tv Squawk Alley CNBC November 25, 2019 11:00am-12:00pm EST
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good monday morning, welcome to "squawk alley," i'm carl quintanilla with morgan brennan and jon fortt. we will start with uber. they lose their license to operate in london. regulators citing a pattern of failures from uber that place passenger safety and security at risk cnbc contributor kara swisher joins us to talk about this. >> how are you doing. >> not too bad we will see how the appeals process goes, the big question is whether other cities follow suit. >> it's a troublesome thing. uber has been struggling for a long time in these cities and actually the first thing that the new ceo who came in after travis kalanick did was go to londer to assuage the critics there. it was one of his first international trips and it was very soon into his becoming ceo. so it's really problematic if
they don't get these cities straight, especially london which i think is its biggest revenue generator after the united states. the thing is it comes after a couple of really big stumbles including dara's unfortunate interview he did with axios where he seemed to not defend the saudis, but wasn't -- certainly wasn't -- didn't -- he misspoke, i guess. i don't know what else to say. and then obviously there's issues around the economics of the company, there's the stock sales and things like that so it's not a great time for him as a ceo >> kara, trying to pit this inside a larger tech narrative it seems like there are some platforms that had a maybe if not growth at all costs, growth, growth, growth strategy. >> yeah. >> now they're having to go back and add costs to figure out how to either comply with regulations or just operate the platform in a reasonable way going forward. where do you think this ends up with uber?
does it help make their business model more viable, shake competitors out or is it a continuing headache for them >> well, this is a team that i've been talking about a lot. it's very easy to have great results when you don't pay all the costs. i've talked about this with facebook in content moderation, with uber and lyft -- it's not just uber, these prices are so low and it's great for consumers but it's at the expense of actual economic viability. so when you're looking at an uber ride that is so -- like how can they do this how they can do this is they lose money on t the request he is once you figure in the costs of doing proper regulation, proper checking, possibly paying employee benefits, that's another thing the ab-5 in california, these things tend to add up and these businesses look a little less growth -- you know, as good, i guess and the growth at all costs idea is in order to get market share but once you do you have to have a business that justifies itself you see this all over the internet space of companies
trying to justify themselves, especially if there is a trend towards more public markets really want them to pay more attention to the bottom line >> kara, in london according to the tso these unauthorized drivers and the way they were able to upload their photos and basically pose as other drivers, that 14,000 trips in london alone. >> yeah. >> it begs the question about whether this is a practice that is happening in other cities as well i guess really just basic -- basic question to you on this, how could the company go this long without realizing that thi was happening? >> well, that's an issue of a lot of these companies they obviously didn't have systems in place that ensure these things don't get gamed essentially. airbnb had this problem of party houses, oh, we didn't realize party houses i kind of knew about party houses, a lot of people did. it's putting systems in place to deal with the problems that are going to come that are inherent in any business you have that has an analog base so safety of consumers, which is
something that dara has pushed heavily and have made lots of improvements is something that's critically important and the vetting of drivers and make sure the drivers are insured, make sure they don't have criminal records is a critical part of this business in order to keep it going properly, besides all the other issues including price and competition and everything else. >> kara, really click, as they begin to touchdown audio and video recording of rides, what's it going to do to the privacy versus security debate >> another big issue this is the thing, these companies sort of growing up and to the right, they all run into the reality of running a business, whatever business it happens to be. obviously i was thinking about t do you want your things recorded, maybe you do, maybe you don't. who has rights to those recordings what if someone records you without your permission? it's very confusing, i think i didn't quite understand how it's going to be deployed. you know, it's a move towards the idea that we make it safer
and safer and we're not going to avoid being on camera in the future more and more, but it's still -- you know, it's another -- what i would like is for them to vet the drivers and they have insurance. that to me is table stakes. >> lots of layers there, care rachlt let's turn to tesla really quick obviously the surge in reservations for that cyber truck according to musk. phil lebeau that is that in chicago. >> the total stands at 200,000 reservations for the cyber truck. when they unveiled this on thursday night we knew they were going to open this up for $100 refundable reservations at the time, a littleunclear how many they were going to get the most popular reservation is for the $49,900 dual-motor cyber truck, 42% of the reservations coming in there. how does this compare with the model 3 reservations with he saw back in 2016 after about three days there were far more model 3 reservations than there are for the cyber truck and with the
