Retail sector is still under pressure. Pandora shares on the rise after activist Investment Firm calling for pandora to consider a sale. Stocks poised to open lower following mondays rally. Futures up 0. 4 as gasoline, medical care and food prices up. April Housing Starts up 6. 6. Well above expectations on a 3. 7 gain. Economy doesnt look too bad this morning, jim. No. A lot of that increase in cpi is gasoline has come up. Thats something that the market likes, which is the craziness of this market. Remember we go to 48 for oil yesterday, and we have an explosion. All the stocks of the companies that do poorly when oil goes higher, but thats all right because oil is meant to be a barometer. We keep telling ourselves that. At a certain point its not a barometer. At a certain point its back to the inflation rate. But at the same time i dont see a lot of strength. I just see a lot of no volume, algorithmic moves in the stock market. Yesterday was one of the worst examples of it because the stocks kind of gravitated i was looking at some of the gains and how little stock they were made on. I mean, other than valeant, you had moves 80,000 shares for 3m, 100,000 shares for united technologies. These are things that shouldnt youve been in business for a long time. In 1987 it would take a million shares to move united technologies. A million. So the rally gets no credit yesterday. None. None. Its just oil. If oil were to reverse right now and go to 49, we would be saying can you believe how great home depot is, its 1. 43. Right. Thats how bad it is. If oil goes up, home depot had a great quarter, if oil was down, it was better than expected. I dont want to play that game, but we have to understand its dependent on oil. And dependent on that in part because of your original part about algorithms, we talk about this funds oftentimes. Its not the fast trading its not the High Frequency trading were talking about. Were talking about a different discipline where hedge funds are focused on hiring a lot of math ma tigss who frankly no nothing about the stock market and dont care. Looking at relationships between Different Things setting up algorithms they think are going to work and they dominate trading some days in fact youve never heard of can be as much as 3 or 4 of volume on basis every single day, jim. They run this market oftentimes. There was a gal up poll yesterday down to almost 50 of households that own stock used to be much higher. If they do own stock, theyre a part of this whole just an index fund, they dont really care, the hatred for individual stocks is unparalleled in terms of my career. And periodically youll see a stock that just blows the numbers away and it goes higher and breaks the oar. But we see the futures go up. And then when we see big sales may be redemptions we were talking about before, its blocks of hedge funds that have kind of given up. Its people who have to withdraw money because investors want it back. You saw this morning they dont like hedge funds anymore. What about sorros now buying 2 million shares of this put option on the s p, cutting exposure to stocks by a third, buying baric. I think its a great stock, but icahn more short than long whats interesting we say sorros of course and we has people who do this for him, but so little of his capital is focused on the stock market. Right. After this 13f season what weve been reporting on, whats interesting is how little capital some of them have at work. I know. And were also in this redemption cycle right now for a lot of hedge funds where we may be seeing sales of stocks, perhaps some activist names that they dont necessarily want to but they are. There is something happening in the hedge fund world, capitals starting to come out, maybe they are also starting to take risk off. To your point of not a lot of volume, theres just not a lot of conviction out there. None. Mentioning apple yesterday, as soon as we heard Warren Buffett bought it within a minute we heard it wasnt Warren Buffett, within two minutes we heard it didnt matter, within four minutes we felt we had to short apple because hes so bad on ibm and in five minutes we decided apple was the greatest short ever and the iphone 7 doesnt work and now im waiting for a chapter 11 file. There you go. Theres the life cycle of a company that made 10 billion this quarter. Thats the way this world works now. Todd and ted bought it. Interesting apple adventure, this stuff im hearing its like i want to leave. I want to leave and go do something productive. Unfortunately were not going to let you do that. Honestly the value, i look at tjx, an amazing quarter, okay. And home goods plus 9, now thats incredible. Its just not as important until the basket so maybe it has a shot. Pandora, corvex, well big deal, lets call tim cook and see if we can buy it. Do you want to do more stories were talking about coming up, you want to get deeper . Were going to talk about youtube later too. I was going through it and perrigos down it. Didnt seem important to me at all but im making it important because perrigos down. Im reacting to the tape. Im just saying whats moving is insane that the stuff that goes higher should be going lower, which is that a lot of stuff that is going up that is oil related and that oil really is responsive to china and china goes up, the baltic freight goes up, we like freeport. If freeport doesnt go under then we like the banks. Is there not correlated nearly as much as people think, or the gas stations stocks would be higher. According to ph. D. S and mathematics hired by those phonies. I thought you were a fan of watson. By the guys at citadel or millennium or point 72. Point 72. Yeah. They got a lot of them too. 38th parallel guys are fabulous. Someone the other day was telling me, you know what, in the business of health care and health care mathematics and drug approvals he says he never sees wats watson. I said watsons invisible. He said, no, clients of watson. So you have to go back to ibm and say where are some clients. All im saying is the market its not its acting incorrectly. And if we look at individual companies, a lot of them are doing so much better than the stock market indicates. Thats what im getting at. And theyre being captured by all sorts of different algos that make no sense. To your point one name acting better, or at least performing better is depot raising their fouryear guidance posting better than expected q1 comps up 6. 