Transcripts For CNBC Squawk On The Street 20170525

Our road map begins with the retail surprise. Best buy, sears, Williams Sonoma, all with earnings beat. Shares of best buy are surging. And Mickey Drexler is explaining how the j crew market missed the tech revolution. The s p is on track for another fresh record close. Opec agrees on the cut extension and oil is down. A lot of news on the retail front. Best buy is up, helped by an unexpected increase in u. S. Comps. Williams sonoma is out with better than expected guidance and earnings beat and then sears coming in above forecast. Although sales continue to slump. Its not often, jim, an 11. 9 decline in comp is actually above expectations. Yeah. Look, sears is a big short squeeze whenever it goes up and people realize well, wait a second. Even when they keep selling Closing Stores the existing stores have bad numbers. These are terminal numbers. I mean, i wont tell you that maybe you can close all of the stores and see the stock go up. But i have never i mean, there has never been a return to any great growth from double digit and including jcpenney. Jcpenney is hanging on. Right. Its helping the stock today. Of course we talk about the fat market cap wise, this is a tiny company. But to your point, kmart is down 11. 2 . These are significant numbers when you look at the revenues overall. 4. 3 billion in revenues for the quarter. The same store, 11. 2 decline and sears was 12 decline. This years stores. Yeah. The cfo at home depot calls sears a shared donor. When you look at the categories that are doing well at home depot they are categories that are shrinking rather rapidly at sears. I did a big twitter poll that talked about how many people are worried about buying something at sears and not being able to return it because the store closes. And there are issues. But in the meantime, Eddie Lampert has proved adept at one thing which is to keep it alive. This is david blaine of retailers, right . David blaine. I guess. Hes a very good magician. He doesnt do just rabbed byes out of the rabbits out of the hat. When i saw him it was supernatural and he said, no its sleight of hand. Like elon musk he takes aim when you believe in. But i believe the important take away is best buy. People were shocked at best buy, why . Because if you listen to the target call they talked about the Nintendo Switch driving electronics which had been a weak part of their business to minus 9 and the switch is called out again on best buy. Again, dont forget gaming. Gaming is so big. We dont talk about league of legends enough. League of legends what . Im ready to talk about it. Im sorry we dont enough. I was learning in the final four, Robert Morris in illinois, they have a big team. Its a college. They have a big team theyre the ones who recruit they have a big stadium. Take two interactive owns all the nba teams. The Boston Garden sells out, thats part of this best buy revolution. Best buy is so nonpromotional i have to do it for them. Except in the press release and they tell you they reported better than expected First Quarter results. Thats for us, not for you to do, best buy. Just give us the numbers. Dont tell us theyre better than expected. The headline did not jive with what i was thought not too early overly optimistic. It is going to send up gamestop. It will be incorrect. But this Nintendo Switch i have to get it this weekend. I really do. Theres a surge in pc sales. We got that from hp. This is a wacko time. Amazing week. You know, we had autozone and tiffany and all the other weak reports. Today weve got a raise in guidance from best buy, from pvh. And from Williams Sonoma. In your house, well do anything Williams Sonoma numbers i have to tell you this west theyre on fire. They are now talking about the brick and mortar, i love brick and mortar is a source of value added services. A source of inspiration. They are going trying to be all digital. They increased a lot they have the stores. But theyre opening up a flagship store, were going to do that. Were going to go with credit cards blazing. To your point, you can do most of it online. You do have to put it together a little bit. But otherwise get ready for the term aggressive shopping because thats what you and i are doing at the end of the quarter. You talked to chirico last night . Oh, my, double digit comps in europe, germany, so france. Britain. We are talking about Tommy Hilfiger, calvin klein, starting to see some good numbers in china. Heritage. This was something that was so confusing. You know, that izod. The old stuff. The heritage stores, they comped at zero. But thats a big turn. U. S. , no. Hes talking about the need for having fewer Stores Including some big stores hes now saying dont get theres a changing landscape very rapidly. Yeah. Lets take a listen to what manny told jim last night on mad money. All brands are performing, you know, pretty well. You can see it in the heritage numbers. And were pretty bullish about the heritage business in the Second Quarter. I think the key in this market in the u. S. Is to manage your inventories tightly as well as your expenses and you have to recognize that were going through a Seismic Shift in the retail distribution channels. Speaking of which well talk later this morning about what Mickey Drexler told the journal, how digital changed retail and how he wished he could go back ten years and do things differently. Well, kind of like superman when yeah. Turns the world but manny is a business man. Im not denigrating manny you know, mickey is a business but manny understood that if he got caught with too much inventory in this system there would be a big football. You would see all of their calvin klein and Tommy Hilfiger in the discount channels. Under armour did not control its inventory well. Theyre like flooding the discount channels. Keep them out of the discount channels, dont lower your price points and then some of the numbers were down five in the u. S. , they did not get caught and Tommy Hilfiger, i dont know if you have been to berlin. But i happened to take a place that was next door to the hilfiger store and there was a line when it opened. Each morning. A line for Tommy Hilfiger. And thats this is a premium, premium, premium brand in europe. The numbers are extraordinary and the Gross Margins are great. Manny chirico keeps the inventory down in the u. S. , has plenty in europe, and i think its lasting. You have to buy the stock even up here. You can forgive investors if theyre a bit confused by the retail landscape. So hard. Because this morning here we are talking about very positive things. With the likes of course of best buy. Yet, we also spend so much time talking about the decline of the mall. And there being no untouched retailers within the mall at this point. Even tiffany yesterday. Tiffany. That was not mall related. Footlocker did not make it. Williams sonomas in malls. But its housing. Go back to the home depot call and what they were saying. People want to make their housing their houses, they want to invest in their houses. No longer an expense. Look, i know that people there are shorts and longs on this wayfair. But furniture is selling well. Remember when this was a big insider buy by gary friedman, restoration hardware, that stock doubled. Furniture in the home, making your home great. Putting new paneling, im doing remodeling in the home at summit. We are going double digit shopping for my remodeling. I promised lisa. Its a big job. If you go to rh, it will set you back. Rh crushed us when we did our bathroom. Rh. We got annihilated but it looks great. Lisa, youre really terrific. I told gary friedman, youre credit. She doesnt watch the show but thats okay. The dogs watch the show more closely than she does. Well take about retail, one of the big stories of the day. And along with a winning streak, five straight days. The s p is going to go for six. Just off of an alltime intraday high. Then theres oil. Opec delegates saying that the cartel has agreed to extend cuts nine months. Would they go 12, is that why were selling off a little bit today . Look, i dont know. These are not the cuts you need. The u. S. Russki brazil, thank you so much. Do you think the gulf of mexico is coming on strong. After mccondo, there was a big pause in drilling and now the big chevron wells are coming in. Youre producing a couple hundred thousand barrels per month. None of the guys in opec are ready for it. The elephant in the room is the permian, gulf of mexico, they dont get it. Theyre caught flat footed. Opec were back to 9. 