Transcripts For CNBC Squawk On The Street 20170823

To get a border wall built walmart and google team up and the latest move for the battle for your money and shares fall in the premarket stocks are on track to open lower the nasdaq avoids a loss for what would have been the first of the year. How much weight did you put into the president s comments in phoenix. Will frost said it best this morning when he was talking on Worldwide Exchange saying that its we discount his rhetoric a little more. He feels that by, i say, later on in the day we will sense that there is a bit of hyperbole to him but were trading off of speeches now and the speech the night before sounded like what we want from a president last nights speech was a little over the top i watched it and i said wow, you know, the election must be imminent theres like a real election coming. Its 3. 5 years away he did say if we have to close down our government were building that wall went on to talk about nafta. We will negotiate nafta or terminate. This is last night in phoenix we have to close down our government, were building that wall. That coincides with the report from the times last night that theres a new cold war between the president and mcconnell. Again would be inhibitors to an agenda this fall. Think about what happened the other day. We have mcconnell say on monday this is your chance to debt ceiling. You talked about the idea that the democrats might fight that then this speech the p gives about afghanistan and then we have a wall speech and this is, is he putting the wall now s that going to be in front of tax reform i come back and say get on message man. He loves this. He knows this is really where his heart is and its tough because if he had gone there and talked about tax reform then he might have bored people to death. He doesnt want to bore anybody. The journal one last point on policy the journal today says that tax reform at least for business is going to be a priority tv campaigns run by the business council. They say companies are inviting lawmakers to their facilities encouraging workers to call your Congress People and push through at least corporate con grez has a different schedule than we realize. The president is off message every other day. Hes off message. At least in his first markets where priorities are concerned. I thought his speech was distracting. It was weird guys holding up signs and this and that and people riding behind him and cnn. Its just different. Those of us in the media think that. I hope im not part of, we take it too personally obviously but it was jarring it was jarring just as the last, the afghanistan was not jarring. So i mean, not that the future is down because europe is down 2. After a big day yesterday. Yes. But theres enough that could have been positive and if the president wants to start causing the market to go down which is what i thought that speech did then i think he is going to own the stock market many away he has to stay in the white house. I dont know i dont know what he should do workout . I dont know. Well, were going to balance that with all corporate stuff we have today lowes is down after a quarterly miss on earnings and revenue comps did increase they said Profit Margins would be lower than previously expected prior they were look at up 120 basis points now 80 to 100. Remember home depot spent a fortune with sales force. Com but the one thing i would say if youre looking at how badly home depot did after a remarkably good quarter and its done poorly then you might question that lowes is only down three might not want to take a stab at it. It needs to retrace what home depot did. Lowes was not good home depot was great how can lowes not get clobbered. Were going to talk im sure about walmart but we have some clear winners this quarter and i thought home depot should have been a clear winner but the stock wasnt the company was. When they say its dispi disappointing. Im not going to say that wasnt disappointing. Im going to say wow that was really disappointing the interview was walk back a lot of negatives its in a very subtle fashion but lowes has to say look this was each month is bad. Thats what they should say. Each month was better. Im tired of lowes not performing as well as home depot. Lowes is the bridesmaid but the price action. Lowes takes it personal. I went to a lowes and they said which one. I went to a lowes that had a much longer line than home depot. Theres more to it than that but you get on twitter and i had bad experiences at lowes and theyre like okay. You probably did. Jim mentions walmart and walmart is jumping into the voice shopping market. I think walmart is right to do that blake has said you have to have an answer to the dark star that is amazons alexa. They have more work to do on voice. Voice is everything i still thought the stock has not come back enough. Theres a lot of shorts in amazon i like amazon longterm but they google voice is not as good as i think people think. They say that amazon accounts for 45 scents of every dollar online, 45, where as walmart is steady at 2. So theres some low hanging fruit i guess if walmart puts their mind to it. I think that jet. Com, i notice look at the way he talked about jet. Com as being part of the family i think they can do something but thats unbelievable last night when i was talking i said look Amazon Web Services say juggernaut and it is everyone is scared of Amazon Web Services people say look its coming up. And they are. You see snap going up and google is doing well in data centers but whenever you really talk to people off line they say we have not been able to crack the amazon code. When alexa first came out with you can order stuff we made fun of it, right alexa is really smart when people use the term Machine Learning what that is is its each time it gets smarter and smarter and what i dont want it to do is say alexa what music should i listen to . You know me better than myself then its going to do it thats where were going Artificial Intelligence. He talked about the idea of clothes and watches with Artificial Intelligence. Alexa is a little too close to home. Im scared of her. She is a little intimidating. She is. What is she really listening to. Not that i had anything to say i ordered the tickets to go to the Fishing Contest july 26th and 7th down in louisiana and i was thinking i