Transcripts For CNBC Mad Money 20170911

Perspective. Sometimes the stock market sees a Glass Half Full other times half empty its a very rare market that looks at a half full glass and judges it to be overflowing. Thats what we had today with the dow. Nasdaq pulled 1. 13 . In the last two hours we have seen events that might give investors pause. This time this gave buyers the opportunity to get in while the getting is good. The buyers are embracing the future lets go over some some of these issues so you know what im talking about theyre calling lessing to create a rip snorting bull market first, its a very rare time, very rare occurrence when the absence of negative, however fleeting or relative creates a stampede of buying but the fact that north korea chose not to test a missile on saturday, the day of the foundation of the republic has the holidays known there came as a shock a single that we may be dealing with a bellicose leader kim jongun. The fact we can sprinkle on very little and little happens its a blind faith thats interval to Chinese Market capital chinas idea of Good Behavior for north korea is very different from ours. Still, rationality isnt necessarily the hallmark of stam peeds. Meanwhile, its been the case for a while. Our market took its cue from positive european boris action key driver behind the moving of the stocks that dominate the s p foouchs. Think about an ibm, 3m, mcdonalds, united health. Honeywell. The truth is that irma behaved better than wed fear and that was enough to trigger a relief rally. It doesnt matter that there were preps tens of billions of dollars in damage when the smoke clears, irma didnt live up to the height so to speak, and that boosted the markets. We have seen a mad flight into the quality of treasures last week sending buyers biggest worries right now are fears of a slow down and a less aggressive fed, something that could hurt bank earnings. With no disaster occurring we got a reversal today which cheered the fresher, gave birth to a bullish state of mind of course stocks run in in anticipation of the rebuild in florida. Think of what sold in the endless islands of home depot and they took a hitter whenever wind damage owned by flooding its covered by standard Homeowners Insurance and its filled with years without Major National disasters. These stocks which have been in a relentless down turn which i believe shake off the rally anew thats not what i expect to happen to homeowners but to car owners car owners in houston after hurricane harveys destruction very few of homeowners, that Flood Insurance not written by most companies but there are hundreds of thousands of car owners with coverage and the ruin waters are so mass they could lead to a break in decline of the auto cycle. So two big bearish theories, peak housing and pique auto can be charged here. And the damage could be vast enough to let them raise rates to you but not so big that it dents Balance Sheets looking back we got a full glass. Looking forward at the future our cup run net over today first launch of the iphone and were hearing it could be 1,000 whose going to pay 1,000 bucks for a new phone. In this country we know the phone companies could subsidize that picture we have a stock rush not only apple but all the gocomponents the solutions, boy come when the animal spiritual running you know what should be the partake, fang theres still reasons for each to run facebooks talking about spending a billion dollars for original television, given that right now you provide the entertainment for zero cost, thats a small price to pay. We hear amazons cut pay in gross foods have already boasted sales. Amazons profit is so great is going to be a confrontation. Stay tuned for that. Netflix always does well when people are shut in its as much of a storm play as amazon which gets new prime members when stores are closed finally, when we hear that business is better whether it be from insurance checks in the mail, from the storms, the weaker dollar and overall acceleration of worldwide growth, the transport always runs, thats a measure of commerce and one that always gets the bulls running heres the bottom loan people. No, im not men mizing the tragedy of catastrophic Natural Disasters no more than i would be remiss talking about the sad 16th anniversary of 9 11 as i will do later in the show. Theres something to be said about a market that infuse things positively. Even as theres no time to celebrate in the real world, its all so different from stocks and bonds leading california, lee. Specific breach i like that whats up . We appreciate what you do for us, home gamers. I have a position in united technology, utx, along with some other analyst base industrials united tech is the position i have some lock in, some xli. When utx when the rock well merger happened, utx is ipped, some people think its dead money. I see it as a possible opportunity to further add the money lee, i have to tell you i couldnt agree with you more it is now allowed you to buy United Technologies is the less than where it was before i one on vacation. If isnt an opportunity i dont know what. I think i would tell you to buy more if you didnt already have so much how about jeff in kansas jeff bowie ya tim. Bowie ya. First