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tv   Squawk Box  CNBC  August 17, 2021 6:00am-9:00am EDT

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a busy day for retail. quarterly results from home depot and walmart and the government's read on retail sales for july it is tuesday, august 17th, 2021 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. welcome back good to see you. >> great to see you >> great to see you as well. i'm here punchy >> i noticed already going off script a little? >> semi -- to my right and blind spot a little bit punching. long drive asphalt.
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i-95 cowboy. i know every bit of asphalt. i have adaptive cruise control i can move my right leg. previous times i could not move my hip or right leg. that frees you up a little bit autonomous driving, i think should be maximum what i do. i'm there. i'm ready. i'm in control >> cruise control is the most we can really qualify for >> adaptive cruise control with the tesla investigation >> you see what is happening there you go calm, cool and relaxed as always maybe we should get you a cup of coffee >> have you had a horn replaced? >> i don't think i ever used my horn >> i used it >> you are so timid. as we go >> welcome back. gang's all together. you see a little bit of pressure built up
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dow futures down by close to 200 points yesterday at this time we saw a lot of red arrows. yesterday, the dow and s&p went on to set new records again. that seems like something we repeat every day s&p fights down 21 nasdaq off 58. talking how quickly we have come back the s&p 500. march of 2020. the pbottom we hit the magic number yesterday. the low for the s&p was 2,234.4. yesterday, closed at 4,479.76. the fastest we have ever seen a doubling in a bull market like that since world war ii when the records started being kept this is the fastest we have seen 354 market days. on average, it takes about 1,000 days to see that doubling off the bottom liketells you how qu
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have moved with the government action the stimulus going out and the fed's measures they have been taking we heard that the fed may want to stop some of the extreme measures the bond buying they have been doing. we haven't heard it officially yet. doubling of stock market over that time. let's look at where treasury yields stand at least right now, we are in the same range that we have been forever at this point. 10-year is 1.228%. andrew let's talk about the news overnight. booster shots. that's where the news is moving right now. the biden administration saying it plans to recommend most people in the united states end up getting a booster shot eight months after your second dose. according to multiple media reports saying the biden administration is planning for that guidance. it would apply to two-shot
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regimens from pfizer and moderna. it will go into effect in september. that puts nursing home residents and an frontline workers at the head of the line the question is, then, who comes after them and what speed. guys >> the other question is as we spoke to dr. scott gottlieb yesterday. when will vaccines be authorized for kids under 12. i'm concerned about it with a couple of kids maybe october. pfizer said it would turn in the data by september. i thought maybe by october, you could get your first vaccine on all of these things. maybe i mmunized by thanksgiving dr. scott gottlieb is asking for the expansion. now looking at mid it to late winter maybe february that is a scary prospect if you
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are trying to keep your kids safe between now and then especially with the rise in delta variant. >> i got home pretty early i haven't seen a lot of cable news or anything i dguess it takes a big thing t move covid off the headlines i turned on the tv yesterday andrew, i didn't hear covid or delta for six hours straight >> we were talking safghanistan. >> it might have been something else amazing that we can actually -- what did we do put it on the back burner? really, no coverage. no coverage for ten hours yesterday. amazing. home depot out with earnings profit coming in for the company at $4.53 a share for the second quarter compared to the estimate of $4.44 revenue topping the wall street
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forecast comp sales up 4.5% compared to the 5% increase. the average customer ticket did jump by more than 11% from a year earlier for immediate reaction and report, let's bring in brian nagel. analyst at oppenheimer brian, that had to play into it to some extent >> good morning. it is probably the bigger tickets. i know digging through the results right now. it is a short release from home depot. there are interesting numbers, joe. comp sales did miss consensus. i think the more important message is the comp sales are positive that is a positive for home depot. they have slowed significantly from what we saw in the last couple quarters with domestic comp sales up 30%. here we are seeing 3.4%. a significant slowdown here in sales growth at home depot look, that is happening as you
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have comparisons which are difficult despite the delta variant talk and the crisis beginning to abate. >> what is the macro headwinds that the company is experiencing right now? is there a stimulus fatigue? is the end of that in sight for people that had checks to spend on home improvement? where are people going back out or coming back home because of delta? where are we with that cycle in terms of the pandemic play home depot was a pandemic play for a while. then you think when he you come out of the pandemic, it should do well also this is surprising that you are seeing a second derivative slowdown >> a number of factors at play here in my mind, you know, something i have been talking about for a while now. the biggest factor is the
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difficult comparisons and more important than that is likely to be some type of normalization spending as the pandemic sub sides. what i'm talking about is what you said home improvement was a big covid winner home depot performed masterfully. they served their customers well as the economy opens up, as people start to move around again, there will be less of a focus on spending on the home. i think that's what we see in the numbers. we will see on the conference call withthe supply chain. a lot of supply chain. home depot is a great company. that still could be a factor here >> the key thing for investors today is the slowing in the comp store growth or a stock that's
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moved to the extent that home depot has. the 52-week low is 2.46. you need to explain it anymore than the stock has had an incredible run up to $350 billion in market cap? this is to be expected, i think. you see it on the chart. it doesn't look like the end of the world on the chart although it is down almost 5% >> look, i think it is a combination of both sectors. in my mind, i say home depot is a great company. there will be a time to buy the stock and buy it aggressively. i don't think the market is prepared for what is likely to be slower sales at home depot over the next few quarters what we see in the print this morning is the first clear indication of this again, comps stay positive what the market will ask more and more is what is that 3.4%
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here turn into q3 and q4 hope hopefully, as the economy pulls away further from the pandemic. >> lowe's is going as we will eventually hear from them. that stock is down today is there a reason to think that they are not affected by the same macro factors as home depot? >> i think it is trading lower pre-market we will hear from lowe's tomorrow morning i think the two companies are likely to perform similarly. what i can tell with our clients, if you want to own one, i think lowe's is the better opportunity. there is more of a self help at lowes than home depot. i think we are a little way away from that. >> i think back -- i guess home depot is not obviously a back to
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school talk about whether margins are at risk. you talk about supply chain problems we all heard about certainly raw material increases that we see that might be transitory is it in addition to comp store sales? are there margin sales with home depot and lowe's they have hiring they are not having trouble staffing stores? wage increase pressures? >> relatively speaking, you know, i give kudos to home depot. it is a well run company as an investment group, we watch margins. the margins are steady home depot has a lot of control over merchandise they are buying with regard to hiring, every retailer i'm talking to is having a difficult time hiring employees. that is less the case with home depot. home depot, again, extraordinary
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company. they pay really well they offer career opportunities. i think they are having an easier time relatively speaking hiring qualified employees. >> all right brian, we will see you tomorrow, right? you have something >> i'll talk about lowe's. >> you have it laid out already? do you know what you will have a different jacket or something? >> i'll be on location back in new york with a different jacket. >> surprise me all right. see you later. >> thank you thanks for having me. >> hey, becky. guess which state legalized online gambling recently georgia. >> no. >> new jersey. >> i was there for the entire time not doing anything. i was okay i ended on a high note before i left doing really well. we got to virginia where we stayed over and i saw it on the highway.