should just say alexa could you set this trip up for me that is whats going to happen. Shell know where you want to stay, how you want to get around town. Yes she will. Thats where were going and thats going to be exciting because hi to go to 50 different websites but whats going to happen is youre going to give her a project and she is going to book you. And youre going to say im going to do this because it takes me three hours to book tickets for that i love a Fishing Contest but she would know far better how to do it than i do he talked about everything from battling oracle to margins to ceo relationships with the white house. Later on the head of go daddy on why hes retiring after five years on the job as we said earlier, dow coming off the best day since april goes green for august although the dollar taking a hit here s p could get its first three day gain since july. Back in a minute bell rings screeching tires bell rings sales force down in the premarket despite better than expected Quarterly Results last fight on mad money he talked to jim about the Growth Prospects and arch rival oracle. You could see we just pounded oracle in the quarter and you can see it in the market share numbers. Sales force is considerably larger and the spread continues to go and you can also see it in the top line Growth Numbers 13 growth for the year. We raised it for the Second Quarter in a row people said wait a second they didnt guide up the gross r margins they did improve last year they were in a little bit of disarray. It was not that good of a quarter. This quarter was great i think that the stock going down is going to make peel feel it wasnt great. Thats wrong theres a long standing group. Ellison did say that theyre doing much better than sales force. These guys from what i can tell like each other so its more that sure doesnt sound like when theyre on. I thought it was an amazing quarter. Government spending sets big dont forget this is a guy that had big contracts that he wasnt allowed to mention the nails he wasnt allowed to mention it so he he had to hold back because there were clients that wouldnt let him use the names but they were huge he did have a huge deal from airbus. Interesting the top line guy. Yeah. Some wonder, does it raise the operating margin guide. Its incredible how few retailers are doing it i feel this is another break out quarter for a guy last year at this time, the company did not have great dont forget youre going into dream force and dream force has historically been something that you want to own the stock into its a little later in november but i think that he was the most ecstatic i have seen in all the ten years he has been coming on the show so look can the stock come to any stock can go down and its a down day for a hot of stocks that are high growth but this was a remarkable quarter and great conference call. It was a really well produced show. When he watches the home when he gets home with his wife and shows me a picture of him watching the show its like a mirror he asked what should we do i said focus on apprenticeship we need to make sure that we do more job retaining thats why were looking to have a 5 million apprenticeship dream and for the ceos that say should i resign . Should i stay . Should gi go i dont know what to tell them because i didnt join the councils because i learned a long time ago the best thing i can do is give my best advice and the best way is not to be incouple bermui incumbered with any job and any administration and he said symbols of hatred including nazi flags. They were quick to congratulate him for the come mens. It is his company. He has created a great deal of wealth hes a very charitable man somehow i dont think thats nearly as controversial as people might think. As we said American Business moved fast. Chuck robbins helped us there when he said i thought these issues were done and im sure people think what an inappropriate place but the analyst didnt i was surprised. Take one more look here at the premarket. More squawk on the street after the break. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. Ultimately at they had an unblemished record theyre going to have to update when they report and theyre saying that its a weaker backdrop now you could say well wait a second, no kidding, maybe thats been factored in at the same time we have seen price competition in this area largely from the Department Stores that have tried to get back into this game a lot of stuff is in this chart obviously people hate it only estee lauder has been the winner here. Even elf which is eyes lips face just okay so one winner lots of losers. Is it the same dynamic thats taken the high end out of nigh he key shooegs a victim of incredible success those are the two company with the best loyalty and at a certain point you have to get back in because its a great company. One of your favorites for a long time. Absolutely. Were going to get to the opening bell in a few minutes. Dont go away. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. A pat on the back to himself. These pmi numbers are so hot. I continue, if you listen to last night to them when you listen to what he said if you look at that games in europe and you look at the pmi you have to say theres no hotter area in the world now than germany and yet those rates stay that low, its just insane but the discourse among the president is that europe is not the enemy. I think that mexico, europe, south korea, china, all together had just gotten the best of us. More so than europe. Those others. Europe is just keeping rates down if ban nonhad been there yesterday it would have been a much calmer speech. Most believe the ghost of bannon was all over that place. He was a calming influence in retrospect although its been a quite week in some respects might get a little more interesting in the back half. Yes it sure will. Lets get the opening bell at the bottom of your screen. Down here at the big board today its pier in Natural Resources celebrating its 20th anniversary. Foe cousin on Early Childhood education in his native serbia. Fantastic oi think that he will tell a more compelling story and do a do over. He saw it coming. One of the few people that did and like i said, no one believes that europe is strong but europe has very strong brand, very strong cars and an incredible love for Tommy Hilfiger and calvin cline im not their target market. No, we know who that is its not that all that impressive to start. I said last night was this rally any more meaningful than the decline the other day. Its like nothing good happened. When europe is down we followed through instantly. Europe is down some of the countries were down b badly we think it doesnt take its cue from europe but we carrie the book over from europe almost every day an then the mark gets a little bit better as we forget about it but rate versus to go higher and thats why youre so right about fireworks at the end of the week because if ratds dont go higher were going to repeal that little bank rally we had its pretty good. Ten year at 2. 