You can see there is a bounce back. A lot of that coming from walmart. 44 points from walmarts deline alone. You can see this morning theres a bit of a bounce back. Dow futures are up by 107 points, s p futures up by 12 and the nasdaq up by 28. A couple of big stories were watching. First data priegs its ipo at 16 a share last night. Heres the bad news, thats below the 18 to 20 expected range. Selling 160 million shares to raise 2. 6 billion in total. It is the years largest Public Offering but albertson was expected to be the years second biggest ipo but the super market chain decided to delay its pricing due to market volatility. Also it could be that the market is now that window is closing. Mobile Payments Company square officially filed for its ipo saying it plans to list on the nyse under the ticker sq. The news comes just a week after square qceo was named ceo of twitter. It reported a net loss in the first half of this year. United health out with quarterly numbers. It Beat Estimates by 1 cent with earnings of 1. 65 a share. Revenue was also above forecast. Breaking news out of washington this morning. President obama will announce today at the end of 2016 the u. S. Will maintain a presence of 5500 troops in afghanistan. The number is much higher than the initial target of 1,000 troops. The administration points to mounting violence and instability in afghanistan. As the reasons for keeping more troops. Right now, the u. S. Has 9800 troops there. Wow. And were going down from there. Things seem great as is. President obama is going to make the announcement later this morning. Lets get back to walmart. Shares of the dow component plunging as much as 10 . That dragged down the blue chip index by 45 points. Walmart getting slammed after they predicted poor profit and flat sales at an Analyst Meeting in new york. Prior to that gathering Doug Mcmillon joined us on squawk box. Walmart is the second worst performing dow component of the year. What are you going to tell the analysts on wall street today . Theres people that will buy into the longterm story and some that arent. Theyre going to say how long is how long. How long is long . Normally we provide guidance for just a year and were going to talk about three years out for today. That will help people getting their minds around it. What do you see three years out . Thats part of the problem. When people were looking at the estimates for fiscal 2017 they were looking at earnings of more than 7 as recently as as recently as the beginning of this year. Those number versus come down drastically. Well share the numbers later today but well talk about revenue projections, earnings projections, what we think were going to need in capital and then they can judge for themselves. Well, as you can see, check out the chart. The street did not judge kindly. Later in the day after the company lost about 20 billion in market capitalization, mcmillon returned and spoke to jim cramer on mad money about the Impact Investing in a higher minimum wage of 10 an hour well have in terms of shortterm profitability. Its great that were giving visibility into what the next three years will look like. Thats a radical departure from what people thought. Dont you think you could have put a release out this morning before squawk. People have known that 10 was coming for awhile. This news today is just that we quantified it for everybody. I will say when he was on our air he quantity pied it by saying we thought it was a billion dollars it would end up costing the company. Closer to 1. 2 billion. And additional effects next year but obviously there was a lot of confusion. They went into yesterday with a way to approach the whole they knew what was going to happen and they came in with a way to approach it. Now when he was here he told us about the 15 billion negative forex and copped to the higher wages were going to be a problem but in trying to do it before you saw the numbers and then he got defensive with the analysts saying i thought we had already told you all of this stuff. Which he thought he came clean with us but he really thats what it was. If he had given the numbers and was exmaining at the same time. Why have an analyst call if youre going to tell everyone on a tv show. But why didnt you put out a release. But what is it that he didnt tell us . Was it the weakness in the consumer . If its the weakness in the consumer this is not just a walmart story this is a fed story and economy story. Which is why all the other retailers this is not a walmart getting hit alone. When we asked him about the consumer he said its going okay. I said is that a 2 or 2. 5 gdp. He said yeah. Its going okay but didnt get specific with numbers. Its more than having put out a statement yesterday before talking to us. Its about how you would have told people about this over the past two months. Its never easy. This is not just bad news. Its constant updates on its sales. It stopped doing that several years ago and as a result you get much less frequent updates. You hope youre preparing slowly to get people used to it but if you dont do it enough yesterday you said it shouldnt be mcmillon it should be mcbi i mcbillon. He had a tough time trying to justify the higher costs. There was a moral argument plead guilty made and all of these other things but this is going to put a real damper on this company broadly. They shouldnt have approached it this way in terms of what the wage should be but how its being articulated. Is it incumbent upon a company theyre having the analyst call to let you know. Courtney reagan is here. Why tell people, you dont need to release a statement before you have the analyst call about what youre going to say in the analyst call, do you . I think what would have been good is if they would have put the release out first and then he comes on and talks about it on tv. It gives the analysts some time to update their models. Come full circle with where theyre thinking. Prepare a little bit better because what i heard and charlie was there was that once the news came out, the analysts ran out of the room, everyone went on their phones in a panic and nobody could find a private spot to talk because everyone was calling back to their desks and having to update things so many of the analysts were unprepared for that type of information. Investors were unprepared for that. It came as a surprise to anybody out there. The meeting could have been a clarification. That could have been very helpful as opposed to hearing it for the first time and being there without your computers or without the ability to remodel and ask intelligent questions there. Charlie oshea is here. How big of a surprise was it for you . It really wasnt a surprise for us. We had mentioned something earlier in the year about the potential cost for this in a press release. We pegged it at about a billion for 15. He did say yesterday morning its probably closer to 1. 