Nike on a downgrade from jpmorgan after those layoffs yesterday. Apple getting serious on content hiring two big time executives from sony. Well go live to miami ahead of the president s expected announcement on cuba this afternoon. We are getting some breaking news on whole foods. Holy cow. I heard you gasp just now. This is such a game changer amazon to buy whole foods. You know yesterday was a day for kroger that was tough today will be an even tougher day. This is a game changer this is it this is what everybody thought could happen they will now dominate food within the next two years. Wow. Just yesterday we were reading a piece in texas monthly, john mackey, basically going after activists saying theyre not interested in the long term. More interested in the short term stock was halted i would say about four or five minutes ago for news pending but this this is wow. A day well remember for a long time. Yes, we will. I guess mackie had enough of them hes one tough hes a tough guy, all right now, let me just say this is a reordering because what amazon can do is use this as a now, theres not that many stores hay can do 1,200 stores. They have a third of that, but what this says is that amazon wants to do for food which they have struggled with what they did for every other part of retail it is get out of dodge time. Two German Companies have moved in aggressively, walmart, target everybody who sells food everybody. Because you cant compete. Amazon they will not let you compete. This is incredible i mean, this was rumored and i mean, i thought it would be brilliant in some ways if amazon wanted to dominate food which i didnt think they wanted to. But now they can because the big issue with food had always been that you cant it doesnt travel it doesnt need to travel. This is their launching pad. They have all the money in the world. They can build all the stores then in the world, they can change the whole business, paradigm, which has been crowded by the fact that the Dollar Stores have it and aldi, lytle, the two German Companies that moved in, trader joes. What does kroger do, that Conference Call from kroger yesterday, it was depressing it was like night mother tough show to watch. I think that this made it so its night mother 2. Even after the bloodletting yesterday, its down 6 now. Walmarts down 2 . Amazon down 1. 5 . Well, you know, amazon, see what kind of money theyre playing with but they have a whole foods was down a couple of bucks off of kroger. Congratulations to them. I struggle to figure out what the whole industry is going to look like. Is everyone a Department Store waiting to be eaten alive . Bezos has incredible scale i want to watch costco because theyre the company thats able to have food for low prices because they make it up with the with the membership, sure. What kind of day, this is supposed to be a summer day, going to the beach im canceling the beach. Thats it. The hamptons, forget them. This is the hamptons forget amagansett, this is it. Has there been a more ambitious purchase by amazon no. John mackey, i guess he just was exhausted by these people. And he did have cannibalization. And yes, there were problems no doubt about it, whole foods became a high cost operator. Different regions, there were ways to slim it down i think he got fed up. He got fed up because you know what he was he is a visionary. He is. But you know, you can only take so much. These activists have made life miserable for a lot of people. And this was a savior for him. I think their model was going to be challenged. The two german entrants would come in. What target is doing, trying to figure out where it is walmart was making a big move into food. Theyll still make a move. This is food deflation the fed has to think about this. Yeah. We should no longer just asterisk food to inflation amazon is a Deflationary Force gary cohn recognizes it. Hes talked about this but this is food deflation we are going to pay so much less for food i pay 5 for a gallon of milk, thats over. Wow for a Company Whose reputation was for expensive food, right . The deal is being valued here at 13. 7 you saw from the lower side of your screen geez. Whole foods. Heres a quote from bezos, millions love Whole Foods Market because they offer organic foods and Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades theyre doing an amazing job and we want that to continue. Now theyll get a sales get something i mean heres what you get you immediately get use your phone. Or you you know, you order on amazon the whole foods guys will deliver it to you. Theyll have a Delivery System maybe they use an uber system, maybe they use i dont know they can use grubhub whatever they have they will get it to you. They will get it to you. This is it it will be very hard to compete against these guys and i just i look at this and i think if i look if i work at kroger right now, im thinking how what do i do, what do i do i have a high cost versus them amazon can strip down the cost remember, amazon is able to do self they have selfcheckout. Youll go boom boom boom im stunned. Now, that said, whole foods has about 430 stores. But they did have a road map to do 1,200. Krogers, 3,000. Stores that are going to be hurting because you cannot compete with amazon. You just cant i dont know what going to happen here. I just think this industry i called the industry last night on mad money completely uninvestable now its totally uninvestable. I dont think anyone knows no one knows how to compete with them no one maybe walmart. So walmart will be a well be getting eggs, theyll be giving us eggs. We may be finding that this is the ultimate buy one get one we are going