Hasnt gapped down on earnings more than 5 in 17 years so by that narrow lane, its pretty significant selloff absolutely. Its down about 10 right now. So that really speaks to just how much investors dont like this report today. Its interesting though i mean, compared to amazon which can kind of turn off earnings whenever they want just as long as it shows up on the growth side, you got to wonder are they just sort of caught in the middle here where maybe theyre not investing quite enough to drive that online revenue but they still feel like they need to preserve the profit and maybe they need to pick a side caught between the cost of all the investments and its getting more to transport goods around the country so all those combining that is the margin story on walmart today. Absolutely. And labor costs, of course, have been going up. And some of that has been by their own measure, the fact theyre looking to increase wages. But its also, i mean, i think its also kind of interesting given the fact that 14 consecutive quarters of growth in samestore sales, that is the one thing that seems to be getting overlooked here. For more on walmarts latest quarter, lets bring in retail analyst at Deutsche Bank and daniel bin Daniel Binder from jeffries. Thank you for joining us paul, i want to start with you sort of looking at the walmart numbers, the fact the stock is gapping down as dramatically as it is today. Are you surprised to see a move like this . Frankly, given the results today, i think that the stock reaction is directly on point. And the reason for that is that the premium in valuation that walmart atanld ovtained over tht year is due to two factors with sun o one is outperformance based on peer group and the second is the robust growth story around the ecommerce today we saw both slip there are other retailers like target that are outcomping walmart, 2. 6 samestore sales growth is a good solid number. But its no longer an outperformance and 23 ecommerce growth is such a meaningful slowdown versus 50 just a quarter ago. I think that is very difficult for investors to really get a handle on just how walmart is going to very quickly reaccelerate that online growth. Im glad you brought up target i want to dig into that more first, daniel, is this really the jet. Com tail wind wearing off here well, management citing capacity issues around peak periods. They seem to have that under control and theyre guiding to 40 ecommerce growth next year. So if they didnt have it under control, i would have expected them to adjust that expectation. Certainly the conversion of some sams clubs being closed, well deal with the capacity issues. But at the end of the day, walmart had a little stumble here you know, maybe lost the battle. I still think theyre winning the war. They added 65 million skews online since june of 16 when we upgraded the stock the prices are competitive, more competitive than amazon, frankly. I think youre going to see a rebound. I think the stock reaction is a little overdone today. Paul, whos story should you really believe here . I mean if you believe the walmart turn around story as daniel mentioned, theyre projecting 40 ecommerce growth going out. Theyre switching to just annual guidance which suggests to me that maybe theyre going to do some more investment in a way that they can plan out over longer periods of time if you believed in walmart last week, shouldnt you buy here look, i think that theres undoubtedly a lot of success in terms of execution that weve seen from the walmart team over the past few years and i think that the majority of the issues today are very transitory regarding the guidance and regarding the margin factors you brought up like transportation and wages. Those are transitory issues and that is frankly not our concern. We adamantly believe that investors focus today is on ecommerce growth. Walmart cited that the jet. Com asset of the business is slowing a little bit theyre pulling back on some of the marketing dollars related to jet. And in addition, there is also the fact that we just cycled on january 31st the rollout of their free two day shipping that they did a year ago. Again, we dont want to suggest that walmart wont be able to make a meaningful come back and showcase robust online growth again. But there is some questions that they need to really answer i dont think they did good enough a job in terms of detailing that this morning. You think the selloff is largely about ecommerce even though we know a percentage of total sales are ecommerce . Absolutely. Its to your point. Less than 3 of this companys overall business. That is really zeroing in one area of the channel. Correct and we would go back and see that walmarts valuation over time has been largely reflective of a good retail brickandmortar business. Clearly there was an inflection that occurred over the last 12 months which became amazon 2. 0 or at least the next best thing. And ultimately, e commerce grow growth is the metric were going to gauge walmart on if theyre going to keep up with the 800 pound gorilla. Daniel, you cover home depot in addition to walmart which is the other retailer that reported today and is actually up 1 . Carl mentioned transportation costs. Certainly youve seen trucking rates spiking. Weve seen inflation costs starting to excuse me, labor costs start to go up is inflation a risk for the Companies Moving forward especially when you have things like price wars for to tra attract consumers . What do you think . I dont think its a big secret to Retail Investors that transportation costs have been rising double digits in some cases. Wage pressures are mounting. But people are making more money. Theyre going to spend more money. I think a little inflation is generally good for retail. Too much is not so good. So like a lot of things in life, a little moderation. But, you know, i think the at the end of the day, if it leads to higher Interest Rates and a fed thats more aggressive, that leads to multiple compression for retailers as they tend to be early cycle stocks