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a draftkings advertisement. >> and your whole vacation turned around. >> i got to the car and told my family if they advertise it we looked it up and they did i i bet on the dodgers and took the money to outback steakhouse. i did the over $8 on the 121. that is a lot for me i haven't done it in a while. still to come -- you know what is coming up? football do you believe that? >> i thought you were going to say walmart. >> major league baseball is too hard we will hear from another dow component. walmart is coming later this morning. plus a key read on retail sales in july. estimates coming up next
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futures indicate down. down almost 200. yesterday was a lot of previous days in the summer where you are down in the morning and close at record "squawk box" is coming back. >> announcer: today's big number $6.84 trillion that's how much cash and short-term investment companies around the globe had on their balance sheets in the second quarter. a new record according to data from s&p global. a 45% jump from the average of the five-year period leading up to the pandemic. >> announcer: today's big number is sponsored by mercedes-benz. the best or nothing. it's where safe and daring seamlessly intersect. it's understated, yet over-delivers.
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welcome back in today's "squawk planner" as we heard from home depot, we will hear about walmart this afternoon. the forecast is expected to drop .3% bank of america economists say the decline in sales could look more ominous forecasting a 2.3% decline we will have the numbers and reaction at 8:30 a.m. eastern. let's talk china overnight, china market regulators issuing draft rules
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aimed at stopping than unfair competition on the internet. it would prevent companies from misrepresenting the number of clicks on a piece of content and prevent them from traffic hijacking which is rejecting users to their web site while using a browser from another check out some chinese tech stocks falling across the board alibaba off 5% this morning. tencent off 4% look down the list jd at 3.5% baidu off more than 5% we will talk more about china with kyle bass from hayman capital at 8:40 a.m. eastern the crackdown on china tech cont continuing if you are a u.s. tech company, i'm thinking that you're thinking this is great what do you think? >> maybe >> i don't think they want to
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say that out loud. >> unless you are uber and own a stake in one of the companies. >> that's true, too. >> the regulations they are talking about today are different from what we heard to this point things like you can't hide or lie about the reviews out there. okay it doesn't sound too terrible to crackdown. this is an overall big picture these aspects are less concerning than what we have seen before. >> some rules i like if we tried to propose these rules in the united states, people would go out of their brains. >> the rules from china. this is onerous and ridiculous stuff like this. it is a hard time fighting you cannot lie to customers on promote yourself over everybody else okay crickets stocks to watch this morning. another one we are looking at is spirit airlines. the disruption cost $50 million in revenue in weeks.
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the airline canceled 2,800 flights from july 30th and august 9th talking about staffing shortages and bad weather and technical problems the shortages is a big deal. spirit said it will make tactical schedule reductions for the third quarter to soften the shor shortfalls spirit warns customers are cancelling because of the rise of covid infections. that combined with the hit of reductions, spirit is expecting $80 million of negative revenue impact in the third quarter. staffing issues has been a problem at some airlines more than others, andrew. >> absolutely. coming up, we are going to talk about the chaos that is gri gripping kabul this morning. we have the latest on the taliban takeover of afghanistan with reaction at home and on the global stage first, whale watching.
