Getting through as many as we can. Its a jampacked two hours. Why niles shorts amazon on the back of the deal, and former walmart ceo, bill simon, why walmart has more to worry about other than amazon. Bill miller, a bull on the stock, and talking to him about valeant, and alexander accosta reacting to President Trumps comments on cuban policy lets get to it we have details of the amazons deal to buy whole foods and what it means for rivals. Mike, this is a little bit of what it means because ramifications have many, many ripple effects, but the deal to buy whole foods makes it amazons biggest acquisition to date, and one thats royaling grocery and retail stocks. Amazon says it will maintain the whole foods brand with the ceo and cofounder somedaying at the helm, for now. The overlapping is high already, and the stores are are located close to many amazon distribution centers, which is an interesting point the partnership certainly arms whole foods with logistics and data expertise, and amazon gets 460 stores and know how and fresh grocery. So much, amazons locations are experiments, and analysts estimate amazon fresh is small whats it mean for other Grocery Retail players when amazon airs a category whether its books, video, streaming, or Cloud Computing, it plays to win meaning it pushes prices lower. Whole foods is working to shed the whole paycheck nickname as they expand offerings at lower prices amazon gives it the financial power to get there faster, threatening other players like kroger and walmart running thin grocery margins and likely ups the possibility for other consolidation in the industry. Walmart is the Worlds Largest retailer and grocer saying the customers look for shopping experiences thats providing everyday low pricing and a mix of channels to meet their needs. We feel great about the position with more than 4500 stores around the country and fast growing ecommerce and Online Grocery businesses the bigger concern from analysts is if amazon begins to use the whole foods stores as distribution or pickup points, lowering the cost of the last mile giving shoppers, again, another option to get their packages faster or in a way that may be more convenient for some of them, say, driving on the way home from work kelly . Yeah, absolutely, stay right there. A deeper dive into the deal today, and, in fact, went into whole foods a little bit away from here in manhattan to see what customers think about the deal heres some of what they had to say. Hopefully it prices can be a little bit more competitive. Youre on amazon prime and get groceries delivered. I will switch over. I love whole foods, its better than fresh, and the stock went up they absorbed it for nothing looked like a great deal i have three very young kids, so logistically its tricky to shop with all of them, so i hope it makes things better, yeah do you like coming to the store with your mom . Amazon this morning announced they bought whole foods. Bolt. Whats that mean . That means they know nothing about organic food they will give us horrible quality. Theres no reason for them to buy this terrific establishment. Yeah. He was not happy about it. More he was in the minority. I feel as if they are on board with the deal. He said hed shop in another market post nine is here. Welcome to you all, and, john, let me begin with you making the point that in the u. K. , they have three times the Online Grocery penetration than we have here, so, you know, is the u. S. Going to catch up to that quickly . Well, the u. S. Could catch up to it, but for amazon, weve been saying for 18 months that grocery is the biggest user path to greater Revenue Growth. The largest Retail Market in the u. S. And globally. In the u. S. Its a trillionthree market. This deal makes amazon the number five grocer in the u. S. We think they are number three by 2022, and it really, you know, accelerates pretty quickly their footprint in grocery, so, you know, we are bullish on the deal tom, from an investers point of view, if theres some complexity involved, obviously, in running this business its a lot more of a physical real world moving stuff around amsons already in there, but its going to bring head count up by 25 . Are you concerned . Is it a good return on capital a gambit by amazon jeff bezos is a a great capital allocator, one where this supersedes intention. We talk about the story of the death of brick and mortar, but now we have to change the story, right . They are doing reverse, going back into brick and mortar, one area they couldnt do it alone online if thats the case, youd think all the grocery names respond positively because, wait, theres so much value in the businesses, but now everybodys dumping everybody else whats that tell you when they move into your neighborhood, youre in trouble. They attack margins. They will get price competitive. Dont think Grocery Stores is where they end think of the things they make. Brick and mortar owned by amazon is bullish, and not owned is bearish in the short term, yes. Amazon has new distribution now, and for the existing plays, its competition. Kelly, i think this speaks tots whole idea that you have to have both. Weve been talking about this for some time. I dont want to use the word omnichannel anymore. It doesnt matter. You have to have both. Consumers want the option to buy online, pick up in store or buy online and have it delivered, or i dont want to bother online, i want to pick meat for myself and put it in my own trunk you have to over everything. There was a good point that he thinks this actually might have been a result of amsazon what walmart did with jet. Com and thought, oh, they have a physical presence, going after