2 billion. We knew there was some risk to the upside for cost, down side for metrics with that number. Then hook out to 2016 you have the increase going to 10. Its more than 9. So you could back into it. They also have added Department Managers in a lot of these stores. Their starting wage is 15 an hour. There just werent enough specifics. It wasnt tied together and then the impact on what that meant on the bottom and the top line. If he had said, you asked him about earnings expectations. He said three years of guidance. Are they too high right now. If he had said at that point, and sort of given body language or whatever that people are not prepared, would it have closed at 63 . Is it different . Does it matter that he didnt do that beforehand . Im not sure. I dont know if it would have made a difference yesterday morning. But maybe like andrew said the last couple of months. Or in february when they made the wage announcement and they did give us some indication of how much of a hit it would be to earnings and then again in august but they didnt fully model it all out including the 10 increase until yesterday and even he said during the question and answer session we told you it was 9 and 10. Maybe we didnt give you enough math to do this but you knew it was going to be a big number. So it felt a little defensive to me. As if walmart felt that they had given the street enough. I will say that. From everybody, from jim talking to him walmart thought that they gave. I think they were very surprised by the streets extreme reaction to that. Id have to agree. Im a fixed income analyst. We take a longer term view here. We think this is a good idea Going Forward as you try to turn the battleship. But i think there was, you look at what the stock did and clearly it wasnt a popular decision to make. A Bernie Sanders story because shareholders lost 20 billion because wage earners are going up to 9 and 10. So the income inequality issue if you thought that shareholders had been rewarded to the exclusion of the labor force this is what youre supposed to do. Unfortunately a lot of people in the middle own walmart stock and Pension Plans and you cant ever really look at this as a good thing when market cap losses total 20 billion. You cant say its worth it for the wages going up, can you . Well, for shareholders, again, i look at this through a different lenses. Through a fixed income longer term lenses and this is what we feel the Company Needs to do in every other brick and mortar retailer needs to do this stuff. They have to invest in employers and price and also have to invest in ecommerce and theyre going to spend a billion dollars in ecommerce a year for the next three years on top of whats already been spent. Youre trying to move multichannel. Its not free. It doesnt happen overnight and to compete with amazon in our view is the brick and mortar retailers are well positioned to compete online, you have to do this thing. If the investors have a longer term view i dont think they react the way they did with walmart yesterday. If theyre taking a shorter term view theyre going to react the way they did yesterday and thats a balancing sheet. I thought the ten year goes under 2. The euro is back at 115. So some of the things that cause the problems are reversing because of that but this morning, feds not going probably no 2015. So what if it really is a slow down . Because were now seeing that the benefits of it, sooner or later youre not going to have anything to do if the market has another tantrum and the market could get a tantrum if the consumer goes away. The consumer is stressed. Theres almost a bar bell here where the upper end consumer is still doing well and the lower end consumer remains pressured. Theres still effects from the snap payment reductions at the lowest end. The payroll tax with holding increase hitting everybody in the middle. Families of 50,000 in income lost to about 1,000 in spendable disposable income. Thats money that never came back. A lot of the positives on the consumer side are being driven by autos. If youre buying a car youre not buying anything else. Even if you lease you have to put a big chunk of money down. Housing has been choppy. Our view of the consumer at moodies is certainly mixed. Thank you. Lets talk about another stock on the move this morning and that is netflix. Quarterly results falling short of estimates and subscriber numbers below forecast. Theyre blaming the transition to chip based credit cards for the miss. Old cards on file at netflix no longer work. This resulted in what netflix is calling involuntary turn. Shares dropping by as much as 15 after the bell. Anthony joins us this morning to get his take. Hes of course the senior analyst. What do you make is the card thing is that a real excuse . And the reason i ask that theres a number of analyst outs there that says its the craziest thing they ever heard. I think its a real excuse. A real driver. One of a few different drives. One could be seasonality. Another could be macro. Theyre about a third through this transition to chip based, debit based cards. The key point is that gross edition. So new science up on a gross basis was strong. Very strong. Above their internal estimates. Specifically internationally. Well i was just talking about the u. S. But certainly internationally. The guidance was awesome. Thats story of the stock. Is the international expansion, the global scale and even though you have a little bit of this question, the involuntary turn well talk about today its a temporary phenomenon. The longterm narrative remains intact. Whats your target for the stock . 