And fpfizer and getting ready fr the twoday meeting and waiting for the president to make a new proposal on tax reduction. And we will wait for the two components merck and pfizer. Are patent problems looming. After posting weak sales in north america and announcing two executives leaving the company. And you heard it here first, two firms buying hmas. And watch the fertilizer stock, because they are down after one of the Potash Companies drops. Slight sli above forecast and the revenues are shy of census, and fpfizer plans to go into three segments. Meanwhile, mercks q2 earnings were above estimates and the merck beats the earnings but profit is cut in the half. That is the repeating echo of the quarter and a lot of the names and in some cases blockbusters losing exclusivity and trying to fill the pipeline with stuff at the other end. That is the story of big pharma, and a pack of development and changing in recent months and years, carl. Of course, replacing off patent with whatever you can whether it is a new formulation or an actual new drug has been the key, and they are dealing with the patent cliff for a big time the big names. Pfizer and merck, and do you think, david, it spurs acquisitions or sparks the pharma loop that has been so hot this year . Well, it is interesting, because there is one big action going on out there and that is onyx, and samgen is not big pharma, but big biotech there. And some of the pharmas are trading at multiples that are as high if not higher of some of the big broker names. We talked to jim cramer about it whether it is celgene or gilead, and interesting, and we will see if there is more consolidation. I want to hear about the calls going on for merck and pfizerings because i nknow that the news is coming awe of those as well. Should we get to it . Get to the analysts to see what they have the say about it and get more insight on the big pharma. Tony butler is at barclays, and Seamus Fernandez is at leering swan, an analyst. And thank you both. T tony, let me start with you, if i could get your fake on merck he here. I am looking at something in the Conference Call they said that operational x januvial is up, and anything come off of the Conference Call better than expected . Well, that may have been the focus for the street, but q1 sales were dismal for a large driver to mercks revenue, and you are talking about a product or two products under 36 billion in sales so based on the comments earlier, the period that merck is undergoing, they need the products to do well. Q tlt 1 is dismal and picked it up in q2 and the u. S. Is about 5 growth. They need to continue to grow these two products and it is very important. Okay. So xus looks better than some may have anticipated going into the quarter . Absolutely. That is key. I think that one thing to consider though it is x us including europe and merging market markets. Japan is weak, and they get a tremendous amount of revenue in japan and in fact, the largest selling oral diabetes product in japan. Japans key for that growth xus. Right. Well, lets talk pfizer there. Scott, more or less inline in this quarter and restructuring is the key them that continues there. Yeah, i think that the key is re really is exactly what you said the restructuring, and the company is talking about splitting the operating and reporting sessionment men in ii parts which may result in a further separation of the company into three segments. Value segment, and two operational and innovative segment which is interesting than the street expected. Two segments were more of the consensus expectation for a possible split up, but the fact that the company is looking at these as Global Operations across distribution lines that make sense, i do think it is doing to drive more interest. Seamus, the company says they that have been asked about this today obviously and pushing back that this is a move to separate the value business, but you believe it is . Well, again, i think that it certainly sets up the possibility of executing that kind of separation, so it is l early for them to make a clear statement about that, but my understanding is ta thhat they provide us with the operational segments and then after that incremental color on the Balance Sheet and cash flow and tax report reporting statements in 2015 which could then allow the company to execute a taxfree separation in 2016. Again, i think that they are lining up the pieces on the chess board, but you know, it does not necessarily mean that those steps are going to be taken. Seamus, so interesting though, but a it is a detailed walk through of what might happen here that you would have to expect if the company were not seriously considering this, they would say to the people, look, relax on the speculation. Sure. I think that the, you know, the pushback on the speculation, they dont want the expectations to get too far ahead of themselves, and there are a number of important catalysts that need to kind of occur going forwa forward. Those catalysts need to execute well on the launches of the Innovative Products on the one side. And so the cellgens and another product that is the ap anticoagulant that is going to launch right now have to do well for innovative core one to succeed. The other business which has the oncology business baked into it, really requires some meaningful success in the pipeline there and a product called pavlocyclid for Breast Cancer needs to succeed to drive the next steps of the separation. Important pieces of the puzzle that we need to know over the next couple of years. On the merck side, tony, and in terms of trying to fill the pipeline, a lot of talk of the insomnia drug that the fda will not approve in the short term, how close are researchers to new discoveries . Well sh, with the ip some kn ya drug, quite frankly, this will put you to sleep, but what you need the focus on is a couple of the more Innovative Products that they have developed. One is for alzheimers which is late stage development, and interesting and based on the elegant gin net enetics and the is cancer. It is pd1 and a cell sep or t receptor, and they and bristol mi iers are on the forefront to look at ways to improve the outcome of a lot of tumors and not just melanoma or other sing singlecell cancers, but those are vast for merck, and i would separate it vastly. And so from the stock point, tony, preference or maybe you go elsewhere . Listen, we have been recommending j j, because they have the biggest pharmaceutical drivers and the m a is quite high, but i prefer merck over pfizer, and innovation is the key. Merck today leads a little greater on the innovation side. I think it is great for reorganization for pfizer, but it is reorganization to drive the revenue. Tony and seamus, thank you very much and a lot to talk about with two famous names. And merck is now the most shorted down stock according to forbes this morning replacing industrial. I would not expect it for a big name like that. And meanwhile, coach is falling in the market, and they posted 89 cents a share in the Fourth Quarter in line with forecasts, and the same store sales in north america is down 1. 7. They announce the president and the ceo and president are leaving the company at the end of august. The down 1. 