18 and change. Theres a couple of homes that didnt sell this is very typical i thought it was all systems go. No peak housing. Housing typically say million homes and and a lot of the developments are doing quite well so i say we are too negative that was a good quarter. Yeah. In terms of the losers a lot of it is advertising. But also some chips, some retail and transports, jim. The journal does a front page piece on operational struggles if i were someone shipping maybe have to be careful but csx has certain month nop lis on areas you cant just say you know what im going to use Norfolk Southern and its going to get there. It doesnt work like that. Maybe he didnt like the way the stock ran but he liked the way the trains ran how much time is lost by trains that they dont know are on citings. Yes. It does seem they have problems. Yes. Lows is one of your biggest losers today in danger of taking out its lows from literally july not too far away. It is amazing any time you see a big box retailer go down you then see a common increase in walmart stock. And there we are walmart, look i think people like the google thing but can we just understand that walmart stock after that socalled disappointing quarter is almost back to where it was when they reported that stock has staying power people are underestimating it because he underestimates himself. Frankly it was unbecoming. Will you just come on. David were here hed give you a hard time about that especially if it ends up happening. Go slip a note to doug saying jim has time. American eagle is one of the big winners today. 19 cents, beat 16. They do see comps. Flat to low single digits. Im looking at a nice gain. Every day someone asks me that every day i have to say because i was wrong. This was this is a company that is, its so, its doing everything right like amazon but theres just a lot more people in china so they had a bigger market they were in the Shopping Mall in china this quarter. By the way, they have a lot of brands tom ford is loved in china make up is loved in china. Yes, yes. Brands, make up. I never know the distance my wife will say, jim, this make up is so much better than this its other and i always say theres a woman up stairs that spray paints me every day and i never thought this was an issue. Telling employees to brace for more headlines after that and theyre expanded review. The waiting game begins. Is there going to be a picture of wells fargo and the bank . They have got to get this under control. And end this thing if this is adobe or anybody that they can continue to say were not at the bottom of this thing. At the end of the day its just bank accounts. How many days can you come in and say its bad again this is just a headline. The new samsung is out and you dont need a water bottle and extinguisher it seems like its all systems go i was thinking we havent sprayed the dog and i was thinking are they going to have that come with it. Its an external water bottle. Always keep that in hand. It was 51 at the open. Everyone was surprised up over 100 points for now the volume is not nearly as great. Its a slight image yesterday. Let me show you the s p futures overnight. Some credit could be given the president here for the markets right now. The dollar lost ground and the stocks did move down a little bit after trump warned of a Government Shutdown if he didnt get to build the walls meantime, yesterday what were the Leadership Groups . Semiconductors, banks, bio tech what are the laggers today semi conductors, banks and bio tech that might have something to do with that Google Walmart announcement they had a 28 boost in ecommerce about 28 of the sales are online now theyre down 40 for the year. Remember that. American eagle they had sales trends improvement but theyre down 20 consumers able to place orders for instore pick up. Thats a nice move there they had jet theyre really trying to innovate over atwal mart you have to hand it to them. The one thing i would point out is the disparities that exist between the retailers. Let me keep it to market capitalization theres a small group of a half a dozen in the retail space now lead by amazon which has almost a 5 500 billion market cap. Walmart vieis right behind tm then you have price line and netflix and costco but these are the biggest ones out there most are occupying it but there is a vast universe of companies that are way below 5 billion. American eagle theyre below 2 billion. Barnes noble which is amazons these are micocap stocks not small caps micocap and i want to point out the ultimate irony here. Its a 500 million market cap 1,000 times greater. Macys only has a 6 billion market cap thats also essentially a company. Strange world. Dow is down 75 points carl. Bob, thank you very much. What a statistic oil prices were watching as well inventories on our way at 10 30 eastern time good morning. Good morning to you thats right oil prices are slightly lower ahead of that inventory report last night the api came in with a 3. 6 million barrel draw in crude. And then a 1. 4 million barrel build in gasoline. U. S. Production at 9. 5 Million Barrels a day last week. Thats 100,000 under the peak of 9. 