125. So you still love it. Joe is laughing. Your target is supposed to be 9,000 on netflix because every dollar of market cap that old media has is supposed to go into netflix. I looked to see if i could watch fargo the last season but i couldnt but i can see chips and reruns of why are you so angry . Im not seeing it happen. You said you would get out of Everything Else to the exclusion of netflix and its gone down more than old media in this route. I said that at 50 bucks, joe. The stock has more than doubled that. No, this was much later. This is only a couple of months ago. Dealership is shifting to internet television. Its whats going on in traditional media. Media the stocks are under pressure because theres a longterm bear case thats typical to disprove. Netflix is the answer. Netflix goes down more than the old media that you were talking about. Last night . No, after espn and disney. After espn and disney. Stocks rebounded most of the way back there. Its at 105. 105. Went all the way to 90 at that point. The stocks doubled this year. Im not talking about since the last time we were talking. Since the espn deal. I think that the Traditional Media Companies now are trying to adapt to what the consumer wants to do. Internet video. Ad free, on demand, across all platforms. Tsa wh thats what netflix is tapping into. So heres the question and a agree by the way, this was a minor theres a larger question on netflix which is the cost. Content costs are going to continue to rise for them. At what point does that become challenging or does it . I think that the thing that deflects that concern is their longer term guidance on profitability and margins. So they reiterate their guidance for 40 margins in the u. S. How do they do that . Shift their mix to originals which they said they get more bang for their buck. So more viewership per dollar spent as opposed to acquired programming and one of the things they said is theyre not interested. They raise prices. They just raise prices so that in some sense allows them to spend more on content while not taking down its not you. Its netflix. Im unhappy. If i want to see jaws, i dont want to see splash. And whenever i look you used to be able to get any dvd you want. I think youre focused on movie. I think its shifting to tv shows. Original content though. They better not start the thing you should worry about they did say yesterday on the call is they want to get into the news business. Really . No joke. Not necessary live news. I dont know if they were referring to more docks or what they were going after. They jokingly referred to vice media. What theyre doing with real live. Long form type of stuff. So theyre experimenting. They want to leave themselves room to experiment. But not live sport yet. Not at all. What do you think the news thing is going to be . Im not sure. Vice is now into theyre doing daily journalism. But we did have very journalism . We did have dillard here this week. Who is the english guy that nobody really watches . Is that journalism . No, the guy that does the hbo thing. John oliver. John oliver on hbo. Its a form of news. Its a comedy show. Heres the thing i would say about news. If you have a daily show or weekly show you eliminate the idea of going in and then turning. If you have content where it tethers you to the service on a daily, weekly, monthly basis thats what the general strategy is, that reduces we talked about involuntary turn, that reduces the voluntary turn. Thank you. Whats up. Coming up some very long. We didnt play that. Its about you. Some very long custom lines. Custom lines at u. S. Airports. Well tell you why, next. But first heres a look back at this date in history. Surprise we heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . Screening from passengers slow down for a time. All is back to normal. Its used to screen passengers that may be on the watch list or have other security issues. Customs and border protections say they were able to use alternative methods to process incoming passengers. Now to politics. Were less than two weeks away from the next gop debate. Watch it outside. Joining john harwood from washington to take a look at the big issues on the table. Dem cats say the economy stinks. That was my point. The candidates agree. If middle class is suffering. So you didnt see that in the debate, john . I heard democrats complaining about the economy just as president obama complaining about it looking for growth. But the issue that confounded republicans so far has been immigration. Remember coming out of 2012, Barrack Obama got 710 latino votes. Republicans know they have got to do better. When donald trump when mexico sends its people. Theyre not sending the best. Theyre not sending you. Theyre not sending you. Theyre sending people that have lots of problems and theyre bringing those problems with us. Theyre bringing drug, theyre bringing crime. Theyre rapists. Whats coming from more than mexico. Its coming from all over south and latin america and its coming probably from the middle east but we dont know because we have no protection and we have no competence. We dont know whats happening. Its got to stop and got to stop fast. What thats done is put on the offensive candidates that hoped to appeal to latino voters with a more optimistic message and temperate message on the issue of immigration. Jeb bush uses his own personal biography. The fact that hes married to a mexicanamerican he met while study ago broad. Take a listen to this clip. In 1971, 8 years before then candidate Ronald Reagan said that we should stop thinking of our neighbors as foreigners, i was ahead of my time in cross border outreach. Across a plaza i saw a girl. She spoke only a little english. My spanish was okay but really not that good. As a candidate, i intended to let everyone hear my message including the many that can express their love of country in a different language. But jeb bush has been forced by the pressure to back away from his past support for a path to citizenship for illegal immigrants. So has marco rubio who himself is the son of immig