Transcripts For CNBC Squawk On The Street 20240714

Investments ever. Were closing in on new records in the markets, this amid new optimism for that potential china u. S. Trade deal as you saw stocks are set to open higher. And the tech lash heads to the states a major multistate investigation into antitrust practices at google, set to be announced later on this afternoon. David, kick us off on t. Interesting here. In so many ways. 3. 2 billion as you said the stake from elliott, the largest single investment i believe they made at the company, a long letter comes out this morning detailing the reasons why this could be a 60 stock within lets call it three years or so, 2021 is what theyre talking about. 65 or so upside to todays stock price. They believe 5 in dividends and 55 stock price, you could get to 10 earnings per share grower with significant margin improvement, what theyre calling for. And buyback. Something i want to make sure people understand here, it is interesting, people who know the company well, but sort of are vaguely aware of elliott this morning have called and said, well, theyre calling for the breakup, right no theyre not calling for a wholesale breakup of at t. What they are calling for is nonstrategic assets to be reviewed and potentially sold, although again there you are talking about things like the latin american presence for directv or at ts presence in mexico by the way, they tried on latin america and directv already, havent found many buyers there, and then they are also calling for significant margin improvement. And i think thats one of the keys here as well, that were going to be focused on as we go along here 36 adjusted ebitda margins in 2022 is what the company i should say elliott believes can be achieved that would be a 300 basis point ebitda margin, expansion, over the next there it is, three years, thank you. While we have identified opportunities for savings one, in excess of 10 billion, it would only been 5 billion in net cost reductions. Conservatively designed to encourage at t to identify savings and invest in growth areas. The other key area theyre focused on is management last week we got the word that john stankey will be the new ceo. Theyre not happy with that at elliott. I can say that in my own way they believe this is an undermanaged company but i think one of the key questions investors have to ask is it the assets that have been put together by this company or is it the management that is the problem . And can you really deliver this higher stock price that elliott believes is easily reached through simply some changes in management, savings, which is always tough for at t, by the way, in terms of firing people, and nonstrategic sales or do you have to go a different route i have to tell you that the tone of this piece, and i know that they didnt spend much time with Randall Stephenson, the ceo, but the tone of this is very positive. And, david, something you said over and over again is dont underestimate the acquisition of time warner. They like the acquisition of time warner. They do they believe it is a strong asset, to your point, although you and i have discussed many times the questions that are out there right now in terms of their strategy for direct to consumer, whether it is going to work, the trends that we know are taking place and the business in terms of cord cutting and what it means for the cable net works and the like, the loss of some talent at at t now they have some talented guys there as well. I dont want to take away from that greenblatt, our former colleague at nbc and others. There are questions, jim, and they are about the future for warner and how well they can execute on that future. But, youre right, theyre not looking for a sale or anything like that. They believe it is a strong asset, but they also say, listen, 50 of ebitda, this company is still wireless and they would like them to sort of not refocus, because at t says focus on wireless, but have that come to the fore again they also outline their disastrous series of decisions, when it comes to acquisition the inability to acquire tmobile in 2011, which put tmobile in business, by giving them enormous amount of money and breakup fee and all that spectrum the directv deal which took place in 2014, some 68 billion or so. And what has happened there with directv now, the inability to get the ott product up and launched, huge loss of subs at directv and the questions about warner which took two years to get to the finish line. A lot of people said to me, immediately, are they kidding . At t, it is their large position at t is this behemoth, you cant change it. I read through this and think that, you know what, maybe some Board Members are fed up themselves, maybe there are shareholders, very angry and this gets the ball rolling thats a great point, jim oftentimes in situations like this, in some ways, management might not or the board might actually view them as a positive i dont know what matt rose, the lead director, is thinking here. Hes a pretty serious guy. Glen hutchins on that board, another serious guy we know well you wonder whether this will if they continue to apply pressure and the board despite decicides along with them, results in changes in upper management. But youre right it can sometimes be a positive that said, i couldnt help but think about another large activist investment, very similar size but did not go particularly well in a storied name. Talking ge . I am. Ge and triad 3. 2, similar size stake. In this case, these guys will say, listen, the dividend is not just it is safe, there is no question about that. You and i had a conversation about that last week i indicated obviously there is any number of investors who i speak to who have different questions, longer term at t comes back sharply and says are you kidding us our dividend coverage ratio sbe is the best they have been in a long time. Were only coming down in terms of our debt service and perhap a good point. I feel they must have been talking to some people because they have a tremendous insight into the number of buildings they have in california, versus what they should the ease with which sthey could get to 5 billion when verizon is at 10 billion. There is a lot of verizon versus these guys there was the disastrous funding of tmobile, with a breakup fee. Incredible. And should have known going in that that had very low likelihood of occurring, 2011, when at t did try to buy tmobile and enticed them to the altar as a result of this enormous break fee they were willing to give them to help put them in business youre right there are plenty of exat t employees out there that can help Elliott Elliott has been working on this for as much as a year. To your point earlier, they have had some conversation i believe with mr. Stephenson, but unclear. And, carl, now the president actually weighing in on an activist situation he is commenting on the stake. Mostly through a lens of politics and media there is a look at his tweet about at t is an owner of cnn, more interestingly, though, i wonder what you think it says about hedge funds willingness to go elephant hunting to some degree a lot of talk about high cash balances over at berkshire, different story obviously. But maybe some are starting to swing. I think that theyre going after Companies Different from ge where they were very friendly trian says we missed red we were misled. They called me during the eagles redskins game and cnn, you know when i met Randall Stephenson, i met him in the white house, george w. Bush, the most republican these guys are the most republican of any publicly traded company. Theyre overt. And yet cnn has been what the president singles out. To me, i think he could very easily talk about what a lousy stock. But i do think thats covered. The president is actually weighing in at all hes following hes probably watching right now. Sure is i dont think there is any consequence his tweet came at the top of our hour. No. We appreciate that we welcome all viewers i think were happy to have him. There are some people who probably think why did we spend eight minutes on this. I know on mad money we get a huge number of calls because this is an underowned name, as they say. Underowned institutionally. Boy, overunderowned retail. Elliott simply believes this comes to the normal Institutional Ownership you would have for at t, that obviously will bring even more buying power second most underowned in the s p 500. Trading at less than 10 times. But we know the reasons why. And, you know, it is not as though questioning the acquisition track record of this management is something that has not been done previously there are plenty who look at it and sort of wonder what the overall strategy is, it seems ais though Randall Stephenson for years has been running away from the core business, being wireless we talked about the contract with verizon, other than their poor forays, but minimal ones in terms of buying other businesses and gets a higher multiple by the way, the growth rate overall and the business is not particularly great you talk 10 ebs growth if youre elliott, you think theyll be able to initiate buyback buybacks as they delever it is not coming from top line growth. Is there any way you can do an asset like model which is hinted about, where you dont necessarily need all of the equipment that at t has. Because they love the time warner asset and then, david, loaded question, you