Investments ever. Were closing in on new records in the markets, this amid new optimism for that potential china u. S. Trade deal as you saw stocks are set to open higher. And the tech lash heads to the states a major multistate investigation into antitrust practices at google, set to be announced later on this afternoon. David, kick us off on t. Interesting here. In so many ways. 3. 2 billion as you said the stake from elliott, the largest single investment i believe they made at the company, a long letter comes out this morning detailing the reasons why this could be a 60 stock within lets call it three years or so, 2021 is what theyre talking about. 65 or so upside to todays stock price. They believe 5 in dividends and 55 stock price, you could get to 10 earnings per share grower with significant margin improvement, what theyre calling for. And buyback. Something i want to make sure people understand here, it is interesting, people who know the company well, but sort of are vaguely aware of elliott this morning have called and said, well, theyre calling for the breakup, right no theyre not calling for a wholesale breakup of at t. What they are calling for is nonstrategic assets to be reviewed and potentially sold, although again there you are talking about things like the latin american presence for directv or at ts presence in mexico by the way, they tried on latin america and directv already, havent found many buyers there, and then they are also calling for significant margin improvement. And i think thats one of the keys here as well, that were going to be focused on as we go along here 36 adjusted ebitda margins in 2022 is what the company i should say elliott believes can be achieved that would be a 300 basis point ebitda margin, expansion, over the next there it is, three years, thank you. While we have identified opportunities for savings one, in excess of 10 billion, it would only been 5 billion in net cost reductions. Conservatively designed to encourage at t to identify savings and invest in growth areas. The other key area theyre focused on is management last week we got the word that john stankey will be the new ceo. Theyre not happy with that at elliott. I can say that in my own way they believe this is an undermanaged company but i think one of the key questions investors have to ask is it the assets that have been put together by this company or is it the management that is the problem . And can you really deliver this higher stock price that elliott believes is easily reached through simply some changes in management, savings, which is always tough for at t, by the way, in terms of firing people, and nonstrategic sales or do you have to go a different route i have to tell you that the tone of this piece, and i know that they didnt spend much time with Randall Stephenson, the ceo, but the tone of this is very positive. And, david, something you said over and over again is dont underestimate the acquisition of time warner. They like the acquisition of time warner. They do they believe it is a strong asset, to your point, although you and i have discussed many times the questions that are out there right now in terms of their strategy for direct to consumer, whether it is going to work, the trends that we know are taking place and the business in terms of cord cutting and what it means for the cable net works and the like, the loss of some talent at at t now they have some talented guys there as well. I dont want to take away from that greenblatt, our former colleague at nbc and others. There are questions, jim, and they are about the future for warner and how well they can execute on that future. But, youre right, theyre not looking for a sale or anything like that. They believe it is a strong asset, but they also say, listen, 50 of ebitda, this company is still wireless and they would like them to sort of not refocus, because at t says focus on wireless, but have that come to the fore again they also outline their disastrous series of decisions, when it comes to acquisition the inability to acquire tmobile in 2011, which put tmobile in business, by giving them enormous amount of money and breakup fee and all that spectrum the directv deal which took place in 2014, some 68 billion or so. And what has happened there with directv now, the inability to get the ott product up and launched, huge loss of subs at directv and the questions about warner which took two years to get to the finish line. A lot of people said to me, immediately, are they kidding . At t, it is their large position at t is this behemoth, you cant change it. I read through this and think that, you know what, maybe some Board Members are fed up themselves, maybe there are shareholders, very angry and this gets the ball rolling thats a great point, jim oftentimes in situations like this, in some ways, management might not or the board might actually view them as a positive i dont know what matt rose, the lead director, is thinking here. Hes a pretty serious guy. Glen hutchins on that board, another serious guy we know well you wonder whether this will if they continue to apply pressure and the board despite decicides along with them, results in changes in upper management. But youre right it can sometimes be a positive that said, i couldnt help but think about another large activist investment, very similar size but did not go particularly well in a storied name. Talking ge . I am. Ge and triad 3. 