Worst performer is spains ibex 35 and theres wti which i know my partner here will have a lot to talk about he almost always does. It is often a key to this market, down this morning. Lets get to our road map this morning. It starts with the start of amazon shopping holiday, as the rest of retail suffers plus a number of recent ipos that have fallen below the bear syndicate what their pricing was, what it means for the valuations and rest of the companies that want to go pep. Pepsico is out with its results as earnings season begins. Well speak to the companys cfo on set in just a minute. Amazon prime day is under way. The company highlighting deals aimed at enticing customers to become prime subscribers as a number of retailers are coming off a rough day on wall street we were talking about it here before it began. Macys saw shares fall 7 . Best buy was yielding 7. Reports about a geek squad effort at amazon, jcpenney down now in the premarket after announcing the departure of its cfo. You said this yesterday. I know i got it ight. You said wait till today. Today is the day. There might be bargains in retail. Thats what i said. Everyone is going to panic well have to wait to hear its up 20 somebody is going to have to downgrade. This is going to be a day where im taking off people have become so people have never shopped in their career are shopping i looked at this thing i am not buying the 100 glow in the dark pebble walkways for a saving of look at this, 11 it used to be 12. 96 im not calling it a sham but i dont know anybody who actually went on and bought anything on amazon prime. I did this morning. I bought an echo and i bought a laptop. You, who has never shopped . Yeah. It was 89. 99. I was on my computer and with no intention i remembered, went on. The two things i wanted to buy said the deals ended im not sure what was going on this morning, though have you ever bought anything gl go back on. I went back on my phone. My wifes account. Its even better it just goes to her credit card. Okay. This is for the neophites. They can spy on my entire home. Listen in. Subpoena the tapes if they ever need them. Maybe this is bigger than i thought. A man who has never shopped shopped. And me, as a professional, never found anything that i want to buy. Why is that i dont need a 24pair shoe rack maybe i dont need the roomba. The roomba deal looked good, 249. No. Do you like the new balance sneaker deal for 30 i passed on that did you see blue apron for 6 a share . I think i would pass on it as well. How about snap at 15. 50 . I might also pass. Those are jokes i tried to make those jokes with my friend, wilf. They fell flat. They dont fall flat with me. Amazon prime is really one of those things short term Running Shoes were bargains i will give that people were mad at me on twitter that i did not highlight the running shoe bargains. Still to buy a running shoe online, zappos boxes are coming to my house all the time. But, david, this took down every retailer, including walmart, this day, took it down. Is it ridiculous . Im beginning to think its a little ridiculous. If i were to go its an adobe, ugly site spruce the site up. Look at amazon. What, that crock pot . How much time we spent promoting prime the last couple of days . Not even weber grill, coleman . Press releases they tell you nothing but everything millions of members have shopped. Amazon echo is the bestselling item. Wraparound 27 times. Number of things they bought. They turned us into nothing other than an algorithm. Im like jeff bezos remember, you know look at that do you think they had any brioni how many prime members there actually are more today than there were yesterday. Lot more than there were yesterday. We dont know the whole reason behind the foods deal maybe some of them are halfway decent. Dont you love these stocks i tried to get these wing tips same price today as they were yesterday. Do you really buy wing tips online only. Come on. Only. Lot of shoe stores still in new york. David, if they had these on sale, this whole dialogue would be very different. Well, im sorry that they didnt back to retail itself. Do you buy macys . I dont know that you buy it anyway. I would buy some macys debt maybe. Buy sears debt. How about jcpenney . Cfo left. I dont know it looks like i spoke too soon they have the brioni mens lapel suit david, this is the first time its ever happened im buying with one click on air right now. 2,001 they have it for 2,000. Thats a savings of 400. You cant buy a brioni suit on am ston whats wrong with you . Lets move on and talk about some of those ipos well get breaking news on tesla. No yes. No phil lebeau in chicago has it take it away. Rollout of the first vehicle delivered to customers at the end of the month, the company is dramatically expanding its Service Network. Here is what tess la is announcing, 100 Service Centers will be added. 300 mobile service vans, the vans that will go in service of a vehicle, rural location or area if youre not close to a Service Center and adding 1,500 Additional Service workers the importance of this news is the fact that many people have said, look, as these guys expand, as they go from being a niche automaker to being not a huge player but certainly more significant relative to other automakers will they have the Service Network in place to meet the demands of can customers one thing theyre doing thats sort of interesting, they know where all the reservation holders live theyre looking at those addresses and saying where are the density of orders coming from thats where i want to put our Service Centers. Tesla dramatically expanding its Service Component as they prepare for the rollout of the model threes coming up later this month guys, back to you. Phil, any idea what this is going to cost them they have not given me a cost i asked that specifically. They said were not divulging this at this point look, it will be