and i often joke about it, you know throughout this, jeff bewkes is considered to be a Great American by the elliott people would bewkes ever be enticed to come back in any way, shape or form i have not refreshed on this recently he was very happy lets call it six, eight the checks ive gotten on mr. Bewkes, i havent spoken to him directly, hes happy doing what hes doing. Like larry bossity said goodbye john feriola from new core said goodbye it is not fun anymore to be a ceo. It is just lucrative. Yes, look at this, the president s tweet. Im just saying, youre a ceo and youre you wake up, you have an activist in your stock and then get the president all over you too it doesnt make for a great day. No, but we were talking earlier on squawk about andrew ross sorkin, what kind of day is it at t . I think the kind of day it is is basically i bet you for some it is the day when you have a kind of an aw situation, people are saying, it is time i think that the turnover here, and they got a chart about the turnover, i had no idea. That exodus would not be tolerated at any other company. I do think that of all of the places they could have an impact, particularly if you have Board Members who sort of are thinking along some of the lines as in management wasnt a great reception last week to the idea of mr. Stankey taking over. People look and think, well, what was the what exactly is with directv and with warner, is he really showing himself . It is early. Early on whether hes going to succeed with those assets or not. I think it is good that they say the dividend is safe safe at elliott. They do you and i talked about that balance sheet. The numbers will tell you it is safe. The negative story would be that theyre going to suffer ebitda declines of significance in terms of the warner business because they dont get it together under right. They start to suffer in terms of the continued suffering and cord cutting and lack of viewers for the cable nets and what not. And that directv now continues to hemorrhage subs and you get to a point where you are losing ebitda as opposed to gaining any or staying level and that becomes more of an issue. Thats the negative view im not saying it is going to happen elliott clearly doesnt believe they think this is right here and then they got the ability to take it here 2 million subs, i pay for directv. One of the more damming things i saw in this there are 2 Million People who dont, who took it. You do because of football . Yeah. What if amazon or some other Google Youtube bought a huge chunk of streaming rights. That would be great i want my money back can we also get the money back from people who are too stupid and would continue to pay for directv versus the 2 million who didnt and thats who youre losing what were they doing with directv. They gained a lot of subs, particularly in directv. They said, hey, we got to rationalize this it is in many ways the paradigm of what went wrong here and we talk about it all the time directv, they spent a fortune, and amazon. I thought it was done to help them secure the dividend and thats been secured. Amazing story. Yes the lead of the day, obviously cramers mad dash, count down to the opening bell after a break look at the premarket, looks good here. Well get to wework and apple and chipotle and aramco when squawk on the street comes right back ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. 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A lot of it is candidly, david, the drug stocks have been kept down by the democrats. And the possibility of single payer. Lilly has been among them. Amgen has been going up because they bought i expected better this is the news we had not that long ago travel trust owns amgen. Stock was down 8 at one point. Before anyone buys these, you have to understand, i dont know if you saw that Elizabeth Warren has been moving up in the polls. She is a formidable opponent to the healthcare sector. She hurt the managed care stocks and she can hurt the drug stocks be careful. Okay. We will be and i know youll be following it i wanted to follow up, jim, and carl, with a statement we have gotten from at t we led the broadcast this morning with 3. 2 billion stake, taken by elliott, and the long letter which outlines some of the actions they would like to see the company take at t says their Management Team and board of directors maintain a regular and open dialogue with shareholders and will review elliotts perspectives in the context of the companys business strategy. They go on to say they look forward to engaging with elliott and note that many of the actions outlined are ones they already, they say, are executing today. They firmly believe the focus and successful execution of their strategies, the best path forward to create longterm value for shareholders, and they also go on to say they have a unique portfolio of businesses across the Communications Networks and as elliott points out, the foundation for significant value creation. I think elliott is in siege mode at t may have to be more in siege mode this reminds me of arconic, the old alcoa, the people from elliott bought a stake and said, look, you need to make changes he said he was making changes already. They got Board Members and once they got Board Members, the changes werent fast enough. If you remember how contentious it got, and then ultimately klaus kline feld faded into the sunset they took a constructive approach at elliott, it may be followed up by the need to have board seats to get this done thats a great point. And, by the way, something i need to actually fill people in on in terms of when the when the window opens for nominations, it will be a while, i believe, obviously the annual meeting and what not, but you can do that in the next half hour or so but i know that it is this sounds it is almost fairy talelike that anyone could ever go after a company, we all grew up, the bell system, okay. And we always just felt sark w sacrosanct elliott is saying, very bad dont give up on the company, give up on the management. It is always worth pointing out 3. 2 billion on a 250 or do 65 billion market cap is still a relatively small percent but activists like elliott looking to have a punch far above telecom italia. This would be a very exciting saga this is day one. I think everyone has to follow the cart because the stock is up so much. You got a good rate of return. I question at one point, up 2. 5. Do you ring the register it remains one of the great yielders in an era where you cant find income. Verizon, you do feel as though, listen, let me bring someone from verizon back to run it. We know who the people there werent that old who left. I hear other names when it comes to at t. What names . Do you share them or is it too early . John stratton you know who John Stratton is . John stratton. Hbo no, telecom guy speaking of telecom, were going to have dexter goya join us. 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Coming off the first backtoback weekly wins since july and the s p is about 2 from an all time high. Futures are green. Well see if we can revisit s p 3k when we come back 300 miles an hour, thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. Youre watching cnbc squawk on the street live from the Financial Capital of the world the opening bell in two minutes time busy monday, busy week, as Congress Returns to work as we try once again to make a run at 3,000 on the s p and hold it can we do it i think that there is so little news and this is often a good period, so i think that it certainly is a possibility absent something that would be against mnuchins comments in a very pro something breaking. The chinese data last night was very weak. Good article in the journal about how even the weak data is difficult give fann the fact ita command economy. Those saying dont worry about china, think that is misplaced the talks could be more positive dont expect a deal. But a positive series of talks, and then congress coulding back, we have to remember that nancy pelosi is not in favor of a single payer she does not want that system. And biden is still ahead, but i am focused on a major underperformance of healthcare group, banking group, those are very large so i think that they can play catchup, thats what i see happening. You mentioned banks, big Barclays Financial Services conference this week ft says that in four of the past five years when this conference has taken place, they brought numbers down well see what guidance is like. Wells talked about interest margin jamie dimon, probably look, he got the nod for the gigantic saudi deal but these stocks are cheap and Goldman Sachs has been moving up, watch that stock. Very positive note today and there are many, many things good there. Lets get to the opening bell s p 500, the cnbc real Time Exchange at the big board, it is eltise usa. Well talk to the ceo in the next hour. At the nasdaq bellus health, biopharmaceutical company. Couple of times now you mentioned pharma and politics. Yes because ive been looking at lets contrast to United Health, very good company. And cvs. The reason why cvs has been able to climb is because the drugstore chain is very good aetna has been a millstone it is supposed to be the other way. Supposed to be that aetna was going to boost what larry measure l murlow is doing. This group is so weak, it takes my breath away United Health had been a Market Leader for a very long time. If you look at