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welcome back to "squawk box. we'll do some whale watching with leslie picker particularly berkshire hathaway. leslie >> reporter: we saw the firm
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paring back the shares of merck. the position now worth $700 million. the firm cut abbvie and bristol. berkshire closed position in biogen the firm maintained the holdings in j&j and it teva these were small positions berkshire revealed it had been net sellers of $1 billion of equity after unloading $4 billion in q1. berkshire sold about 20% of its stake in marsh ann mclennan and sold 10% stake in gm the firm boosted stake in kroger by 21% to hold more than $2 billion at the end of the
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quarter. it added more to aon as always with the filings, they dated. the positions are as of june 30th they may have changed in the six weeks since. guys >> leslie, what else should we look for in the next 24 hours as these things come through? >> the deadline was yesterday. they are all through it will come down to the models that will sift through and look at it because there are thousands to see what the real themes were during the quarter just based on the several dozen we parsed through last night, it is clear a couple of themes are shaping up number one, a lot of fund managers selling down spac positions which is not surprising given the spac selloff in the second quarter. it is interesting to see the line items within the filings as they came through yesterday complete disillusion of a lot of spac holdings. also really interesting ways
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that fund managers were playing various trends surrounding the pandemic some fund managers, based on the investments, did believe we were not out of the woods despite the vaccination rates and reopening of the economy some fund managers opted to double down on zoom and doordash and shopify. >> leslie, berkshire looked like it was selling down gm shares. you said about 10% of it stan druckenmiller bought into gm during the quarter, right >> yeah. it is interesting because you have these two sides of the coin you see this all the time with 13f filings where certain fund managers take massive bets and the other side of the trade where people will be selling that same exposure
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same for the reopening trade we were talking about before. there were fund managers that did pursue clear trades that were more in line with the reopening of the economy a lot of travel stocks d1 was a fund manager that comes to mind that pursued names like expedia on that front and other travel names increases in booking holdings and expedia for d1 it is interesting when you look at the individual manager level and see how they are thinking during the quarter it is dated, but there is a movement in washington to change it to have only a ten-day window opposed to a 45-day window after the quarter ends. >> leslie picker, thank you. when we come back, fallout from the taliban conquest of
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afghanistan. we have the implications of foreign policy we will take you live to the cnbc middle east bureau after thi this a quick look at the s&p futures. down by 20 and the nasdaq trading down by 50 points. let's look at the winners and losers as we head to break >> announcer: executive edge is sponsored by at&t business our people and network will help keep you connected let's take care of business. dif. oh, we can help with that. okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown,
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good morning welcome back to "squawk box. a quick look at the futures. looking like we are opening down 203 points on the dow. nasdaq looking to open off 50 points down. the s&p 500, joe, looking to open off, we'll call it -- round up to 20 points.
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>> one of these days, andrew, i figure the fed, what did they say? three months might start pulling back a little? i throw up my hands. that's all i can figure it would eventually lessen what seems to be relentless upward pressure every day. yesterday, again. >> you tell me what you think the jobs report is at the end of the month because i think there is a possibility it isn't as good as we want it to be then i don't know if we are back in the soup and people are having a different conversation all over again. >> andrew, if this doesn't work out, we both can get a job just about anywhere we stopped for the last two weeks anywhere i'm not kidding. anywhere >> ihop, mcdonald's, wendy's >> not just fast food. anywhere any of the places that we went sometimes there's a lot. we can't get a table
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they said we don't have bus boys or staff or this or that it's amazing it really is amazing that we're below the potential where we could be who knows? maybe the delta thing starts matching up supply and demand for places that can't serve everyone that wants to come. airlines and everyone else the latest on onthe rapidly situation in afghanistan president biden with the decision to drawdown a lot of criticism on both sides. the president blaming the afghan government and military for allowing the taliban to take over admitting the group did so faster than expected dan murphy is joining us from abu dhabi with the latest. hi, dan. what can you tell us >> reporter: joe, you are right.
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president biden standing behind the u.s. mission in afghanistan and the u.s. decision to withdrawal his narrative has been a really hard sell domestically and politically after we saw images of pure chaos at kabul airport yesterday. indeed, every day americans, veterans and diplomats and all asking how did this unravel so fast and in such a disorderly manner those scenes ending in a number of deaths for afghan civilians just attempting to escape the country. at the same time, we are seeing common scenes at kabul airport evacuating personnel from the airport. the situation is fluid at this point. thousands of people still desperate to get out of the country. at the same time, we also have seen the taliban continuing to
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show strength and authority in the streets in kabul cementing the control of the capital and country. a number of things to update you as well. we have seen reports of taliban militants riding through the streets in captured american and afghan army vehicles fighters collecting weapons on the ground from anyone on the ground who has a uniform and have taken over police posts and army posts on the streets, too cementing their control. it is believed these militants wants to have some peaceful transfer of power and reports suggest that talks are under way of bringing non-taliban leaders in a potential new government. what that looks like remains to be seen, guys. the situation on the ground still complex and challenging. >> indelible images that i figure we will see for a long, long time. dan murphy, i appreciate your
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report this morning. dan murphy coming to us from abu dhabi. becky. thank you, joe when we come back, investors watching for the latest signals from the fed about when it might actually start tapering its purchase program sarah bloom will join us next. and later, kyle bass will talk about the turmoil in afghanistan and what it means for global investors and what it means for china and afghanistan and our relationship with all of them. "squawk box" will be right back. i think you're going to like it here. umm, why is everyone... throwing things at me? look, as cfo it's my job to be ready for whatever's next. that's why i have my finance team, randomly hurl things at me. it's also why we use workday. it gives us insights, so we quickly pivot our strategy, people, planning, you name it. sorry, sir. i will aim straight at your next step. see that you do. would you like some coffee? workday. the finance, hr, and planning system for a changing world.
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the iphone 13 expected to be released in september. demand looks strong for the apple device according to our next guest who made the rounds on supply checks in china and asia dan ives any talk of going straight to a
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14 like in buildings i got married on the 13th. it is a lucky number they are going full on with 13 it could be lucky for apple, dan? >> i think this is luck. i think it will just continue the super cycle that we have seen from iphone 12. everything we're seeing in asia, we are looking at a 10% to 15% increase from demand from iphone 12 this just shows they are really going into what looks like i'll call renaissance growth at cupertino. this growth train at apple is not slowing down that is the key theme from the iphone 13 talks. >> it is not a tv. it doesn't fly you can't fly around it? it is still just the ecosystem and services that continue to -- i guess 5g is going to be a big boost as well? >> yeah, i think there are a few
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things going on. 975 million iphones worldwide. 15 million have not upgraded their iphone in three and a half years. it shows pent-up demand. you have 5g more real as we go into the next 12 to 18 months. then china china will be 20% of the upgrades we are seeing very robust demand there. that continues to be a key lynch pin to the story for apple that is why in six to nine months we are looking at a $3 trillion market cap for apple. >> $3 trillion it has done that got through the first trillion and second now you are talking three now without the new kind of incremental addition to a product lineup with enhancing what they already do and broadening out the apple ecosystem that -- i don't know
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about everybody. not everyone is totally apple oriented i am i don't look elsewhere for anything i'm fully immersed in the ecosystem. >> yeah, it is that golden install base the service rating with apple over the last year then look into next year we think apple glass gets released the vr head set. then two years after that is the apple car. that's one where that will be the next leg to what i view as the ecosystem which is further building out the iphone many thought growth was in the rear-view mirror they are defying the skeptics. >> dan, i dropped my phone in a pool yesterday i've had a little bit of the shake ans because my life is ti up in the phone.