model 3 eventually tesla says it got up to 455,000 reservations back in 2016 and 2017, but remember, with those reservations, guys, people were putting down a $1,000 refundable deposit and the reason the stock moved higher as you take a look at shares over the last three years, it moved higher after those model 3 reservations in part because people said, okay, they have to commit to building this vehicle, this is part of the long-term growth strategy. with the cyber truck remember it's just $100, far less to put down a reservation and also there still remain questions about whether or not they will build this at a large volume in other words, is this going to be a niche truck which many analysts believe it will be or if it will be a larger vehicle at any point you still have 200,000 people who have said put me down for one, i will throw $100 at you. >> do we have any guidance or data from the company on how many of these reservations historically with other models have translated into actual
sales? >> no, we do not, and that's been asked i've heard that on analysts calls, also heard analysts and reporters ask can you update on us on where reservations are particularly with the model 3. after a certain point i'm going off memory here i want to say a year, nine months later e long musk said, no, we're not going to talk about reservations anymore. it's done. we are now strictly talking about production here. there is no way of knowing how many of these 200,000 if you are going off of history how many of these might ultimately turnint actual orders. >> yeah, we will see or maybe we won't see. phil, thank you. kara, is this essentially either fan club deuce o you se starter? does it have long-term bearing on the viability of the company? >> well, i reserved one or you,
jon, and for all of you, actually i don't know is it a hummer is this the hum or is it something more substantive can it be a truck like the ford 150? away from that video that this he showed, you know, can it become a car like that, a truck like that, which a lot of people obviously it's a best seller i don't know i don't know i think it's incredibly -- a lot of showmanship including throwing the metal ball at the car which cracked me up. but, you know, this is just part of sort of elon as he's got this amazing idea pretty cool looking, it's a question of how quickly they can deliver them, which is always an issue with them and whether people are just sort of -- why not sign up for $100 so who knows, it's sort of like the whole story of tesla who nose. >> maybe it doesn't have to be close to an f-150. maybe because the model 3 is so pedestrian looking, this is like a branding opportunity for them. >> yeah, i think it is it's cool looking, it reminds me of the hummer, you know, a
couple people bought them, it was a small niche product, i think it sold, i don't know, $50,000, -- 50,000, 60,000 in the united states. i know the military used them. is it replacing sort of large pickup trucks? is it just the cool factor if it's the cool factor it's a very small group of people it's still cool. so i'm not sure, but it certainly is a great branding exercise it looks interesting you know, it was a great rollout, it was funny, their mistakes, the whole thing of dragging the 150, it's all showmanship by elon and that's not a negative thing necessarily, it keeps a lot of buzz around the company. >> yeah, and certainly news k a few weeks ago actually mentioned cyber truck at a military event at the air force space day, pitch day as well, kind of it you think in cheek pitching it, but certainly that could be something to watch kara, really crazy question here, but the fact that he --
orders instead of preorders, we know the settlement that's in place around him tweeting material information any reason to think that this could be an issue? >> i don't know. i just did an interview with one of the sec commissioners and they were still smarting from their back and forth with elon and they certainly are paying attention to him that did not go well and i don't think he can afford to cross them too many times, but, you know, brazenness seems to work across the united states these days, so, you know, who knows what the price will be if he's not vetting those -- those -- i mean, those -- yeah, the tweets. so, you know, we'll see. we'll see. i don't know if that was such a violation, the others were pretty clear violations of what he had promised to but, again, it's all part of the same elon thing, he's got a really interesting new product, who knows how many they're going to sell, who knows in it will become an enormous hit it's an interesting innovative look at how you can rethink the
truck. there's nothing wrong with that. it's just a question of whether these preorders will translate into orders, whether this will be a big product line or more a side product line, whether it would move into the military there's all kinds of questions, none of which have answers right now. >> plenty of space between today and those first deliveries finally, kara, your latest column we are still talking about political ads and whether or not facebook, google are going to follow in dorsey's footsteps. >> google didn't google did a number of mish ears as you knew last week n fact, during the impeachment hearings to really rein in political ads. it was interesting because dorsey went sort of all the way -- twitter went all the way saying we are not going to do them google had a modified version, we're going to do them but more stronger rules around them and they were quite substantive rules they are putting into place including dealing with demonstrably false ads which was important, i think, an important statement from google that these are not okay now the question is is the
