events in the world, actually, at time inc. Theyre helping us on the short form side of video thats very engaging of them because we have the goods, we have the Raw Materials that makes it an exciting place to work as we move into the future. Certainly, we all want to believe thats the case, given the business were all in, as well thats right. I hope youll come over and walk over occasionally and give us updates along the way absolutely. Thanks, rich. Sara. While you guys were talking, the dow will hit another intra day record high. Its being tuld by names like apple and Goldman Sachs. As long as it stays positive, were back if record territory when we come back, jpmorgan is investing in robotics training in chicago we will take you there live for the details on that. At 11 30 a. M. Eastern time, wilfred frost speaks exclusively with jamie dimon take another look at stocks at this had hour. S p 500 fractionally negative. Sd dn . Wel be right back. Theyve changed how we get around. And how we meet. Our phones have evolved, isnt time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Xfinity mobile. Call or go to xfinitymobile. Com. Calvin harris, number one. He is the highest paid were going to hit them all on squawk on the street. Awesome looking forward to it. Meantime, jpmorgan announcing it is investing 500,000 in robotics training in chicago our wilfred frost is there well be speak to jamie dimon here later this morning on squawk alley and joins us with new details of this push morning, wilfred good morning. Lets get to the news, as you said, sara jpmorgan investing 500,000 here in the brazier foundations robotics Technician Training and support program in chicagos southside. Its part of jpmorgans broader 450 million commitment to Skills Development globally and we will be talking to exclusively to jamie dimon in just over an hours time about that and much more and one of the questions will be why a corporation feels the necessity to make that sort of investment, perhaps the answer will be down to washington gridlock dont forget its a topic, jamie dimon spoke passionately about just a few weeks ago on the q2 Earnings Call saying the gridlock this in washington was making it almost an embarrassment to be americans. Maybe hes feeling he has to take actions into his own hands. Well discuss that and much more, including the prospect for tax reform and whether its likely jamie told me last night that Mitch Mcconnell will be joining him on his companys bus tour, which hes in the middle of to talk about the importance and the likelihood of tax reform. Well discuss the possibility of financial deregulation and when its likely to arrive. Also, diversity in the workplace and silicone valley versus wall street on that particular topic. The weaker dollar, markets and the prospect of fed normalization. All of those topics coming up in the exclusive interview in just over an hour appear time guys thanks very much. Lots of live issues and that jamie dimon bus tour we look forward to that conversation in just a bit meanwhile, it is day 200 of the Trump Presidency to mark that day, Brian Sullivan is life in wisconsin two Major Companies are preparing to go plant. Hey, brian and its real people doing real things, not like the robotics in chicago. We are here in wisconsin this is really the county of the state that gave the president the white house. The two factories, numberone, is herabaugh the german gummy bear factory says it is going to open up a facility here within ten years thats real news so theres two questions here about foxconn. Number one, where exactly will it go . A couple of towns keating. Im going to suggest a location because in the middle of kenosha is a giant six or sevenblock long gaping empty hole that is where the chrysler amc factory used to be they stopped making cars there in 1988, stopped making engines there in 2010. And you can see, we drove around it, it is very bleak why not put it there it would be fairley symbolic thats one question. The second question is this, will they have the workers the Unemployment Rate in wisconsin is only 3. 1 the facility where we are right now, they have trouble finding skilled workers. So instead of complaining about it, there are companies that are doing training yesterday we got a chance to sit down with some 20yearolds who are in and just graduated from gateway technological college. They are learning all the skills from modern day manufacturing. And i have to tell you, guys, it was eye opening for us, as well. You sort of have in image of manufacturing. But in america now, its clean youre in an air conditioned building theyre very optimistic about the future theyre optistic theyre going to have jobs the rest of their lives because they work with the robots and the machines not just on their own later on, guys, awesome interview with wilfred and jamie dimon. We have one coming up, scott walker, the governor for wisconsin. Taking a lot of credits for that well talk about jobs and thats coming up on the closing bell at 3 30 p. M. Live should be a good show. The state that gave trump the white house. All right brian on the front lines of the manufacturing economy in this country. Thanks again appreciate your efforts there. We now are going to send it over to sue herrera for an cnbc update here is whats happening at this hour. Secretary of state Rex Tillerson arriving in kuala lumpur, his first to malaysia since his appointment. He traveled there from bangkok where he met with thailands Prime Minister this time around, he will moo with malaysias Prime Minister during this visit. Former secretary of state