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i haven't gotten it fixed yet. just the addiction factor and/or whatever you want to call it i have no choice everything in my life is caught up in the apple cloud. they can charge more and more for that cloud service to make sure when i do something stew b stupid like this, i can get it all back >> you talk about a great point. what you are seeing more and more is consumers don't switch from iphones you are seeing more android switchers to iphones it is all part as joe talked about the flywheel from airpods to services to back-up to music. that is what they have been able it to do better than any company in the world becky, over the last year and a half, you really started to see acceleration on the services and investors have taken notice. net service alone is worth $1.3 trillion the key part of the sum parts of
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the valuation on apple >> no chip problems or supply chain problems they have avoided those issues as well. i'm not sure how very adept. >> yeah, i think what cook did and the team, if you go back, they were aggressive in terms o ordering on chips. they were at the front of the line given the amount of units they were selling. they were aggressive that put them in a position of strength there is a bit of a headwind with the demand perspective. with the supply, that is attainable i don't think that is, in any way, push or deter what i believe is the super cycle continuing to play out for apple. >> all right dan, thanks. becky, it was the pool you didn't flush the pool?
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>> no, kayley jumped in the pool i had to jump in fully clothed with the phone >> do you have it backed up on icloud >> of course of course. >> that's the whole thing. >> still i tried to fix it yesterday. >> are you living in the stone age? i'm even backed up, sorkin >> i want to make sure by the way, a lot of people now because of privacy don't want to be on icloud i want to make sure you had it toggled on >> you want to mandate everyone to be on the icloud. is that another one of those things, andrew >> i want to inject you with the chip and be on the icloud. yes. >> you need to be backed up on the icloud. >> birthday pictures missing first day of college pictures missing. that happened. >> i get the shakes listening to you having the shakes.
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>> jonesing. coming up when we return, becky will get her phone back and in pristine condition. a question for investors on everyone's mind. the fed's taper timeline we will look at the asset purchases after the break. frank can go to meetings. visit a job site. and even finish work early. you look really lovely. frank? frank...i trusted you! but if cloning isn't right for you, just get posh. virtual receptionists who can answer and transfer your calls, because you can't be in two places at once.
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now to a key topic for investors and that's the fed's tapered timeline say that three times fast. steve liesman joins us after yesterday's news that they're considering scaling back easy money policies more than we've been anticipating. the market was pretty calm yesterday wachlt do you think today? >> yeah. you know, maybe today's down
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futures, becky, is the reaction many expected. so far, funny thing has happened amongst all this taper talk. markets have rallied rather than taper tantrum. the nasdaq is up 8% since the end of may, dow jones up 3%. ten-year bond yield has fallen 36 basis points. add to that, fed rate hikes have barely budged even though it ooks like the fed could announce its taper next month lou crandall writes the fed doesn't really seem to be in that much of a hurry it's hard to describe that kind of timeline as being particularly hawkish data to back him up. if it begins tapering in october it will still buy $660 billion in assets, pushing its balance sheet up to an historic, well,
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call it $9 trillion. markets may just be less worried also about inflation and more worried about delta than the fed. krishna guha of evercore says investors see more downside to the near term growth than the fed, the bond market appears to be betting amid the tape r, bet that inflation will come under control. becky, they're not really taking the punch bowl away that quickly. >> no, no, and that's probably -- excuse me, steve probably the biggest takeaway with that. let's talk more about this right now we want to bring in sarah bloom raskin, former deputy treasury secretary and visiting professor at duke university school of law and cnbc contributor
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sa sarah, we spoke of this yesterday. steve was all over this, telling us what he thought would be happening and where things will be headed next it doesn't seem that extreme maybe it's not a surprise that people weren't already anticipating. >> i think that's right, becky you've got to keep in mind that chairman powell has made it ab unde abundantly clear that there will be a lot of signaling before the tapering i think we're seeing just that it is the beginning of a very well-choreographed and intentional set of moves, set of signi signals that will eventually culminate with chairman powell himself, indicating the announcement of a taper. n now, that is -- you know, he has not done that yet. he hasn't even said he is going to do that yet or when it's happening. but what i think we are seeing and what i think markets should
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understand is that this is part of that slow rollout. >> does the next jobs report matter the last two have been incredibly strong. maybe we're anticipating we'll get strong numbers once again. it's not just that, but the inflation data that's baked into this we know things are probably not going to shut down, as they did with the earlier covid variants. so if you're looking at all of those issues, if we get a weaker read with the next jobs report, would that be enough to put the whole plan on hold >> more data is always better. partic particularly in this period of time where we are really, from an economic perspective, in unprecedented and unchartered territory. waiting for data is always the prudent thing to do. my instinct is that the fed is going to want to wait for data, and they're going to look at it, and very carefully as they
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always do. and, you know, why they would make a move prior to, you know, september data is probably, you know, i think of low probability. so more data is better and data of all kinds. the unemployment side, the labor market, all the contours of the labor market and, of course, what is happening on the inflation side. >> steve, just in terms of the timing of this, you have to think it's because of jackson hole coming up that might not be an announcement that happens before that but it will be hard for chairman powell to get away without talking about these issues maybe that will be his way to ease into what his comments are going to be. >> at some point you have to think there will always be some big event and jackson hole has gone beyond coincidence. at this point, i don't think jackson hole forces the fed's hand i think what's happened, becky, is that jobs has changed 2 million jobs over two months, inflation data coming in hotter
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than expected, producer price index and the fed saying where is the risk? the risk is that inflation will be higher than we expect they're moving to address that. >> steve, sarah, thank both of you. we'll be talking a lot more about this good to see you. >> thanks. coming up, one of the street's top strategists, morgan stanley's mike wilson joins us with his read on the markets for the rest of the year i can tell you the s&p is ahead of his year-end target by quite a bit. i don't know what that means we'll ask him. dow futures down more than 200 points sq "squawk box" is coming right back designed to work better together. save, spend, borrow, invest, and earn cash back rewards, all in one app. that's how you get your money right with sofi.