5. Tjx jim mentions the home of tjmaxx and home goods also meeting quarterly earnings. Depot guides comps up to 4. 9, which would imply they raise comps up 6. 5, and 7. 4 in the u. S. Comp guide to 4. 9 is above expectations above the high end of the prior sfwl the stock was up very, very big earlier. I think what will happen is theyll tell a good story. And people say well why was it down, and the answer is someone kind of painting the tame. Other people see it was up big yesterday. Now, its not childrens place, which wasnt part of the index and plce did a good job, its not francescas, still trying to get to the bottom of that. Home depot is a public large stock everyone thought was going to do great and when it did great it was not enough. Wait until the comps go, wait until torme gets on, not mel tormay spelled different but take anything. I feel whats happened here with home depot is expectations got so high that even though they beat them theres someone selling it. And can we just look back and just say thats silly . Its silly. Its silly. Thank you. You got me thinking about marissa tome now. The cfo of lowes. Just kidding, lowes is good, but they bought a canadian company. And canadas bad. Yeah. Dont forget canada wildfires. Got it. Canada wildfires. Blame canada. When you look at a depot up 7. 4 versus macys down 5. 6, kohls down 3. 9, dillards down 5, right, its the home depot dont forget nordstrom was horrendous. I want everyone who cares about stocks, and thats about five people in the world, to read ellisons comments, not larry, and we revere larry, but ellison at jc penney. He was so eloquent about whats working. Flooring, flooring is working. Window beauty parlor workin, home goods, working, appliance goods, working, apparel, no, no working. No working. Plus sizes work because people want to try them on. Theyre afraid. Everything else you go to amazon. Look at home depot is not a so in other words plus size youre not going to order on amazon . He said they do not feel women who order plus sizes are not confident with the web. Thats his comments. Hes so good, i mean, you got to read them. They did much better than everybody else because hes got a great orientation. He really has at one point he says, you know, the other guys they didnt look at the data. Im very data driven. Hes data driven, well, thats kind of what you do, data driven, only data. Theres a guy named bezos, theres nonunionized workforce and theres mr. Data. And mr. Data leads everything. Watson. Yes. Watson should get into retail. Well, i think amazons got their own a. I. Working too. Is that what they are . Yeah. And alexa. Shes going to be everywhere. In fact ill be able to replace you with her. Is this the apple reorganization . Tell me what home depot stock is going to do today. When we come back well get a closer look at why pandora is getting a lift this morning. Shares of hp inc. Rebounding. Take another look at the premarket on this tuesday morning. By the way, happy birthday to the nyse, the 224th anniversary of that agreement signed by 24 brokers outside 68 wall under that buttonwood tree effectively started this exchange today in 1792. A good car has to maneuver quickly. Thats also true of a good car company. People have always bought cars. But we saw an opportunity in sharing cars. So we moved fast and launched car2go in 29 cities, all around the world. Doing that required dozens of data centers, designed for speed and performance. We built our business on the ibm cloud. Because thats what the ibm cloud is built for. Its a big day for hard data. Cpi starts and now Industrial Production. Lets get to Rick Santelli. Oh, man, this is a big number. Finally, Industrial Production on its month over month change up 0. 7 of 1 . We havent seen a number anywhere near that in quite a while. Looks to me like we could go all the way back to february or march depending on your rounding, and thats of course of 2014. Keep in mind so far this year other than this number two out of three numbers were negative. Last year 10 of 12 numbers were negative. Heres the negative part of this number though, minus 0. 6 last month, and two or three negative outside of this one moves to minus 0. 9. Capacity utilization done, it is 75. 4, now, the utilization rate was expected to be 75, were doing better. And unlike the last number we gained a tenth to 74. 9 last month. 75. 4, how does that stack up . Well, 75. 75 is where we started the year in january, so theres your comp. This rounds out a lot of data, hotter than expected cpi definitely helped push yields up and potentially equities down. I wonder why . I think maybe fed. Well see how that turns out when we get the new york opening. David, its all yours. All right. Thank you very much. Pandora shares are up sharply in the premarket. Corvex management urges it to explore a sale in a letter it released publicly. Run by activist investor keith myself meister makes him the largest shareholder in the company. This is a company that has certainly wellknown in the public consciousness given its the largest still i believe streaming service out there but competing vigorously with the likes of spotify, not to mention apple music or amazon music and many others that have come along of late. Back in february the New York Times reported that the company had held discussions about selling itself. Morgan stanley did work