interesting as they do this, guys this is part of the costs that go with beyond going from what they are to what they want to become. Its going to be costly, along with adding more plants, more giga factories at the end of the day, you and i have talked about this, david. They have to go back to the Capital Markets, will the Capital Markets say yeah, okay, as they have in the past or at some point will the Capital Market say, hmm, not sure about this . Right do they actually ever get the heisman . Thats the question. Phil, i have to ask this. Is there ever a sense in tesla, in the whole ecosystem, ilan musk, that its time to regain control of the stock this is certainly a welltimed event after that bad week. Or is this all happenstance . Look, they will tell you that they do not look at the stock price. All Companies Say this we dont look at the stock price when we decide what news were going to be putting out having said that, ilan musk is the master at sending out tweets, teaser social media in terms of whats coming up. And that juices the believers in this stock. Right. You and i both know that. Weve seen it time and time again. Right. They say we dont look at the stock and whats going on when it comes to making announcements. Well be watching that stock this morning thank you, phil lebeau with that breaking news on tesla. David, one brioni suit only 48 regular im a 42 i had to take it out of my cart. That was a bad choice. Coming out, pepsico reported better than expected quarterly results, upbeat guidance if you want a brioni suit well go shopping today. Whats working for the beverage and snacks giant this could be another look at futures as we go to the break. Well be going to mr. Johnston on the other side. Hey dad, come meet the new guy. The new guy . What new guy . I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. What do you think . What . Pony neighing] hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. A used car, yogigspeed internet. Me . You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids. And these guys. Him. Ah. Oh hello that lady. These houses yes, yes and yes. And dont forget about them. Uh huh. Sure. Still yes you can get it too. Welcome to the party. Introducing gigspeed internet from xfinity. Finally, gig for your neighborhood too. Were driving productivity to expand margins and at the same time using a portion of that productivity to invest in innovation we really ramped that up over the last couple of years were running about 8. 5 of our revenues coming from products over the last they are typically more premium oriented. As a result were getting higher dollars per ounce or higher dollars per pound. Thats why you see a bit of the muted growth relative to the maybe it would be helpful to share a couple of examples if you look at this life water product that we just introduced at the super bowl this year, its an electrolyte water, has a new artist on it we feature new artists continually over time. Right now were doing a feature on women in art. And we sell it at a good price premium. So i think our innovation is working well and thats whats enabling us, along with productivity, to deliver strong results. I think its interesting, hugh, that you mentioned the beverage as part of the innovation story the Beverage Business is still a little bit soft and not quite seeing the growth. Fritolay continues to do the heavy lifting here what are you seeing specifically resurgent in coca cola to make it more lean or trends away from carbonated beverages were competing effectively with coca cola i certainly wouldnt characterize it as that. Theres a shift going on from carbonated to noncarbonated beverages. Whether its tropicana and juice, lipton and tea, starbucks and coffee i think youll see over the course of the year, we should compete effectively there. Carb carbonated soft drinks, were a little soft in the quarter youll see us turn up the advertising a little bit in the back half of the year. I suspect well clean that up pretty well. Regarding your comment on frito, exactly right. Terrific quarter for frito 3. 5 Revenue Growth, 7 Profit Growth leaning to innovation in a significant way. Popable product, not heavy from a volume perspective but revenue perspective as a premium product. Fritos premium revenue is up 8 in the quarter we see the consumer go more premium were going right there with Innovative New products. Hugh, jim i see great organic growth i see that you have a product that turns very quickly. So the supermarkets love it. Its not something that the groceries really want to come after you because youre a principle source of great profit people will not realize how good your organic growth is, sell the stock down and everybody else buys the stock this has been the pattern of late. Yeah. Jim, youre exactly right. We tend to be an early reporter. As we get further into the earnings season generally we do fair favorably to most of our peers, at least we have the last four or five years i expect that will be the case again. To your point about retailers they generally do think very favorably of us. A lot of our products are sold on the perimeter of the store. The center of the store, things are a little more challenging right now. Because our products are impulse in nature, because our products do well on the perimeter and retailers turn them so quickly on average, snacks turns 50 time ace year beverages turns about 80 times a year retailers do love selling pepsico products. Hugh, as sarah and jim have both indicated and you answered as well, it was a good quarter a citi note here says we find it hard to ignore the market slowdown in volume group in most of pepsis Business Segments do you think thats a fair note on their part . What do you say to that when people say, you know, volume growth is slowing down yeah. I think volume was a little bit slower over the last couple of quarters i dont think thats indicative