3 Million Barrels a day. Up as you have been pointing out. Well see the rig count tomorrow. Most important, this seems to have come out of to plunge of oil prices is the shale producers ability to get it out of the ground more cheaply. Not that theyre all profitable because theyre not. But capital is continuing to flow into the industry to allow them to keep moving and bringing that break even price down. When we get three pipelines from the permian, we are going to see a level of pumping that you wouldnt believe. Im going to say it right here, right now. Opec, it has no mojo. The headline is shale drillers one, opec zero. Look do we get to 10 million a day . Easily. Well get to 10 million. Look, there are Oil Companies that are literally keeping oil in the ground because theres not enough pipe. There are pipe there are three proposals right now. People are worried they dont like to do the pipes until theyre absolutely full. Dont forget, President Trump has expressed the desire to pretty much pipe everywhere. Theres pipes trying to go through pennsylvania and new jersey and there are some people who are trying to stop these and they are having luck. But in texas, piping is david, its live free or pipe. Thats not new hampshire. Thats texas. Got it. Different state. Different pipe. Well talk more about crude later on this morning. When we come back a bit more on j crews Mickey Drexler. His confession about tech. Later on, matthew shea met with mnuchin to lobby against the border tax which has a few more headlines today suggesting its taking another hit. Look at the premarket. All three indices up for the month. And the dow and the s p have wiped out their losses from last weeks selloff. Say carl, we have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. I need the phone thats where i happen to be. To be the one that rings. I need not to be missed phone calls. To not be missed. I need seamless handoff. Canyon software. From reception, to landline, to mobile. I need one number. Not two. Im always moving forward. Because i cant afford to get stuck in the past. Comcast business. Built for business. J. Crew ceo Mickey Drexler said he underestimated how quickly technology would change the retail business. He said, quote, i have never seen the speed of change as it is today. If i could go back ten years, i might have done some things earlier. You cannot be successful without being obsessed with the product, obsessed with social media and obsessed with digital. Retail is now about all of that. Goes on to say he thought the brand became too elitist. Gave people the impression they were too expensive. Well, mickey was very selfflag youtory in the piece. I think any single retailer could have said the same thing. I think he was uniquely on the hot seat because the apparel ones were they were meant to be individual. People felt that apparel somehow would get unscathed and mickey was not alone. But mickey is selfeffacing enough he takes it on. He beats up a lot. It was five years ago that we debuted a documentary on drexler. A successful career. They were pushing of course at the time the high quality of their goods and pushing up the price points. Clearly something that they now regret having done. Yes. Maybe moving away from some of their core customers in terms of their own price point. But also, even though they obviously had an online strategy not being enough. Not to mention and we have heard this from him many times, the mall, the mall. He was one of the first people to criticize what was going on inside the mall. Where were you going to go . I mean, this is if you read the complicated, twisted, but positive Williams Sonoma conference call, you will see that they have spent a for churn on digital. And mickey did not do that in part because it was about the eyes. See, mickey has an eye. He knows what we like. But you know what . Amazon is Artificial Intelligence. They know what were going to like. Mickey knew what we liked. They skate not where the puck is going to be, they skate right into the goal. Thats amazon. Theyre going to have robots building robots and well have nothing. Mickey emphasized there was a joy of shopping and a joy of going and touching and feeling merchandise thats completely gone away. Yeah. Something that delighted you . Right. One of the things i want to reference because its this morning, but Williams Sonoma, what are they doing, theyre doing virtual reality. If you want to see what your house would look like with a piece of furniture, mickey w was mickey is about hey, wow, look at that. But hey, wow look at that if youre not at the mall, no one is hey wowing. You go into the mall, you get the one thing, you get the Nintendo Switch and you go home. From the financial perspective, j. Crew has had many consecutive declines in samestore sales. It is a leverage buyout of some vintage with at of debt on it. So it is a precarious financial position that j. Crew finds themselves. And having succeeded enormously the first time they took it private, installed mr. Drexler and then took it public again. But this time it didnt go according to plan given these seismic changes that we talk about so often. Mickey taught me over and over, inventory, inventory, its the bane of the existence and the sin and Manny Chirico figured out the inventory at pvh. You go into zara, you have to go inin and they opened one not far from here. The minute i get a call from the sales person, lisa is going to love this. The supply chain, watch ralph lawyer within the new supply chain from salesforce. This is remarkable. Did you just say your zara salesperson called you . This is her right now. No, im not kidding. She says, lisa will love this. You have something new . Shell love it. My jimmy choo salesperson used to jimmy choo, come on. Choos are unbelievable. She moved on. I dont see you wearing jimmy choos very often. I dont wear it. It was all about toe cleavage, its on the new ones. Mickey was on apples board. He was not a technological luddite. How much should he have seen . A very good question. I know he was willing to stand up to steve jobs, one of the few in the world. This was about apple didnt see he did apple didnt see it. Now right now, youre finally getting Artificial Intelligence for the other guys but amazon knew that you would not like that knit item. They knew that knit wasnt going anywhere. Zara figured out what youll wear three weeks from now even though they know six weeks from now youre not. Youll come with me to zara. It will blow your mind. We have to meet i want to meet your salesperson. I got a coat for lisa. You wouldnt believe it. Okay. Always lisa has seven birthdays a year its incredible. Well get cramers mad dash. Well look at the premarket on a thursday morning. More squawk on the street in a moment. Nobody does underwater stunts, sylvia. Except me, of course. This is my stop. Adios if youre a stuntman, you cheat death. Its what you do. If you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Numero uno i count on my dell small for tech advice. With one phone call, i get products that suit my needs and i get back to business. With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Its been over 100 years since 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 . W. O. W. Is going public today. See how that stock does. Were talking about the Washington Post in the mad dash not because we want to talk about the Washington Post and jeff bezos, but theres something you want to look at. Remarkably the maryland Terrapin Team is doing fabulous in the league of legends even though they dont have their own stadium and athletic director. You see irvine, this Robert Morris illinois, david, this is sweeping the nation. Logitech might have one tonight. You cant win without logitech because their boards are quic y quickly theyre about like an eighth of a mill asecond faster. This is the sport that take two is dominating. They own all the nba team rights to ea sports. Get the Washington Post and read it today. This e sports article will explain how incredible this is sweeping the nation and david, league of legends, who is it owned by . Tencent. What is the object of the game . Do we happen to know . To win up. Thank you. To win. Got it. But anyway, logitech has been up 44 . Take two has got i think that their franchise could be worth billions. Well, we promised to talk e sports and we delivered. Read how the scholarships david, your kid, john recruiting. But your kid has to bear down. I have two, which one . Are you being sexist . I was. That was bad. Because the Womans League is just as good as the mens, i think. All right. Did you see the espn channel . No. But they were on the big ten channel. E sports on big ten and twitter. 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A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. The opening bell is brought to you by brighthouse financial. Established by metlife. Youre watching cnbcs squawk on the street. The opening bell in 90 seconds. Got a lot to watch today. We have covered some retail earnings. Were watching the president in brussels. Hell make his way to sicily later on today. Mnuchin is on the hill. Interesting fed speak on our way. Bray nardz at 10 00. Brainard may talk about the inflation is not picking up. The board has softened its line. I think has been maybe the most rigorous thinkers about thinking about day to day and month to month and the data. The data is very case by case. Some areas, you know theres overheating. Some areas theres not. Theyre in a very hot spot. Because there are a lot of pockets that are not strong in this economy. But the gig economy kind of makes it look like everybody is employed. We have great unemployment numbers. Theyre going to move in june. You were not dissuaded by the minutes yesterday . Anything like that . No. Theres too much thats good. Lets get to the opening bell here. The s p at the bottom of your screen. At the big board its wide open west. Sixth largest Cable Provider in the u. S. Its going public this morning. Well talk with the ceo later today. Over at the nasdaq Software Developer appian celebrating their own ipo this morning. Before we get to some of the movers, people are shaking their heads at bitcoin today, jim. 2,700 for a bitcoin. Its doubled in the month of may. Just incredible. You know, i had the good privilege to be on a good wife. Maybe it pays me great royalties about five years ago. Where i was on the witness stand, interviewed by one of the great actors of our time. Just a genius intellectual. He asked me what i thought of bitcoin, its going much higher. So the bitcoin fanatics. I send them to the tape. I look like a genius. You know what . Sometimes its it is going higher. He watches, bob ball aban. He may be watching right now. Hes brilliant. Yeah. The guy is hes like a triple threat. Theres nothing he cant do. Parabolic charts is that a liability . I dont know. Josh downtown brown a good tweet right now, talking about how apple can buy the whole market of bitcoin. Yes. Five times. People like to use bitcoin because the tax man cant find it. Its a great way to get around taxes. Yes. Or to extort people too when you shut down their computer. Is that a big ransomware name . Yes. What can i say, im a legitimate business man. You just yes. The briefcase with unmarked bills. Theres exactly right. I just find it fascinating. I think people are fascinated by it. A lot of the people in the venezuelas of the world where theyre just desperate are using