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matching your job description. visit quarterly results from dow component walmart expected any minute now what the company is saying about the state of business, moments away. another day, another round of new record force the markets. but the futures this morning are pulling back a bit we'll speak to morgan stanley's mike wilson about the latest move and market expectations for the year. and one year after an op-ed headline that divided the big apple acres look at whether new
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york city is dead or just getting started with this pandemic bounceback. the second hour of "squawk box" begins right now good morning and welcome back to "squawk box. i'm andrew ross sorkin along with becky quick and joe kernin. the dow off 197 points the ten-year note, let's show you where things stand right now. retail sales data at 8:30 a.m. eastern time ten-year note at 1.320 quickly we'll show you bitcoin as well. we've been trading around $46,000 this morning, $46,713. we have earnings just cross ing
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right now, joe >> yes, we do. walmart results just hitting i like that revenue number, courtney there must be -- is there an adjusted eps because first thing they put looks like it would be below, but is there an adjusted eps it's above 157 >> there is an adjusted eps, joe. i know you always like that revenue number, because it's so big, because of the size and scale walmart has. let me give you the results here walmart is beating on earnings and revenues, adjusted earnings per share of $1.78 for the second quarter, compared to estimates of $1.57 on revenues of 141.05 billion. the street was expecting $137.17 billion. updated guidance, roadwaying its full-year guidance range to $6.20 to $6.25, or a growth of 15% to 17% that's above the street's consensus. for your revenue, expected to grow 6 to 7%, up slightly from
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previously walmart forecasting u.s. comp sales for the year to improve 5 to 6%. that's also above analysts' estimates. for the second quarter, walmart sales grew 5.2% with more than 6% in transaction growth and this quarter was led by the stores store traffic continues to grow, according to the company but take a look at walmart's u.s. net e-commerce. this is up 6% for the u.s. this is a much smaller increase than investors are used to seeing it's worth reminding you that the same quarter last year we saw u.s. net e-commerce sales grow 97% on top of that growth the retailer is expecting now global e-commerce to hit $75 billion this year. so, that's just its own goods ex-marketplace goods when you look at that expectation
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i spoke with walmart's ceo brett bigggs who said it's off to awe good start regarding that e-commerce start he said there's going to be quarters where stores lead the way and quarters where online lead the way this was a quarter led by the stores biggs said walmart is watching the delta variant closely but hasn't noticed any big changes other than more mask wearing locally in arkansas where case rates are higher biggs said luggage and party supplies sold well, water balloons early in the quarter, too, along with tops, specifically, and apparel. he said, quote, particularly early in the quarter, you see people coming out of hibernation and back to school is off to a really good start. there is going to be a live conference call here later this morning where we'll get even more color from the world's largest retailer always a good read on the consumer when these walmart numbers cross. back to you guys. >> years of pretty good execution, you would say
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i thought it should be dug mcmillion instead of doug mcmillan but now it needs to be doug mcbillion if he's going to change it. >> it could be, but, joe, walmart is so much about everyday low price and everyday low cost does mcbillion really send the right message? >> no, no, no. maybe mclovin'. >> wrong brand. >> maybe mclovin' although that's already -- >> taken. >> $422 billion company with $140 billion in a quarter in sales. you can see, margins aren't huge, obviously. but they couldn't be because -- >> right. >> it's always low prices, as we know always. >> exactly exactly. and, you know, margins are going to be something that they're always in focus, right but especially with these incre increased cost in the supply chain, increased cost of labor and all of that that's going on, that's really going to be in focus in the quarters to come.