pressure on facebook to do anything at all or, again, the word brazen, are they going to brazen it out and say we're going to let it wild and be as wild west as we've been. you saw pressure from the trump campaign manager around it tweeting at facebook around this i think they'll probably make adjustment but maybe not go as far as google because mark zuckerberg has staked himself pretty far out on we're not going to do that much. >> meantime, kara, you've got snapchat saying that it's fast checking the political ads that are running on its platform as well it does seem like it's shaping up to be quite a case study because each company is implementing their own methodology and their own guidelines and it's different each one across the board. >> there was a joke going around is if you want to change mark zuckerberg's mind on a product just have snapchat make it and then they will copy it i think they will probably do something along the lines of google, maybe a little less microtargeting, a little more
control, maybe demonstrably false things they will take down i don't know they seem to be the outlier and they can be. the issue is they are the only one that really counts, besides google, snapchat and twitter that's great and i admire both of them for doing t but the only thing that matters is what facebook and google do and really the only thing that matters is what facebook does so we'll see. >> is there more danger at this point in facebook remaining the outlier or in them ticking off, you know, one side or the other with restrictions because seems to me there's going to be scrutiny, the ads running on facebook particularly in this cycle right now. if anybody thinks they can blame facebook for tilting things one way or the other because of a an ad with false information in it, because of some dubious targeting, boy, i mean, talk about a hot seat, it's probably going to get even hotter. >> maybe i look at their results, their
results are great, they're doing fantastic. what's the cost for facebook for doing this almost done from a real perspective from a stock perspective, from a business perspective. again, this idea of just continuing to be brazen about things, that's what they're doing. so if this is what they believe and they don't want to make these changes and they have their arguments i wouldn't be surprised if they stuck to the things they've said before they've gone back and forth. they're certainly contemplating it because you have nick klegg saying that they are, carolyn was at a media saying we're not going to change it but 15 minutes later gave an interview saying we're contemplating changes. i suspect you will see some changes around the edges but probably the least of all of them i think google really did strike a nice balance in terms of not banning them outright but making some important changes and i think that was the responsible thing to do and it doesn't mean you have to ban them, it means you have to think about it and have this
discussion internally of your impact on society and elections. i don't know if there will be any price for facebook, maybe some more down the line from a regulation point of view, but right now i don't know i don't know if they will have any price to pay >> stock back above 200, at a four-month high today. >> yep. >> we will watch that. kara, hope to see you before thanks giving, but if not have a great holiday into bye happy thanksgiving >> happy thanksgiving. when we return, hp rejecting xerox again, setting up the possibility of a proxy war david faber joins us next th e latest after the break as the s&p and nasdaq both reach fresh record highs, stay with us
negotiations on a potential combination of hp and xerox getting spicy over the weekend david faber is back at post 9. david, this went from we look forward to the pleasure of your reply to your mama wears combat boots pretty quick. >> it's evolved to where we kind of thought it might be initially. of course, when xerox made their unsolicited bid hp responded as you say very favorably almost. no longer. they rejected of course last week, then xerox rated a little while, but then they put out a fairly nasty letter of its own, questioning, well, you want due diligence on us or you will at least do some, but you won't
allow us to do due diligence, we don't understand it, and hp responding with their own letter, as you say, explaining the reasons why. that's the first time we have seen some of the questions, we have them here, total contract value questions, in excess of revenue decline, suggests revenues may decline faster in recent years, tcv was down 13.9% and note churn was 18% both of which they say are data points that xerox has stopped providing. it goes on to sort of have them question synergies, question the numbers and explain why they wanted a lot more diligence when they were talking back in august and september about an hp deal to acquire xerox. >> kind of went from at least me getting the impression, well, let's see if this makes sense to, boy, we really hate this deal you really have to convince us that there is any rationale behind it at all i thought maybe hp would come back and say, well, maybe it
would be worth us acquiring you but they seem to be questioning the core of xerox's business and viability here. >> they do to your point i think that's exactly right. they even question, in fact, the company's stated presence in the marketplace once the fuji film -- well, it's been exited already, but once the rights they have expire in i think either 12 or 24 months where they talk about synergies here in terms of public information and they question them they basically go on to say you seem to just be saying the costs you're going to take out and the costs we're going to take out equal the costs combined we will take out not the actual synergies that will come from putting the two companies together in terms of additional cost then they go on as well to question the fuji film joint venture saying you mortgage their future for a short term cash infusion. >> that's the come watt boots i was talking about. >> this has the possibility of going to a proxy fight, i think