it instead of gold. Its a gold analog to some degree for some people. Look, i wont talk against it. Why not . Why not use it . I mean, were basically most people are using their credit cards, whats that . Thats just a data, the bits, what is the Federal Reserve doing i mean, its all just the same. Theres a pretty existential rap. Maybe. Its actual paper. Whats the value of that . Its legal tender, david. I agree, yes. Thank you. Speaking of which well hear from the treasury secretary. This time its the Senate Banking committee today. He did make some news yesterday. He said he wants a clean debt ceiling raise. Mulvaney said the receipts are coming in a little bit slower which means that date might come sooner than we think. Geez, i think mnuchin has done a pretty good job when hes on the hill. Hes obviously not stymied. I thought i interviewed professor shiller yesterday in a fabulous show we did. Shiller said something that was kind of hey, listen, dont give up on these tax cuts. These tax cuts are going to occur. Something is going to occur. It will take our market cheap. We know shiller is a legendary bear. I think mnuchin is going to plug and plug and plug and something is going to happen eventually. You look at the house and the i know everything is just about health care. But mnuchin is quietly plugging away. Hes plugging away, david. Plugging away at what . At tax reform. When are we going to see the actual plan . Well, do i look like trump . No. I dont know. Has he given us any mnuchin. When he was on with john harwood we didnt hear a timetable. Mcconnell said the prospect for a tax reform or cuts is better than the health care right now. I thought mcconnell can drive a lot in the senate. You have to do health care before if you are doing i would on reconciliation, do it before tax reform. Do it on reconciliation on the fiscal year 18 budget. Thats what i have been told. Maybe theyll sneak in repatriation. Dont underestimate mnuchin. I wont. But expecting tax reform this year, come on. By the way reform. We keep saying reform it doesnt have to be this year. Most people that i speak to dont expect reform. They expect some sort is of a cut. I think there will be a cut. Thats what i did a repatriation. The republicans will do a cut. Theyre fine with that. People expect that investors will be fine with that as well. I think so. With these kind of earnings how can you not be . You know, two out of three three out of four of every earning number is good. Unless its in the mall, then its nine out of ten. Speaking of which, retail is the strong sector this morning. Pvh the best s p gainer. Depot is the best dow component. Ulta is right behind netflix on the nasdaq. Well get that report. I went over the lowes quarter. It wasnt as bad as people thought. You referenced the home depot quarter. Best buy has been a great tell because a lot of technology. Because the story of the day thats not getting enough anywhere near the heat it should is hp. Where youre talking about pc sales being up really strongly. Printer sales being up strongly. I even thought about looking at staples. Costco will have a good moment. And people are spending a lot of money on hardware. Hpq benefiting from the weaker dollar. You want to watch it versus the yen where they have a lot of competition from other yeah. I think the stock i mean, a lot of people feel it ran ahead. Pick that one up if it goes down. I did want to hit qualcomm versus apple again. We have a new new filing from qualcomm. Trying to get an injunction to get apple to start paying the suppliers who make its phones. Those suppliers have the royalty agreements in place with qualcomm but are not paying because apple is not paying them. Of course this goes back to the ongoing litigation between the two companies. Qualcomm says its a commercial distribute. Apple says different. Its more and more significant for qualcomm. Remember, they held a billion dollars from them last year. Qualcomm is fighting back on that saying that apple induced all the regulators to gang up on it. There were some payments that qualcomm was due to pay apple. So thats 1 billion there. And now hundreds of millions of dollars from each of these suppliers who have their own royalty agreements in place with qualcomm and are paying them for devices they make for other companies. But are no longer paying them at all on the First Quarter for any devices they make for apple. Ipads or iphones. Its adding up to some very big numbers. They are now seeking to get they just got a judge appointed, judge hayes and finally so they will have a hearing on the 26th of june. Seeking an injunction that says you have to start paying qualcomm again until this thing gets to court. Let me just quickly share one excerpt from the brief this morning. Where they say, apples strategy is clear. Its attempting to inflict such severe and immediate and permanent harm on qualcomm that qualcomm will be forced to agree to the licensing demands without having a say in court. Apple can litigate against qualcomm indefinitely. It has unlimited resources as we know and it has filed multiple cases against qualcomm, not only in this court but around the world. When those cases end, apple can file more cases. Hence this injunction until we get into court on the issues at hand. The only other time we heard that when was the u. S. Government was fighting microsoft. This is very interesting because apple has kind of stalled here and qualcomm has had a big move in the last week. Right. Had an upgrade. You had a few people saying its gotten too cheap. Still a lot of focus on the xpi deal which we have talked about enough for now. But i dont want people to overlook this fight. This is an epic battle. It really is. Between the two companies. And it is it goes right to the core of course of profitability for qualcomm. Qualcomm needs that money. Yes. I mean, they have i think thats a fair point. Yeah. Theres a lot of different components. Theres marvel which i like. Starboard in there. A lot of Component Companies are very hot. Micron is starting to come back. Be careful, this group is strong. And qualcomm would have been the leader in the group. Isnt that something . They would have been the leader had not this happened. Yep. Shows the influence of apple thats for sure. Wow. Yes. So s p and nasdaq at alltime highs. The dow is not that far away. About half a percent. Lets get to bob pisani on the floor. Good morning. A nice pop at the open, four points. Historic highs. Lets look at the sectors, was know how ugly it has been for the retailers but as you heard from the guys today, turning it and today. Thats good news, and banks were leading early on. They slipped into negative territory. Theyre up almost 2 this week. Tech has been the big leader and energy turned positive. Even though oil has been down, even though theres disappointment. Perhaps cutting the prices overall. But Nothing Happened there. Status quo was not good enough. On the retailers you heard what was going on. Yes, pvh, they raised their guidance. I hope you saw jims great interview with Manny Chirico, the ceo. And best buy beat. I think the reason you see cigna by the way, a new five year low for signet. But best buy, the reason they had a nice beat is a specific reason and thats gaming. Appliances did very well. They were up 4. 6 . Look at that entertainment thats gaming up 11 . Thats the big results from that Nintendo Switch there. So that really helped put best buy into positive Comp Store Sales territory. Computing, mobile phones probably 40 of their sales. That was down fractionally. Consumer electronics and services all both to the upside. Lets talk about Williams Sonoma samestore sales. West elm, thats a big engine in growth, up 6 . A bit shy of expectations believe it or not. Some people wanted more. Williams sonoma the brand itself did well. Pottery barn doesnt look good at minus 1. 4 but thats been improving. From what i saw from the analysts commentary they were pleased with that. Signet was the real problem today. Signet, they own sterling and they own zales. 1. 67 estimate. Obviously, jewelry is very much slowing down right now. I want to mention we have a one of the big ipos in terms of dollar value here. Wide open west, six largest u. S. Cable operator. They took down the numbers on this. So the talk was 19 million shares at 20 to 22 stlar 22. Were at 17, its going to trade right behind me. There are no indications that 17 whats going on here. Remember, we have always talked about cable being a tough business. This Company Offers very specific Bargain Basement priced cut level internet only packages. They appeal to them. Im sure theyll ask about those cut rate packages and how theyre influencing them. Right now new highs on the s p and the nasdaq. Carl, back to you. Bob, thank you very much. Lets get to the bond pits as well, check in with Rick Santelli at the cme. Good morning. Good morning, carl. You know, we all like the Old Spaghetti westerners, some of the traders on the floor were teasing me but policy contagion by central banks. The good, the bad and the unknown. Listen, all the charts im going to show you, were talking about minutes. They travelled in seconds and they affected all markets uniformly. Okay . I know that that isnt a big deal the minutes but there are many big deals out there. They start with an e and end with an xit. Whether its japan, the eurozone, whether its our fed. All of to is going to have big effects on the market. What are they . Who knows . Look at the two day of two year, see what happened. Right around the minutes. Two day of the euro two year, two day of our tens. Two day of bunds. Two day of gilds. They look so close and they dont correlate on the scaling or necessarily on the absolute values of where rates are price or yield. But the fact that they move uniformly and its any given threat of Central Bank Policy reverberates around the globe. Moves everything. Lets look at the two day dollar index. You could see that it actually moved in an intuitive fashion for a change. As rates moved down, stocks moved up. The dollar moved down. We have seen that movie before. Finally, lets look at a long term picture of the euro versus the dollar. Many months ago, we talked about a macro chart. How 112 jumped out at you. Werent sure if wed get there or not. Lets open that up to the beginning of 2016. Boy, theres a lot of action at the current levels. My guess is, we could spend a lot of time up here. Is that a bad thing . Probably not. Because the biggest enemy of Foreign Exchange according to every business and every ceo around the globe is the volatility more than the absolute level. Carl, jim, david, back to you. All right, rick, thank you. Rick santelli, well check back with you later. Youll want to hear what Cheryl Lansing has to say about jeff bezos. As you saw from pisani, record highs for the s p and the nasdaq and the dow not far behind. Amazon, 15 bucks from 1,000. Were back in a minute. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise a 10speed directshift 5. 0transmission. Ine. A meticulously crafted interior. All of these are feats of engineering. Combining them with nearperfect weight distribution. Is a feat of amazing. Experience the firstever 471horsepower lexus lc 500 or the multistage hybrid lc 500h. Experience amazing. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. But we should be seeing more range of motion. K good, im fine. Okay, well lets see you get up from the couch. Im sorry, what . Grandpa come. At cognizant, were uniting doctors, insurers and patients on a collaborative care platform, making it easier to do whats best for everyones health, every step of the way. You may need more physical therapy. Ugh. Am i covered for that . Yep. Look. Grandpa catch grandpa duck woah ha there you go grandpa. Keep doing that. Get ready, because were helping leading Companies Lead with digital. Sherry lansing is a hollywood titan. She was the first female head of a studio at fox, the ceo of paramount for over a decade. She green lit titanic and other classics. Shes the subject of a new bu o biography and asked her about the bigname disrupters taking over hollywood. Do you think its weird when someone like jeff bezos is thanked at an award show . Not at all. I mean, he took the risk. Hes a disrupter. Theyre making terrific movies and theyre spending a lot of money. The more people you can go to get to the necessary funding the better it is for creative talent. If there are only four or five studios and they say no, youre in trouble. If theres netflix and amazon, that means if im a filmmaker i have more opportunities to get my movie made. Speaking of disrupters, we mentioned amazon. Now 986, almost 987. I know youre watching research on netflix too. The 2020 numbers could be way too low. How much low, 100 too low. Taking the price target of 166 to 190. People are underestimating how well it will play International Like domestic. These people are breaking you know, lansing, what a titan. And recognizes it. This is very similar to what we had with Mickey Drexler, a titan. The titans see it. They see it. But it is so hard. Because even if they see it, they cant necessarily be it. Meanwhile, theres a study out of mag a big consulting group, they survey 16 to 64yearolds saying would you be cutting the cord in the next 12 months . Last year, 5 said yes. This year, its 9 . 9 . Yeah. Theres so many more options now. We talked about it all the time. Critical mass. A Critical Mass of over the top platforms. By the way, still most of them do include sports which has been pointed out. If you take sports out of the packages you bring them down to a price point thats more affordable for people. Right. But theres just simply more of them. I mean, a year ago we didnt have youtubes yet. We didnt have hulus as of yet. We were sort of dealing with just sony and dish or sling and now weve got a lot more. Not to mention directv now. How about the buzzfeed stories and the videos that were doing for facebook . I was watching buzzfeed yesterday and there are two guys who go and they get the most expensive drink and the least expensive drink, the best food. Totally captivating. Fabulous tv. But its not tv. Youd love it. Its about shopping. Everything is about tv. Its about great shopping and bad shopping and dining. The youtube has a new Marketing Campaign and their slogan is this is tv now. Right . Because of the definition of what it is has changed. I just younger people just do not watch it the way we did. Nope. They just dont. You know, we should have someone i remember when pepsico had mike white. He was telling me who then went on to to run directv. 19 to 21yearolds should be in charge of advertising. And that was when 19 and 21yearolds were people who just didnt even play video games, they actually went to college and stuff. For more on our binge series, go to cnbc. Com binge. Well get stop trading with jim in a moment. More squawk on the street. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Time for cramer and stop trading. Im glad we have time to do these because its important. Burlington, thats a matthew from jpmorgan, just first retailer to out and out boost forecast, 79 versus 70. It will take off. Remember theyre a discounter, theyre not in the mall. Theres the recipe. Second, Merrill Lynch has become the big bull on deere, cat is chasing deere and i love that. That stock is going to go much higher if thats the case. Much higher, because the shorts are still congregating, good luck. Mining spending going up, public cats, backlog. Oh, no, sorry, they removed doug, which was a shame. They got to the Promised Land without him and i think thats nonsensical. He did a good job. Whats on mad tonight . Logitech. This was like pingpong for my generation. You can get that scholarship. And then new relic, another one of the companies, they get the data. Grubhub is mining data. Finding out whether people like vegan. Whether they like grubhub is a good story. I had them on last night. It was so come welling. Grubhub who owns seamless . Grubhub. All the big chains are going with grubhub. Theyre conceding and its happening their numbers. It worked. We use seamless a lot. It tells you if you like this last time, you might like that. Theyre doing Machine Learning on what you like and theyre advising people like us, they were telling me, listen, if you were to switch from caviar to us, we can tell if the tacos can travel or not and if you have to redesign your menu. My wife said, no, forget it. Shes managing the place now. Shes tough as nails. Good partner in more than one way. And when i have to clean the tables and oh, whatever. Never too late. Youre not making breakfast at the inn anymore. Yeah, i make the poached eggs like martha stewart. See you tonight. We did get an open on wide open west, its down 4 . Well talk to matthew shay. The dow is up 75. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. Will you be ready when the moment turns romantic . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. And get medical help right away. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Thereit comes to technology, about my Small Business so when i need someone that understands my unique needs. My dell Small Business advisor has gotten to know our business so well that is feels like hes a part of our team. With one phone call, he sets me up with tailored products and services. And when my advisor is focused on my tech, i can focus on my Small Business. Good thursday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen and david faber at the new york stock exchange. Another record high day for the s p and the nasdaq. Dow needs about another 90 points to get one of its own. Well watch that along with the president at nato headquarters and mnuchin on the hill. Our road map for the hour does begin with some bright spots among the wreckage in retail. Best buy and sears surging. Bucking the trend. Well dig through the numbers straight ahead. Oil taking a hit after opec extends the Production Cut but not by as much as some people hoped. Plus, the sixth largest cable tv provider in the United States going public right here at the nyse just moments ago. The ceo of wide open west will be joining us. But first, lets get straight to best buy. Reporting an earnings beat that sent the stocks surging with big time cost cutting. The Electronics Retailer has reported consecutive earnings beating managing to buck the downward trend in the retail sector. For more on best buy and the health of retail, were joined by brian nagel from oppenheimer, and hassan najee, from the commercial Real Estate Investment firm that invests in retail properties. Nice to see you both. On best buy, you have been on hold. Missed out on a nice rally into this report. And a big surprise on the comps. Look, i missed it. Ive liked best buy, i talked up what the company has done for a while. Theyre one of the companies out there thats traditional retailers that is truly embraced online commerce and is now fighting back aggressively against amazon and others but unfortunately i missed the stock. But i think some people might understand why because people try to dissect retail into segments that are unamazonable. How do they do this . Well, thank you. Look, i think what what best buy figured out under the new Management Team a few years ago, they figured out where the store actually makes sense with Consumer Electronics online. So they got much closer with they vendors. They focused on the bigger tvs and now more in home service too so they figured out that part of the Consumer Electronics cycle where amazon couldnt play. Well, they did benefit this quarter from the Nintendo Switch. Saw that in the target earnings as well. I wonder how much gaming is a driver for best buy right now and whether that can last. They called out gaming and digging through the results, gaming and mobile were really two of the key sales drivers. Thats my concern. I wrote a note to the clients saying that the as great as best buy is doing, as great as this quarter