7 numbers and the estimate is plus 1, so it is not a miserable miss, but they are dealing with the easy compares and the notion they lose shares to michael kors and or ttoriort is interesting. They are lagging a company like tiffanys who say that coach, or is tiffanys in danger of losing on the fashion segment, and the investors answer is that they are much more concerned with coach as the name than other places. And we have seen it do well, and not fairly well, but well. I wonder if coach is luxury enough. I wonder if coach is luxury enough, and that is interesting that they are spinning off the more luxury handbag, because at this point, you want to be the super high end name or the name that is a little bit more mass market. Maybe they are getting squeezed. I love the point that dana tellsey made that regular clothes labels on the inside, and accessories, the labels are on the outside. That is one big purchase motivator to show what you own. And china with the same focus as burberry is the same, and people dont care, because it is the north american number. We are running out of time, and do you want to do the hma . Well, the deal was so complex, and hma is going to pay largely stock and cash and take under so many reiterations on this and we need more time and coming up against the break. So we will tell you about this and tell you about the shares, and chs is appearing to be up, and hma is weak today, and the key is glenview and 15 of hma in the midst of the consensus consolidation, and the 10 owner oCommunity Health. What will they do . I have comments, but i use it a as tease to keep the viewers tuned in. I dont know how many care about hma, but who those who do, will keep on watching. Yes, darn it. And we will also talk about the unbelievable margin cap lost, and including a cff who had an interesting day yesterday. Yes, and this is a big market story today that we have to follow. 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Wow, it is a rough morning for fertilizer producers pot tash agrium and they are tumbling in the breakup of one of the largest potash partnerships in belarus. They say that it could drop to below 300 a ton. And this is hurting potash and monsanto was down for a sector that people had been feeling good about including ceos on this way on the way off of the set saying, im into fertilizer. Yes, carl. People have been looking into potash, and this is going back to where there was a concern about the worry of a shortage of it, and you can see how unexpected with people saying, wait a minute, we have gone from getting our hands on the stuff to the availability of it now. The volumes probably go up. Prices come down sharply as the volumes come up, and the pmultiples are coming down, and that is what you are seeing coming down with so many of the names. This is essentially a cartel that kept the prices at a certain point, and it seemed largely about china as you might expect where a lot of the stuff goes, and so many of the things go. We will watch them all. Yesterday, we mentioned that shares of cfn industries and nitrogen and fertilizer, but not potash and lumped in hee, they were up 12 . This is when the quarterly letter that dan loebs puts out to the investors indicated a new position there, and talked about the fact that the company could significantly increase the dividend. I know others who believed it was undervalued and we will see if there is a reevaluation across the board for those companies that are not necessarily right down the middle of the potash and if you are in the larger fertilizer area. And potash had cut the outlook a few days ago so a sort of negative atmosphere, but this is a period on it. That blood letting is fascinating, and today, there is a article about the take of sony and whether it marks a change in tone, and it is harsh. I did tweet something that he is upping the rhetoric there and calling something after earth, and white house down, and the the ishtar and one of the tweets said call it fishtar. In the meantime, how much are the home prices falling or rising in your neck of the woods . We will talk to Robert Shiller of the caseshiller index which had good numbers again, and we will hear what he has to say about those that were released in the hour earlier. And futures okay. The opening bell is in 11 30. So dont go away. We route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Yeah, im married. Does it matter . Youd do that for me . Really . Yeah, id like that. Who are you talking to . Uh, its jake from state farm. Sounds like a really good deal. Jake from state farm at three in the morning. Who is this . Its jake from state farm. What are you wearing, jake from state farm . [ jake ] uh. Khakis. She sounds hideous. Well shes a guy, so. [ male announcer ] another reason more people stay with state farm. Get to a better state. Lets get back to the key housing data out this morning and the latest s p caseshiller showing a gain higher than the last seven years for the composites. We are joined by Robert Shiller and glad to have you back. Thank you. Stellar numbers and atlanta is 20. 1, and las vegas is 23, and phoenix is 20 and San Francisco is 24. You want to get the bubble question out of the way early . Yes, the bubble cities, and the cities that bubbled in the past are bubbling again. So to me, it seems partly psychological and they have seen it before and they are ready for it again. Is it going to work this time is the follow on that . Is this being driven in any way by regular home buyers and people like you and me and first time home buyers or is this institutional . Well, it is both but the new thinghe institutional side. Because the Institutional Investors had tough time making money and they learned about mobili mobility. It is right now going up. And for a flipper who can get out in a year, it seems to be a fairly safe bet. Robert, a little bit of difference or the differentiation here, and the release mentions that the eastern sun belt cities like miami and tampa are lagging behind the western counter parts . Well, the really big cities, yeah, they are the notably San Francisco which is going bananas, and all right. It is psychology and i cant explain it entirely, but it seems like california has h historically been the most bubbly state in the country and it continues. Robert, what is your take on the Mortgage Rates and in is backward looking and big move up, and what is it going to do to the Housing Market . Well, the Mortgage Rates set record lows last fall shortly after qe3 was announced a and that created and part of the impetus for this. People are influenced by the record low. They dont want noisz that. That is part of the thing that is temporarying, because the Interest Rates are up so much. I still think that people are thinking of going higher, so it is a positive force right now. And robert, i want to go back to the point of the bubble cities being bubbly again, because there is Something Different going on. You, yourself, mentioned San Francisco and if anything, you can point to the strong conmy in the area for it doing well as opposed to some traditionally, you know, bubble or sentimentdriven behavior. Well, anything and when you look at the outliers, it is probably an outlier, because of multiple causes and so San Francisco is not going to be easily explained, but i keep thinking that San Francisco is just trying to bubble up. Back in 2009 when the first time home buyer tax credit was put in place, San Francisco was the city that responded the most. I just get it when i get there, because i have a feeling they have high expectations, and maybe the other factors are a part of it, too. Im sure. Robert, some of the cities that did not perform as well, and of course, new york where we all live up 3. 3 , and