the makeup of the dow, you see a bunch of stocks, j j, im reading the piece about opioid and who is at fault for opioid there is j j again i was arguing with my wife, j j has a little part of this, i said, are you kidding me, they were manufacturing the product i come back and say, you know what, that is headline risk. She said something very interesting, which is what is headline risk . What matters is that theyre under fire and i do look at mallon croft, we have not talked at all about mallon croft. No. The company is disappearing in front of our eyes it has over the last couple of years opioid. Opioid. We dont talk enough from the way society turned out it turned out that when you go into states, this is not google, these guys are public enemy number one. Speaking of states, big tech will get news today as some of these state ags announce this antitrust probe on big tech as you talk about policy risk and headline risk. I think a lot of problems that the big tech has is frankly that they are so good. I think that one of the very good fellow talking on brian sullivans show early this morning, talking about how a woman, im sorry shouldnt we all be shouldnt basically google be paying us . They get our information and what the heck, they make so much money off of it i come back and say, why would they need to pay it . Im happy with free. What theyll be struggling with are the actual users of these products like them if youre a Small Business person, i think you feel that it could be punitive. There are a lot of Small Businesses that have really made their whole business around facebook and alphabet. I dont know i dont know what the attorneys general can do i do think this is not like microsoft where they really the old one, microsoft was cutting out another ompany here, there are other companies and other industries that just werent that successful. And i call attention to viacom cbs this was if you wanted to own the nfl, you never thought that it would be on cbs, nbc bid against it, how much will espn come in . Well, guess what, any one of these companies can write a check and i think thats what a lot of people are worried about. They could. Would be very interesting to see if they do right the ratings may not be good enough just because they may it is not clear what platform people are still accustomed to watching these things on. Very good point although, i mean, amazon could put it on amazon prime and you would be watching it on your television but amazon already took a shot on a couple of thursday night games, right yeah, ill tell you, i know you dont wear a watch, but when youre in a situation, on a sunday, where there is difficulties, say, in fights at home about football, it is awfully great to program this for, look, geez, look at that wasnt a good day yesterday daal velvin cook is breaking. Speaking of accessories and apple, journal piece today argues they need to keep accessorizing because iphone revenue is now down 15 for the first nine months into june year on year. There is wed bush saying you want to roll with this, and the china data is good for them, i think service revenue, we had a piece by katy huberty. The only thing i point out is would you wait for 5g . Is your phone good enough why do i need a phone, an 11, i love my phone, i was at apple my daughter hijacked my x i had the 8. It was like going to facebook and not havingwhatsapp or facebook are you on facebook . No. Thats a loser if you see zuckerbe zuckerberg have facebook. You wont see me. I try to see him i wave to him. Thats good but i want to go back to what to what carl said. When there is no friction for trade, and there is no powell talk, the companies themselves are doing all right. Most importantly, theyre not talking. I went through my game plan, it is hard to find any company of any significance that reports this week. And that matters it matters because how do you have disappointment if there is no Companies Got the s p up,. 13 right now. Dow is a bit higher. 3 points. I think that look, we have faang up there. To me, it is all about watch, not aang we got some research to look at web bush goes to outperform on chipotle i said to myself, where have you been when brian nickle took over, he reinvented the company that got i dont know if you sought advertising on the nfl, the advertising is fantastic, big national campaign, will get better and better. Delivery, delivery comes, it is pretty much in tact. It gets there, still hot that does matter delivery is huge the through put problems have been solved. If you go there, you feel great. A lot of analysts who downgraded it during the health scare are coming back and saying i missed it, i hope you didnt see i missed it, i missed it why not just say i blew it if michael sometimes you do get that line. You do. It tells you how hard it is for an analyst to put out a sell because, boy, you can be a laughingstock if you put out a sell there is people, david, right now, who are putting out a sell from church and dwight, but they have a short position. Well, the gentleman who was making the case for that was on squawk box from spruce capital earlier this morning. Going after the outperformer of the group, right . I did not see the stock reacting that negatively, at least this morning story i love the company forever. And you try to they were talking about hidden acquisitions, all i can tell you is that when you go after these guys, you know if you shoot the king you got to kill the king. And this is a king, this is very well run company. With a lot of good grants. And he did mention that he was long clorox against it clorox finally coming out with pods, about time those who support church and dwight would point out it is organic growth rate year to date is 4. 2 , i believe and so it does outperform its peers and therefore perhaps deserving again, these are the those are the positive things, of that higher multiple. Eps growth up 8 versus its peers. How is ge doing since that vicious attack by an unnamed hedge fund using a forensic mr. Marcopolis. Was it around 10 . No, i dont think it was around 10. Having gone back and forth with ge during the period, i think that i think there were some ill advised positions. Yeah. That were taken worth coming back to at t this morning, our lead story, the stock up a little less than 5 in the early prior to the open of the market, it appeared it might be up more than that. If youre just joining us, elliott, the large fund that is known for its activism taking a 3. 2 billion stake, unclear how they hedged it, by the way we dont often talk about that they do hedge. You hedge it through another ownership, some other kind, that moves differently, you hedge these things and they are known to as well. But 3. 2 billion stake is one of if not the largest single stake now in a company the size of at t, where the market cap of some 270 plus billion as of this morning, still very small percentage but elliott has a lot of weight. They have decent following among other institutions they point out, of course, this is a very much underowned name where they talk about it being perhaps second, least second least owned megacap by activ managers theyre talking about a focus on nonstrategic assets that could be sold. And improvement, they believe, significant improvement that can take place in terms of margins, 300 basis points in improvement over the next few years that they think can be attained and they want better management. Some of those names of businesses that could at least be considered, there is a Margin Expansion plan, which may prove the most important part of this, many people say, well, can at t really deliver on that arent they already working on that getting margins up to they did say they are and they say they have identified savings of like 5 billion, could be 10 billion and so there could be even be more they believe that coupled with the ability to buyback shares as leverage comes down will contribute to what they believe could be 10 earnings per share growth. That is so high that it makes sense to buyback stock before you pay down debt. I mentioned managed care earlier, talking to carl, David Cordani at cigna, he had been a seller of stock, the stock has been underperformed, Elizabeth Warren issue just terminated his 10b5 plan. He took feels that the group is undervalued. Looking for undervalue at t was undervalued this morning. Healthcare, banks. I do this because if were going to hit a high, were not going to do it with the same stocks. We got to do it with the new stocks we got to do it with Companies Like bank of america, downgraded last week. Very, very brutal downgrade. Was this his personal purchase yes, personal i happen to like cordani very much ive been wrong. I didnt really expect that the single payer drumbeat would be taken as seriously given the fact that the republicans were probably still will control the senate, makes it hard to imagine even if there is a democratic president who wants that president or democratic. I go with democratic. Republicans are not democratic in terms of the structure of the government. Yes. This is a semantic word play we hear a lot about. To your point about insider purchases, we have seen some of ge in recent weeks i think manny tariqo he made a statement by, if you look at the stock, cut in half a lot of the Apparel Companies have been abysmal. Lululemon talked about china being the best market. And canada goose, the china mark ed is very good. Maybe there