john kerry is among thousands of observers in kenya for that countrys president ial election today. Speaking at a polling station in nairobi, kerry, b who leads the u. S. Opener mission says the transition from voting to counting is going to be critical were going to watch the whole day unfold and well look at the whole picture well talk with the election officials. Well talk with the other observers. And over the course of the next day and a half, two days, solid judgments can begin to be made back here at home, heavy rains pounding the houston area causing flash flooding throughout that region some areas received as much as 5 inches of rain and the worst may yet be to come more rain is in the forecast throughout sunday. Well keep you posted on that. Thats the news update this hour david, back downtown to you. Okay. Thank you, sue and when we come back here on squawk on the street, michael kors and ralph lauren soaring on earnings that beat expectations were going to dig through those numbers and explain why both those stocks were up 145r7ly sharply the channels you love. Your favorite shows and movies. Making your iphone into more of a. Oh my tv is ringing. Hey. Im in the middle of a. A second iphone from at t . Okay right now when you buy a new iphone 7 from at t youll get a second iphone 7 on us. And power both with unlimited data and live tv. At the lexus golden opportunity tesales event before it ends. Choose from the is turbo, es 350 or nx turbo for 299 a month for 36 months if you lease now. Experience amazing at your lexus dealer. Welcome back to squawk on the street. Lets get over to bob pisani today. Lets take a look at the sector leaders trying to get some movement out of the retail group. Theyre up fractionally today. Market leader, semi. Not doing too much bank stocks poking up modestly in positive territory. We have some strange divergences going on in the last couple of weeks. I had not seen this in a long time take a look, the dow, we keep telling you everyday new highs in the dow, up almost 3 since july 24th. Dow transports are down and the russell 2,000 is down almost 2 . These are strange divergences. Theres a couple of reasons this is happening number one, the largest stocks are big movers in the dow. Its a priceweighted index. Boeing has been almost a third of the points in the dow boeing, Goldman Sachs, banks have moved up, home depot and apple. The others are about 30 or so another factor are a lot of companies, these biggest industrial names get a lot of revenues outside the United States the Global Economy he is doing better mcdonalds gets twothird of its revenue outside the United States boeing, 3m gets 630 , as well. Theres your dollar index. Thats been going down for months on end here another big strange divergence out there is oil versus oil stocks look at this crude oil is up almost 7 the last couple of weeks but the xop, which is the expiration of production, its down about 3 . Whats that all about . Whats happening is everyone is realizing theyre not going to get the big, big earnings boost in the third and Fourth Quarter. So the numbers have been coming down forelady oil stocks third and Fourth Quarter for april 1st, theyre expecting up 220 for the third quarter. This is all the energy stocks. But its been coming down almost a hundred Percentage Points in the last month so or as people have realized theyre not going to make the numbers because oil is going to sit at 45 to 50 and not go towards 60 so two strange divergences we have had otherwise, a bright day in retail here. We had a glimmer of hope here, ralph lauren, pikal kors do better than expected overall so lets call it a glimmer of hope im skeptical about this there have been let me tell less downward revisions recently. Were expecting a 1 earnings going for the whole Retail Sector for the Second Quarter. Department stores, i should note, a shocking number. Earnings expected to be down 76 for the quarter. Well see how that is happening. Theyre going to be reporting later this week. Kohls has been trying kohls had a nice run, up about 5 in the last few weeks they brought back under armour in march i think that will away positive for them but overall, well see how these companies do when they report later in the week. Guys, back to you. Bob, thanks bob mentioned those retailers bouncing today were going to go deeper into that ralph lauren and michael kors are surging on the Earnings Report many wondering perhaps if the worst might be over for retail for more on these earnings and the state of the industry, lets bring in jay niffen. And ike borachow, managing director at wells fargo. Thanks for being here this morning. Ike, just your take on kors and ralph lauren right now obviously, the market is taking this better than expected. Maybe theres stabilization in the business but we also are talking about smaller sales declines than forecast so its still kind of a negative top line story as far as the eye can see. Whats your take on these two in particular and whether they can do more than bounce here in terms of the stocks . No, youre absolutely right theyre both still seeing declines, especially in the u. S. Wholesale channel and the u. S. Market but, again, youve got to call before you walk. Less negative declines, Second Derivative rate of change. Thats kind of what people are looking for. Remember, both Companies Beat on top line, beat on margin, and guided their out quarter above where the street is. You know with, when youve got depressed valuation and sentiment as bad as its ben since the recession, this is a great first step, i think. And everybody is