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with walmart, it's so big and has such scale and leverage, like you mentioned earlier, they're good at managing it. >> yep. >> you may not see those cross currents as much as you might with some smaller retailers. >> i know you live for this day, courtney. >> love it. >> see you thank you. for a look at what else is moving in the premarket right now, let's get over to dom chu good morning. >> good morning, becky in addition to walmart and the action that courtney and joe just highlighted, from home depot, big bellwether when it comes to consumer spending, especially pandemic spending home improvement, do it yourself type things, diy home depot shares off 3 perks roughly 25,000 shares have traded so far. year-to-date base up 23% going all the way back to the pandemic, it was a beneficiary as folks stayed at home, looked at home improvement projects,
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stay look ed at things they wanted to change the way they wanted to, given pandemic trends they posted better-than-expected profits. topped $40 billion in a quarter for the first time ever and same store sales growth that did trail analysts' expectations just a little bit, as some of those trends start to cool off in that big home improvement trend over the course of the last several months. watch home depot shares. also want to take a look at what's happening with the vaccine makers reports are out right now that the u.s. is going to likely recommend a booster shot dosage for kmpd about eight months after your second shot dosage. many of these vaccine makers are stable in the trade but fpfizer is up 30% so far this year that's the laggechlt rd. biontech, moderna, novavax at least doubling in value. a good amount of that profit taking still in play for these
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vaccine make rs, still ones to watch given that news coming out. chinese internet stocks under pressure again no surprise here new market regulator has come out and said they want to regulate the fair use of the internet and that's maybe being viewed as the next incremental step towards the bigger crackdown on its internet companies, alibaba,, baidu, off 2% to 4%. chinese internet stocks, retail in general, andrew back over to you guys. >> dom, thank you for that when we return, we'll talk about tesla's autopilot. it's facing a u.s. inquiry through a series of crashes. we'll bring you a breakdown of what this could mean for the company with investors, former ford ceo mark fields then later morgan stanley's chief u.s. equity strategist mike wilson will join us plus these other great guests will be joining us. jeff blau, endeavor ceo
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ariemanual and kyle bass talking about afghanistan and the investor impacts quk"etns with all of it after this
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so that everyone can enjoy the freedom of swimming. like the athletes competing in tokyo, these entrepreneurs have a fierce work ethic and drive to achieve - to change the game and inspire the team of tomorrow. welcome back, everybody. shares of tesla dropped more than 4% yesterday. this comes after federal
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regul regulators announced an investigation into the autopilot system mark, how significant is this investigation? what happens now >> well, this is a significant investigation. first off, it establishes an organized, almost formalizes a number of the issues that folks have had with some of the tesla full self driving systems. and i think it's significant because if you look at the model years, this is a very large time period that they're investigating, from 2014 to 2021 and if you look at the number of potentially affected vehicles, that's literally over half of all the vehicles that tesla has ever built so the process is it's a couple step process this first step is an area of evaluation where it looks at the
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data this could take about four months, get some interaction from the company if they decide to go forward they go to the next phase, preliminary engineering analysis, which takes about a year and at that point in time they decide whether it needs a recall or not this is going to play out over the next year, year and a half or so. >> is this a situation where the company, tesla, instead of doing recalls could just shut off the autopilot offering, or is that something that you think would be a problem that customers would push back? >> well, tesla has led the industry in what they call over the air updates where they can update a vehicle without having it brought into the dealership there could be two fixes, over the air software change, shut it off or change the features and in the fsd, or if it's -- if they find issues in the chip and they have to update the semi conductor chip, that changes the basics of the vehicle
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functionality, that's more serious. that's where the customer would actually have to bring the vehicle in and have it physically worked on, which would be a much more expensive recall if that unfolds in that scenario. >> i mean, this has been something that people have talked about for a long time, even the idea of calling it autopilot. it's not it's more like cruise control. you have to be paying attention all the time other companies in the industry have similar offer ings gm has it, but they watch to make sure that you're actually paying attention, that your eyes are on the road. that's something that tesla has been playing around with recently, too. >> it's important. there are distinct differences gm's system actually has a camera that looks at the driver's eyes to see if their eyes are on the road this will be a very, i think, investigation. if you think about systems like
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anti-lock brakes, seat belts, things of that nature, they only have benefits and recalls around those are around the product quality. here, you have these automated driver assistance systems, like the fsd or autopilot from tesla, or the super cruise from gm, blue cruise from ford. those involve the driver responsibilities and there could be misuse from the driver on that that could cause serious accidents. that's why this investigation is so precedent setting, because it's going to start the debate on how the government should approach regulation on this in the new era of safety. >> it's something that i've been watching just very -- with a lot of interest. it's different, because this is the innovators, silicon valley guys, people who are using fast, breaking things asking for forgiveness, not permission to do things running up against
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industry where in the past you've been very used to making sure that the regulars sign off on something like this first what do you think the bigger implications will be for the industry >> well, the industry has always taken the approach, it's absolutely important you don't beta test systems, safety systems with customers because they're customers' lives. you never chance that. that being said, tesla, as well as the industry, when you look at the driver assistance systems, you're never going to get there without some issues, right? these are very involved systems, lots of inputs that the vehicle has to process you can look at the investigation. this really involves tesla vehicles that were approaching first responders. >> right. >> lights flashing and cones and things of that nature. so, this is not unexpected, but clearly the way you market this and how you monitor the driver is very, very important, because
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the bottom line is you want to not only keep the driver safe, you want to keep others that are in the environment where you're driving safe as well. >> there are liability issues. how do you think about it as the former ceo of ford, how would you kind of walk through the liability issues on this >> well, and this is where it's going to get really interesting. when the first couple cases come through on accidents that involve these systems, there's a couple different options but usually the trial lawyers or litigators, they follow the money. they're going to look at the manufacturer of the vehicle, who developed the software they're going to look at some of the componentry. and they're going to go after everyone, but the big target on the back is going to be who is the overall producer of the vehicle? and in this case it's going to
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be. >> are other manufacturers looking at this to see what will happen with their system or do you think they'll take a different approach >> every car maker will be looking at this investigation. the tesla autopilot or fsd system does not use what's called lidar which is basically radar which senses its environment in any topography and climatic condition t tesla only uses cameras. all the other oems, automakers have their systems use some degree of lidar. there is a different technological approach to these systems. and, you know, most of the interstate thinks, which i agree with, lidar is a very important part to sensing the environment to allow the system to work correctly and safely tesla doesn't take that route. they take a different route. that's what that industry will
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be looking at. >> mark, great to see you today. thanks for joining us. >> thanks, beck. >> i mark fields. coming up, it's been a year now since author and investor james alta declared new york was in a death spiral because businesses were remote and they aren't returning to the office the op ed led jerry seinfeld to pen an article declaring new york sure as hell will be back so, who was right? robert frank will break down where the big apple stands a quk x"iler, one thing we know, "sawbo wl be back right after a break. l the things, all around you... where you learn, work, and fly... we help make them healthier. we are the people of abm. for more than 100 years, we've been a leader in making spaces cleaner, from the things you touch to the air you breathe. today, more than 100,000 of us are innovating to ensure spaces are more efficient, healthier and safer. abm. making spaces healthier for you.