is, i worry about the sustainability of the gains. You have a big window into malls and retail across the country. What do you see in terms of a category break down, in electronics for instance. Amazonable or not, how are they faring versus the other categories right now . Good morning. Your point is the most absolute important point to be made. Theres such a bifurcation of the retail. You have a Large Grocery store, a large drugstore in a Community Neighborhood center theyre performing extremely well. The Power Centers that attract costco and marshalls, they have done a great job in evolving in the ecommerce age and now best buy that has done a great job surviving and changing this strategy with the smaller footprint. A store within a store. Working with the landlords to basically get through this amazon based competition. Those are examples of whats working in retail and basically Fast Food Restaurant and these needs based retail type of formats are the vast majority of the stock. But the malls and Department Stores that are struggling tend to get the negative attention and the headlines recently. Yeah. Certainly. What are you seeing on the ground there and how do you replace big anchor stores like Department Stores within malls . You know, the evolution ha hash has been pretty remarkable. You have a lot of fitness and personal services and health. In some cases education type of retailers coming in to take the space. We have seen complete reuse. The best use of the older malls, class b which is middle of the road and c which is older malls are going through a lot of reuse. But in terms of the actual shops you see players like apple, microsoft, amazon expanding into brick and mortar. Because its about consumer draw. Entertainment, restaurants and bars which are doing very well tend to attract people. If you can reengineer the tenant mix in a Shopping Center the returns are still fantastic. Hassan, we are looking at sears comps today. Down another 12 or so. Kmart in the similar ballpark. How long can that last and whats happening to malls where sears is still an anchor . Do we even talk about anchors these days . We absolutely do. Theres a pain in a love the cases where a large tenant like a Department Store will close its doors and then a lot of c e cases it takes a long time for someone else to come in. For the most part were seeing the big box get divided up into smaller reuse. Most of the trouble if you will is in the tertiary locations. The urban locations, especially where the Young Millennials tend to be shopping are doing fairly well. And the other real ingredient is the fast food and restaurants and bars because if you believe it, fast food and restaurant sales are more than grocery sales. People are eating out more. Which made me think of costco and this is a standout, brian. You have liked this stock i think. So has investors. They won confidence in a tough retail environment. Can they keep it up . I think so. I think costco has one of the best Business Models in the retail sector. What costco has done, they operate very effectively at low margins which allows them to compete with amazon and others. So look, i think well see good results out of costco tonight. More importantly than that, they continue to perform in this environment. Good curtain raiser for the earnings. Thank you for talking about the retail today. Trying to keep our eye on oil prices. The opec delegates say that the group has agreed to extend Production Cuts, but oil is down. Steve sedgwick is there at the meeting and he joins us this morning. Hey, steve. Hi, guys. I have to keep my voice down because unprecedented scenes here. We have the opec members and nonopec members here. Im going to push in and just show you the gentleman standing up is the secretary general of opec and the gentleman on the right is the all Important Oil minister, and the gentleman in the glasses, alexander novak, the russian oil minister. The people in this room between them control half the worlds of global oil. So actually the cooperation going on here between opec and nonopec. They have gone for whats achievable rather than a slam dunk than the markets might have thought, which is of course a deeper cuts than we saw in november of last year. What we have got here from the 1st of july unless were told otherwise, we have a rollover of the 1 offensive 8 Million Barrels a day. This will go forward until the end of the First Quarter of 2018. I spoke to mr. Al falih earlier on. He said, look, i think the markets will rebalance between six months, but we have to go for nine months to be safe as well. And for all kinds of reasons including the fact of the First Quarter that demand is so soft, they didnt want to put that oil back on the market. So much more sensible to put it on in the Second Quarter as well. But very interesting. Now we will get a speech from the secretarygeneral. Back to you guys. People say they want to be a fly on the wall in the room. Steve, thanks for taking us there. Steve sedgwick in vienna. We are awaiting the president s arrival at the new nato headquarters. Well take you there and 23 more people uninsured. Thats the latest from the cbo on the health care law. Stocks at this hour looking at dows on the gain at 70 points. Record highs for the s p and nasdaq. Were back in a minute. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. Steve, other than making me move stuff, im here at the Td Ameritrade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Big story out of washington, the cbo is out with the scoring of the Gop Health Care bill. Our Kayla Tausche has all the details. Good morning, kayla. Good morning, carl. That report shows 23 million fewer people would be insured in ten years and the deficit in the time would fall by 119 billion, 32 billion less than the previous version of the bill. Premiums will vary widely. Theyre going to rise across the board until 2020 the cbo found which is when states choose how to implement the law. But at that point, half the population would see premiums fall 4 because of participation from younger people. A third of the population would fall 20 because the plans will be less coverage. But the remainder could see premiums rise beyond affordability for people with preexisting conditions in particular. In one scenario laid out by the cbo alone a person in their 60s could see premiums rise 800 . Its stats like that that led the aarp to call it an age tax. The senate found the cbo report and the underlying bill a hard pill to swallow. Four republicans at least speaking out against it, which all but guarantees it will get rewritten. Among the critics, bill cassidy of louisiana, a physician, and one whom the Vice President referenced directly while stumping for the bill in his state yesterday. I hope you leave here today and give your congressman a call and thank him. Thank them for their leadership and principled stand and i suggest you might call your two republican senators and tell them its time for the senate to step up and do their part to repeal and replace obamacare. The senate has said they have real concerns with the bill. They want to rewrite it. The goalposts are moving, they still hope to get this done by recess. Guys . All right, could be an uphill battle especially in light of senator Mitch Mcconnells comments yesterday. We want to take you live right now to brussels where President Trump is arriving at the new nato headquarters in belgium. Were looking at the motorcade right now. Hopefully this a moment clearly, the fact they got nato on the agenda in the first foreign trip. Nato he trump famously as candidate called out and hes gone back on that statement as president. It comes on a week where terrorism is front and center for europe and were expecting a commitment from nato members in the fight specifically toward isis. Something that the United States and the Trump Administration wants very much. Hell have a dinner tonight at headquarters there. General mattis will be joining him before he goes to the g7. He already met with the eu. Donald tusk and the eu have no common position on russia. That w that was interesting. A meeting with macron and where the hand shake is being dissected on social media. Everybody is waiting for the merkel moment of course after merkel and president obama were actually at an event together this morning in berlin. Funny political coincidence there. Our haley gamble is on the ground. Awaiting President Trump, hadley, just how different of a nato meeting is this going to be with trumps presence . Well, this is a city of course, brussels, that he in the past has called a hell hole and of course hes rolled the comments back since the end of his campaign and as president he has been a lot more thoughtful about what hes had to say about nato and brussels and europe as well. Committing himself more to the nato organization than to the european project, but its interesting to note theres one meeting hell have later today and thats with theresa may. That can cause some ruffled feathers where we had intelligence leaking from the United States and the british officials were not happy about that. So that certainly will come up in that meeting. That comes on the heels of another breach in security. That was around Israeli Intelligence being leaked to sergei lavrov, a lot of questions surrounding intelligence. A lot of questions are not just about the Nato Alliance and the future of the alliance but what theyll do in terms of the nato countries pulling their fair share in terms of 2 of gdp. Thats what theyre supposed to be spending in the military buildup with nato and then the Big Questions in what happens next with russia and the fight on terror. Guys . Hadley, of course, the Manchester Bombing to a large degree has overshadowed some of his international trip. How much of that is being discussed and any reaction to headlines that for example uk intelligence officials are starting to share less with their u. S. Counterparts because of leaks that have happened here stateside . Thats what we