is something going on with the chinese economy where theyre not as export oriented and good piece again in the journal looking at the country from the satellite, but they are domestically there is a lot of business going on. And i think thats important and the best one, estee lauder, do you need to buy expensive cosmetics . The chinese have been a leader these are things that are discretionary if we got these numbers in our country saying, wow, you know what, consumer is turning on the jets, not what you hear no, well, the journal today doing a long piece on the fact that trying to get below the numbers, many of which are not believed in terms of those that show economic progress in china and what really the number is. But on the consumer front, it does appear that consumer and china is still pretty strong very good piece now, five minute sound bite about china and supply chain for apple what i would point out, i was doing work with vietnam. The administration has been saying be careful of vietnam a lot of vietnam is trans shipment even though vietnam has great resources, great population, they only have high flung harbor had the first big container ship leave because it is not a big harbor you can move to india, but the harbors are what matters china has these unbelievable harbors that can handle any ship that goes to california. The fact that vietnam has one and it is high fong, wow yeah you need a deep water port to get a big shipment in. I remember when the United States government mined the high fong harbor because it was so important for trade with the russians to bring it just has been static. And i think people have to recognize, there is a lot more reasons why people havent shifted than just the belief that, you know what it is not it is find me a port. Dow up 33 lets get to bob pisani. Welcome back. Thank you very much had a great week off in los angeles. One of my favorite cities. Modest upside led by cyclicals, mr. Mnuchin saying u. S. china made a lot of progress, his words on the trade talks you see the cyclical rally here. Banks, semiconductors, energy, dow transports, thats your classic rally here and we had a number of things positive in the last couple of weeks overall. The important thing is we got progress on trade talks, thats mr. Mnuchins words. We also have a very strong u. S. Consumer out there as well then we have an ecb meeting this week, theyre expected to probably lower rates, a lot of people say they dont need to. I think the ecb is going to go down swinging on this very strong on the rate cuts, fed rate cut, likely next week all this coming together to get us not far from new highs. Were not there yet. If you look here, the dow industrials, this was just prior to the open by the way 2 from the historic highs nasdaq 2. 7 i like the to point out the russell 2000 is almost 13 from historic lies. It is loaded up with Small Company financial stocks that kept the the russell 2,000 small cap indices back here. We have been talking about low volatility sectors that keep dominating the markets, consumer staples, reits and utilities all essentially lets not quibble here at historic highs the question is now rotation if that trade story and stable economic growth, big ifs there, continue, can we rotate into the more cyclical sectors that had a tougher time of it recently. If you look at some of the big names here, like energy and banks, materials, 24 from their old highs. Banks, 17 materials and industrials, and jim made a good point, we need new leadership this is where the leadership will come to if we can get to new highs. The banks, the materials and the industrials. Thats a big, big question right now. I want to note on industrials, it has been a very rough ride for the industrials. Some are doing a lot better than others you got your honeywells and Illinois Tool Works and united tech these are big global names only 4 or 5, 6 . Caterpillar had a tough Time Automotive has been really ugly for them they had to lower their guidance and that hurt them this is a very bifurcated group now. Well see how that emerges elsewhere, a busy week september is a hot month traditionally for the ipo market thats going to happen were going to have six, maybe seven this week. Small direct club, one of those at home teeth straightening companies, you think how much money there is in that, this is an 8 billion ipo, one of the bigger ipos, cloud fare, web security, web services for companies thats a 3. 5 billion ipo. Put it all together, two or three biotech companies, going to be a busy week. A record year . Now is the time you start asking that, we were saying that earlier, doesnt look like it, 100 billion the record in 2000. This may be the second biggest year for them, were not sure, 2014 was the big one it depends how things go the ipo etf up 34 for the year. Wework, they may launch this week, we dont know. The valuation of that company has been enormous issue over the last week well see if we get news in the next day or so on that carl, back to you. Bob, see you in a little while. To Rick Santelli as well at the cme group in chicago good morning, rick. Good morning, carl. Now that 10s to 2s isnt inverted, not so many are paying attention to it. We should t turned a bit positive everything farther ought you go today is doing better in terms of higher yield, lower price look at one week of two year note yields it also breaking out a bit. See that top rate around 156 last couple of sessions. Were through it look at one week of 10s. 160 represented that level were kind of through it and long bonds, i dont have a intraday there, but 209 is the area thats still where were holding. Open the chart up to june of 16. See the bottom on the left side, that was the all time bottom close at 209 until recently. Thats why it is so significant. I continue to say 30 year bonds will lead the way. And who is leading bonds i would think that europe is look at one week of bunds. Take notice, last wednesday they made a low of minus 75 basis points, revisited once, and here we are now, minus 58, minus 57 1 2 thats a lot of movement for bunds, and it takes me to next chart very important the difference between 10s and bunds is now the narrowest at 18 months since the beginning of 2018. And this is happening with bund yields moving a little bit higher in front of their ecb, it seems speculators may have got and bit too aggressive in the assumptions about how much stimulus might be delivered on the 12th carl, jim, david, back to you. All right, rick, thank you. Still to come this morning, Florida Attorney general ashley moody among the state ags probing big tech on antitrust. Well talk about that. Along with mozelle thompsonthom. Were back in a minute. This look at at t stock which is up about 4 1 2 if youre thinking about some nonstrategic assets they might look to sell, Home Security business, Regional Sports network, sky mexico, puerto rican operations theres plenty to choose from, wel see if they actually do because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans. Can experience 5g all at once. This is happening in 13 stadiums all across the country. Now if verizon 5g can do this for the nfl. Imagine what it can do for you. Because theres always another team looking to punch one in. A spectacular touchdown grab with nfl redzone from nfl network on xfinity, you get every touchdown from every game on sunday afternoons, all season long. Watch every breakout star, every heartpounding running attack, and every big time defensive stop. Sundays were made for football on xfinity. Thats simple, easy, awesome. Add the Sports Entertainment package for nfl redzone. Click, call, or visit a store today to learn more. Lets get to jim and stop trading. Local technology being annihilated. Microsoft is a good example. A lot of them sell much more, but holy cow, you can just see everything being just blotto i think thats important tonight i have zoom and altruix replacing excel. Zoom, many have used it for fantasy football its a great way to be able to communicate with people. After this im headed down to a dollar tree. My Family Dollar which is always not great apparently has been redone ive been going way out of my way to my dollar tree because i didnt like what Family Dollar gary said if i ever fix it, i want you to come down. Gary fixed it. Time to go to Family Dollar. Maybe ill bring you back five pairs of sunglasses for 5 polarized. Not unlike our president and the country jim, well see you tonight. Mad money 6 00 p. M when we come back, the state ag versus big tech. Well talk with hlasey moody with the dow up 19 free access to every platform. Yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. No hidden fees. No platform fees. No trade minimums. And yes, its all at one low price. Td ameritrade. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. Ultimately, its helping thousands of patients with licensed agents availablep when 247,d it. Its not just easy. Its havingjeromebettis onyourflagfootballteam easy. Go get em, bus ohhhh [laughing] cmon bus, cmon hey, wait, wait, wait hey man, i got your flag i got your flag, man i got your flag its geico easy. With licensed agents available 24 7. 49 nothing woo good monday morning. Welcome back markets with a nice little bounce, although off the initial highs. Dow is up 39 points ahead of a busy week, whether its banks or tech, you name it. At t also seeing a big rally this morning and thats what well start with Elliott Management announced its taking a 3. 