6 which we saw in june of 2015 this is hard evidence that the u. S. Took advantage of the opec cuts to pump more. Actually 550,000 barrels a day more to be exact since january when opec announced it was curving its output. Well be back with with those numbers very likely to drive the marks today. Well see you then. When we come back right now, sir Martin Sorrell lowering guidance and thats weighing on shares of the advertising giant. Take a look at the movement in treasuries this morning. Ten year right below 219 were back in a minute were going to talk with him in the next hour what do you think is behind this. I talk to a lot of companies. Theres issues with google this is not the read im getting from any of the major outlets so i was surprised. The instinct is to read some sort of Macro Economic trend but theres such migration of dollars. Clorox is the best and clorox is putting 45 of the money online and youre not going to see. Theyre just giving it to the companies. This is something that by the way nelson peltz has been saying that the way proctor made that quarter was to cut back on something that might be valuable in terms of marketing that is what you cut back. He said okay listen were going to advertise and advertise in the right places look at that stock so i dont know it was a conundrum i heard it earlier this morning and i said i dont have enough outlets saying that. Facebook certainly not google certainly not twitter maybe. Twitter you believe in him which is yes they are indeed cousins. This stock gave you about 35 seconds to buy and thats what i mean about watch trading people are finding something wrong with that quarter. I found so much, government spending, european spending, retail spending, 10 billion 15 billion in deferred revenue Fastest Growing enterprise and they were selling it because of some number that was just not conventi consequential so he delivered and thats why the stock is up its so crucial to the market but look out i just saw there were north texas none were none in that quarr. D is down 75. Taking a chunk out of the rally. Well get stuck trading with jim in just a moment experience unparalleled luxury at the lexus golden opportunity sales 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. Livestreat the airport. E sport binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv on every screen is awesome. The Xfinity Stream app. All your tv at home. The most on demand your entire dvr. Top networks. And live sports on the go. Included with xfinity tv. Xfinity, the future of awesome. The second u. S. Curtis upholds the conviction at least one did receive it providing confidential information lets get to cramer and stop trading. One of my favorite analysts is at Morgan Stanley and she comes out with a note just now that says well it was early morning, ibm, gross profit recovery stock out performs. She does not make up things to say so i think people that are shorting ibm take a look at her stuff she has been spot on on apple too. Becky is going to have buffet next week. I know. Now thats unfortunate because he has been on the other side of the trade. She talks about it i talk about her like she is my buddy i never met her. I like her stuff. So tonight, a do over for pioneer after that really bad quarter. Really pbh is going to give you back to school and holiday spend. I did not read them i spilled salad dressing on. See you tonight as we return the head of wpp sir Martin Sorrell dow off the lows down 50 good wednesday morning welcome back post 9 of the New York Stock Exchange david is off today markets losing a little bit of the ground it got since yesterday. Down about 60 points watching earnings and then well get Oil Inventories in half an hour. Our road map starts with President Trump shuttenithreate Government Shutdown. Making a prediction about terminating nasa. Walmart and google teaming up to take on amazon. Well tell you how and why plus sticking with retail. A rough road for lows. Stocks being hammered after earnings disappoint. Getting Economic Data across with the tape. Lets get to diana with those numbers. Sales of newly built homes tank 9. 4 in july. Down 9. 4 to 571,000 seasonally adjusted annualized units. Thats a big miss. The streets are looking for 610,000. Junes numbers were revised up. Still a big drop at 9. 4 im always watching prices the median price was 313,700. Thats up 6. 3 year over year and thats a big gain. We were starting to see the new home prices come down as builders try to target those buyers but didnt happen in july selling is what is on the higher end. Thats what builders are building and those are the people that can afford it right now. These are signed contracts in july not closing. So these are people out shopping for homes in july. We did see a jump in the supply of newly built homes from 5. 8 month supply to 5. 4 month supply youre seeing surveillance lie go up and sales go down. Not a great trend. We did see the Interest Rate on jumbo loans drop significantly to 3. 99 so that could be a help for some buyers but again didnt help in july down 9. 4 for the month. Back to you guys. Ugly miss there on the headline number. Thank you. President trump make some interesting statements last night at his rally in phoenix involving a possible Government Shutdown and the future of nafta. Aman joins us with more. Investors are left questioning how seriously to take these comments. Thats absolutely right a change in tone for the president. A fiery rally in phoenix arizona. The president very critical of the press calling them dishonest. Defensive about his remarks in the wake of the racist violence in charlottesville, virginia and attacking without naming the states two republican senators. The president also had a pessimistic view on the renegotiation of nafta heres what he said on that. And you know that one of the worst deals that anybody in history has ever entered into, we have begun formal renegotiation with mexico and canada on nafta. Personally i dont think we can make a deal. Because we have been so badly taken advantage of they have made such great deals, both of the countries but in particular mexico that i dont think that we can make a deal so i think well end up probably terminating nafta at some point. The president also raised the idea of a Government Shutdown next month in the wake of failure to find funding for building his wall along the border with mexico heres what he said on that one. Build that wall and end of the month in september both of those in theory could involve fights over funding. And where republicans end up on that calls a debt ceiling deal with markets. Also tweeting and the Senate Filibuster if Republican Senate doesnt get rid of a filibuster rule and go to a simple majority they are just wasting time so this is a president that is very frustrated lashing out at a number of different audiences including