2, similar size stake. In this case, these guys will say, listen, the dividend is not just it is safe, there is no question about that. You and i had a conversation about that last week i indicated obviously there is any number of investors who i speak to who have different questions, longer term at t comes back sharply and says are you kidding us our dividend coverage ratio sbe is the best they have been in a long time. Were only coming down in terms of our debt service and perhap a good point. I feel they must have been talking to some people because they have a tremendous insight into the number of buildings they have in california, versus what they should the ease with which sthey could get to 5 billion when verizon is at 10 billion. There is a lot of verizon versus these guys there was the disastrous funding of tmobile, with a breakup fee. Incredible. And should have known going in that that had very low likelihood of occurring, 2011, when at t did try to buy tmobile and enticed them to the altar as a result of this enormous break fee they were willing to give them to help put them in business youre right there are plenty of exat t employees out there that can help Elliott Elliott has been working on this for as much as a year. To your point earlier, they have had some conversation i believe with mr. Stephenson, but unclear. And, carl, now the president actually weighing in on an activist situation he is commenting on the stake. Mostly through a lens of politics and media there is a look at his tweet about at t is an owner of cnn, more interestingly, though, i wonder what you think it says about hedge funds willingness to go elephant hunting to some degree a lot of talk about high cash balances over at berkshire, different story obviously. But maybe some are starting to swing. I think that theyre going after Companies Different from ge where they were very friendly trian says we missed red we were misled. They called me during the eagles redskins game and cnn, you know when i met Randall Stephenson, i met him in the white house, george w. Bush, the most republican these guys are the most republican of any publicly traded company. Theyre overt. And yet cnn has been what the president singles out. To me, i think he could very easily talk about what a lousy stock. But i do think thats covered. The president is actually weighing in at all hes following hes probably watching right now. Sure is i dont think there is any consequence his tweet came at the top of our hour. No. We appreciate that we welcome all viewers i think were happy to have him. There are some people who probably think why did we spend eight minutes on this. I know on mad money we get a huge number of calls because this is an underowned name, as they say. Underowned institutionally. Boy, overunderowned retail. Elliott simply believes this comes to the normal Institutional Ownership you would have for at t, that obviously will bring even more buying power second most underowned in the s p 500. Trading at less than 10 times. But we know the reasons why. And, you know, it is not as though questioning the acquisition track record of this management is something that has not been done previously there are plenty who look at it and sort of wonder what the overall strategy is, it seems ais though Randall Stephenson for years has been running away from the core business, being wireless we talked about the contract with verizon, other than their poor forays, but minimal ones in terms of buying other businesses and gets a higher multiple by the way, the growth rate overall and the business is not particularly great you talk 10 ebs growth if youre elliott, you think theyll be able to initiate buyback buybacks as they delever it is not coming from top line growth. Is there any way you can do an asset like model which is hinted about, where you dont necessarily need all of the equipment that at t has. Because they love the time warner asset and then, david, loaded question, you and i often joke about it, you know throughout this, jeff bewkes is considered to be a Great American by the elliott people would bewkes ever be enticed to come back in any way, shape or form i have not refreshed on this recently he was very happy lets call it six, eight the checks ive gotten on mr. Bewkes, i havent spoken to him directly, hes happy doing what hes doing. Like larry bossity said goodbye john feriola from new core said goodbye it is not fun anymore to be a ceo. It is just lucrative. Yes, look at this, the president s tweet. Im just saying, youre a ceo and youre you wake up, you have an activist in your stock and then get the president all over you too it doesnt make for a great day. No, but we were talking earlier on squawk about andrew ross sorkin, what kind of day is it at t . I think the kind of day it is is basically i bet you for some it is the day when you have a kind of an aw situation, people are saying, it is time i think that the turnover here, and they got a chart about the turnover, i had no idea. That exodus would not be tolerated at any other company. I do think that of all of the places they could have an impact, particularly if you have Board Members who sort of are thinking along some of the lines as in management wasnt a great reception last week to the idea of mr. Stankey taking over. People look and think, well, what was the what exactly is with directv and with warner, is he really showing himself . It is early. Early on whether hes going to succeed with those assets or not. I think it is good that they say the dividend is safe safe at elliott. They do you and i talked about that balance sheet. The numbers will tell you it is safe. The negative story would be that theyre going to suffer ebitda declines of significance in terms of the warner business because they dont get it together under right. They start to suffer in terms of the continued suffering and cord cutting and lack of viewers for the cable nets and what not. And that directv now continues to hemorrhage subs and you get to a point where you are losing ebitda as opposed to gaining any or staying level and that becomes more of an issue. Thats the negative view im not saying it is going to happen elliott clearly doesnt believe they think this is right here and then they got the ability to take it here 2 million subs, i pay for directv. One of the more damming things i saw in this there are 2 Million People who