2 billion stake in the company. Launching a new unlimited phone plan. Tech under fire, the Florida Attorney general will join us on new multistate antitrust probes against google and facebook we will start with at t rallying after Elliott Management announced 3. 2 billion stake in the company saying the stock could be worth at least 60 a share elliott sending a letter to the board arguing for ways the company can, quote, improve its business and re reelize the historic interest in value and cutting cords with things like Regional Sports network. Focussing on what they call nonstrategic assets that they believe could be sold. They also of course go into the long history of at t and what they call a poor, to be kind, poor track record, whether it was actually getting deals done or not of course, they go back to 2011, the deal that didnt get done, tmobile, but the enormous amount of spectrum and just hard cash that was paid by at t to tmobile in the breakup fee as a result of that being turned down by the department of justice helping make tmobile a robust competitor to at t wireless. And then of course the 2014 deal to acquire directv and the 2016 announcement of deal of course to acquire warner which took almost two years to actually get done none of which elliott believes have added a great deal of value. Theyre not focused on a wholesale breakup of the company as much as they are on simply saying management can do better, perhaps different management can do better. They talk about a 300 basis point improvement they think can take place over the next three years and the leverage as it comes down, the ability to buy back stock its not as at t is growing 50 . Although on the marketplace, people are more focused perhaps on warner and directv and the woes that theyre having there. I think youre right to point out the leverage here. Thats a key overhang for this stock and it has been for quite some time. Its a byproduct of what theyve done if that were to change, that could be a big drag on this stock. And so i think elliott had studied this for about a year before disclosing their letter today. Interesting that they did stop short for at least at the moment calling for any board seats or board seat nominations but i think the reaction that youre seeing in the stock today is largely a result of elliotts reputation of really taking on these companies and getting their way. You talk to any adviser who does defense for Corporate America and elliott oftentimes, if not always, is mentioned as the most feared activist. And they are one of the most active as well this is a large stake for them as we pointed out, probably the largest single economically. Unclear how theyre hedging it or if they are on that point, at ts nomination window does open on december 28th closes on january 27th all the directors are up and the meeting will be held or last year was held on april 26th they havent said a thing about trying to replace directors. It is a very small stake versus the 270 plus billion dollar market cap of at t, but elliott does have a lot to your point of followers in the institutional community. They point out of course at t is the second least owned mega cap, whatever that means. Just not well owned. Because of the concerns amongst investors in terms of their ability to execute at this point. The elevation of john stanky last week. Another thing investors did not point to as a positive and while the company has said numerous times their dividend is safe and theyre going to take leverage down to 2 1 2 times at which time they can start buying back stock. In terms of their ability to execute or execute well at warner and what the numbers will look like there, not to mention the wireless business where they are doing just fine, but its not growing. I think the key will be to see how at t really responds in earn toe earnest to some of these pro po proposals laid out. The amount of machinery that is being put into place is nothing short of enormous. I will tell you that the fees that company pays and now will be paying for defense to banks all over the place, its big. Thanks for seeing green also seeing green, the dow down about 2 from the alltime highs. Could this muddle the outlook for the much anticipated fed rate cut joining us now is cowan ceo jeff solomon. What do you think . Any less likely to see potential fed rate cut this year i mean, the fed is going to cut this year at least once, maybe twice. I think a lot of this has to do with the rate structure globally i think youre got a whole bunch of the develop world in negative rate territory the fed is an out lie ylier given that and the backdrop for the election, the fed will do whatever it can to keep things humming along and that means by one, probably two rate cuts by the end of the year. Is the negative rate factor 16 trillion of negative yielding, is that enough for the fed to cut rates or are there things within the economy on a fundamental basis that also support your thesis there . I think the fed has said theyre going to do whatever they can to extend the recovery to the periphery i think thats, again, a different mandate the fed has had historically, but the chairman actually said it and so i think when you look at this sort of pressure on them to effectively keep things going the way that the rate structure is and the rest of the world, it lines up for at least one and i think, you know, probably two by the end of the year. People are talking about there being four rate cuts between now and 12 months. I dont know if thats going to happen, but i think one or two is probably in the bag. Tentative trade deal by october, but you say they can wait until the election. What are you expecting our best case is waiting until the election, but a couple of things have changed first of all, were beginning to see how much actually kpeconomic slowing there is in china. The hong kong thing is not so great either for president xi. He may need a wing here. I dont know that. If youre a china watcher, it isnt exactly great over there and so the president probably needs a win too. The one thing they can really present a monumental challenge to the president s reelection is an economic slow down. I do think hes in a position where it doesnt really work out, we do get a slow down, he can blame the fed and china, but i think all things being equal, its better if we dont have an economic slow down if its a deal that gets done, he gets to declare victory, xi gets to declare victory. We got what we wanted according to the administration and everybody moves on im a little more balanced than the last time i was here where i thought china would wait us out. You think there could be a deal in principle, something on paper . How tentative could it be . Take a look at what happened with nafta and the replacement for nafta. Is it really that different . It isnt really that different, but its got a new name. The president said, you know, we got china we got mexico and we got canada to bend to our wishes okay he just says it. So i think that theres a perception out there that maybe that actually happened we basically got nafta with a new name i dont see why you cant take that rubric and applyit to china trade. I mean, ill be clear. I dont think the democrats have really argued that hard on china trade. Its really interesting. If anything, theyve outflanked him sometimes to the right. Right so in their mind maybe one of the best things that happens is he goes forward with tariffs and an economic slowdown that creates a window i think with all the things they are arguing about thats not one of them. Theres a case to be made that the strategy of pursuing tariffs has been all in all pretty broad based success. Well see. Jeff, let me turn you quickly to our own Capital Markets youve got experience in the ipo market cowen a key underrighter for smaller mid sized companies. What do you make of the resistance amongst investors to the we work ipo . I cant really discuss that one in particular but i think you can actually talk about whats happening with some of the bigger tech names. I just think investors are being public and Company Investors are saying we need to have a real conversation about valuation i think thats actually the health of the Public Markets is to do that so if theres a concern that i have, its about all the private capital thats crowded into Technology Trades without there being an ultimate validation of that value in the Public Markets, which i do think that the Public Markets actually give you the ultimate determiner of value. And so, you know, whether its that name or other names, i just think when they come to market, the Public Market investors have a forum for feedback on whether we want to own that. Thats probably what youre seeing there. They want to clear a path to profitability and sooner than some of the companies are willing to give them. I think if you look at whats happened with uber and lyft and a bunch of these other folks who continue to spend money, i think theres some question on the part of a Public Company investor listen, i also think Public Company investors are savvy. There are limited areas where theres growth generally speaking, what weve done and where weve seen growth is with companies that have eliminated middle men and have done things to accurate efficiencies at the end of the day, Public Company investors understand in the real world you have to be able to show a clear path