heard earlier today. British officials very unhappy with the leaks from their u. S. Counterparts. Of course this sharing of intelligence goes back to the second world war. Very, very strong. Particularly on the war on terror. Now we have heard from one of the u. S. Ambassadors to the european project. He said well continue to share intelligence with our uk counterparts. No doubt theres a way around this. Theyll work this out in the coming days but its interesting to note that this falls as you said on a momentous occasion for the president. He said that in the past that nato was an obsolete entity so a lot of questions Going Forward over what in really means for the european and u. S. Relationship and also what this means when it comes to russia. I wonder also, hadley, how the story out of the uk with Prime Minister theresa may, intelligence sharing from the manchester attack, whether they want to share that with the u. S. , a little bit of drama into the meeting today as these leaders prepare to meet. Absolutely. Theres always a little drama when you talk about nato meetings. You have so many different countries, different agendas. Earlier today we heard from donald tusk. He mentioned he doesnt know if the United States and europe really are on the same page when it comes to russia. A lot of questions about intelligence sharing not just what happened with the manchester incident. But also whats going to happen Going Forward because of brexit. We had a strong uk french relationship on terror suspects. Now of course a lot of people are questioning if thats going to remain as strong as brexit moves forward. A lot of questions over whether or not that relationship with the United States is going to continue as strong as it has in the past because of the leaks we have been seeing over the last 24 hours. A fair number of bilaterals on this long trip. We are about to see how it changes as he moves into the multilateral negotiations. Thank you, hadley. Brian gardner and wells fargos senior Global Equity strategist scott wren. Good to see you both. On the trip the markets have had a nice run. How much do you think is attribu attributable to what he has been able to accomplish overseas . I think the hysteria has dissipated a little bit while the president has been overseas. I would say that largely, you know, the markets had a good bid to it. Very low volume. Some people are starting to chase a little. This is i would argue i mean, in our opinion were above fair value. This is where people start to jump in. Get a little overly enthusiastic. We might see a push in the near term that reflects that. Brian, i guess does the political calculus, has anything changed that would make us move above 2400 seem more legitimate . No, i dont think the political calculus has changed but i take a little different take on scotts comments. I think the trip has diverted the attention from the Political Drama of washington away. The president has gotten fairly good press coverage. Theres less coverage on the political noise and drama in washington. I think that is that is a help to the markets at the end of the day. But to your original question, no, i dont think the political calculus has changed a whole lot. The Health Care Issue is going to be debated for a while. Theres no end in sight to that. And tax reform is still a big question with a lot of hurdles to be climbed before tax reform can be accomplished. Yeah. And investors have been watching that tax reform debate and how close we are, how far we are as we watch the president who is being escorted inside by natos chief, jens stoltenberg. Does the cbo report on health care which a lot of investors were waiting for and watching, any closer or further . The cbo is always inaccurate on the predictions. Are they right one out of ten times, less than that, im not really sure. Im not sure why everyone puts such faith in the cbo report. Tax reform a lot of people assumed this would happen sooner rather than later. We assumed this was a 2018, 2020 story. In my mind, repatriation or Corporate Tax reform thats a nobrainer. Thats an easy one, but when you mix it in with the individual tax reform thats where it gets to be a problem. That debate is going to drag on for a long, long time. So i think tax reform t markets hopeful a little bit that that is eventually going to work. I think it is. I think well get some tax reform. But your guess is as good as mine as to when its going to happen. I dont think it will be this year. But scott, even if it does come next year, next spring, and they make it retroactive to 17 doesnt that provide a pretty long runway for an underlying bid in the market all year long . Really it would, carl. You know, based on what were doing and our work, you know, were not going to see something retroactive to 17. It may be retroactive to the beginning of 18. But i think we need a better indication and of course, you know, were leaning toward the more cyclical sectors that would benefit from a continuation and some tax reform. So you know were leaning that way. Were not leaning really hard that way. I think its you know, at least in our case, valuations, wage pressure on margins in the second half. Those are head winds. I think probably well end the year lower than where we are on the s p 500. Youre looking at the events in d. C. And not to get too technical but we have the budget outline this week. Doesnt it work with reconciliation, no budget, no tax reform, no Health Care Reform . Dont those things have to sort of fit together . They do have to fit together to bring about policy change. I dont spend a lot of time thinking of the president s budget, because a president s budget, whether its this president or his predecessors, dead on arrival when it gets to congress. Lets set that aside. Congress also writes a budget. And just to get in the weeds a little bit in order to get to reconciliation, Congress Must must pass a budget resolution. No budget resolution, no reconciliation. No reconciliation, its very tough to get to tax reform. Because republicans seemingly are going to have to go this alone. I dont see where democrats enough democrats are going to get on board to get to 60 votes. So these are a critical few months on the future of tax reform. Whether its this year, whether its 2018, you know, between now and i would say columbus day pretty really even earlier than that. September, are critical months figuring out whether tax reform is going to happen before the end of 2018. Before the end of 2018 . Yes. Wow. That keeps getting pushed out scott mentioned 2020 a minute ago. It could be, sara. You dont know. It wont happen soon. I think we feel pretty good about that. Yeah. 2017 guys, youll have midterm elections in 18. That could change the whole map, couldnt it . Absolutely. Absolutely. But in terms of getting it done before the midterm elections theres no magic cutoff on january 1. I think if we get to a point a year from today and tax reform has not been completed, its in real trouble. Theres no doubt about it. But its a sliding scale from the beginning of the year until roughly memorial day. Then david, to your point, you know, once you get beyond the 2018 midterms then you have to reassess and the likelihood of tax reform if it is not accomplished by that point. Yeah. Brian, scott, thanks, guys. See you soon. Have a good day. Same to you. As we head to the quick break look at shares of wide open west. W. O. W. Is the ticker. Its the sixth largest Cable Provider in the u. S. , going public moments ago here at the nyse. Well talk to the ceo straight ahead. The dow is up. Ready or not, here i come. Ek. anyone can dream. Making it a reality is the hard part. Northrop grumman command and control systems always let you see the complete picture. And were looking for a few dreamers to join us. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. [ male announcer ] tora bora fallujah argonne khe sanh midway dak to normandy medina ridge the chosin reservoir these are places history will never forget but more important are the faces we will always remember. Wide open west the sixth largest Cable Provider in the u. S. Going public right here at the nyse this morning. For more were joined now in a first on cnbc interview by the ceo of wide open west, steven cochran. Speaking of some potential investors at least they point out, listen, nine times ebitda is where this came in. Youre an overbuilder, youre up against our parent company, comcast in some markets and charter in others. Why are you going to succeed against these huge deep pocketed competitors . Same question i have answered for the last 15 year being with w. O. W. As we have successfully grown the company and got into this position. You know, its really about creating an opportunity, especially in the internet space to provide a Great Customer experience. Selling our service the way that the customer wants to get it. 50 of the new sales are internet only so its a piece of the business we are going after. I think were well positioned to compete well against Good Companies who are also good providers as well. Give me the sales pitch then. I mean, i want broadband. Lets say im a millennial, i dont care i should, but i dont care about the video stream. Why are you better than comcast or charter for me in terms of whatever youre going to be providing . Not necessarily better, but maybe the right choice for the customer. 500 megs at 59. 