republicans up on capitol hill saying that they have to get rid of the filibuster which implies that most controversial legislation needs a 60 vote threshold to pass back over to you. Thank you a lot to unpack there in washington for more on how its impacting the markets, ubs director of floor operations joins us here at post 9. Good morning. Good morning. How much cedo you put into these comments its the nafta thing that possibly hurts the most. Its an important trade relationship with mexico and canada and it looks like were going to have some difficulty keeping that intact. The other thing that the market is concerned about is hes back tweeting about youve got to make this move and that move youll recall that yesterdays rally was about rumors and press releases out that the republicans had a skeleton tax proposal that we might get a repr repatriation deal and that would move into the physical restructuring deal and heres the president saying were not getting along as well as anybody thought and the market is readjusting for that. You mention the nafta comments its a huge deal were talking about a quarter of the Global Economy between the u. S. Mexico and canada trade why is it that the market seemingly more worried about that were looking at a third of a percentage decline for some of the major averages right now if he does with draw from nafta, wouldnt that disrupt industries from autos to farming and do you think that investors are taking that seriously not fully to heart. I think the idea that. He is not in the room negotiating. He will have to put all of this stuff together when it comes out and okay it so for now, they see it as the possibility that negotiations will lengthen and become more difficult. So i agree with you. They fully bought into no more nafta. Do you say maybe the market corrected below the surface or are we still kicking around this range . No, some what disappointed. As good as yesterdays rally looked it was a retracement rally. Does that all change tomorrow and into friday in jackson hole . Jackson hole can change several things i think hes realizes hes temporarily caught between a rock and a hard place. He has the german election coming up. He doesnt want to do anything. Its always something though. It is and unfortunately things in italy are starting to look a little tense again. A lot will depend at 10 00 a. M. On friday when yellen takes the stand. The europe keeps shooting high wrer. Its above 118 do you see that as a strong European Growth story . Did get good manufacturing numbers out over there or the trump trade the idea that nothing is going to get done in the u. S. Its partly the story of things going very well in europe they were showing aside from italy as i just said certainly germany is going full blast. So i think we will get a couple of surprises in jackson hole they may not come from anybody sitting in power may come from an academic or two. Those papers are always good. Yes. Must read for the weekend art, thank you. When we come back, walmart and google teaming up. Well tell you who its against and why. Plus another report of retail lowes getting hammered. Later on wpp reporting earnings. They cut their growth forecast what is going on in advertising . Well talk to sir Martin Sorrell when squawk on the street continues. Dow down 78. Highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. Hey dad, come meet the new guy. The new guy . What new guy . I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. Hey youve gotta see this. What do ycno. N. Nk . Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. This time partnering with google to do it. So in september shoppers will be able to order hundreds of thousands of items from walmart and just using voice commands. The best use cases are for reordering since it will have your complete order history by linking your walmart account thats going to be key next year more functions will be added like grocery ordering orpiking up your voice order in a store for a pick up discount but that will be available right away i asked what walmarts Business Opportunity is with Artificial Intelligence ordering and he said he wont see a massive percentage of volume flowing through right away but quote one day as the experience improves and as Artificial Intelligence continues to get better i do see this as being a primary way for consumers to shop under certain conditions under certain use cases. Now walmart joins a growing list of around 40 retailers already partnering with Google Express since february shoppers have been able to buy from costco, target, whole foods, using google home. Walmart is the first however to link accounts for past purchasing history now Google Expressed general manager Brian Elliott tells me theres nothing exclusive about the walmart partnership. Google is open to any partner that makes shopping easier even potentially amazon when i asked him, carl. As youre speaking, whole foods shareholders have voted in approval of that amazon deal so well keep that in mind. Thank you for that sticking with retail lowes reporting this morning they missed on the top and the bottom line. Comps were slightly better than expected up 45 but the Home Improvement retailer gave a full year earnings forecast that was belowestmenteds. The stock down almost 6 walmart moved here to enable voice ordering and linking the history is important the idea is if we can get the home depots and costcos to enable that same feature you start to develop an alternative platform to amazon as you know amazon is not always the lowest price but that plus the ease of ordering through alexa creates such a moat around that business. We need to create an alternate site where the rest of retail can go and create Critical Mass from a customers perspective. Google is willing to be the carrier for that fight. I think so. Courtmy talked about, theyre linking up with them in terms of a Third Party Delivery agent to get that from the store that last mile to your home or apartment so its really important and honestly like, the enemy of my enemy is my best friend and maybe thats a little bit of whats going on with google versus amazon. Yeah. Thats how the New York Times put it today too im a little unclear about what exactly it means for walmart because as i understand it Google Express has plen tip ty retailers that supply the merchandise that you buy