time calling so thanks for taking me call excellent recently ive increased my position in a corporation, my family so im asking your take on ccl carnival well thats one of my absolutely favorite ceos he has done a remarkable job whether it be with the incredibly rise and gross margins. He has competition because royals a terrific stop. Norwegians good but with Arnold Donald at the helm, the incredible turn of carnival despite those tremendous reversals has to be duly noted as one of the best come backs of all time we have a Glass Half Full on our hands. One of things in the midst of all the real world hurt theres something to be said about that. The Consumer Goods Company is firing back and im talking with a feisty ceo. Then when the duponts merger complete well take a closer look. Stick with cramer. Your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. The strikingly designed lexus nx turbo and hybrid. Lease the 2017 nx turbo for 299 a month for 36 months. Experience amazing at your lexus dealer. Did you hear directvs latest deal . Its cheap and gets you all the big games. It starts at sixty bucks a month, but jumps to over 100 after 3 months. Cool i think . And jumps again to over 150 after a year. Noooo. And ends up costing over 3500 bucks over 2 years. Youre cleaning that up. Dont get caught off guard by directv. Touchdown. Get the best with xfinity. What do you make of driving a ceramic im talking about the increasingly proxy fight hes pushing for a seat on the board of directors last week he released a 24page decoration laying out his position on approximate for. More outsiders in response the company put out two statements citing the strength of the brands, number one number one number one, i can go on and on, in the many ways in which management has already streamed on the business in recent years. Last week my colleagues asked him opinion his plans for procter. Tonight i want to give david taylor, the present chairman of ceo procter to tell his story himself. Mr. Taylor welcome to mad money good to see you sir we know youre company has been in the newspaper about the proxy fight. But you know what, i think its important and well get to that for you to tell the story of this, maybe the akindic america. Pogs going through a transformation and were a Different Company than we were years ago. Nelson talks about data thats been supplied to him but somebody that left eight years today p g are back on track. Were now the ten categories these ten categories are one where pretrial conference drives purchase we are the company that brings you all of these brands. P g has also gone through a dramatic portfolio improvement in addition to the productivity improvements this began with the were making we just finished fiscal 16, 17. P g is back on track okay that does admitting that theres a dry spell maybe a spell in procter that perhaps if you take a longer time frame might indicate there is need for more chang if you look back over a long period of time we went through a period where we had tremendous Foreign Exchange impacts, and i do acknowledge that. Over that fiveyear period of time including last year we had 14 billion of Foreign Exchange on the top line, 4 1 2 on the bottom line. We made the changs in our portfolio and in our organization were a leader today than we were five years ago, especially ten years ago. We made the chang in your culture, take able to set ourselfings up with a Accountable Organization this sounds to me like a believe that mr. Pelts want to bring to the table its interesting identify met with him several times back and forth 16 times we corresponded and ive listened to his ideas in the first several meetings he didnt advance new ideas and the few he did advance went right for our company. Weve already made many of the changes he advocates the last thing we need right now is a reorganization. When youre delivering and improving across every element you look, stay the course, execute brilliantly and create a value. Lets talk about innovation and growth, what are you brought that has allowed the stock from july of 2015, when i announced ceo to maturely outperform the entire Leadership Team and the 95,000 employees with p g is dedicated to creating value. The chang ive mentioned have come together. The portfolio changes, the productivity changes, the cultural changs. If you go back through decades we are an innovation growth company. We listen and understand what consumers need and we try to do that better than offer competitors and in any category we compete in. When we do it well we get rewarded to share gross over time we had two of our top 20s country grow and share today we have 11 of our top 20 countries grow in the hold and share, the progress is strong. Lets talk about the changing world youre facing. We live in a world with washington and target are feeling pressure from amazon how do you fend off the pressure to produce your margins. How do you deal with the idea that the and a look that makes you want to buy is no longer a be all end all business at the end of the day consumers decide whether we win or not customers ask me for two thing, grow the categories and help them make profit the way you do that is innovating the invasion that were focusing on cost product, package, the