you have to increase that possibility based on everything i've been hearing where they would go after the entire board of xerox or some component thereof to show them shareholders want to do this and we could be waiting until april. >> one of the other deals ebay selling stub hub to via go go, we spoke to their ceo in the last hour as well. >> i had a chance to talk to ebay's interim ceo president one request he will be what are you going to do with the proceeds, a significant amount of money didn't tell me much other than we will continue our capital allocation plans which include buy back, dividends and m&a for the marketplace business where they're looking to try to reignite growth. it was a great investment for them $3 1r0 million in 2007, exited $4 billion that's a 17% annual compounded growth rate. >> is ebay turning into the hp of home commerce
they had gc commerce, they plit that off, they plit off paypal, now they're splitting this off what's going to be left? >> it's just a marketplace business you tell me what the growth looks like for that. that's been the key question as to whether they can rei go vig rate that, maybe as can become more of a business for them. they do have the classifieds still, they are not going to do anything with that at least for this year is what i was told we will have to wait to see until next year if they jettison that. >> can we cram more in between now and new year's serious question. >> i think that's a possibility. people steam to be fairly busy there's always a question of can you get to the finish line on things for regulatory, for social issues, for so many of the different things that come up not to mention if you are a fairly large enterprise the current economic environment, you may have some questions, but there does seem to be a decent pace that would seem to me we might get some stuff between now and year-end. >> big appetites this time of
year. >> a true merger mob, we can actually say it and mean it. >> i saw $63 billion if you include some of the tiny european stuff announced, formally announced that's a big day. >> david faber, thank you. getting a check on where we stand across the major averages, the s&p and nasdaq hitting all time highs earlier in the session. tech and csuonmer discretionary the two sectors leading the charm right now. we're back in a moment
welcome back to "squawk alley. european markets set to close in just a moment. seema mody joins us with a breakdown of today's action overseas >> and, morgan, we are higher across the board, on pace for the biggest gain in three weeks for the stock 600 on trade headlines. take a look at the uk, signs that the worst is over for the retail sector, just in time for the holiday season now, sales were broadly unchanged in november, but that did end six straight months of falling demand that upbeat data lifting shares of uk retailers, marking spencer, king fisher and
next meanwhile, in germany business sentiment picking up for the third consecutive month, another sign of economy bottoming out, ing economists warn bottoming out does not signal a rebound. while manufacturing firms are planning production cut backs and the sector remains in contraction sentiment hit a four-month high adding to the bull case for european stocks. in morning morgan stanley publishing a new note saying they continue to see more opportunity in investing abroad versus here in the u.s. with the s&p 500 now up nearly 25% in 2019 guys, back to you. >> thanks, seema news update time sue herrera has that back at headquarters sue. >> i do, indeed. thank you, jon here is what's happening at this hour, everyone mcdonald's has agreed to pay $26 million to settle a class action lawsuit with some california workers who claimed the restaurant violated state labor laws, including denying breaks and failing to pay overtime.
mcdonald's said that it believed that it was in compliance with those laws the creator of the worldwide web wants to fix it. timber nard lee and google and facebook are backing a contract for the web which calls for companies to respect consumer data privacy and for governments to ensure internet access for all. it's beginning to look a lot like christmas on capitol hill at least a 60-foot blue spruce arriving this morning after making a 2,000 mile journey from new mexico's carson national forest. the tee will be lit next wednesday. and speaking of the holidays when it comes to gift giving 74% of shoppers will not increase their spending this year according to bank rate the biggest reasons are concerns over finances and the economy. which is interesting given the fact that we have the stock market at all time highs all right. you're up to date. that's the news update this hour guys, back downtown to you carl. >> sues, thanks very much.
shares of uber continue to fall after losing its license in london we will break down what comes next for new york's former tlc after the break. stay with us. >> announcer: the cnbc trend tracker live data board is brought to you by the cme group. i'm a regular in my neighborhood. >> announcer: cme group, where the world comes to manage risk when you shop small you help support your community - from after school programs to the arts! so become a regular, more regularly. because for every dollar you spend at a small business, an average of 67 cents stays in the community. join me and american express on small business saturday, november 30th, and see how shopping small adds up.