with the company back then. Its unclear whether there was a real process to actually go about selling itself. I was never able to discern in the reporting that i did whether or not they really had moved down the road in any talks in any way or fully explored the potential universe of buyers that might be interested. And that is sort of central to what corvex is now arguing they should do while they spend a lot of time in the letter talking about operations, they go onto say lets be clear it remains their firm belief the company should hold value to realized in a Sale Transaction and full results of fulsome sale process against other options including risk adjusted value continuing to operate on a stand alone basis. They think theres a lot of value there. Of course sirius comes up often, jim, when you hear about consolidation in this area. Would they have interest . Likely they would, but price becomes an issue as it always does. Pandora did get a fairly positive ruling on the royalty last month. Stock acted positively to that. Founder comes back to run the company as its ceo recently. Had considered going after three board seats, they tell us in their letter, this has not been made public previously, they had delivered a notice of intent to nominate directors but they backed off from that, now theyre coming pretty aggressively not to nominate directors but to say get with it, we want you to really explore a sales process which we dont believe you have done previously. That at least is their belief. Look, i think that there are a lot of people who say why doesnt apple buy it. Expand that Service Revenue stream versus say spotify. I think apple wants to wipe them out, thats probably why they wont buy them. I think apple thinks they can wipe them out. Apple is not a pitiful helpless giant like a lot of people think it is. I dont want to take them on. You dont want to what . I would not want to take apple on even though right now retooling the music offering at this point. Right. Theyre doing retooling. But i do think that right now there are people who are recommending apple stock, like tony says their best days are behind them. One of those opportunities for a downgrade. Its pocket change for apple to buy pandora. Or didi. Yeah, that was a billion dollars. This would be, i dont know, for a decent premium still dont get to a very big number for apple. The bears dont even care anymore. They dont even care. Its really incredible. I find that down 40 points youre just obsessed with this. You are. With apple. You cant get away from it. Im obsessed with the stories that i dont think are bad. For instance, here, getting some word on a watson. Which i dont mean watson has some geico, these are stocks that i think are not expensive. I dont think ibms expensive. I dont think apples expensive. I dont think these stocks are dangerous. That was my theme last night. Its not as dangerous as you think, but when i hear soros, see icahn, i say they must be scared. Im not scared of ibm at ten times earnings or apple, scared at cocacola 22 times earnings . No one else is. Soros is obviously scared of a big fat tail in china. Thats his whole raise on debtra as they said. The government could be overthrown, thats true. Here or there . There. Oh. Here too, i dont know. I dont get political. Stop it. Lets not. Yeah. But in china, no, theres always a constant worry. You dont think theyre worried . You think they have Electoral College over there . Are they like poland . Hes more in control than anybody. Yeah, that government there is not up for election. Im aware of that. We should go to commercial. Lets do it. When we come back well get cramers mad dash, count down to the opening bell and take one more like at the premarket. More squawk on the street from the nyse straight ahead. This might look like a zerogravity drop. But its actually a triumph of predictive analytics. Because of optum. 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But the one thats direct cause and effect is activism gone good, darden. Piper goes hold to buy, Sustainable Management changes, this stock, good yield, big turn, commodity pricing coming down, same store sales going up, again, an example of a stock that people are like so what. Right. I think the so what by the way, yum is the same thing. This sowhat factor has gotten too high. Yums interesting, of course thats corvex we were talking about earlier with pandora. Here were talking jeff smith with starboard replacing the pyre board, gene lee been on the board for a while activists are now double edge sword. They can make something happen but if they have redemptions, they hurt your stock. Sometimes even when theyre on the board interestingly theyre forced to sell as a result of redemptions but they still have board seats. Thats a story for another day. Didnt have enough capital no. No . Ackmans got 6 billion in permanent capital. Oh, okay, hes fine. These activists are not going to be playing the big names anymore except for a handful. Pe pershing, its interesting, jim. Hedge funds that were active need to have great returns to get more money. It worked for a long time. It seems to be going its a vicious cycle down now. Could be annin virtuous circle up. Watch darden though. It was good. Everybody did good there. All right. Opening bell right after this. My name is melissa snyder, im a Customer Relationship manager with pg e. Ive helped customers like plantronics meet their Energy Efficiency goals. So you save energy and you can save money. Energy efficiency and the environment go hand in hand. And i love how pg es commitment to the environment helps a Community Like santa cruz be a better place to live. And being able to pass that along to my family is really important to me. Just being together and appreciating what we have right here in santa cruz. See how you can save energy at pge. Com. 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