way we go to market and the way we communicate is valuable for consumers and customers. Thats why we have the support of our leading customers sometimes people feel there is the millennials dont buy into the all packaging that you have and all the materials that you have the millennials have they may like the pod but want something that is more natural and organic. What are you doing about this new generation that seems so judgmental about the things you and i may have liked when we were growing up . The millennials, like almost everybody want products that solve problems and performance drives the purchase. These brands solve problems or provide important needs for each person most of these brandsare winnin amongst millennials. Whatever they want, if you have dandruff what do you want, a product that solves the issue. You reach for head and shoulders. Ive heard some say big brands cant grow the Fastest Growing part of our company is the big trusted brands whether thats online or off line, trusted brands that perform win with consumers we go to go back to this idea youre talking about picking up sure you have to understand there is a period where the company stalled where you were not doing as well as competitives. Are you telling me youve been able to turn this around this fast there was a period where shares were lost in many countries. No question thats true and i dont deny where we were the past ten years but lack at what happened in the past two years this company has rallied around the portfolio and the changs weve given each of the ten product category leaders the accountability and responsibility to make the decisions on innovation branding, all way down to how many sales people they need in the markets end to end and its paying off we got a lot more to chair back with Procter Gamble ceo well be right back. This is a story about mail and packages. And its also a story about people. People who rely on us every day to deliver their dreams theyre handing us more than mail theyre handing us their business and while we make more ecommerce deliveries to homes than anyone else in the country, we never forget. That your business is our business the United States postal service. Priority you were back with david taylor, president and ceo of Procter Gamble thanks so much for being with us again. Lets talk about this proxy contest. Your Company Stock has been a consistency of mine. 33 years. You hosted 101 brands does it strike you as odd that a company with 61 consecutive years of dividends is now the subject of a proxy fight we have people coming in and suggesting we do many of the things we have been doing. We didnt go for the proxy fight but we are to do whats right for the short and longterm of the company and for that reason were fighting it. But why would it necessarily be bad for the longterm hes the shareholder so he wouldnt want to hurt the situation. Wouldnt it be good for cooperate government to bring in an outsider with a different point of view . Weve got an downstanding board. You foe many of our Board Members, they are outstanding and they are most important for the future of our company. Many people tell me why not. Why not is not the governing standard for our company we want why. Who are the right people to bring to the Company Based on the amount of whom and you can put more on rather than fight him for what he says could be 150 million. You can invite him in and bring those ideas, hes just one person why would he interrupt the corporation . Well, first of all i dont know where he got the 150 mltds. The cost of solicitation weve given estimates in that area the why not, hes proposed things that could be dangerous to the shortterm, which is reorganize the company many of the inventions in the process improvements that serve many of these brands and underpen the tremendous performance in efficiency and value they offer came out of corporate rnd and into the byes. I want people to understand he is not calling for a cut in the rnd budget youre talking about a different kind of level . Absolutely. Hell tell you hes not trying to eliminate you as the ceo, he is not trying to spend less than rnd. You just think the way the company is spending the rnd is fine now versus what we wants . What we want to do, many of the innovations, one of the businesses or perplexes in the businesses it wouldnt have gone out several different areas. The sashays that are used for sarch ls, the process to make these faster than anybody can make this commercially at a lower cost was developed using our liquids understand from the liquids business in the converting capabilities that come out of our partner businesses if you have separate businesses you wouldnt have made the connection and missed an opportunity to take advantage of a fair plus. I want to ask you, there were notations in your previous statement which you said, the management also talked to ceos and directors and others who have worked with mr. Pelts and positive recommendations were not coming i foe several of the ceos and theyve said positive things to me mr. Pelts said they spoke 13 out of 13 and they said they didnt contact it can you explain the disparitity here thats not true i and Board Members have talk to directors, ceos and members of