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china rolls out new ideas to protect ip, global times says a phase one deal is, quote, very close. and then fold in all the m&a we have gotten announced, lvmh, tiffany, schwab, tv, novartis, ndco, you have a potent mix today. >> semi-conductors having a good morning, nvidia up 4.5%, applied materials up about 4 as well, but, i mean, that's not anything new, semis have been doing well for quite a while. city regulators in london have announced uber has been stripped of its license to operate in the city as of today. uber has said it will appeal the decision it can continue to operate while it does appeal joining us now is former chair and ceo of the new york city taxi and limousine commission mere i can't joshi good morning. >> good morning. >> are you priced that london took this hard line or was the writing on the wall? >> they've been hinting at it for quite a while.
they issued a probationary two-month license which had a series of safety concerns they outlined that they needed addressed. it wasn't, i don't think, a surprise particularly. i think what's important to underscore for the public is that it doesn't really change day-to-day operations. so uber will continue to operate, they can continue to bring on new drivers, there is a magistrate's process which takes quite a bit of time. >> uber had been accused and admitted to basically allowing drivers who weren't allowed on the platform to drive by uploading their photos to somebody else's profile, 14,000 -- at least 14,000 trips were taken this way where th riders were uninsured, in danger i take it this is something that doesn't just happen in london, presumably it's happening in the u.s. as well did you see this happening when you were watching this closely maybe you still have and is
anyone in the u.s. policing it >> it certainly is happening worldwide, beijing there was -- i believe it was didi had an incredible problem with illegal drivers joining their platform under pretext. so it's certainly a problem that's in the apps doing business in all major cities in new york city we require that these companies provide us with data on the exact driver and the exact vehicle and they are required to synch up with active drivers and active vehicles three times a day so that you're caught out when sending out unauthorized drivers in vehicles so it allows the city to police this a lot more closely. no method is perfect around this, it's a systemic problem, but it's certainly a lot closer attention. but in other major cities it is alive and well lots of times either drivers give out their credentials, other people take their
credentials. there is not a lot of checks and balances on the edit of the driver and whether it's the one that was actually authorized to drive by the regulator or by the company. >> mira, i was just going to basically ask you that very question which is i know you do focus on and communicate with quite a number of different cities and regulators in those cities around ride sharing is this something that is going to be adopted, for example, the rules, the policies that new york city has in place do you expect to see that adopted in more places is it being adopted in more places >> well, it's certainly probably a push for it in places that are collecting data like new york city and for cities that are considering collecting data it provides themwith a pretty goo method of how to check driver identity and make sure that there's more validation going on what i think i find a little troubling about the london situation is uber is proposing biometrics, facial recognition as a means of validating
drivers. now, i think drivers may not enjoy that i think that's putting it mildly and second it's a joe tear thing, one company is doing it but they could stop doing it at any time there is a risk to uber it puts them at a disadvantage a lot of companies not applying facial recognition may be for attractive to work for i think there should be a regulator approach that is consistent and applies to every company. >> how many costs are there for companies like uber to get up to a reasonable standard that maybe investors are not considering? already stocks like uber and lyft, specifically uber and lyft, are under pressure on the expectation that they are going to have to make money eventually and so their costs that they are going to charge are going to go up, it's going to affect demand. at the same time it seems like there's things that the companies may have to deal with and it seems like investors
aren't sure who you to factor that >> i would guess and hopefully it's not a completely irrational guest, but something like employing facial recognition and then that's not enough, you have to make sure that it's working and that it's catching instances when people are trying to get around it is not a minor endeavor once you offer it in one city there's going to be pressure that you offer it in others, combine that with probably likely litigation by drivers groups who will be opposed to that, those costs will certainly add up if that's the approach that they take i long that that will be a costly one and a lot of times they're taking that approach because the alternative which is sharing regular data with a regulator is something they want to avoid at all costs. so they're making a decision about where they want to spend money and you will have to take the long view about whether that's the right one or not. >> investors will have to watch
that thank you for being with us. >> thank you let's get over to the cme and get the santelli exchange. good morning, rick. >> good morning, carl. like to welcome my guest jim karen, global fixed income portfolio manager. jim, thank you for joining me. gets get right into it in your writing today you believe that xx has bottomed in 2018 what do you think on the who are zon that has led to you that conclusion and what would that mean for investing in 2020? >> look, i think in 2019 what we've seen was a mid cycle reset by the fed which meant that the manufacturing sector slowed down, you could see that in the ism numbers. we've been seeing ism and pmi starting to pick up. if 2019 was a mid cycle reset as termed by the fed 2020 may be a cyclical recovery period if that happens the cyclical sector which in equity terms that would be more value but in some other areas more industrial manufacturing, i think that can actually even take the place of