99, helping the customer out to acquire the ott content. They make the experience better for the customer. You know, the overbuild context, in the early 2000s when it was a video only business you really had to get your share to be able to, you know, to make the economic model work. With the triple play services and the margin and the variety of businesses, you know, theres plenty of room for multiple providers in that space. Is it difficult to negotiate with the content providers given your relatively small scale versus some of the competitors . It is. Thats one of the reasons for the shift we made. Almost three years ago moving to the more hsd centric model. Video costs had been pretty tough to compete with and we pay significantly more than the guys were competing against. So we said, how do we go, how do we be successful so we focused on the area where we dont have a disadvantage and thats on the internet. While we compete effectively we know where the sweet spot is. Its internet customers, internet customers who bundle and prioritize based on internet. If it comes to the video only customer were not going to win. Its capital intensive business of course. I would assume this. This is delevering, the money raised it will take down the interest payments. Absolutely. We should see between the 70 to 75 million a year reduction in interest expense which allows us to put more capital into the business. Youre passing 3 million potential customers. Whats the expectation that you we have been increasing the homes pass. Well build 70,000 this year and hope to ramp that up over time. We have a lot of markets that we are only a small piece of the overall footprint so this allows us to do that. Secondarily, we have enterprise level data and Voice Services on the commercial side and we have a great opportunity there which is also a capital intensive business but one we feel good about our opportunity with. First day as a public company, thank you. Steven cochran, ceo of wide open west. You see the president there with the leaders at nato headquarters. He made some comments about alleged leaks out of Government Agencies and he said my administration will get to the bottom of this. But they pose a grave threat to national security. And that there is no relationship more important than the one between the uk and the United States. So as we get more headlines out of that meeting of course well bring it to you. Dows up 78. Lets get over to sue herera for a news update. Sue . Good morning, carl. Good morning, everyone. Heres whats happening at this hour. President trump meeting with newly elected french president macron in brussels. He praised macron and he added never a loot a lot to discuss including terrorism. Queen elizabeth told the children that the attack in manchester was wicked. And she chat and and shook hands with the staff. An altercation between gianforte and a reporter erupted into a physical encounter. It started when the reporter ben jacobs asked gianforte about the analysis of the Republican Health care plan. Ill talk about that later. But im just curious. Speak with shane, please. Im sick and tired of you guys. The last guy you did the same thing. Get the hell out of here get the hell out of here the last guy did the same thing. You with the guardian . Yeah, you just broke my glasses. Gianforte has been charged with misdemeanor assault. Thats the news update this hour. Send it back downtown to you, carl. Sue, thank you very much. When we come back, retail and the border tax in the spotlight. The ceo of the National Retail federation matthew shay is with us. We see the dow climbing, up to 86. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Some build walls to keep people out. But these are walls that welcome you in. Within these walls, californias educators create safe places for every student to learn and grow. Where teachers open minds to history. Unleash creativity. And show our kids the future. Some build walls to divide us. But the California Teachers Association knows these are walls that bring us together. Because quality Public Schools build a better california for all of us. Executives from the National Retail Federation Meeting with members of Congress Last night to lobby against the border adjustment tax. For more on the meetings and the state of retail, lets bring in matt shay, president and ceo of the National Retail federation. Nice to see you again. Thanks for having me back. So what is your take away after meeting with some members of congress and continuing to advocate against the border adjustment tax . Well, you know, yesterday was really in some ways a pretty historic day. We had three visits backtoback with three cabinet secretaries and we had a dozen ceos with us. Saw secretary ross and costa and then secretary mnuchin. A couple of big things merged from that. First of all, it was very apparent how seriously they take the interest of the Retail Industry, how much they recognize retailers as major job creators in the economy. This administration has some great leaders running the departments and the agencies and its refreshing after the last eight years. Matthew, we have to cut you short here because we want to take you back to brussels. President trump has taken taken the lectern outside nato headquarters. Hell be speaking and dedicating something from the 9 11 memorial to nato. Our article 5, one for all and all for one. Hundreds of thousands of european and canadian soldiers have served shoulder to shoulder was troops in afghanistan with u. S. Troops for over a decade. For it to never again be a safe haven for the terrorists. It is our solidarity that keeps our nations safe and when our open and free societies come under attack, we stand up for our values and our way of life. That is why a strong nato is good for europe and good for north america. The 9 11 and article 5 memorial will be a daily reminder of our vital bond. And today, we will commit to do more in our common struggle against terrorism. So mr. President , it is a great honor to have you here. A great honor to give you the floor. Thanks. Thank you. Thank you very much, secretarygeneral stoltenberg. Chancellor merkel, thank you very much. Other heads of state and government, im honored to be here with members of an alliance that has promoted safety and peace across the world. Prime minister may, all of the nations today grieve with you and stand with you. I would like to ask that we now observe a moment of silence for the victims and families of the savage attack which took place in manchester. Thank you. A terrible thing. This ceremony is a day for both remembrance and resolve. We remember and mourn those nearly 3,000 innocent people who were brutally murdered by terrorists on september 11th, 2001. Our nato allies responded swiftly and decisively invoking for the first time in its history the article 5 collective defense commitments. The recent attack on manchester and the United Kingdom demonstrates the depths of the evil we face with terrorism. Innocent little girls and so many others were horribly murdered and badly injured while attending a concert. Beautiful lives with so much great potential, torn from their families forever and ever. It was a barbaric and vicious attack upon our civilization. All people who cherish life must unite in finding, exposing and removing these killers and extremists. And yes, losers. They are losers. Wherever they exist in our societies, we must drive them out and never ever let them back in. This call for driving out terrorism is a message i took to a historic gathering of arab and Muslim Leaders across the region hosted by saudi arabia. There i spent much time with king salman, a wise man, who wants to see things get much better rapidly. The leaders of the middle east have agreed at this unprecedented meeting to stop funding the radical ideology that leads to this horrible terrorism all over the globe. My travels and meetings have given me renewed hope that nations of many faiths can unite to defeat terrorism, a Common Threat to all of humanity. Terrorism must be stopped in its tracks or the horror you saw in manchester and so many other places will continue forever. You have thousands and thousands of people pouring into our various countries and spreading throughout and in many cases we have no idea who they are. We must be tough, we must be strong. And we must be vigilant. The nato of the future must include a great focus on terrorism and immigration as well as threats from russia and our northern and southern borders. These grave concerns are the reasons i have been very, very direct with secretary stoltenberg and members of the alliance in saying that nato members must finally contribute their fair share and meet their financial obligations. But 23 of the 28 member nations are still not paying what they should be paying and what theyre supposed to be paying for their defense. This is not fair to the people and taxpayers of the United States. And many of these nations owe massive amounts of money from past years. And not paying in those past years. Over the last eight years the United States spent more on defense than all other nato countries combined. If all nato members had spent just 2 of their gdp on defense last year, we would have had another 119 billion for our collective defense and for the financing of additional nato reserves. We should recognize that with these chronic underpayments and growing threats, even 2 of gdp is insufficient to close the gaps in modernizing readiness, and the size of forces. We have to make up for the many years lost. 2 is the bare minimum for confronting todays very real and very vicious threats. If nato countries made their full and complete contributions then nato would be Even Stronger than it is today, especially from the threat of terrorism. I want to extend my appreciation to the 9 11 memorial and museum in new york for contributing this remnant of the north tower as well as to chancellor merkel and the german people for donating this portion of the berlin wall. It is truly fitting that these two artifacts now reside here so close together at the new nato headquarters. And i never asked once what the new nato headquarters cost. I refuse to do that. But it is beautiful. Each one marks a pivotal event in the history of this alliance, and in the eternal battle between good and evil. On one side a testament to the triumph of our ideals over a totalitarian communist ideology, bent on the oppression of millions and millions of people. On the other, a painful reminder of the barbaric evil that still exists in the world and that we must confront and defeat together as a