whats the edge for walmart . How big of an impact is it for them. The ease of ordering via voice in your home the internet of things in a connected home is not only growing, best buy is a Major Initiative to put alexa in your hand and put the google device into your household. You become less price sensitive. So order coffee youre not necessarily going online and comparing the prices obviously were going to check prices on tvs but for your every day items it inhibits or mitigates the price discovery mechanism of the internet and it just creates ease and repetitive orders and loyalty to whatever platform that youre on. Chris, the market seems to have a hard time trying to figure out if any of the traditional players are going to be winners its almost like all the chain retailers have been placed in the almost uninvestable bucket right now. Even the Home Improvement guys had a rough three months so how do you try to pick and choose among the stocks in the sectors for some of the survivors perhaps. At the end of the day you end up with three buckets of retail. Its the sort of structurally margin impaired or uninvestable as you talked about it and the third bucket is longterm survivors and Retail Businesses generate great cash so that third bucket is a best buy thats doing very well and survived amazons on slot. You could argue walmart growth is in that bucket too. Im not sure if they end up growing earnings over the longterm but theyre a longterm survivor the market is trying to grapple with how to value these three buckets and theyre going to trade at 21 times. And home depot stands out in that regard. More next time. Thank you again. Thank you have a great day hey carl and yes whole foods shareholders have just voted to aapprove amazons proposal to take over the company for nearly 14 billion that happened where from where we are now. Theyre likely wrapping up the meeting now. The next step is government regulatory approval. Amazon said they expect to close this deal by the end of the year however a source familiar tell mess that it could happen sooner rather than later. Some lawmakers highlighted con serns a conconcerns. Well be talking about this throughout the day and well try to talk to shareholders too. Back to you. Thank you very much and when we come back, well take a look at the markets here in a second. Taxes on the budget in focus, well speak with a former assistant secretary of the treasury for tax policy thats coming up next squawk on the street will be back dow down 56 points was down 90 earlier. I know when i hand them the keys to their first car its gonna be scary. But i also know that were gonna have usaa insurance for both my boys. Its something that theyre not even gonna have to think of. Its just gonna be in the family. Were the tenneys and were usaa members for life. Is former assistant treasury secretary for tax policy and the Senior Analyst at the center for federal tax policy at the Tax Foundation welcome gentlemen, how kpielted should investors be about tax reform yesterday it looked like a top priority after last nights rally. The president veered off message. Investors should continue to be cautious about tax reform its passing a tax bill has certainly been a priority of the administration but ultimately its congress that passes a bill not the white house. And there are still a lot of issues and disagreements that need to be resolved by congress before they can come anywhere close to passing a bill. What do you think is the Biggest Issue . Do you think its so we could see tax cuts without offsets and increasing it . Tax reform itself is hard it needs to be maid whether youre broadening the tax base or taking away tax benefits that taxpayers have become accustomed to so its hard to do and to get it done right but its politically even harder because the taxpayers that think theyre being disadvantaged tend to be sure of that and very vocal and taxpayers on the other side may think its down a little bit theyre a little less sure and much less vocal. They involve the house and senate its going to be difficult for the republican majority to thread that needle do you think thats going to be the group to watch theres a lot of different groups to watch. They could be industry lines or demographic lines. You saw retailers unhappy at that and you almost immediately saw the senators being opposed to it. It has the last geographic issue. Theres a report out yesterday that some republican lawmakers are considering basically treating the current policy baseline as the basis for any tax provisions coming forward so in other words it would be a way to allow for more tax cuts to happen without necessary offsets maybe up to a half a trillion dollars over the ten year period. Is this something that first of all seems likely to you and does it tell you that maybe the republicans are heading more toward some kind of a tax cut as opposed to a comprehensive reform package. Well the republicans have been talking about using a current policy baseline for over a year it was mentioned in a document written by speaker ryan a year ago so this is an idea that they have been discussing and an idea that could make it into a budget resolution it would enable a bill to lower federal revenue lower than current law although as current policy terminology indicates not maybe lower than current policy. It could enable essentially a small tax cut to take place. Overall this baseline wont solve all of lawmakers problems though theres still a lot of difficult choices. Whatever baseline lawmakers choose to use. Finally mark. Big piece in the journal and theyre asking employees to call their Congress People and inviting lawmakers to their facilities how efficient is that if congresss overall bandwidth is being challenged thats a question congress has to deal with a debt limit increase and funding the federal government in the month of september but then they can turn their attention to tax reform part of what theyre trying to do is create some momentum for tax reform and that would help move it along. It would help take some difficult growth and if you look back in history in 1986 with the tax reform act, she urged americans to write about tax reform and obviously very few people write letters today so this could be the 2017 version of getting it. Last word to you scott, the president flat out threatened a Government Shutdown. What