the consumer a little bit. we've made a big deal about the consumer holding up the economy, i think manufacturing and industrials i think they can actually pull some weight as well and you could get a modest mild pickup in growth and i do think the fed is going to let the economy run hot, the bar is really high for them to hike rates again. >> you know, jim, many would agree with your last statement, the fed is going to let the economy run hot, and i would guess that should inflation ramp up but it doesn't look like it's going to anytime soon that would be included under run hot, but there are risks to running hot, just right off the bat i guess the first risk i see is that many are long duration, heavy duration, of which you have written about, motor vehicle they're very susceptible to a quick rise in interest rates with risk parity and volatility low now, if that should kick up, wouldn't that create a series of events that could disrupt the markets? >> rick, you're absolutely right. i think it will. i think the initial stages, though, of what gets rates to
actually rise if it's good data, if it's a recovering economy, a cyclical recovery the markets will take that very, very positively, but wung you get ten-year notes up to 2.2, 2.25% i think that's rlg enough. if rates rise further than that that could create a bit of a contraction and slowdown the bottom line is we're probably in a range, have a mild recovery, needs are poised to move a little higher, they can't move a whole lot higher, it's going to put a drain or at least a strain on significant economic growth and really, really running hot. i think, look, we may be looking at 2% growth for '20, maybe a little higher than that, but nothing terrible listen, i mean, the point is that we have been in a global economic slowdown if you look at gdp. i think that we're going to stabilize and even recover i think that's good news, but i think there's limits to that good news. >> now, my final thought, i want to go back to where we started capital expenditures, there is
little doubt that that is the missing ingredient to really see some stronger fd numbers, maybe back in the 3s in your final sean, what is it going to take and when will these checks be written by the corporate offices to start expanding things like research development and other projects >> i think it's happening already, rick, and i think it's really happening in the i.t. space and the thing is that it's a bit of a lag, so i think we are going to start to see that in the first quarter and in the second quarter i don't think it's going to be very, very long and i think industrials are going to follow very, very shortly thereafter. >> excellent jim, always a pleasure to hear your thoughts, especially regarding the economy in 2020. morgan, back to you. >> rick santelli, thank you. after the break, the reporter behind the investigation into amazon's workplace practices. that's next. don't go anywhere, we're back in two.
i'm scott wapner here is what's coming up mario grivelli is with us, we're talking stocks, the outlook for the markets in the year ahead plus we will debate what other stocks could be in play on this big merger monday. and new york jets linemaner brandon copeland joins the investment group today, he teaches an investment class at his alma mater and will tell us the investments he hopes to help with his students. see you then, scott, thanks. pinterest making a couple retail
friendly moves this morning ahead of black friday. julia borsen is in los angeles with that news. >> that's right, john. bin tres making two big changes designed to drive shopping on the platform ahead of the all important holiday shopping season this morning pinterest unveiling the pinterest shop with hundreds of products from small and medium businesses. will start with 17 businesses and will expand to retailers they are testing a shop tab at the top of users' home feeds this is the first time the company has promoted a personalized boutique for users. it features custom shopping options. now, these announcements follow on the company's recently announced brand and price filters making it easier to brows products not just based on type, but also on brand and price. the key thing about shopping on pinterest is that the company does not take a cut of sales on the platforms but it does hope that making it easier to buy
will drive advertising dollars pinterest shares are down over 40% since they hit an all time high in august mark mahaney are an outperform rating on the stocks points to retailers interest in driving sales through the platform with 75% more merchants uploading their catalogs to pinterest in the fourth quarter the toll that's having on factory workers. finding that worker injury rates are likely under counted and, in fact, higher than industry averages joining us now the reporter
behind the investigation reveals. will evans, we have reached out to amazon for comment and have not heard back thanks for being with us today >> thanks so much for having me on >> you spent the better part of the year investigating amazon and its warehouse conditions what did you find? >> we found that they're injuring a tremendous amount of people the injury rates in their warehouses, for the warehouses we were able to find were double the industry average for their serious injuries so this is like as many as some warehouses had 15 serious injuries for every 100 workers up to a quarter of the workers were being injured this is -- these are extremely high injury rates, and amazon's official record. >> so warehouse work is not easy work it's grueling work how much of this is tempo?