fixated on mall traffic on the challenges of physical stores these are two companies that are about, really, their brands and their franchises more than people walking into a storefront does that mean that theres hope for Companies Like these that dont necessarily have to rely quite as much on the physical traffic . Oh, theres big hope for brands and these are two great brands im still much more favorable toward ralph than i am toward michael kors but big brands are whats going to win with the internet they have opportunities other people dont have. So yes, i think brands are the place to be right now. I think michael kors had a lot of on work to do so i was not pushing them today. I wish i had been. I was pushing ralph lauren because i think theyve done the hard work, most of it already. But yes, i think these brands have to take over the space, they have to win the game in the store, they have to get more at first markdown, more at full price selling and theyre making all the efforts to do that so brands win, Third Party Sellers lose im interested, jan, in what you said about kors kversus coach. This quarter, i saw some interesting similarities here. For instance, average prices for kors handbags and apparel rose 5 if the last quarter obviously, that got off set. But theyre cutting back on the promotion, and theyre making acquisitions like jimmy choo which is also happening. Isnt this the coach turn around play book for kors yes coach did this and they started a long time ago. Kors is still, as i say, going down the hill rather than up the hill coach has come up the other side and theyre coming up the hill so theyre way ahead of them i think ralph is ahead of them, not as far along as coach. Michael kors is yet to come. So at some point, i would have been recommending michael kors im not there now and i wasnt there today. But yes, theyre in the same playbook as the other two. Ike, i know youve been on this team, as well, saying brands are in a better spot than actual retailers, that their party sellers. You also were pointing i think to hanes brands. Is that another one that you see as potentially a haven here or has the market figured that out . Yeah. And ill echo what has been said the brands are mass ofly outperforming the retailers. The amazon and the online boogieman cant hurt the brands the way it hurts the retailers but were bullish on the brands. Were buying hanes brands, vf corp. Last week. Pvh and coach havent reported yet. We would still be buyers of those. But does that mean that youve really just entirely avoid the ri retailers youve had similar bounces off the lows for target, for kohls and things like that, ike . Yeah. Look, i think its more of a battleground to try to find the Third Party Sellers that are going to work. Look, we have buys on the off price sector, but that sector has been under pressure. You look at auto parts, you look at Beauty Retail theyre all you know, the athletic guys and Sporting Good guys, theyre all guilty until proven innocent right now. And right now, i think its just an easier path to being proven right, to go with the brands over the retailers all right maybe a reprieve today anyway for the group. The retail etf up about. 5 . Thanks a lot thank you thank you as we head to a brake here, checking in on shares of twilio, theyre up 8. 5 . Surging as the Cloud Communications Company Reported earnings last night that beat on both the top and bottom lines. Revenue up nearly 50 from the same time last year. Squawk on the street will be right back [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Theextreme risk of burstd a pipes and water damage. Y. Soon, Insurance Companies wont pay for damages. That is, not if they can help prevent damages from happening in the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. With welcome back. Lets get out to the cme group in chicago Rick Santelli has the Santelli Exchange good morning. First time on the Santelli Exchange, ben mandell, global strategist, thanks for time the time, ben. Thanks. You know, its all about the balance from an investor standpoint of how much risk they are willing to assume for how much reward. If you had to summarize the risk horizon now with global investing, how would you summarize it you know, id say id want to take a step back and talk about reflation as a market narrative. Reinflation is about one year old right now. It was last summer if youll recall when Global Growth started to pick up, some of the tail risks started to fade and after that equities and credit and other risk assets had a good ride. So i guess what i would argue is that reflation may well with be only in its adolescence at this point. You had a Good Business cycle and in terms of expectation probably another couple of years. You know, Global Growth has been surprising on the upside what we did in the first half of the year, inflation which, you know, is moving in the right direction has been doing so extremely slowly and Central Banks are sensitive to that fact and theyre not in any rush so reflation as a market theme talking about the risk reward has some room to run here. Were expressing that an an overweight equities globally you know, its hard to argue with that, ben, and i pretty much agree with everything you said with regard to it seems as though theres some runway left. My next question is when i look at the landscape, i guess i see things, for example, tesla is going to be bringing an eightyear junk deal, i believe its going to be about 1. 