senior management. I respect and honor the confidentiality people ask for when we give our information but weve done our home work, you know our board our company is thorough. We want the best for our company. The standard is the best weve done our home work and hes not the right person okay, because your board is rigorous, theres the lead director we have praised him often from former boeing, frank blake. Yes, another outstanding. So what i need to know is, is it category, a lack of knowledge, is there something about mr. Pelts that wouldnt bring 50 years of Consumer Product something to the table of value here . He and many other people could be candidates but you want the best weve looked at things and identified the areas that the board is focused right now we want people to understand technology we want people to apply technology to our industry we want folks that understand technology, we brought amy chang on the board she wen to ebay and applied technology to our space. Went to google at a number of Different Levels and ended up as a global head and it started her as a founding company. That person is 40 years old, brings diversiont diversity, Technical Skills and many of the things were looking for thats what were trying to do is find the best people for our board. Mr. Pelts said you cut back your digital spending in order to have a better return. Amy chang was added at the same time is it true you kcut it back . We cut the Fourth Quarter because we learned some of the ads were inappropriate content we vote with our money, our digital spending yen year is flat our ecommerce business is twice the size of our next competitor. We have a billion dollars business in the u. S. Growing at 40 . A billion dollar u. S. Commerce business in china growings at 40 . We understand how to reach consumers when and where theyre reseptemberive to the methods. We havent had a choice to cut damagetal spending other than to make sure its being sufficiently surged in leverage. I want to know where you are in this rule versus white fight. Mr. Pelts is the white part. Have you talked to the index funds . Have roughly 18 have you talked to large share holdsers mr. Pelts on our air said lose isnt part of his category should it be i think it should be for him. Were focused on winning the proximity contest because were working for all of our share owners nelson pelts is one of the first meetings i had with him and jim mcmurry says david, you got to give me something for my shareholders we got to do whats right for all of our shareholders. Net son principles is not the right person, we have don our home work. He has said you have told him we cannot bring in two outside people at two senior levels or they would fail. That to me say proxy would hes taking that very much out of contest, we were talking about acquisitions. P gs made the choice and ive been open about it, were going to hire the best if it means selectively going outside well do that. In the last 9 months we hired the chief Operations Officer from the outside we had four times as many external experienced hires in the last year is three years ago. Our standard is not internal or external, its the best. All right, now i think we i dont want to overdo proxy i want to talk about longterm. Sure. Long term if you owned a stock for last 50 years, how have you done . Very well we supplied a chart. It shows p gs progress over the long time. Its been an outstanding stock for people to buy and hold how Many Companies have had a better record of your 61 years of increased i dont know of many, you may know were 61 consecutive years and were quite committed to given our shareholders difr did he understand and again you admit there was a period of underperformance, youve come in and had to do a lot to reinvigorate. True. Weve had to make the changes that were necessary, that is true the external environment that created difficult times for a few years, the Foreign Exchange on our company was different versus european competitives we addressed that. We also addressed some of the comments he made about a Matrix Organization he said that but thats again using data thats eight and five years old. What weve done is made the changes needed to make sure the companys position to grow for the future at the end of the day, couple things have to happen for p g to win, we stay focused on consumers, and we empower to talented people in p g you understand he does have your former c s o, a man i respect saying theres not enough change. He has a reference. 8 years ago. What has changed in your show and in the world in the last eight years. Having somebody thats left eight years that is not in touch with the changes weve made. Today were an entirely Different Company than we were 8 years ago. Our portfolios different. We can reinvest in packages to consumers is different than it was. The culture underpins that, the power of p g people is different. P g has a bright future. Fair enough thats leave it at that. Thats david taylor. A week and a half ago a long awaited merger between dow chemical and dupont finally closed ive been very bullish on this deal ever since it was first announced in december 2015 but you have to remember, the current dow dupont set up is only an intermediate stage for the combined company breaks itself up into three separate businesses so, because this is a complicated story, i think its worth circling back to see how much value has been created and more important for you at home, how much more still on the table as dow dupont prepare for its big break up at the moment this is the Worlds Largest completely company. 