group, as a world. This twisted mass of metal reminds us not only of what we have lost, but also what forever endures. The courage of our people, the strength of our resolve and the commitments that bind us together as one. We will never forget the lives that were lost. We will never forsake the friends who stood by our side. We will never waiver in our determination and achieving lasting security, prosperity and peace. Thank you very much, its a great honor to be here. Thank you. President trump there addressing the opening meeting of the 28 member, 68yearold military alliance of nato outside the brandnew headquarters. Making a dedication from the 9 11 memorial museum. Hadley gamble is still with us from nato. So how did President Trump and of course we should remind everyone the u. S. Is the biggest and most influential member here spends the most on its military budget by far, how did he set the stage for these discusses to come, hadley . Well, it was interesting listening to that monologue from the president because essentially he was putting most of his emphasis on antiterror efforts and thats going to be interesting Going Forward because nato is planning on joining this antiisis coalition, but putting boots on the ground is not what its all about. It is about nation building and humanitarian efforts Going Forward. There were a lot of questions about syria and iraq, if wed see a marshal like plan. But no word yet on what that could look like. I want to mention he brought up the nato headquarters. Brandnew behind me, 250,000 square meters, but its expanded a lot since 1967 and they hadnt updated their building. So hes really kind of calling out these nato companies for how much they had potentially spent on this new development. As much as a billion euros but at the end of the day they hadnt updated since 1967 and several countries have joined since then. In terms of what he was saying there, he was talking about mostly about antiterror efforts and led by the United States and joined by arab countries what it will look like Going Forward. But what most leaders will agree on, russia has to be involved in antiterror efforts and what happens next in syria and iraq and the islamic state. A lot of questions about how russia will be brought into the process because all of the leaders have agreed in the past and certainly in interviews that i have done over the weekend not just in jordan at the dead sea, but a also in saudi arabia, russia has to be at the table. Yes, see how the dinner goes tonight. Had he made the comments about the spending habits. President trump did mention Russia Threats as one of the prerogatives there. Some could have been looking for. Its an awkward subject. Well get talk some more best buy, talk to matt shay of the mrf. Best buy is up almost 18 this morning. Well talk about that on the other side of this break. Its been over 100 years since 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 . Retail top of mind with earnings out from best buy, sears, its stock setting a new record high as executives and Industry Leaders meet on capitol hill to lobby against the border adjustment tax. Lets bring back matt shay who got cut off earlier to hear from President Trump at nato. Thank you for sticking with us. You were talking about your meeting with with three cabinet secretaries, mnuchin, ross and i think the new labor secretary as well. What kind of assure ranlgs ance get if any on the border adjustment tax as part of tax reform . I think what was very apparently was how aware they are of the job creating impact of the Retail Industry across our economy. And their strong desire as they pursue tax reform and other issue, Regulatory Reform and other measures to get our on economy moving again, that they dont do anything that would harm the jobcreating aspects. Secretary mnuchin repeated a couple times, wow, one in four jobs, 42 million americans. And so they clearly rec be nid what is at stake here. And i think they made it clear that while they want to find a way forward on tax reform, its not going to be at the expense of job creating and hurting consumers. And that was very apparently in all the discussions. Matthew, you apparently did your job pretty well. Are we over and done with, no more talk about the b. A. T. Or you have to stay on it just in case it somehow bubbles up again . You know things in washington never really die. And so i think until we see the president signing a tax bill at a ceremony in the rose garden on a bill that does not have that in it or some kind of a consumption tax or value added tax or something that will hurt consumers, i think until we get to that day, we have to remain vigilant. There is too much at stake with the jobs created and the way in which consumption drives this economy to rest. So we will continue to be very aggressive about trying to educate members about the impact of this bill. And when youre in these meetings, do you suggest an allege ter in a difference . There was a logical idea behind b. A. T. In terms of meeting the v. A. T. S that we find in so many other on markets around the world. And of course being part of this overall tax reform. I mean, do you have suggestions for them as well as what might replace the revenue raising mechanism that they were relying on for tax reform . Yeah, what i would say is we do have those conversations. And tax reform like any other big policy debate is about making choices. And the Leadership Practice a choice and they made a choice this is the direction they want to pursue. Its certainly not the only choice that could be made. If you go back over the last 30 years, there are numerous other proposals that have been put out there before that made other choices about how you lowered the rate, how you wrought about sen brought about sensible reform. So we suggest we go back to some of those other ideas. Wrought ab brought about sensible reform. So we suggest we go back to some of those other ideas. We just think this is the wrong choice. I know youre focused in washington on the potential job losses coming from a border adjustment tax. Leave that aside for a moment. What about potential jobhe wave retail . Were coming off another Earnings Period where, yes, there were some winner, but brutal period overall for retail. What can we expect on jobs over the next few months . I think what were seeing is is this rapid transformation. We know the way consumers are shopping has changed. And they are changing more quickly than many retailers are able to change their infrastructure, their overhead expenses, the other capital expenses and investments that they have made. And youve reported some great numbers this morning from best buy, there was great coverage with walmart. There is a way for succeed in this marketplace about and thos are doing a great job. But retailers are across the industry. It is not just bricks and mortar stores. Derek pegu dare i say even amazon who has covered this morning. And there is a rapid period of transformation and the job shift is happening and it has implications for all retailers wherever they are. Well talk amount made sonazt hour. For now, matt, thank yyou. Lets get the santelli exchange. Morning, rick. Morning. Id like to welcome my guest brad tank. Love his last name. Than thanks for taking the time. You listened to the minutes, you watched the markets. Give me your translation. Markets liked it. I think the markets liked it because it was confident yet gentle in terms of what they will do with the balance sheet. It will start later this year. So i think the markets like the idea later is better. Lets get a rate hike or two out of the way and then start to sling otherwihrink the balance fourth quarter. All right. You talked about rate hikes. How long do you think are left for 2017 . Two. How many for 2018 . Two. Whoa, people. Thats of that half the number everybody answers. Everybody says two and four about that where is t temperatu. Two and two makes more sense. But lets say that its two and four. What do you think the yield curve would look like considering we have one 32 year and a 225 ten year . Its two and four. Ten year neats are going up, the way is how much. Id say they can get to three under those circumstances because four next year means the economy is running a lot hotter in 2018 than it is in 2017. Well, if youre 3, 3 1 2 in tens, where would that place twos . Probably up more from where are we are. So you get a bit more steepness in the front end anticipating additional rate hikes. Were only talking about 2018. To get there at the end of 2018, you will have to have the mar debt pretty optimistic about growth Going Forward from there. With regard to balance sheet, were still light on facts and i dont have a problem with that. Its a big issue. Id like them to spend time thinking about it. With respect to runoff, it sounds like they will put it on automatic pilot. The issue i keep thinking about is how does the maturity in the sensitivity of the portfolio, the duration, get affected if they just leave it on automatic pilot . If there could be some mobiles there. Yeah, they will have to manage it. Right now everybody is guessing because they have left out a lot of important facts. How big they start, how fast they increase it, what their terminal end game is. So there is a lot of guesswork going on right now. But i would guess and our view general bely is that they will try to leave the maturity mix alone at least at the outset to minimize yield curve impact. And real quickly, the equity markets seem to have liked it yesterday. Equity markets werent bugged by china. In the end, if the ecb has a rough exit, does the u. S. Stock market go up or down . It goes down. Interesting. So you dont believe that the money will just seek a new home no matter what. Very interesting. Brad tank, thank you. And squawk alley is coming up right now. Thank you very much, rick. Good morning, it is 10 00 a. M. At best buy headquarters, 11 00 on wall street and squasquawk alley is live. Good thursday morning. Welcome to