to a Sustainable Business model i dont think thats an unrealistic ask on the part of Public Company investors. Jeff, thank you so much for joining us. Good to be here. When we come back this morning, got a shakeup in the Wireless Service space well hear from altice usa and on the overall media landscape take a look at some of the top names on the dow walgreens boots. Were back in just a moment. Hey. You must be stevens phone. Now you can know whos on your network and control who shouldnt be, only with xfinity xfi. Simple. Easy. Awesome. Altice usa breaking into the Wireless Service its 20 a month if you take altice cable 30 a month for nonaltice cable subscribers making it the lowest priced offering in the space the ceo of altice usa and he joins me now nice to have you here. Good job ringing the opening bell you got your people yelling and screaming. Thanks for that. You got a lot of pushback on the Conference Call when you introduced this ap analysts were saying can you really be profitable for 20 for your customers or 30 and you kept saying yeah. Were not pricing this no undercut the market and lose money. Why are you confident you can make money skbl if you look at the average usage, probably about 7 gigs a month. If you have the right price point in terms of what youre paying to rent, you know space per gig you can make money. Were not in this business to go out there and lose money were pricing this at a gross profit positive. We obviously are going to have a little bit of losses in the first 12 months as we market, but fundamentally its just really about the mathematics of volume as we get to a certain volume, were going to be very profitable. How long do you think it will take you to get to those i think the question is whats the initial response going to be the initial response has been already very strong. Are we going to get there quicker or a little bit later . Weve modelled it out over 12 months, but well see over the next couple months as we really start launching our campaign actively the next couple weeks. How should i be viewing others, my Parent Company amongst them, marketing their Wireless Service substantially higher are they not getting it . I think you should switch over to ours is what i would tell brian and the rest of the crew i think the whole question is the partnership youll be able to set up. We have a different platform and based on gno. Can you explain what that means. We have our own core network. We control the sim card. Were able to manage the traffic that goes on and off the wifi network more accurately and seamlessly that allows us to be a lot more Cost Effective in terms of how much were paying to our roaming partners those are the basic features theres a bunch of other control features we have when you have an infrastructure base the basic one is we have a better maintaining of cost control on what were doing. Should we view this or should your Investor Base or future investors perhaps view this as another significant part of your business, one that will contribute significantly the same way that broad band and or video does absolutely. Were in the business of continuing to drive simplicity, clarity and better User Experience the whole thing about wireless today, wireless in the home, everyone talks about wifi, the entire experience on broad band is wireless. We need to be inside and outside the home and have the best service, clarity, simplicity for our customers. Were building this as a stand alone profitable business. It may have ancillary benefits to our fixed line business Going Forward, but thats not priced in today to our business model, but were certain we will see some of that fundamentally, this is going to be a stand alone pillar and weve got a good runway Going Forward in terms of time to think about other things, what we want to do. Right and learn about it are you a believer 5g will represent a significant challenge to those who bring a wire into the home when its able to bring the speeds of what we hear is possible . I think its going to be a Complimentary Service as opposed to challenge service the usage patterns were sighing from our broadband cable subscribers, i also think that 5g may end up cannibalizing some of the 4g Services People have the wallet to spend on both. I dont think that theres going to be full replacement unnecessarily of fix maybe in certain parts, particularly in rural areas where the fixed broadband is poor youll see 5g penetration. If you speak to all the wireless operators out there, theyre not out there marketing that theyre going to have a replacement service. No. At least not yet. Not yet i mean, maybe in the future. Speaking of of course bringing broadband into the home, one of your competitors, charter and perhaps others, are deemphasizing the video business they wouldnt say this, but i will pushing people off because the higher margin broadband business is important to them you pushed back on them. Are you deemphasizing the video business no. Because its still a profitable business everyone is a Broadband Customer anyway, so our fundamental drive is to continue to get more wallet share and mind share from our customers. So today if people are paying for video and its a profitable business, maybe the margins are getting skinnier, but well continue to deliver profitable businesses to each one of our customers and mobile is an example. Video is falling off, right video is not necessarily falling. We have a very unique footprint in that were in the new york t tristate area then a very underpenetrated video market in our historical suddenly footprint which has been competing with satellite. We have kind of a weird effect insofar aswere actually weve had six quarters in a row of better video performance year over year. We continue to see the trends. You do continue to see those trends as well the broadband business at this point, is there room for continued margin improvement, or do you feel like youve optimized . I feel on the pure broadband product its a high gross margin product. If you were just a broad zaiband provider, the effects related to your business start to get sk skinnied down quite a bit. It becomes less when you dont have video and you dont have set up boxes if you were pure broadband, your margins have more movement youve obviously, the stock has done very well this year in terms of how investors have responded to that view you and the chairman of altice took over cable vision youre known as cost cutters, people who can come in and identify things that conceivably should be cut. Do you think this opportunity that elliott sees in at t, big story this morning, is your sense having at least done that at some of these companies that there is a lot of low hanging fruit to cut costs i didnt really Pay Attention exactly to the focus of the letter. Theyre talking about 300 basis point improvement in margins over the next three years. I think no matter what, when youre able to take a step back and youre outside looking inside, you fundamentally can see opportunities to do thing given that the Management Team has been there for a little bit of time and is used to the way things work over there im certain there is opportunities to do stuff. I dont know where it would be we dont know the business that well. Finally, we you know for a while as being an inquisitive company. Cable vision among the two that have tributed to your u. S. Footprint. Are you done when it comes to acquisitions wed love to do more. Cable is a good sector to consolidate. Whats left, though, other than names that are too big . Charter is 90 million market cap. Youre not going to do that, are you . Were not going to do anything other than focus on shareholder value. Today the organic opportunities continue to be very large for us to create a lot of shareholder value. Weve always talked about historically can people team up, can we buy smaller businesses, all those types of things, were very, very flexible in terms of the opportunities well look at. Back to wireless, 30 a month. Im a nonaltice customer. Lets find you deal. My service is going to work its sprint and at t network supplemented with our network as well its a fantastic network we really are seeing unbelievable response and great performance of it. Look forward to having you as a customer by the way, its free international. 35 countries, free international. Youre not getting that 10. Right always a pleasure to have you. Thank you, david. Ceo of altice, usa. Back to you. David, thanks when we come back, floridas attorney general ashley moody will join us shes among the state ags probing big tech on antitrust dow is up 82 financials leading as the 30 year yields at a threeweek high at Southern New Hampshire university, we believe in education built for all people. [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Its time for our etf spotlight. Looking at the ticker xlc getting a slight boost top holdings mixed but at t holdings strong after Elliott Management announced a 3. 