dont, who took it. You do because of football . Yeah. What if amazon or some other Google Youtube bought a huge chunk of streaming rights. That would be great i want my money back can we also get the money back from people who are too stupid and would continue to pay for directv versus the 2 million who didnt and thats who youre losing what were they doing with directv. They gained a lot of subs, particularly in directv. They said, hey, we got to rationalize this it is in many ways the paradigm of what went wrong here and we talk about it all the time directv, they spent a fortune, and amazon. I thought it was done to help them secure the dividend and thats been secured. Amazing story. Yes the lead of the day, obviously cramers mad dash, count down to the opening bell after a break look at the premarket, looks good here. Well get to wework and apple and chipotle and aramco when squawk on the street comes right back ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. Should always be working harder. Oney return home. Thats why, your cash automatically goes into a Money Market Fund when you open a new account. Just another reminder of the value youll find at fidelity. Open an account today. All right, lets do a mad dash now as we get you ready for the opening bell 13 or so minutes well stay seated. What do you got . Two stocks going in that direction today. Shows you about expectations eli lilly had a drug for lung cancer people, felt it was pretty good, turned out to be good pretty good and you do pretty good, your stock gets slaughtered in this market not special and then turns out to be incredibly special, youre going to get a really good number i would tell you i think lilly is an inexpensive stock. A lot of it is candidly, david, the drug stocks have been kept down by the democrats. And the possibility of single payer. Lilly has been among them. Amgen has been going up because they bought i expected better this is the news we had not that long ago travel trust owns amgen. Stock was down 8 at one point. Before anyone buys these, you have to understand, i dont know if you saw that Elizabeth Warren has been moving up in the polls. She is a formidable opponent to the healthcare sector. She hurt the managed care stocks and she can hurt the drug stocks be careful. Okay. We will be and i know youll be following it i wanted to follow up, jim, and carl, with a statement we have gotten from at t we led the broadcast this morning with 3. 2 billion stake, taken by elliott, and the long letter which outlines some of the actions they would like to see the company take at t says their Management Team and board of directors maintain a regular and open dialogue with shareholders and will review elliotts perspectives in the context of the companys business strategy. They go on to say they look forward to engaging with elliott and note that many of the actions outlined are ones they already, they say, are executing today. They firmly believe the focus and successful execution of their strategies, the best path forward to create longterm value for shareholders, and they also go on to say they have a unique portfolio of businesses across the Communications Networks and as elliott points out, the foundation for significant value creation. I think elliott is in siege mode at t may have to be more in siege mode this reminds me of arconic, the old alcoa, the people from elliott bought a stake and said, look, you need to make changes he said he was making changes already. They got Board Members and once they got Board Members, the changes werent fast enough. If you remember how contentious it got, and then ultimately klaus kline feld faded into the sunset they took a constructive approach at elliott, it may be followed up by the need to have board seats to get this done thats a great point. And, by the way, something i need to actually fill people in on in terms of when the when the window opens for nominations, it will be a while, i believe, obviously the annual meeting and what not, but you can do that in the next half hour or so but i know that it is this sounds it is almost fairy talelike that anyone could ever go after a company, we all grew up, the bell system, okay. And we always just felt sark w sacrosanct elliott is saying, very bad dont give up on the company, give up on the management. It is always worth pointing out 3. 2 billion on a 250 or do 65 billion market cap is still a relatively small percent but activists like elliott looking to have a punch far above telecom italia. This would be a very exciting saga this is day one. I think everyone has to follow the cart because the stock is up so much. You got a good rate of return. I question at one point, up 2. 5. Do you ring the register it remains one of the great yielders in an era where you cant find income. Verizon, you do feel as though, listen, let me bring someone from verizon back to run it. We know who the people there werent that old who left. I hear other names when it comes to at t. What names . Do you share them or is it too early . John stratton you know who John Stratton is . John stratton. Hbo no, telecom guy speaking of telecom, were going to have dexter goya join us. The move into unlimited service. Hes a young fellow how about him . Here it how it fits into the growth strategy. Hell tell us about that futures, opening bell 7 1 2 minutes from now rba fm stinafter this Johnson Johnson is a baby company. But were also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. From the day youre born we never stop taking care of you. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Coming off the first backtoback weekly wins since july and the s p is about 2 from an all time high. Futures are green. Well see if we can revisit s p 3k when we come back 300 miles an hour, thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. Youre watching cnbc squawk on the street live from the Financial Capital of the