5 billion. Its going to have yields a little bit over 5 they are six notches below ford, i believe d minus by s p do you think that that is a good value . Are we at the point now where six notches below ford is something that people should invest in . You know, the key for in terms of Asset Allocation is to take that information and try to map it into is this a source of vulnerability for the economy, for Financial Markets. And i think, you know, thats something we take very seriously. When we look at the evolution of the cycle, we see labor markets that are tight, we see private credit, particularly for firms so, with you know, debt to ebidta ratios have been extra elevated so the question is, is that a significant source of vulnerability . Id say there is a you know, the sanguin way to look at it would be to say Interest Rates are low and theyre going to drift up very slowly profits are recovering so theres Something Like debt to ebitda is not on its face in the economy would suggest. But i think thats something you have underlying factors would indicate all right and my final question, maybe the most difficult to answer having said all of that, a lot of assumptions and youve written about this we have policy convergence meaning, all these central bank thats have done a lot to help the scenario you just painted, most likely theyre going to be moving together to remove it what if thats not the case . What if central bankers find that right when theyre about to do something that is considered removing stimulus, the markets dont like it. Will they retrench in other words, are we overestimating that central bankers will have the fortitude to lean off some of the rich run that we have going through the economic carburetor . Your final thought yeah, rick, you dont have to take my word for it. Look at the dollar the dollar is down 9 year to date on the index. And that is a referendum but isnt that mostly euro story . Believe me, if our fed is reluctant to be aggressive on removing stimulus, then mario dr draghi is 50 mile behind that. Its not just the ecb, its the fed, its the ecb, bank of can dash canada all are moving in the same direction. So my point is its just hard to tell the difference in an environment like that relative to 201415 when you saw the moving in starkly opposite directions ben, thank you very much. Its always interesting to talk to somebody that looks at the globe as one david faber, back to you okay. Thank you very much, Rick Santelli now time to send it over to jon fortt, find out all the exciting things coming up on squawk alley. Maybe a couple exciting things google employee who said its not safe to express conservative points of view, hes been fire after expressing a conservative point of view z this have implications for the company and investors . Quk lemie dimon coming up on sawaly. Financial services right. But if thats not enough, we have 7500 allys looking out for one thing, you. Call in the next ten minutes to save on. And if thats not enough, well look after your every dollar. Put down the phone. And if thats not enough, well look after your every cent. Grab your wallet. Access denied. And if thats still not enough to help you save. Ooo i need these well just bring out the snowplow. You dont need those well do anything, seriously anything, to help our customers. Thanks. Ally. Do it right. We have moran what we can expect after the bell and, of course, the key interview as well julia . Thanks, david thats right, how disney changes the landscape and core cutting will loom large as disney faces tough comparisons to the year ago quarter. Analysts project 1 Revenue Growth to 14. 4 billion and analysts think earnings will decline 4 to 1. 55 per share. Espn and disneys Media Networks will be in focus it was two years ago that bob eger raised red flags about cord cutting. Disney shares are down 10 since then despite the fact that a number of digital and skinny bundle thats launched including espn and he announced that espn will launch the first direct to Consumer Service later this year investors are looking more insight into that product in light of cbs announcing theyre working on a digital sports service. Were also listening for the impact of the skinny and digital bunld lz and whether theyre compensating for tv declines resorts are expected to show top line growth. Avatar land launched in may. They warn that the higher spending on parks initiatives will weigh on results. Now overall, ceo bob eger warned this would be a Slower Growth year before strong growth resumes in the last quarter of this calendar year that is when the star wars, the last jedi, opens well see what update eger gives on that outlook ill be sitting down with iger right before the numbers close. Back over to you looking forward it to, julia. Thank you. Coming up that, interview with jamie dimon. Plus at noon eastern time, an interview jeffrey gunlach. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Youre searching for something. Whoooo. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if. There was a single site. Where you could find the. Right hotel for you at the best price . There is. Because tripadvisor now compares. Prices from over 200 booking. Sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Welcome back to squawk on the street. Markets turning a bit higher s p 500 materials sector down. 5 construction and steel stocks weighing the most on the sector. All among the laggers, down 1 or so. The biggest decliner, albemarle. Yesterday the lidthium supplier hit all time high. Now let geese to squawk alley. Thank you, dom. Good morning, its 8 00 a. M. At google or alphabet headquarters in mountainview. Once again, 11 00 a. M. On wall street squawk alley is live