2 billion stake in the company. At t on pace for its best day since july, 2017 and its best year in over a decade. That stock now up more than 4 meantime juul and e cigarettes facing major Health Concerns that could impact sales for big tobacco companies. Frank holland joins us with more on that. Before vaping concerns surfaced, big tobacco had had a plan c to debut another cigarette alternative also designed to convert smokers. Heated tobacco is expected to make its u. S. Debut this month the Phillip Morris product will be sold with a store in atlanta. It takes what looks like smaller cigarettes s cigarettes and then heats them to release nicotine as opposed to po burning them sales grew 37 last year globally for Phillip Morris heated tobacco is only around 5 of the company sales. Iqos received approval in april. It has fewer toxic chemicals than traditional cigarettes. They have whats called a modified risk product under review it is also under the same restrictions as traditional cigarettes when it comes to advertisi advertising. British americans glow product is now the chief rival international to iqos. Last quarter the Company Reported 17 growth and a 3. 7 decline in cigarettes. Japan tobacco has a product with a nationwide rollout in japan started last month it trades intokyo and imperial has a device being tested in japan japan as well. According to research, heated tobacco has a more than 70 Conversion Rate for former smokers. You can expect a lot more companies to try to get into this business especially if it sees a lot of success here in the u. S. That is true, although its interesting to see big players try to enter new markets where so much of the discussion about potential health risks or the study of potential health risks. Absolutely. Thats one of the selling points at least for Phillip Morris and altria is that the fda said this product has fewer toxic chemicals. However, the application says its safer than cigarettes is under review thats a high bar to meet. Well watch that space closely. Getting awfully interesting. Lets send it over to sue for our cnbc news update. Good morning, everyone. Heres whats happening at this hour the International Atomic Energy Agency meeting in geneva confirming iran is preparing to use which is a breach of the 2015 nuclear deal. Iran had announced that step as it tries to pressure european signatories to find a way to maintain Oil Shipments and ease the toll of u. S. Sanctions thousands of students forming human chains outside schools across hong kong to push for more democratic reforms. This after violent weekend clashes in the territory they were joined by graduates wearing trademark black shirts and masks. British airways says it has to cancel almost all flights as a result of a pilot 48 hour strike over pay the carrier has offered a pay raise of 11 1 2 over three years. Very, very sorry that due to the cynical actions of the pilots union we found ourselves having to cancel flights affecting thousands of passengers this is by all means a nongoal of punishing our customers it is punishing our brand. You are up to date. Thats the news update this hour i will send it back downtown to. Sue, thank you. When we return, the Florida Attorney general will join us exclusively next a new multistate antitrust probes against google and facebook squawk on the street will be right back dont go away. When did you see the sign . When i needed to jumpstart sales. Build attendance for an event. Help people find their way. Fastsigns designed new directional signage. And got them back on track. Get started at fastsigns. Com. Officially a coalition of attorneys general investigating possible antitrust violation saying we will use every investigative tool at our disposal to determine whether facebooks actions have endangered consumer data, reduced the quality of Consumer Choices or increased the price of advertising joining us this morning is the Florida Attorney general ashley moody. Thanks so much for your time good morning. Of course good morning. Weve sort of established the scope of the probe in that intro, but can you help us understand on a ladder what is the most important to the group of ags well, we 1200 history things like tobacco and pharma and mortgage lending is there a case study youre trying to model this group after . With the last question you can see its an entirely different way of dealing with a monopoly we have to bring the resources together of all the states that have the capability to do that not every state has the talent or the size in order to dedicate resources to this issue. I can tell you that florida is committed to making sure that consumers are protected and that we do, in fact, have Competition Among these social networking platforms. You mentioned resources the federal government is already expending some of them in similar investigations. Is there any overlap or cooperation between the states and the federal government or are you duplicating efforts that you dont necessarily need to be duplicating . Well, i can tell you anytime we have a number of states that get together and lead these investigations it is to prevent duplicating effort we dont need to duplicate we have met with the department of justice we will continue to share information as we work through this investigation and depending upon what we ultimately find, that may indicate how we further collaborate, but i can tell you right now the states leading the investigation are working together well and as we receive the information from subpoenas, well be able to better determine where we are and what types of remedies we might be seeking. Is it going to stop at facebook i can tell you im meeting with attorney generals as soon as i leave this interview and well have further announcements today. Well be looking for more on that attorney general of florida, ashley moody thank you so much for your time. Thank you for having me. Lets bring in the former ftc commissioner and former facebook Advisory Board member. Also with us, scott is the antitrust bureau chief in the new york ags office who consults on big techs practices good to see you both thoughts on what is about . Well, whats interesting is that attorneys general regularly get involved in antitrust actions, but they usually do it in a coordinated fashion its not clear what the roles are going to be here yet its not clear the extent of their involvement. I recognize, for example, that states have limited resources and as you pointed out that the federal government is already involved in that so lets see if their approach is different i thought it was interesting hearing today about fundamental change in antitrust law. Im not sure that is something that ive heard expressed before, but it will take a lot of people to be involved in order for that to happen. You think theyre over their skis as far as what doj has defined as antitrust i think its very early yet, but what youll also see, you saw in the ftc what theyve done recently in terms of privacy if theres a split even in the commission about what they think the role of size and power is in technology so were going to see that develop over time. What i recognize is the attorney generals, they run for office. So that they are involved, but there also may be an array of points of view on this particular subject. Scott, does this make sense to you, particularly in light of the resources question when you have the federal government looking at it and theres plenty of things state ags can go after in terms of a Company Price gouging and could impact the consumer as well. I think it does make sense. States have a longstanding history of getting involved in major antitrust cases with investigations that often ultimately lead to cases being filed. I think the most famous example here would be microsoft where not only doj pursued monopolization case, but also a coalition of states were working side by side and to a substantial degree hand in hand with the federal government. Why is it that microsoft hant been wrapped up in thismost recent round of scrutiny in terms of tech . Were in a new world. Were interested in platform, especially Online Platforms that sit as middle men often between users and purchasers on the one hand and advertisers on the other. This raises new concerns that are familiar in certain ways, but have some new aspects as well we have new, the last 15 to 20 years with firms with large market positions and possibly conduct that needs to be investigated. You point to the large Market Conditions regulators approved facebooks acquisitions of instagram, for example, because the market environment didnt look at the time like it does today. If youre a deal maker or a regulator or a lawyer advising companies today, how can you pursue deals when in the future youve come under attack for the market environment changing . Its a good question. As your question anticipates, a big part of the investigation with facebook is likely to be to look at these previous acquisitions, especially instagram in 2012 and whats happened in 2014 by and large deal makers can rest easy to the extent that facebook is unusual in a lot of ways for one thing, as general moody suggested, facebook might be a monopolyist. If you dont have a strong one of becoming one the investigation into facebook doesnt have much relevance to your business. Also part of that is understanding that those Companies May not those subsidiaries may not be as strong without the development of facebook. So you have to balance that out too. Thats an interesting challenge and i dont know whats going to happen there what i also thinkis really important here is that i hope that no one loses sight of what the middle of the bell curve is. In other words, a lot of people are using these technologies theyre using them well and successfully theyve had some real benefits to people in connecting in ways they never used it before. Its going to be an interesting