Transcripts For CNBC Squawk Box 20160505 : vimarsana.com

Transcripts For CNBC Squawk Box 20160505

You can see . Morning the nasdaq is indicated higher by about 22 points. Nearing correction territory. Wti trading up about 3 . A pop of 1. 34 to 45. 12. Among the reasons for the surge in prices escalated fighting in libya thats disrupted production there. Some canadian pipelines shut down as the precaution after a wild fire shut down the oil city of forth mcmurray in canada. Weekly jobless claims forecast. James bullard is in Southern California today to speak about the economy and monetary policy. And alibaba and merck reporting results before the opening bell and also news corp, square and gopro after the close. And dont miss an exclusive interview with John Williams. That happens this afternoon at 1 40 p. M. On power lunch. Bullard an here a lot. He comes here a lot. If he wants to Say Something. He could some here and thats it. So many approximate of them the time that the if they really want to Say Something to us. Come here and do it. Else were not going to cover it. Fitbit First Quarter profits fell. Costs nearly tripled and. Expected to fall well short of analysts expectations. Whole foods kept costs under control. Also cut prices in the face of stiff competition in same store sales fell a little more than analysts had forecast. Cutting its full year outlook. Stocks doing okay but kind of had a long fall. And i cant do it. Used to call this yakky. I yas and the media business. Professionals. Professionals. And now they are trying to sell subscription asks things. You have been on it . Ive toyed around with it. Yeah. We actually internally use it here at cnbc sometimes. Here. Yeah. Were a media organization. We are, yeah. Kind of fringe. Filled with professionals. Filled with proflgss, yeah. April same store sales today. First out of the gate is cost ko. The wholesale warehouse april comps were flat. Stock is down about 53 cents. Tribunes publishing board unanimously rejects the takeover offer. Tribune says it will proceed with the Strategic Plan to revive its print business. Craziest thing i ever saw. Sold this stake to this guy two months ago at 8. 40. They thought this was fair. And then they claim this is opportunistic. The more people want you the more you think you are worth. Day also created like 20 Million Dollars out of ebitda out of nothing yesterday. All said its either criminal or fantasy. Theres something amiss over there. It just bugs me. Produced lots of news from some of the worlds best known henl fund managedge fund manage one of our historical sign post os after company in trouble is when numbers of senior people leave over a short period of time. Tesla fits that bill. Elon should just have a battery company. If he could create batteries that powered houses. If that happens its truly transformational. It is very expensive. It is very volumal. So buy it at 200. There is legitimate Public Policy concerns about any consolidation in healthcare given concerns in pharma and pricing. Amazon, think about the longterm secular trends in its favor. First people want to buy more conveniently. That has immediate tail wind into the Retail Business which we think is going to be worth at least 10 billion in ten years. That game is over. People are trying to bottom fish in this game think hag the so stock is cheap but we think it is anything but cheap. I do have a real problem with apple in that steve jobs is the man. And what is their product cycle going forward. I this i apple is going to be diminishing in importance looking forward a generation. Unbelievable. Kate kelly joins us now with more. Clokelly a lot of that was interesting. The tesla thing from chanos was interesting. [inaudible] because of Amazon Web Services the cloud unit. Gundlach. Start preparing for Cloud Services in the u. S. Because President Trump is going run up the debt. Hes conservative. People asking afterwards is he endorsing him . When someone is a master of non consensus thinking looks at the conventional wisdom and says trumps gonna that got me interested. What was his theory behind it on why the conventional wisdom is all wrong on that. He wouldnt landslide [inaudible]. Jeb bush just totally lacked organization and his Campaign Slogan should have been wtf exclamation point. And the said get out of the market completely. [inaudible]. Couple of hieghlights. A couple of huge movers from the morning session. Kratons polymers. A Specialty Chemical Company, up 15 by the close of trading yesterday. Here is what roczen had to say in summary. It is a Specialty Chemical Company that trades as though it is a commodity company. It is our view that the stock is materially undervalued. We looked relative to his peers, relative to the market. And relative to our view of intrinsic value. They were saying look this is a roll up strategy. Were concerned about the unfunded real estate loans and laid out his thesis and by close of day the stock was down 4 which was an improvement from the 13 or so it fell in the initial hour or so after the presentation. Take a listen. At best for this bank they are not going to be able to sustain Earnings Growth and they are very much priced as the growth stock. And at worse we could see real funding pressures and pressure on the Balance Sheet as well. When real estate markets come off this period. If there was an overarching theme i felt a lot of people were talk akd commodity cycle and specifically oil and that drove these ideas. One recommended buying royal dutch shell. He likes their lng business which they got as a result of the deal with bg. David einhorn. Short caterpillar. Not a new idea. How long has he had that . He basically thinks there is further down run. Zach schreiber, he says short the saudi riyal. He thinks they are structurely insolvent to the tune of 5 trillion dollars. Trying to sell a stake in the oil company. Exactly becky. And hes using the valuation as the basis for his math. And jim chanos is short mtn group. Long story short, africa to him is