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beautiful shot this morning of times square live we are watching shares of e-commerce company wish. shares plunging 20% on friday, continuing their slide yesterday, dropping another 9% this coming after the company reporting a 6.4% drop in quarterly revenue, a slight increase of monthly active u
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users. monthly active users plunged 22%. the company's ceo pledging major changes to try to make the shopping experience more fun stock debuted at $24 per share in december, traded as high as $31.19 on february 1st we are sitting at $6.69 this morning, becky quite a ride. >> up and down, right? still to come on "squawk box," one of the biggest landlords in new york city will join us to talk about the comeback of manhattan real estate. plus dow futures indicated down 223 points after setting a record yesterday s&p set a record yesterday, indicated off by 22 and nasdaq, which was weaker yesterday, indicated down 60 this morning
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hom home depot came out with earning better than expected but people keep waiting for the drop and wonder what same store sales will look like walmart topping expectations, at $4.53 versus the 4.44 the street was anticipating strong numbers across the board there. that stock down 1.5% at pnc bank, we believe in the power of the watch out. the “make way, coming through”... great. the storm alert... dad. and the subtle but effective ding. that's why we created low cash mode. the financial watch out that gives you the options and time needed to help you avoid overdraft fees. it's one way we're making a difference. because we believe how you handle overdrafts should be in your control, not just your banks. low cash mode on virtual wallet from pnc bank. [music plays.] ♪♪
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new york is dead forever, the headline op-ed that declared new york in a death spiral because, quote, businesses are remote and aren't returning to the office, ended up leaving jerry seinfeld to pen his appeal that new york sure as hell will be back. so a year later, who was right robert frank joins us with more. robert >> good morning, andrew. jerry seinfeld's words still inspiring new yorkers a year
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later with that #nyc is not dead t that, of course, was a response to all futures op-ed saying remote work, boarded up restaurants, rising crime and high taxes would hollow out the city for years and decades who was right? a year later on the residential real estate side, that has rebounded sales more than doubling over the past year. prices almost back to prepandemic levels and new rentals having their best quarter in recent history. you look at restaurant traffic that was down 89% a year ago from prepandemic now, it's about half of those prepandemic levels mta subway ridership is improving but still about half of what it was prepandemic hotel occupancy now at around 67%, that compares to about 40% a year ago so, improvement there as well. but new york's recovery and its future depends a lot on office workers, and that is the big
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unknown. there was 47 million square feet of empty office space in midtown as of the first quarter. and then if you look at rental rates, they are down 9% from a year ago a year ago only 12% of new york city workers were back in the office now it is 23% and, guys, with the delta variant, we thought people would come back right after labor day. now we're looking at mid-october maybe. so, until we get those office wor workers back, until we know how many do come back, new york's recovery is still open to question guys >> robert, before you go, that is the question. what percentage of people do we think are in the office right now in terms of white collar workers in new york city do we have any idea? >> 23% again, that is double what it was a year ago but i think a lot of people expect that by now we would be a little bit higher. and the big unknown, the month
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of reckoning will be october how many come back, how many days will they be back, and how much office space will be needed and paid for in new york >> robert, some of the statistics you were running through, you know, 23% of office workers back subway ridership only at 50% there was hotel occupancy, i think you said, 67% or something. what level do they have to hit to be profitable or to at least not continue to make losses? >> well, you know, each business is different the subway certainly needs to be higher than that it needs to be higher than that every single day if hybrid is two or three days a week, will that work economically for the subway? the other issue for the economic engine of new york city is taxes. we won't get $22 billion in federal aid every year property taxes are the largest contributor in new york city's budget they'll be down 10% next year. so that's the longer term question, does that economic model for new york city continue to work if people are hybrid and
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if taxes continue to go down >> okay. robert frank, appreciate it. we'll continue this conversation right now. for more on real estate in the great city of new york, we're joined by related company ceo jeff blau, who nearly, we should say, one year ago today wrote an op-ed in "the wall street journal" titled "it's time to open new york's offices," one of the largest landlords in new york jeff, a year later in your mind, given the stats we just heard, where are we >> good morning, andrew. i certainly agree new york is not dead, and i think it's coming back. and i think it will be back better than ever so, most of the stats you talked about were about people comeing back to the office and while we are, today, about 23, 25% occupied in the offices, that doesn't mean you're 23, 25% leased these units are leased to large companies. we do expect them to be back in the office we expected them to be back in
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the office right after labor day. i do think with delta, it's going to be pushed back a little bit. but people want to come back to new york the flight to florida, the flight to different cities, i think, is temporary. we're already seeing people come back today we're signing leases quickly here at hud son yards. we just signed coin base, welcomed them as a tenant at hudson yards there are lots of companies that did well during the pandemic and will actually be back in their offices. and we hope as this delta kind of passes through here, they'll be returning as quick as possible schools are starting people will be en mass that article that new york is dead certainly isn't true. >> counterintuitively, there has been an argument that perhaps big companies will end up renting and leasing even more space to account for sort of a
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new work environment i'm curious if you're seeing that and also, what kind of reconfigurations are you starting to see, if there are any, around moving from either open floor plans to other kinds of environments where people either are going to feel safer or because the work space itself is going to change because people are going to use it to come together, but maybe they're going to therefore work from home a couple of days a week, how you think that's starting to shake out. >> well, i certainly do think people are going to be taking more space we've already seen it here almost every one of our companies at hudson yards is expanding today. that is definitely true. we haven't quite seen the modifications yet just because i think time hasn't passed but i think you will see more gathering spaces i do think there will be flexibility in the workplace people might work, you know, partial week, partial at home. and the office spaces will be a place for people to get together and gather and as new spaces get built out,