of a longterm trend other than the shift into premium because, as Premium Products sell for a higher dollar per ounce or higher dollar per pound youre going to see less volume growth to generate the revenue. In a lot of ways thats good as consumers theyre willing to pay more for Innovative Products obviously its less stress on the supply chains if we have lower volume growth per dollar of sale. I think volume is just fine. Were not really overly worried about that at this point. You talk about the tax on soda ful philadelphia has one chicago is making a comeback is there a lag, drop and then you come back . Had has that been the pattern . Yeah. Typically a falloff for six to nine months and then the consumer tends to adapt to it. Then you see the volumes tend to come back after that in general, obviously, were not in favor of taxes that are discriminatory of one product. Were willing to pay our share of the tax burden for the good but generally speaking were not in favor of these beverage taxes. No surprise there a good economic snapshot on you from the consumer. I noticed better results in the emerging markets, places like mexico and doubledigit growth in china, russia coming back give us the spots where you still see trouble and which were the real highlights and surprises for you . Yeah. I think what you see in the developed markets is a consumer that generally is healthier but a bit cautious in terms of their spending lots of the turmoil that exists in the news, i think, does cause consumers to hold back on spending a little bit. Regarding international markets, mexico was terrific for us i think there was a pause with the mexican consumer in the latter half of the last year and earlier this year. Now the mexican consumer is clearly leaning in, as russia has started to rebound its general economy, we certainly saw single digit Revenue Growth there. China business overall performed for us a lot of that is less about the china consumer and more about the way were managing the business thats enabling us to perform well. You talk about the new channels i know youre on the board of twitter. You certainly have we know that amazon, getting more aggressive, without dealing with any particular supplier here, or distributor. What is the impact, say, of a deal like amazon, buying whole foods on you how much of yours is Convenience Store and can be, lets say, bought at impulse versus stored . Whats the impact of this deal yeah. So, i mean, in terms of that deal specifically, we try not to talk about any specific customer generally you do see consumers buying more food and beverage online from one perspective, you might argue the case as impulse products that may not be good for you. I would argue the opposite case. As we learn more about consumers, both through our digital customers as well as learning from consumers independently, we have the ability to target consumers more effectively with the things they really want to buy and deliver the right messages and the right promotions and the right price points to individual consumers so, over time, i actually see the move to digital from a consumer perspective as being very favorable to pepsico and other products more broadly regarding our Customer Base we have a big brick and mortar setup customers, pure play customers all of these channels seem to be converging anyway. My expectation is that from a margin perspective, it will probably net out about neutral and it represents our ability to sell innovation more effectively. Hugh johnston, thank you for joining us vice chairman and cfo of pepsico. Thank you. More food and beverage online, less bironi suits. 2,000 but not my size. Saving of 100. Sarah, thank you for bringing that. Thanks, guys. Jims mad dash as we count down to the opening bell one more look at futures before th at i put everything into my business. And i had all these points from my chase ink card. So i bought ingredients, utensils, even made custom donut cutters. Wow all with points. Thats how i created the ripple the doughnut in a doughnut in a doughnut. Suddenly its everywhere. I mean, it really took off. What will you create with your points . Learn more about the ink business preferred card. Thats a look at snap now below day one where the stock opened well talk about whether this sends a bad signal to ipos in the offing, with jim, of course, enco back. Mad dash, opening bell right after this baby crying slow jazz music fly me to the moon and let me play bell ring a mad dash before weget to the opening bell, jim. An obituary comes out this morning. They didnt mean to make an obituary but Morgan Stanley, competition increasing price starts at 16 snap, crackle, pop. Boom, boom, boom. Boom, boom, boom. David, why . Instagram. They have a couple of reasons. The other ones are the window dressing advertisers strong growth on return investment, bidding not working. But sponsored lenses for freebie instagram. This is zuckerberg going after them in a way that is only, as i imagine what hes doing, instagram thats behind the downgrade. David, the print price is broken now, remember, i told you i felt bad for these billionaires yes yesterday, you said that i said come on. This was a very devastating downgrade. And others are going to have to start taking account return on investing may not be there for advertisers. Its very damning and thats what started the long decline of twitter. I want to talk about whats happening on the other side of this bell. I can hear it, of course tuesday here the big board, serenity shares. Not serenity now serenity shares, recent launch of its impact, victory capital, two Exchange Funds speaking that have, you see the s p 500 back at hq there kind of a mixed opening after not a bad day yesterday. Pepsico getting hurt here exactly what we talked about people will look back and say why did we sell that this has been a common pattern pepsico had a good quarter, good o