an innovative digital retailer maybe we need to do the opposite superreceivering the customer is right, something they prized, and bezos pushed for with the company. This is more of a distribution play an a retail play. They are getting into the grocery business, of course, but longer term or near term, real play here is all the real estate locations, the ability, then, to sameday deliver amazon goods on top of groceries, and thats what they are going after and building out and flying into here more than the groceries he also better hope hes able to improve the store and store performance, some of the most expensive real estate you can find in fact, whole foods is known as having very high end locations, not particular about how much they pay in rent theres the whole foods reit, right, investors see where they pop up its good in terms of where hot household residents are, the first to sign up for amazon prime, by the way, now, of course, lowering that for lower Income Customers out there, so amazon goes high and seeps into the mid to lower tier customer thats really smart. I dont i foresee them doing similar things with whole foods locations as well. Again, its not necessarily like amazon stores, but store fronts, distribution centers, a way to deliver things faster to you heres the performance were talking about for the supermarkets this week kroger is down 30 , sprouts down 15 , and weis down 10 . Targets down 10 . This all in one week so, tom, just going back to the issue, scout mentioned this this morning on air, saying, you just gave amazon entry into the weltiest households and centers in the world this is a frightening day for every retailer thats not amazon and in the future this is seen as the beginning of the end of traditional retail do you defend traditional retail further here we would. We see the death of so many things amson got into retail, walmart still exists, right . Now they get into grocery. Youre going to be youre going to have high end, low end, middle is going to be squeezed, and, as you said, this is amazon getting into a business they were already in, and they realized we need the bricks and mortars. Kelly, i argue with my old professor and say actually you dont necessarily gain the shoppers because i really believe based on data i have seen that you already have a big overlap, meaning if youre a whole foods shopper, high probability youre an amazon and more than likely than that an amazon prime shopper that was true, mike, with the people we spoke to in the store. I asked them, are you a prime member it was at least three quarters were sure. If nothing else, they have more data about them, which whole foods didnt john, Bigger Picture with the dominant tech companies. It seems as if maybe the look at grocery as a tremendous end market that amazon feels it has to attack or other Companies Looking at transportation, mobility, it seems like whats left for the enormous companies is human stuff, but hard stuff down the road, is that going to be an issue for the stocks i didnt really get the question, but one thing i would like to add is for prime prime is the driver of amazons business, and they could do things like they are in their bookstores, offering discounts for members, 460 locations theres about 52 million prime households in the u. S. You know, this is a Good Opportunity to further that penetration of prime, and prime, you know, members buy, you know, with the most frequency and across the most verticals, and last thing on grocery, househ d households in the u. S. Buy groceries five times a month at least. This increases amazon, which is a huge factor i feel like its five times a week john, showing this on the screen here, that s p put amazon on watch negative unhappy with the fact this is financed with debt, saying its leverage approaches one and a half times is that something youre concerned about here i dont think its a big concern at all the companies are positive so, yeah not a big deal at all. Its not like they are buying whole foods as cash flow negative so i think its fine its totally fine. Jeff knows how to work the market, always has i dont see that an issue necessarily either these days, aaminus is still good especially in retail. Yeah, exactly might be the top of the list right there. Thanks, everybody. Thank you amazon is one of the largest position in legendary bill millers Opportunity Fund. His take, and in honor of fathers day this weekend, his son is going to weigh in as well we have bill miller iii and iv you see the dow, almost exactly flat too, s p similar. You do have the nasdaq and the small cap russell under performing again yeah. 6153 nasdaq well off the record highs, dow and s p below that as well closely watched Hedge Fund Manager dan niles why hes shorting ams shorting amazon next also ahead, what snaps decline to the ipo price this week could mean for the ipo market youre watching cnbc, first in business, worldwide. The power of 100 of the worlds top companies. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . 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Following the news of the day that amazon bought whole foods, and look at impinj, they make radio frequency chips used for management of groceries, in other words, the things youre checking out with, the companys last quarterly meeting, the ceo told amazon joined an alliance it runs to promote radio frequency tagging. Speculation there about further deployment across whole foods locations, michael, pushing shares up today. One of the few positive ripple effects in the deal thats true shares of whole foods itself surging after amazon said theyll buy the grocer for nearly 14 billion whole foods, in fact, above the offer price of 42 a share worth noting. Traders dont think its the end of the story, but lets bring in tech fund manager dan niles on the phone. He says after the deal today, hes shorting amazon, long walmart. Dan, whats the thesis here . Caller yeah, i mean, i think this is a great deal for amazon. Look at the history. Amazon got into grocery back in 2007 it took them six years to open the next amazon fresh in los angeles in 2013, and this deal shows groceries are hard you need physical locations. So if amazon was up and walmart was up and grocers were up, say, hey, there is value to the physical location, i would have no problems with it, or if all the stocks were down including amazon because this is a low margin, hard to do business, then no problems with it, but, to me, look at walmart, i go, amazon bought 461 locations. Walmarts got 4500 areas for distribution in food, and they got 11,700 stores globally im looking at this saying, well, walmart grew ecommerce 63 last quarter they believe that is accelerating amazons actually responding to walmart. If you remember, walmart dropped prices on january 31st from 4 the 9 to 5 its not a coincidence that amazon weeks later dropped Free Shipping to 45 this is the first time you have seen walmart being able to draw any blood against amazon, and its a good move for amazon. I think they have to do this, but, you know, investings about riskreward. It makes zero sense that amazon gets in retail, good for them. No value to the guy with the most retail distribution on the planet dan, i understand your case for walmart, but why the short on amazon . You know, what kind of price are you looking at a short for a couple bucks, or is this something you hang on to thinking its a couple hundred dollars overpriced caller yeah, i mean, amazon, again, its not an isolation its tied in with walmart. To some extent, depends how the stocks move together thought about it differently, you know, amazons expected to grow their top nine this year at 22 . The stocks already up 32 for the year, so unlike other name, and well talk about facebook later, you know, this stocks already up more this year than expected Revenue Growth for all the years, so its get r more expensive as we go now, and thats where i have a problem with this. This is going to get more competitive. We have not talked about the fact that some other Companies Like aldi is coming into the u. S. , so this space will be more competitive, not less, and, you know, jeff, obviously got amazing distribution, incredible what hes built, but at this valuation and increase in the stock price doesnt make sense to me relative to walmart. Dan, you mentioned facebook out there. Of course, amazon is lumped in with facebook, with google, you know, essentially all of these kinds of big Virtual Software based companies. Seems to me am ason is a little different in terms of just the nature of its business and just its not just code, right . This business is all about kind of messy stuff like warehouses and pushing stuff around is that part of the thesis why amso amazon is looking rich here caller 100 right. This gets them into the the physical ownership of retail space stores, et cetera. Its this business is ugly. Its hard. Theres a reason why the, you know, the these companies before today were all getting murdered, because its not a good business, more competitive, especially as you have a little bit of product inflation, you know, squeezing margins, and, you know, for amsazon, if you look at this saying, hey, its great, were not dealing with the physical location stuff, its all with the internet, that just changed for you today im surprised its stock is out of whack with the rest of the space because its good for the guys or its bad dan, yeah, can i ask you again about, you know, the kind of short youre doing here again, because to short a company like amazon is a bold move im curious, talking short term or longer term or talk about where you think the price is going and where you would exit the trade . Caller yeah. I mean, i guess id be a fool if i told you i know where the price is going you also think about it in terms of, well, whats the market doing, right a lot of these stocks have gone up on the fact that its going up, so theres been a lot of momentum what you see starting last friday is a lot of the names are rolling over as well, so, for me, its a portfolio, and thats the way i think about it, so to answer your question, im looking at more of these prices starting to converge, and dont forget, this is not in isolation. Were long facebook. We love facebook unlike amazon, where you got Revenue Growth of 22 and stocks up 32 , with facebook, revenues are expected to be up 3 the39 this year and stocks up 30 . You argue its cheaper as we go unlike amazon. Were also long google these are part of portfolio stocks we say wed rather own facebook and google, and in this case with amazon getting into physical retail, which is really messy, we dont like it at this level relative to the other two, and in which case, i can go to sleep tonight and go, i dont care if the market goes down 5 tomorrow because my view is that those two stocks will hang out against walmart, aldi, kroger, and its a mess. To play devils advocate, its inflation armageddon, and walmart is the company to fight the war right now. Caller completely correct. Thats how the markets taking it, but why . If it was so easy to do, they launched their first entry into this in 2007 with amazon fresh in seattle took six years to open a second store in 2013. Now they got major markets, but this is difficult to do. Maybe he gets through this with no issues, but i think i think this space has be