to experience tremendous a great thing for america. Our inflation, its going to be very hard to have food inflation. Very hard. It feeds into the ongoing narrative, jim, of disrupters subsidizing music, entertainment, cellular service. Food now and well see if that migrates to other forms of retail. You know what i happen to have been a huge walter robb fan. I like john, i met him several times at the brooklyn store. I love my brooklyn store walter robb this may be a dream come true in some ways because what happened is that robb likes to feed the world. I mean, hes always about doing the right thing. And doing you know, right by consumers. And now carl the key thing, amazon is nonunion now yesterday on that call, there was a moment on that kroger call which was, you know, remember, that was the it was the opposite of dickens. It was the worst of times, it was the worst of times it was the season of winter, it was the season of winter what happens is this kroger had higher labor costs and food deflation it is almost do you know that kroger is a great company. Theyre the best my fred meyer in oregon, i can eat off the floor. Not that i want to eat off the floor, but forget it i dont want to eat off the floor, but i do look, walmart buys why dont you buy netta puerta. Walmart they have answered it i have some i have some of their shirts they look great. Theyre nice. Its a once they sent me home because my shirt was pilling. This is a deal that you have a no Union Versus Union environment. You have guys who play with wampum, jeff bezos, you have Assembly Lines and food. I have to tell you, this is going to make it so you scan, no lines. I hate the lines at i many whole foods, i at my whole foods, ill walk right out. Youre out. Yeah. By the way, whole foods is going to keep its stores under that brand mackie is going to remain ceo. Terrific. Headquarters will remain in austin. Oh, i want them lets bring back walter robb come on, bring back walter robb because we want a heart. Whats the matter with a human face capitalism with a human face is walter robb. I miss him look at walmart, kroger. This is supposed to be a friday where i was the wife was saying, can you take the early train, the early train, with the gin and tonic, no. That was a big move. Were doing a show tomorrow. Big move for a big market cap name like walmart. 3 move too often why is there no acquisition halo for some of those other names . Investors not counting on i saw sprouts market had it for 30 seconds the one i struggle with is target i mean, target has been struggling with food mightily. Theyre trying to figure out theres a race to the bottom if you were on that kroger call which i have now equated to almost every sad thing bang the drum kroger it is one of the situations that kroger is stuck saying, listen, well compete on price, basically. That was underneath the cap we call it the chyron or the lower deck i dont know what they call it. Lower third. Lower third, yes. We will every day low price this is not every day low price. This is every day we have to give food away even faber will want to go to the supermarket with me. I mean, like hey, listen, i like the eggs for free, how about we throw in some milk amazon, you know what, imagine if you say i like i like kensington mustard you might like hellmanns mayonnaise two unilever products to give paul polman a kiss there. Amazon has gone down 30 and change to 21 and change in two days kroger is without a doubt the most consistent player you know, they have fabulous research they do great things they even understood that packaging that millennials hate packaging. You go in, they have the big stacks of things and you open the thing and you spill the cheerios, you have the ugly fruit area, because you dont want to throw it out it doesnt matter, carl. It doesnt matter. Amazon is here an industry is done. You mean industry at large is the food the grocery business everybody could be like the great atlantic and Pacific Tea Company when theyre done. Tnp is their model take no prisoners. Then theres the added layer of what this does for other Amazon Logistics i mean, it gives them a huge parcel of real estate around the country. Now we know this is like digital realty. Now we know they have a base and remember, when walter robb was there, walter robb, they did 1200 they got sidetracked the ceos, push me pull me thing. This is without a doubt if you were shaking right Brian Cornell is saying hes like calling an emergency meeting like defcon 4. Like, wow, its like jack bauer. I have jack bauer. They need chloe. So what was the whole notion that amazon was going to experiment with brick and mortar. Theyre not experimenting. Is that all a head fake they have now taken it over. Experiments over. Yes whole foods has they just started delivery whole foods has not had a great affinity plan and i fault that for them they havent done a salesforce. Com affinity plan there are 3 million checkers in the country. Its a great entry job dont need to go to fancy college to be a checker but ill tell you, they are ready are their checkout they are ready with their checkout with this this is like king now. Now, this isnt about cheese its. Cheese its from the walmart site Doug Mcmillon listen, hes calling jet. Com. How many minutes out are the jets like 20 minutes out. Doug, theyre 20 minutes out, we have to get the jets here. Jet. Com. That guy is a smart guy. Im guessing the overlay of prime membership and whole foods shoppers is pretty broad. Can you imagine all the data they have on the users. They have everything on that. And my wife pushes that button, the tide comes stop pushing the button, too much tide is coming. Their