how much of this is technology and when you talk about higher rates than what you see on average, what kind of numbers are we talking about >> yes, so for the average for the warehousing industry you'd expect to have four serious injuries per 100 workers at the amazon facilities we looked at it was above nine per 100 workers and some of these warehouses were up to 26, almost 26 per 100 workers that's just unheard of, six times the average. and yet over and over again we heard that the reason behind it is just how fast these warehouses move, how fast the workers are required to move each worker is tracked down to the second how many boxes they have to get, they have to process per hour, hundreds of boxes per hour they have a specific target. if they don't hit the target they know they will get written up and eventually fired. and so when they -- when they're
confronted between having maybe losing their job and having to take shortcuts or put this toll on their body, they do that an end up getting hurt, they injure their backs, shoulders, knees, repetitive stress injuries they have strains that put them out of work for months i talked to people who are basically going to be in lifelong pain and they get replaced by the next worker who can hit the quota. amazon has said that they have these robots, these technically advanced warehouses with robots that make the job easier for workers. they don't have to walk for miles. the robots bring the packages to them, but what we found was that actually the warehouses with robots had some of the highest injury rates what we understand is the workers actually have -- because the robots make things more
efficient they have to work faster they have hundreds more packages to deal with an hour, so they're going faster and faster and faster with these robots, and their bodies are breaking down they are now -- >> what do you think -- why do you think these issues in the warehouses aren't showing up more in online reviews in particular i've looked at the amazon warehouse worker reviews and they have around 40,000 plus of those. walmart also has them. walgree walgreens, costco, others, 3.5, 3.6 star ratings out of 5. is it just that the numbers are so big that these injury cases and conditions don't show up as clearly? why isn't amazon getting a 2 rating out of 5 if their warehouses are so much worse than others? >> i can't speak to the online reviews so much as i know i've
talked to a lot of workers who didn't post an online review they're at home, they're in pain a lot of them didn't want to speak on the record about amazon because, honestly, they feel amazon has all this power and money and who am i i'm a lone individual. don't put my name in i'm afraid there are a lot of people like that out there the online reviews, i don't know these are the actual injury records of amazon. amazon tracked it according to the government standards and so it's easy to compare amazon's numbers versus the industry standard versus anyone else's this is like what they're held to by the government these are the records, and they show the true toll you have warehouses with hundreds -- more than 400 injuries in a year thousands across the country
>> where is osha on all of this? >> so osha is, you know, requires companies to track this data, but there's no limit for how many people you can hurt for the injury rate. the high injury rates can trigger inspections and so you would expect that there would be some inspections here. what i found, even when a guy died in indiana, was crushed by a fork lift, osha came in. they cited amazon for serious safety violations. all of a sudden those safety violations disappeared they were dropped. i called the osha inspector who was on the case and he told me -- go ahead he actually had political pressure from on high, up to the governor's office to back off that case. >> wow >> in the end amazon didn't face
any citations. >> all right, well, thank you for joining us the podcast is out and available and releases at 12:30 eastern. we appreciate your time. separately for amazon, the latest ranking of america's best-run companies, amazon did lled in at number one in 2019 foow by microsoft, alphabet and cisco. "squawk alley" returns after this break their medicare options...ere people go to learn about before they're on medicare. come on in. you're turning 65 soon?
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obviously a good day for the bulls. the russell is having a very large today as well. let's get to the judge with mario. carl, thanks so much i'm scott wapner the record run for stocks, new milestones again for the s&p and nasdaq as carl said we're trading with super investor mario gabelli it is noon and this is "the halftime report. >> the rally picking up steam. new record highs mario gabelli weighs in with his best ideas for this rally. netflix getting downgraded but it's been on a rally we'll debate in our call of the day. football and financial advice.
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