so, you know, you have sort of tug of war here, competing forces multiple compression versus growing earnings i think what you saw different in the home depot release today is that their ecommerce growth was robust they talked about pulling some investments and the guidance is below the street but two very different reactions. So i think pauls definitely, you know accurate in terms of what is hitting the stock and ecommerce is something that walmart is going to have to show us next quarter and the quarter after that they did rebound from this slowdown. I think they will. Guys, well leave it there. Thank you for joining us paul and daniel. Thanks for having us. And still ahead, grocery and m a making news. Well speak with irwin simon and disney Smashing Box Office records with february with the latest marvel release black panther. The movie also, perhaps, breaking down barriers in hollywood. Well explain. And qualcomm upping its bid for nxp. David faber spoke with the lead soireor he gng to join us next when squawk alley comes right back. Fund ments. Qual co qualcomms lead director Thomas Horton joined david faber this morning and hes back with more on that story david . Thanks, jon a big day for qualcomm really. This has been in the works for some time as a possibility remember, it was 16 months ago of that qualcomm announced its 110 a share all cash deal to acquire nxp. They still dont have the Regulatory Approvals all in place. Still waiting for klichina to s on but in the intervening months and year and whatever its been, well, nxps business improved, the multiple for the group has gone up. And many of its shareholders have said as we reported for many months now were not going to tender at 110. Tender is the key. They need 8 of t0 of the shar be tenders to make a deal. Finally qualcomm made the move and succeeded in doing, so signing up nine of the key funds that hold the bulk of the shares or at least 28 of the shares including elliott which, by the way, had previously said it saw nxps value at least in excess of 135 a share. The price, 127. 50 the tender threshold goes down from 80 to 70 . It will close on march 5th if they do get that chinese approval in time and that will be one day before shareholders vote on what to do about the board of directors overall. But it is a big moment for qualcomm you can see, of course, it does seem to be enhancing their ability to stay independent and raising the prospect that broadcom will not be successful in its continued efforts to buy qualcomm for 82 a share in cash and stock. Earlier as jon said, i sat down with tom horton, the lead director of qualcomm we talked about the nxp deal an why this board is firmly opposed to that 82 a share bid. If you look at our 2019 earnings projections which are now more certain than they were with the completion of the nxp deal, around 7 a share. 82 represented 11 to 12 times multiple on that the semiconductor average multiple is around 8 precedent deals is around 22 so its just not even close to what the value of the company is and thats the boards view. For their part, broadcom puts out a statement this morning saying it continues to simply review its options with regard to the continued bid for qualcomm again, that meeting is scheduled for the 6th of march proxy Advisory Firm iss late on friday said it would recommend four of the directors that broadcom is nominating for that board. Well see. But there is moving along and this is a very important moment for qualcomm as it now really has secured nxp. Yeah. Sure is. Well see if its effective poison pill. Thank you, david for more on broadcom, qualcomm and a tech sector that is coming off the best week since 2011, lets bring in chief Investment Officer paul meeks and senior portfolio manage dan morgan good morning to both of you. Good morning. Paul, im interested in your take on qualcomm here which we were just talking about. It seems to me qualcomm investor who has been watching the company for a long time knows that this is a company that is about the long game, whether it comes to the licensing business, perhaps whether it comes to the acquisitions and the question has become is the game theyre playing too long are they even going to make it to the end of the game what do you think about where the company is now and whether it is worth more than its trading for right now no matter what the outcome i think it is worth more than where its trading right now even if they get close to closing an arbitrage spread and well probably get some visibility into that at the Shareholders Meeting on march 6th for the proposed board of directors from broadcom. But on the other hand, the company has come to the dance over time with the rise of the smart phone. And at least in the developed world, there is a maturation of that product and so its going to grow slowly so the important thing for them to take it to the next level, to get that higher multiple as theyre demanding is that they become more of an iot or internet of Things Company i think theyre done that. Not necessarily in one fell swoop. But they have shown nice progress if they close the nxp deal. Dan, looking at the big growers, you know, youre of the opinion that were really not in a situation where those are overvalued as long as the economy keeps growing. What gives you that conviction and could anything in terms of the numbers that were seeing from these companies or just demand for their Services Change your mind . Well, jon, if you look at the fanni faang stocks, net flicks and also amazon, if you take them away and you just look at the other players, microsoft, facebook, and so forth and apple, they all pretty much trade in line in terms of mult i multiples. Their growth is 25 times earnings and the current multiples are about 24, 25 times earnings so its really just those two, amazon and netflix that carry the huge multiples we have to remember that you have a the lolot of other compai technology doing well, micron, sea gate, companies that stock prices have done extremely well over the course of