challenge to balance what people think might be harms with what they think might be benefits. Scott, how long in your sense will these investigations actually take . I know thats a hard question to answer, but i ask it in light of investors at least wondering when are we going to know yes or no whether theres going to be an opportunity to move forward for state ags or the federal government i would not expect a lawsuit or conclusion of the investigation in this calendar year antitrust investigations are big, heavy expensive things. The facebook investigation might be a little bit different in the sense that its been widely reported that facebook is in the process of integrating their messaging services and one possible implication of that would be to make antitrust action more difficult. Anticipating that potential problem, you might expect regulators, whether they are state ags or the federal trade commission or the doj to act more quickly than they otherwise would. Whats being said finally at agencies today about this . Well, i think one of the challenges you have is that you have differences of opinion, real differences of opinion between agencies, but within agencies like i said before, the split at the ftc about their view of technology were going to see how that plays out. But at the same time, you also have very interesting discussions happening on the hill where this issue has been politicized and will continue to be throughout the next year. Were bracing for that and this adds a new wrinkle. Gentlemen, thanks for that scott, good to see you both. Appreciate it. By the way, a quick programming note louisianas attorney general is going to join us later on today on the closing bell at 4 00 p. M. Eastern time join us for that meantime, a letter from the fda to the ceo of juul, the electronic nicotine assistant product talking about requirements from the fda. If you are a new tobacco product that you undergo premarket review and receive authorization from the fda permitting the product, sale and distribution prior to being offered a delivered for sale into interstate commerce, asking for a response from juul to the fda, but it just adds to the layers of scrutiny that juul, because theyre the biggest, but also a number of other players have gotten in recent days, guidelines from the cdc and the strange gcase from hundreds of vaping illnesses to which doctors seem to have no real clue. It will be interesting to see what this does and when it has an impact on their business. Juul is one of the most highly valued unicorns there is right now. I think its about 60 billion brie privately based on its recent investments. If you have so much overhang, this is a nightmare scenario for the company as it grapples with the safety of its products and the intense scrutiny that its receiving from regulators. It also figures into those talks i think between Phillip Morris international and altria of course, the merger of equals that we talked about that is being negotiated still juul is a significant economic state for altria might figure in its future although they have no real control there. They do have some board seats. They havent gotten the full approval i dont think yet certainly one to watch. As we go to break, take a look at shares of chipotle getting an upgrade. The firm also raising its price target on the stock to 980 per share. Chipotle already up around 100 so far in 2019 more squawk on the street when we return. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. A bullish trend could be unfolding. A top lysanfalt explains what tt could mean more squawk on the trestreet s coming up. It was sophies big day. By the way, shes the next mozart. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. China trade tariffs effecting everything from big tech to lobster sales. Contessa brewer joins us live from maine with more contessa reporter hi there. Coastal maine as you know is famous for its lobster when the boats bring back in their hauls, turns out these guys fetch more in china thaninn maine. Thats why they invested heavily in opening the chinese market, and business was booming until last summer when the trade war erupted. Fast forward to first half of the year, we saw exports to china plummet by 60 the dealers in maine saw sales plummet, had to layoff workers, cut hours. We have many less employees, probably half our full sales staff. I have more time to spend in my garden this summer so thats great. But no, my sales will be down 45 this year. Reporter you know who is really benefitting from the trade war with china the canadians, because their exports to china have gone up 40 the first half of the year they invested heavily in infrastructure to make the trade more efficient the problem is, the distributors in maine say they lost chinese customers to canada they dont think theyre getting back guys so contessa, if theyre not able to export as much as they used to to china, is there an excess supply of lobsters in maine, have prices come down as a result reporter interestingly they have actually increased their exports to canada by 130 . So leslie, theres people on the ground in maine and canada who have said to us they suspect the maine lob sistesters are shippeo canada, sent to china as caught in canada, avoiding tariffs. But enforcement on or gin and labeling is lack theres no proof thats happening. Are lobster men losing jobs as a result of this . Reporter lobster men are like farmers, theyre in Family Businesses that they invested in over a long time so theyre coming back theyre finding markets. But lobster here dont catch the same premium as lobster in china. They have relationships with the lobster men, they have to keep those, so they keep buying lobster, even though theyre not selling lobster for as much in connecticut or new york city as they would if they were sent to china where it is a premium product. All right Contessa Brewer in maine for us. Thank you. Lets send it over to Morgan Brennan with a special look at whats coming up on squawk alley. Hey, leslie, we have a big show coming up we are revving up for it scott wine will join us, ceo of polaris. The company celebrating 65 years. Were going to talk about all these vehicles and products, health of the consumer, trade and tariffs. So much more coming up leslie, ill send it back to you. All right. Keeping our eyes on at t, that stock one of the top gainers today. Guys, what do you make of all of this stock price reaction with regard to elliott being the key fulcrum in the situation i have to imagine if any other activist came in, we wouldnt see this type of stock price reaction, up now 3. 4 . You made clear the reputation elliott has for getting hands dirty, the size of the stake, relative underownership of the name itself, and probably the suppressed stock price in the past few months, right david is well koicoiled for a m like this. At t has been a strong performer this year, underperformer in years past, no doubt there have been plenty of questions about the Acquisition Strategy that elliott makes a focus in part of its letter over the last number of years, whether it is worth having done, i pointed out moving away from wireless as opposed to embracing it the way their competitor has. Shares are up again. Not nearly as much as earlier. I think thats interesting as well perhaps more of a wait and see approach from investors. The key will be what engagement elliott gets with the board. I think thats got to be sort of what the focus is. The lead director is matt rose, of course, known for having run burlington and well see where they go there, whether in fact theres alignment in terms of two and what elliott is looking for and what some of the board thinks board and management dont have to be aligned as well. If you sense it as an activist that theres a rupture there or room, you may want to exploited it. Elliott is known for Intense Research they use tremendous resources to get their way, known for getting their way in fights. They were able to raise 5 billion in 24 hours as a result of some of their successes in the activism world theyve gone after warren buffett, taking on the Encore Acquisition last year, theyve taken on argentina, gotten their way there. Samsung. Samsung. You talk to jonathan bush, he has some views, we have in terms of at least they have tried to have sort of a kinder, gentler approach of late, i think it is fair to say, than some of the more bullying, scary tactics they may have employed in the past. Worth noting we dont often see them, this is the largest position ever. We rarely see them, if ever, in a company thats this size while they have been successful in the past, and you mentioned this earlier, david, at t has these to shell out to prevent this behavior. They do, youre right, it is a mega cap they have not typically played in mega cap space the way other big activists have done. Which cost p g millions to fend them off, and after both that, both sides spending hundreds of millions, it still was an incredibly close contest. So close. P g has done great. When we come back, apple gears up for a big event tomorrow well tell you what to expect. Goldman doing well ba ia dsrep. Gh as yiel a u ckn moment are we supposed to dance . 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Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. Good morning it is 8 00 a. M. At alphabet headquarters in mountain view, california 11 00 a. M. On wall street. Squawk alley is live