a commodity story. Those economies particularly. And this company is going to suffer as a result. Thats interesting. Because hes been playing commodity related shorts for a long time. Absolutely. Very early with caterpillar. Always interesting to see how he has this theses of the commodity slowdown and looks down the road to find links. And africa has is a place that has to mine and drill commodities and sell them and used to depend on russia and cuba and now moved toe china and china is lowing to slow down which is going to hurt africa and then tellco and the impact there. I right. And people playing straight against china has a tough time with times because a big economy or Big Government controlled economy can do a lot things otherwise so it is always interesting to hear the macro pieces. This the morning there was a fund manager from cmtdy, which is a Commodity Hedge Fund and he said the lows are in in oil and he thid said i this i the collapses of the chinese economy has been put off a few weeks or few months but im sure you will hear its coming in the afternoon. And hes absolutely right. And druckenmiller talked about the theme how the ease in money isnt working and corporate debt is squandered. And the last time 2005, it was on record about the financial crisis and it happened three years later. Hes been on this thing. Sent me some weird message the other day i didnt really understand but he definitely is thinking maybing it is coming to pass. Can the gold is pretty much the only thing he likes. Vale resorts, which actually took a hit because people were confused what it was. I just hit up. Right the its gone from 30 to 140. There is nothing do with shareholders are not let me talk to him another. Im not even addressing you. It has not getten the message yet that the world is ending. Snow and flooding and people are going to be on the wheels going down on the rocks in vail. But that stocks done nothing but go up in the face of snow disappearing in the northern hemisphere. You know why the stocks gonna occupy though right . They made about a million acquisitions in the last five years. They are still in the ski business. They are still in the ski business but the reason the stock is up ultimately is a function of current revenues and current profits. Im just suggesting to you. So those might go away when there is to more snow. Im [inaudible]. Nobody is thinking the snow is going away in 20 years. They predicted it to be gone by now on the east coast. They did. Five years ago. For children growing up you werent going to know what it was take a look at whats going on this morning. The futures. Dow looks it would open up about 60 point huer. The. Lets flip that board around. In europe overnight. While everyones been sleeping. Sort of a mixed picture. Everything is up marginally if not a little better than that. Overnight in asia. Markets in japan and south korea were closed for a Public Holiday but what you can see there is things again marginally up. And lets take a quick look at oil and the 10 year. Wti crude at 44. 77. Up this morning but again down from, what is the high in the past week or two . 46 . 47 . And then the you look at the 10 year right now were looking at 1. 793. And finally gold which mr. Druckenmiller would like everyone to get into immediately, as owe sell off all your stocks. Flip it around. Show everybody gold for one second if we could. Thank you very much. There we have it. 1278. 30. The now and s p on pace to post their second straight week of losses. The nasdaq falling for the ninth time in the last 10 days. Nearing correction levels. Joining us is richard steinberg. Also with us is peter bookvar. We get to see you a lot. So hang on just for a second. Rich, i want to know what you are going to do about all this and whether frankly you agree with mr. Druckenmiller which is basically to sell everything immediately. That is just the i dont think you sell everything immediately at all. Doug cass, a front of mine, says the market has no memory from day to day right now. And that is the market were going to stay in right. Now fear of missing the upside and the downside is going to keep us in a short run andrew. The key will be when investors flip the switch to 2017 earnings. This years earnings have come down from 120 bucks to about 118 in change. Next year earnings appear too high about 135 dollars. So i think we have to see where trends continue but i think were going to grind it out. There are some areas starting to concern us in overvaluation in the dividend space, which we invest in and our analysts are finding it harder to find names that make sense. But i think investors so you would just use their cash on pull backs to showily put money to work and not be in a huge rush. What does that mean in terms of now in terms of the trading range, is that a function of the election . A function of brexit . What is that . And exactly where would you put the money toe . I think that the range will be until earnings start to come through into the Second Quarter. And where we are putting money now is even though you have had some disappointments in the large name, i think liquidity is going to be key going into the election, going into the fed decision so that you have the ability to maneuver. So weve been putting names in the top 25 names in the s p even though theres been some disappointments. Money in dividends. Our value guys are starting to find more names in the bank sector. But that thesis is going to be really driven when the fed starts to flip the switch again and that is going to be a slow road. Peter, your negativity is winning out right now. Well i think were at the end of a cycle. Were at the end of a profit Margin Expansion cycle. We are at the end of a multiple expansion cycle. We are at the end of this modern day monetary extremism cycle. Were at the end of an economic cycle, a credit cycle. And in the context of markets that in my opinion are still very expensive. And i think that is what creates the danger in markets generally speaking. You may be right. The question is when . Well that is obviously in this age of Central Bank Activism and you have been thinking the this for some time. Right. But every time we get a new step of monetary activism it continues to push out what i think will be inevitable. But i think the most noteworthy thing has been the pushback of the ecb and the bank of japan have done. The first sign that markets have gone continue contrato what Central Banks are started to achi achief. When we come back the short sellers in attack mode. Details from the report next and donald trump joins us. We have a lot of ground to cover this morning including his plan to win support from the gop establishment. Squawk box will be right back. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. His tesla motors posting a busted loss. Giving a bullish guidance for production. Moving its target up two years to half a million vehicles annually by 2018. Earlier on cnbc famed short seller jim chanos elaborating on his short position in tesla. One historical sign post of a company in trouble is when numbers of senior people leave over a short period of time. Tesla fits that bill. We have a chart weve got of Senior Executives of leaving tesla is a flood in the past few years. And that is not a good sign. A company that cant forecast deliveries one quarter out and yet everybody is confident what they are going to make in 2020 or 2025. Tesla ceo elon musk addressing the criticism on the Conference Call. Convincing the nay sayers, i think that will be basically never. What i find ironic about is nay sayers is the very same people will transition from saying it was impossible to saying it was obvious. A ha ha ha. Shares initially rose as much as 8 in after hours trading before pairing back gains. Joining us is colin rush, a Senior Research analyst at oppenheimerer and thanks for coming in today. My pleasure. Which side to you come down on . Jim chanos makes some good points. Two production and manufacturing guys leaving at the same time tesla is upping the production time. What do you think . Were cautiously optimistic here. The company set an extremely high bar for them to reach. And elon did note on the Conference Call last night that some of o these production goals were aggressive and they wouldnt meet some of the deadlines they were setting for their own suppliers. And so as we look at this company they have set these extreme goals and gotten most of the way there over time. And thats been fluff to support the stock. We do think they are ramping at a rate that is going to demonstrate significant operating leverage and that is really whats at stake for this company right now. What do you mean specifically. As they ramp sales, they have set up enough infrastructure that they are going to see we see 15 increment operating margins. Because they built the infrastructure ahead of time so they are ready. Absolutely. Going to have to continue to invest but not the same rate to date. Why do you think the two executives left . Is this an issue where they didnt think they could meet that heightened time line. My sense after the call is they need to go into a higher volume manufacturing and needed to bring some additional talent in. Think they have gotten pretty for a and they are going to make some impressive high hires. And they can do that. I its amazing to see the number of consumers who are willing to put money down to reserve one of the model 3s coming out. That is something ive never seen with any auto maker before. And a lot of people say the cars are just amazing. You do think that the profitability is there. You would say cautiously optimistic. But do you tell people to buy it here . Yeah i think the big overhang right now is on capital risk. They have accelerated ramp, they are going to need more capital. They talked about it. The question is when and how much to raise. And once you take the over hang there off the other next question is substantial demand and execution. The folks bullish are going to give them the benefit of the doubt on the production ramp. Do you look at any of the competitors . How far ahead of anybody else are these guys . Who is the next guy behind them . And how far in terms of catching up . And can they . As we look at this, i think the bmw i3 is kind of a disappointment in my view. A glorified hatch back without a great range. So were looking at mercedes and at this point at least two or three years behind on something affordable for folks. What about a latest announcement we just heard with Fiat Chrysler hooking one google too . That sounds like a different sort of collaboration. We havent seen direct clapgs between a slk val guy and a detroit guy. We a. To see those two organizations try and Work Together i think will be an interesting experiment. But seeing success out of it from a product standpoint i guess i want to see the results before i get too scared about anything there. Colin, thanks for coming in. Thank you. It is smie owe righcinco de . Do we have anything planned at all in we have seen on twitter there was a margarita thing. You are the king of margarita. I am. Im like paul mccartney. Doesnt smoke pot anymore. He says if i want do anything i have a margarita and a glass of sha chardonnay. I feel like we did something once on cinco de mayo. Might have gotten in trouble for it wasnt a safe zone. We were talking in relation to something i im treading on thin ice here even mentioning margarita. Can i just tell you. I three things. Ounce lime juice. Two ounces pure agave tequila and then agave nectar. No triple sec no kwan trio. We do frozen. Stop the presses. Likes the frozen. Get me an umbrella. Put nit theit in this there. Makes it better. Do you like getting caught in the rain . Totally. I whats the next line of that . Its spin class on steroids. Figuratively i max is launching a super size it was. 2014. And it said end of snow and a hundred years from now. Thats what it said. But lets just read the article. And tha

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