happens to the odds of tax reform. Whether its a policy distraction or distraction in the news every single one of those meets tax reform more difficult. Every pending Government Shutdown takes away legislative resources that could have been used for writing a tax bill and devotes them to other purposes the story so far has been distraction after distraction from policy and that very well could continue into the fall. Well see what happens. Gentlemen, thank you for talking taxes with us this morning mark major and Scott Greenburg and with that lets send it out to sue herrera back at headquaters for a news update. Good morning, everyone. Heres whats happening at this hour missiles hit a small hotel near the capital and killed dozens of people no word on why that particular hotel was targeted also delivering the message that washington d. C. Will not tolerate russias annexation of ukraine. The navy confirming the commander of 27th fleet is dismissed due to a loss of confidence in his ability to command. That comes following two fatal warship collisions in the pacific. The latest happening two days ago when a u. S. Destroyer collided with a tanker off singapore. And doctors in new york report seeing dozens of patients that regret looking at the sun during mondays eclipse despite all the warnings we got a draw down in inventories of 3. 3 Million Barrels. A draw down in gasoline of 1. 2 Million Barrels. These were in line with expectations inside that production, inside that report the u. S. Production number coming in at 9. 528 Million Barrels a day. And the u. S. Producers are making up for some of that. When we return the ceo of wpp is with us well talk earnings, guidance, whats happening in advertising in the white house ua ois down 63 points. Sqwkn the street continues in a moment. Whats happening in the add market. What were seeing if you look at it geographically the u. K. Did well and finally the u. S. Was weaker which we have seen across the industry and other agencies too in their reports for the first half year. From a functional point of view Public Relations were the strongest sector but one of the smallest sectors in our group. Advertising and media were the same in q1 and q2. A little bit of growth but challenged health care and digital was stronger and the weakest part of the business was data business if you ask me what i think is happening i think there are three forces at work here. First is digital disruption. Particularly in Package Goods companies which put them under shortterm pressure and then the third force here is those using low cost of capital money, cheap money starting to acquire companies and take positions in companies putting under shortterm pressure and if you look at the s p 500 they would be retaining to share, returning to shareholders more and most in 5 or 6 of the last 8 quarters. Were seeing shortterm pressure and cost cutting mainly in asia and latin america and i think thats the warning bell and maybe what we will see in the second half is consumer package Good Companies in particular starting to spend more on innovation and in branding because once volumes start to come off thats the danger signal could you expand on that a little bit as someone that follows these Consumer Product companies . P g is dealing with a proxy battle right now to get one of its top shareholders not to join the board. Unilever had to get that take over bid from kraft heinz . Is that what youre talking about . And thats influencing their ad budgets because of the pressure . Yes, if you look at the s p 500, technology and the hmos if you look at the valuations of the companies, its in our presentation today if you look at tech, the compound rate of top line growth over the last three quarters has been about 8 and they are valued at 22 times earnings when volumes slide thats where the issues are package Good Companies may be their response to activists or zero based budgeting or one time cost cuts and they start from a lower base but i think they are going to have to invest more in innovation and branding. You mentioned that when you say digital disruption is more opportunity than threat for your business, is that the promise of digital platforms for an advertiser that they can target better and lower the advertising intensity of their business . Are you worried about that structurally that it causes them to look for ways to essentially economize. No, 41 in the first half of this year, 41 of our revenues came from digital. So its 41 which is about 20 billion. We made the Digital Transition as far as consumers, the way that consumers consume media and the way they buy goods for example, today we see google linking up with walmart. Both of whom were big clients of ours to try to combat amazon in the ecommerce area. Its the digital disruption youre seeing in consumer, consumption of media, the digital disruption you see in distribution and the digital disruption that you see in production through 3d printing and digital forms of production. That for us is a bigger opportunity. Another shortterm focus putting pressure on management for restructuring. Seem to be jeopardizing the Tax Reduction Program that was promised are you putting, you talk about three reasons here for weakness in u. S. Ad is the white house part of that or no if you look at the trump administrati administration, that was the initial enthusiasm was around that and that was not misplaced. That was good news there were then antiregulation or reduction and regulation, thats starting to happen. There was Infrastructure Spending that takes some time and not a lot of signs of that as yet but that may be getting momentum but the third which was tax reform simplification and reduction will take a lot of time. That has tax reform. Last night i think the dow was up and when he was appointed secretary of the treasury they were talk about august to implemented and then started talking about the beginning of 2018 now i think the timetable must be longer and the question that i guess business is asking is how long its going to take if it happens for that tax program. That simplification to develop last week we watched american ceo take a moral stand like we have never seen before walking away from the president s councils, disbanding the president s executive councils im curious as a global ceo that does a lot of business in the United States