73 billion in sales taking the helm, ceo dows andrew lemons hes been on the show many times. Just the merger between dow completely and dupont is within 18 months the Company Plans to break its up by end market so, lets talk about stage one, merger that was completed september 1st. Within the next two years, dow dupont expects to achieve 3 billion worth of cost synergies and those numbers could prove to be low. They had to get Regulatory Approval like selling duponts actions to another phase, fnc, the truth is that the combined company has had tremendous scale. And gets major advantage versus the competition. Stage two, the upcoming separation from three different trading companies. Dow dupont plans to spends the next decade laying the ground work so each division can stand on its own two legs. They merged so the combined company can transform itself from the single diverse tied chemical into three more focused businesses that could dominate the markets. In other words, owning dow dupont here is about getting yourself a piece of each of these impending spin offs. You have a Power Company some should say should be the best. You got a powerful Material Science Company which will keep the name dow chemical. Several other plastic materials and you get a powerful specially product company. Maybe its bit of a catch all. Nutrition, one of my favorite businesses health, bio sciences, Electronic Technologies how do you keep track of where dow duponts headed. Tomorrow at cncb delivering Alpha Companies david and i will be interviewing at the ceo it will be at 11 30. David and i interviewed another executive from a complicated story. Since then the stock has run from about 100 up to 174 as of today. As i just basically said when i came out here after that interview. Other than events that specifically includes yours truly what else should you watch for . Dow dupont hasnt told us when its earning yet, well likely hear from them sometime near the end of october which is where the dupont reported Third Quarter results last year. Profinancials are expected to be available by november 15th and that could be another positive catalyst for investors well likely hear about the dividend in the not so distance future final over the summer, dow and dupont brought in mcquincy to help them figure out how to set up the stock up. And bank america believe the will be reviewing the study in the next few months. Heres the big question, now that the mergers closed, dow dupont still orders most of the analyst remains bullish. This morning we got two incredible opposite bankers reported bank of america as i mentioned stock of buy barkeleys came out with an underrate rating bank of america, merrill cease growth, due upon worth 7 bucks a share barkeleys up theyre concerned the three way break up may not be impressive as people think. They worry that this certainer ji may not flow to the bottom line thats why barkeleys only gives a stock of 6 or 7 price target. My view, im a huge fan of dow due upon for two reasons the first as i mentioned many times before, as ceo im calling the gs when it comes to break up the ceo unlocked a tremendous amount of value for share owners almost nobody saw. In the end, when you have the broken up components, tyco shareholders were given 960 return in the 60 years what if the board of directors try to get in brings way. Then theres the second reason i like dow dupont. Tons and tons of activism activity push him from underneath nelson pelts as s trier. And danilos third point giving history at tyco, why would anyone think hes done creating value after hes creating a three new company, thats not his style one last thing, Stock Traders at 15ive 6 times next year earnings estimates, and these estimates are still pretty rough that makes dow dupont stock a pretty good value here it wouldnt shock me if the estimates end up being way too low. Youre not too late, in fact six the deal was announced in 2015 the dupont stock informed the s p 500 while dow is only outperforming by a hair. Meaning, the stock could have a lot more room to run as we wait dow duponts big threeway split. I say trust ed, hes the king of break up long live the king before we take a break, i got to thank everyone for going above and beyond for help during Hurricane Irma you do not want to miss tonight, boots on the ground in floridas special show he followed irmas path. Covered everything you need to know about the crisis, the recovery and the impact on the committe economy. Tonight right after mad money 7 00 p. M. Eastern. Back after the break what started as a passion to make something original. Has grown into an enterprise. Thats why i switched to the spark cash card from capital one. Now, im earning unlimited 2 cash back on every purchase i make. Everything. Which adds up to thousands of dollars back every year. And helps keep my passion growing. In every direction. Whats in your wallet . Expestandard. E