last six months to were all focused on faang and looking at the names. But we have to remember that there are a the love other things going none tech right now, Applied Materials did great numbers last week. So there is a lot of good things happening just beyond what is going on with netflix and amazon and those huge multiples , so dan, are you investing in the names that you just mentioned . I mean where should invest job be putting their money right now . I think investors who are watching the show today should keep a steady eye on those stocks and we have all those pretty much on our buy list obviously youre trying to find opportunities based on weakness. They pulled back a little bit when we had that pullback in terms of in the overall markets. Theyre very volatile. You can find entry points. I think facebook may be interesting right now just because theyre under a tlot of pressure with donald trump and this russia investigation and so forth and all the things going on with that so you can pick your spaces based on which fall out of favor and so forth based on where theyre trade right now. But weve got all those names pretty much on our buy list. Paul, i wonder how you factor in trends like Artificial Intelligence into how you project out the growth possibilities for some of the companies. Its kind of flavor of the year, perhaps. But to me its unclear exactly how much revenue and how much profit thats going to drive for names like facebook, amazon, google that are talking so much about them what is your expectation and how do you calculate that . Its very difficult to calculate. But i would say the expectation is, yeah, its going to be a driver but the way i look at that driver, its many years into the future and so in the near term, im looking for companies that are really leading the charge in Cloud Computing and hopefully, you know, theyre going to benefit over time from ai. I think its way too early to try to calculate and imbed that in valuations of stocks. Right now i like the Semiconductor Industry within the tech sector. And i think just as the previous speaker said, they probably came down too much recently in that correction that we had overall in tech and so things like micron, i agree, analog devices, lamb research, Applied Materials, those are my favorites. And, dan, when you look at Growth Catalysts for the tech business, you are also focused on cloud and the buildout . And are we at the point google just made the argument at earnings that its Cloud Business is a billion dollar business are we at ate point where theyre really getting separated and you can say here are the mega scale players that really going to benefit and here are maybe the laggers i think so, jon you mentioned the trends, Artificial Intelligence, social networking and the cloud of course, you have to break it up you look at what you mentioned which is gcp, google Cloud Platform has a ratrail right no. Probably a billion dollars you compare that to aws with amazon at a little over 5 billion. So you got some big numbers now trending forward obviously microsoft with office 365, azure and dynamics. I have to put those guys in that place in terms of infrastructure as a service and then, of course, we have the play out with sales force in software as a service. Those are the names in that group. But i think if you look at the big mega trends in tech like paul was talking about with Artificial Intelligence and semiconductors, i think the biggest next mega trend obviously is this Movement Towards cloud and then, of course, deciphering who the leaders in the different buckets. Okay. Well still some time to make hay, it sounds like. Paul, dan, thanks. Thank you jeff bezos tweeted this video of a massive 10,000year clock that is being built inside a west texas mountain. The clock is 500 feet tall powered by the earths thermal cycles the project has been in the works for three decades. Hes been helping with the project for about six years. Bezos doesnt tweet that often so its interesting when he chooses to draw attention to something. I think its also note worthy that this clock is being built very near the space port he is looking to develop or is developing for his space startup blue origin as well in west texas i guess the question is, will it be even able to see that clock from mars . You know, to see what time it is where well all be . Right, once elon gets us there, i suppose wow well see. I think its a 42 Million Investment pocket change exactly still to come, the food and consumer space making headlines today with walmarts big loss and grocery deal joining us in just a few, the ceo of a supplier to Companies Like whole foods and walmart, irwin simon. More squawk alley coming up. [fbi agent] youre a brave man, mr. Stevens. Your testimony will save lives. Mr. Stevens . This is your new name. This is your new house. And a perfectly inconspicuous suv. You must become invisible. [hero] ill take my chances. Developments carl, european stocks higher in today sessis session as the continues the decline. Sentiment fell from a record high this month and the german Producer Price index came in stronger than expected following those inflationary fears that we have been discussing black rock says it is neutral on european he can quits citing the euros strength as a source of pain german dax up. 75 earnings news dragging down the ftse 100. Earnings had more than doubled the previous years levels the bank says it plans to raise up to 7 billion of the next four months to boost capital levels this as steward gulliver ends the sevenyear tenure as ceo shares down more than 3 bhp billiton down. Missing on earnings despite reporting a 25 jump in profit and we finish with intercontinental hotels, down despite better than expected 2017 results this is a home of crown plaza and holiday inn saying no Additional Capital will be paid to investors this year citing the need to focus on growth plans and cost cutting this reflects the competitive land xap we landscape were seeing around the travel industry. When we return, were live at