how you viewed that and whether you would have walked away after the president s response to charlottesville. And then the comments in relation to charlottesville and i think the ceo is involved with the Manufacturing Council and the general Business Advisory council did the right thing. And if i had been a member i probably would have done that right thing as well. I dont think their position was t tenible given the reaction to those remarks so i wouldnt disagree with that and thats obviously muted, the positive response that the Trump Administration when it first came in and the difference that it showed in being open. And accessible to business where as the Obama Administration took a very difficult position. Last night the president said he would shutdown the government in order to keep his border wall funding. He now has a statement saying that the president pursues this path well be heading toward a Government Shutdown that nobody will like and which wont accomplish anything. Can you characterize your level of concern are those about a shutdown and obviously when these sort of things when theres a war of words over anything, whether its over north korea and about Nuclear Proliferation or in relation to that or whether its to do with a government shut town in relation to funding, whatever it is, it causes disruption and uncertainly and its not helping outside of policy you mention that europe was stronger in the u. K. As well pretty good and wonder how it feels to you in terms of Business Sentiment and whether Corporate Leaders feel as if theres a sustainable increased growth trajectory in europe or another bright spot followed by another slow down. The strongest we had is the u. K. And that continues to be the case in q2. Given the fact that we will have to have a transition period beyond march of 2019 for the negotiations over brexit so that creates it and we have Good Business in the u. K. And theyre doing well and they have a strong market share. Germany is strong. We had a weaker q2 than q1 whatever the italian equivalent is and then spains improvement. France, the macron effect is truly amazing and the psychological effect like in india or in argentina, maybe theres something that have their initials, their last name beginning with m and in those three cases they have certainly made a difference from a leadership point of view. And were starting to see india is a shining star. Argentina very strong and a weekend or so again which is good news and i think macron has a tremendous psychological difference in france already and that cabot be anything but good news we havent seen it yet reflected in the numbers but these are recoveries or improvements from a low base so its going to take some time to improve but i think generally the direction of travel is better and you see that with stock markets and you see that with private equity and you see private equity for opportunities in europe which is cheaper too. Its always good to cover we had a lot of time to do it too thank you so much. Well see you soon. Thank you. Thanks for it. Thank you speaking of longterm up trend were seeing a little recovery in the market dow is down about 41 by the way, warren buffet talking next wednesday. Whats next, morgan were giving new meaning to the term beer run right now. Were driving to the bronx and headed to the brewery in newark. Were talking technology and how its shaping up the Trucking Industry this is a ride you dont want to miss hang tight more squawk on the street. Ages. And its also a story about people. Ages. People who rely on us every day to deliver their dreams theyre handing us more than mail theyre handing us their business and while we make more ecommerce deliveries to homes than anyone else in the country, we never forget. That your business is our business the United States postal service. Priority you as many energies enter a bear mke gart,o to tradingnation. Com. More squawk on the street coming up. Looking to disrupt the way shippers are connecting with truckers our Morgan Brennan is live on a truck on a realtime delivery right now. Good morning, morgan reporter hey, thats right, i am technology is changing the way truckloads are brokered. Think userfriendly apps, operating on the cloud, powered by algorithms matching freight to trucks at market competitive rates. So take the big rig were riding in right now our driver, william, just dropped 2,000 cases of budweiser at a Distribution Center in the bronx. We are now heading back to the anheuserbusch brewery in newark to pick up a second load now, he uses convoy. That is a startup that has raised about 80 million from the likes of jeff bezos, bill gates, mark benioff, and he started using the app six months ago and already is resulting in more business for him. As for anheuser, its better navigating the highly fragmented truck industry to find capacity for all the loads. But convoy certainly isnt alone in this space. Uber launched the Freight Service earlier this year. Amazon is exploring this space and other startups include what anheuser uses and loadsmart. But they face a high bar because the established truck brokers in this industry are names like ch robinson, jp hunt, are also investing heavily in new Technology Ch robinson, for example, tells me its invested a billion dollars in new tech including launching two new mobile apps since 2011 what those tried and true players already have is they have relationships and they have market share and that is going to be for the new technology, any of the new apps to function you need both to make this work. Morgan is headed for the bridge back to new jersey. Thank you very much. Lets send it over to john fort on the floor with a look at what is coming up on squawk alley. Hey, jon. Im on the bridge this morning, not on the floor. Not only do we have samsungs big phone launch, but godaddys ceo blake irvin is joining us about why hes stepping down at the end of the year. What is next for web services . At coming up on squawk alley. Right. But you want to fix it. Right. So who sent you . New guy. 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Welcome back to squawk on the street. Markets are lower. Now well send it back downtown for the start of squawk alley. Good morning, 12 00 a. M. At samsung headquarters in seoul, South Carolina and its 11 00 a. M. On wall street and squawk alley is live noed