lexus rx with advance safety. Lease the 2017 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. It is time and then the lightning round is over, are you ready. Well start with michael from new jersey michael. Jim, buddy, listen. Also again what is up with this stock . Its a situation, they got a drug that might come off pat tended, theres a challenge. They put the right to it for an indiana tribe. If its what i regard as double jeopardy in the process, more importantly, i think the stock is inexpensive and should be bought lets go to tray in georgia. Tray good afternoon hows it going . Well thanks for asking. How about you . Im doing fine, weathering the storm down here. I want to ask you about u. S. Gyp son stock. I realize a tragedy was happening to america but if you look at the history from after katrina the stocks spiked. Youre right. Mike take this very clear. Lit them come down and buy them. Us g i think its absolutely the right thing because of mold and you got to replace it because of mold thank you to suburban enterprise z for teaching me that barry in california. Hi jim, i enjoy your show i want to give a shout out to friends in florida and texas my main interest now is arena. Ive been with that rascal since 2000 well they reinvented themselves barry they reinvented themselves in a way so that the stock went undervalue i think its a good one. Anne in ohio please. Anne hello anne. I think were k. Caller what did you just say . Give me a name of a stock and were in business, or a sports team ill take anything at this point. Caller oh hi there, im a fan, i love your energy. Thank you okay now we take that next step with a stock name go birds ra gina help me here anne you still there kr that ladies and gentlemen is litng nclusion of the ghin round. We can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Becareally want to be there, but you cant. At cognizant, were helping todays leading Media Companies create more immersive ways to experience entertainment with new Digital Systems and technologies. Get ready, because were helping leading companies see it and see it throughwith digital. As i mentioned at the top of the show we managed to avoid a disaster in florida this weekend and the markets breathed high relief we staged off the crisis in north korea when kim jongun chosed not to launch the test in ibcm those are things we should be thankful for although a hurricane is a Natural Disaster that cant be avoided but the missile is manmade and can be stopped before a war break out the terroristmade tragedy that occurred 15 years ago today in pen gone in new york city where the twin towers came down, more lives were lost than in pearl harbor its the second day, 16 years old, i fear itll be forgotten if we dont remind those who werent there and werent born when it happened tonight a documentation about the rebuilding a rebirth city was so devastated by the collapse of the gleaming towers that made up the World Trade Center we cannot let the new skyscrapers going up, an incredible vibrancy of live that wen through the area cant make us forget what transported 15 years ago. Thats why i have a request to make here. If you havent visited the sadly beautifully fountainsed by the name of the deceased, both the workers and incredibly brave First Responders who ran in to save those who was trying to get out, as well as going to the museum you must do so. We visit the franklin institute, exciting place we went to the art museum, im sure all of you had similar field trips to the monuments that mark our countrys greatness in your town its this 9 11 museum that because unlike pearl harbor that brought us to world war ii i think can be forgotten if we dont insist that they be remembered you go through a time capsule, what the world was like on the beautiful new york day before the sky turned black from the billowing clouds of debris to refill with incinerated humans unlike anything, about a quarter of the mile away from the tragedy hope to see again. Then in a small alcove met only for those who can handle it emotionally. You can see the visual sign of the tragedy, people choosing suicide, jumping to their death rather than hearing a different kind of fate you can look up stories of those now long since passed, something i found is a resident of summit new jersey where we lost so many with this landmark the incredibly different to Fathom Events of that terrible day can be given the context they deserve. Go there, go see it, remember. Stay with mad money. Its for the people that were murdered on 9 11, this is their legacy aying air guitar. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Please stick around for special ccncb coverage Hurricane Irma. Coming live from tampa bay florida. Our hearts are with everyone suffering through harve you are looking live at charleston, South Carolina jacksonville, florida, and tampa on the west side of the state. Good evening, were live from tampa tonight to cover the economic side of this terrible storm that has hit this great state. Our reporters are fanned out throughout the region. Our cnbc special report coverage of Hurricane Irma crisis and recovery starts right now. Tonight, as irma continues its assault on the southeast, new information emerges from the strike