answer is to acquire a fail guys, thats bad timing. Yes. Yesterdays Conference Call, oh, my god, the timing is so bad. You know, the german they opened in South Carolina and virginia yesterday this is the new mall for whom the bell tolls de novo, our friend writes, pats walmart on the head, thats good sweetheart, this is amazons day. I dont give a damn. Is your radar now tuned to radar to what else they will get into or only digest i dont know, i have to call norad. What else do they need they can literally use this base and use the small store format that mackie had. Theres real estate galore we know the mall situation whole foods is the ultimate anchor for every mall. Sears they might have a shot. Amazon they probably have a master plan right now to be able to explode this thing into into 1,000 stores. They have the capital. Remember, the struggle with whole foods was margins. Buying back stock. Pleasing everybody they pleased none. And now their stores are gorgeous and they are going to be you could like, you know, you can do all that order online, pick up but they can bring it to you i bet you they put drone oh, my theyre going to have drone fields on the ceiling. Right . What im not hearing you say is that retail is in for a wave of buyouts from tech giants. Is this the precursor to that or nobody has only happen in food. Nobody has the scale. Food is a bad business bad business because it tends to be a tough unions. Bad business because of spoilage and food deflation they cant control these are all in favor of amazon because they have they have supply no one has ever been able to feed the beast like amazon does. Right. Think about where they have all their fulfillment centers. They can buy any amount. Theyll know exact my what we want. Yep. They have artificial they have the best Artificial Intelligence remember when you hear about nvidia, remember nvidia, its their chips. They know what we want ahead of what we when we want it theyll have it on the way home. Have it in our house wherever you need it it will be by the way lets not forget, it can be a show room for everything. They could show room for appliances i dont want to own best buy they could be best they can use the whole foods format no keep it at food. Lets keep it at food. But im saying they can stock more costco is threatened by this. I would imagine that one reason why costco this is going to bring the market down 4 . The Retail Sector which has been clubbed but you would have rather seen this deal happen than say nordstroms . I think nordstroms get done. You do . Yeah. If im nordstrom, if i were the brothers i would be selling it to the private equity because its just its happening too fast now its really happening like lightning. Matthew boss from jpmorgan he down graded nike yesterday, he has been predicting this vast shakeout we didnt think it would be this fast this quickly in the supermarket business three German Companies are in the private, they can lose money. By the way, just to put this into some perspective, this is the biggest ever acquisition for amazon it is the biggest ever u. S. Grocer m a deal. We have had a few big ones in the last how does supervalu stay around m a value is still negative which is a comment on where we have been so far this year. Unless its strategic like amazon everyone is worried about taxes. Amazon is not that small a thinker. Amazon is a big thinker. I think amazon stock going to go up even higher because they have the wherewithal. This grocery business has been waiting for rationalization. I always thought there only be a couple but remember look at the template of what happened. First it was the supermarket then it was the costco and then the Dollar Stores capitalizing off of food stamps an then walmart refines. Target comes in aggressively and then the germans come in with three Different Companies that they can lose money all they want, because theyre private. Then along comes the beast the beast. I mean, these guys are the belichick is now in food wow. Yeah. Dont know. Its a game changer. Thinking of whats in the ipo pipeline, blue apron. Yeah. Good theyll try to pull something off. The bankers are desperate to do a deal you can sell you can get a deal done, make a deal happen. But theres also been private equity in that market. I dont know how those companies the people i mean, amazon is an army. Okay its an army that you know its like an army feeds on its stomach. They have a napoleon situation and they can take it by storm. The favorite note is from a well known retailer that we have on all the time. I dont always agree with jim, but this time he is not overly excited. Holy cow, really . I think he accused me of having hyperbole at times i dont know, carl im trying to i mean, i dont know who to call i mean, i can call walter robb and congratulate him because hes the greatest in the world he is. Look, its not about friends, about money. But when they leave or retire its about friends i think he always had a fabulous model. This is i cannot im trying to remember at what time that i ever had seen an industry that just game changed on some sleepy friday morning where all the people wanted to do was be on the 407 this is it. Well cover a blockbuster m a deal this morning. Again, if you just joined us a few moments ago, it hit you know why it hit, faber is on vacation. It was done to torture faber. Amazon buying whole foods, 42 a share. Well talk about that and the nike downgrade out of jpmorgan, downgrade for square, apple making a few big hires in original video content back in a minute the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. 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