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i think you will see those changes in the physical office space. but i don't think it will decrease the total amount of square footages that companies have if someone works at home on friday, they still need office space for the rest of the week. >> right. >> i don't really expect a huge decrease in the total square footage. >> what did you happen to do during this period i'm wondering if you're still having to do it. a lot of landlords are ultimately subsidizing some of the services inside these buildings, restaurants and the like, and others, to try to kee them in business during this period and when do you think some of those subsidies and other things might shift? >> so certainly the restaurants were the hardest hit, as we made our way through this pandemic. but as you know, it's not that easy to get a reservation in new york these days. so, restaurants are back and crowded. and so most of the subsidies or free rents have passed the biggest problem in the restaurants right now are
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getting work ers. they haven't been able to restaff. so, as a result, whether it's lunch or certain days these restaurants can't stay open. so, we're hoping that some of the subsidies burn off for workers to stay home, but they'll actually be able to rehire and retrain workers, because that's what we really need we need the restaurants back open they are back and able to pay rent the demand is certainly there today. >> jeff, long term, do you imagine that buildings like yours are going to have either some kind of testing on site for clients or tenants, if you will, or some kind of system i know that everyone is using this excelsior pass now to get into new york, restaurants and things does that transfer over to offices? are there going to be systems that you think landlords will have to put in place around covid or other health matters?
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>> we created a joint venture with mt. sinai health systems where people have access to a testing center on site for all of our office buildings. we also recently made it mandatory for all related employees to be vaccinated and we strongly encourage our tenants to do the same most of them have done that. and so that will become effective as of the end of this month. and so the idea is that we're really creating a safe, secure, healthy workplace for our tenants and our employees. and we expect that will make a big difference coming back post labor day. >> hey, jeff, i don't know if you heard robert's report right before you he was talking about how residential real estate is almost back. the real estate sales are almost back to the same level they were prepandemic. but he said when it comes to commercial real estate they're still down 9% from where they were a year ago. of course, that was down from prepandemic really significantly. does that reflect what you see at related companies, too?
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>> i do think most of those stats were accurate. i give him good marks this morning for his stats. interesting ones around residential. our rental portfolio at the worst of the pandemic was down to 83% occupancy from a typically almost essentially 100% and plus giving concessions. pretty significant drop as people fled the city today, we're at 99% occupied, no concessions and rents are basically back towhere they were prepandemic and that all happened in the last six weeks or so in anticipation of people being back to work post labor day. so a huge signal on the rental front. on the for sale product, the con condos, we have had -- this year has been the biggest sales velocity since 2013 in new york city it's a pretty remarkable rebound. it's really new yorkers. it's local buyers of the obviously we don't have a lot of
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tourists here and a lot of international travelers. i think all indicating a move back to new york city post-labor d day, very strong. >> but the commercial side. >> on the office side, as you mentioned, that's lagged a little bit, as people decide what to do we are touring so our visits and people that want to see space is back over prepandemic levels, and leases are just getting signed now. there is a slight drop in rental rates around where you're talking about. but we expect that to dissipate shortly. >> and then, jeff, finally, take us behind the scenes, if you could. i imagine you're having conversations with lots of tenants and others around the country who are thinking about when to bring people back to work a number of big tech companies, including facebook and amazon have said we're doing january '22. we're not even going to deal with the brain damage, if you will, of what may or may not happen this fall we're just going to set a date
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that's a couple of months from now. there are other firms, mostly in new york, who are saying october is likely or at least maybe late october, early november. what are you hearing right now in terms of how people are approaching it wall street firms seem to be more aggressive about getting people into the office more than others what do you think is driving the different psyches of how ma managers are thinking about this >> all the tenants were ready to go post labor day prior to delta. all the ones you mentioned they've all concluded that work from home doesn't really work. culture is defined in the office culture is defined as people gather, innovation, new ideas all happen when people are together and so everyone was encouraging people to be back in september and then, obviously, delta has come and the concern has escalated once again so people pushed january,
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february as soon as possible i think people are going to insist people are back in the office, vaccinated at the moment, wear masks in the office i do think to get into these buildings, to go back to work, people are going to insist upon mandatory vaccination. i don't think it's going to be an option. >> jeff, the reason i ask, people are being masked in the office and i wonder whether you think at some point maybe it's once kids are vaccinated or there's a view that a booster shot is going to give enough protection, especially to older people will there just be an acceptance or even bosses that are just going to say, you mow what you may come back to the office. you may even get sick. it's possible you may get sick but given that everybody is vaccinated, hopefully there's not going to -- you're not going to end up in a hospital. you're not going to end up with worse outcomes i mean, how do you think that that whole conversation takes place? >> i agree i think certainly the kids are the last piece here. but i think this is not going
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away any time soon this is going to be with us for a while. people need to get back to work, get back to their normal life. and so i think once people are vaccinated, it's going to be a little bit -- and the kids can get vaccinated it's going to be a little bit just like the flu. you get a shot every year, you might get it you get sick for a couple of days, go back to work. people won't be dying. people won't be in hospitals it's just going to be part of our normal life. and if we have a strain like delta, then there will be a period where we're wearing masks again in the office. i think that's going to be the new normal i think that's where we're headed. >> jeff blau, always good to see you and get your perspective on all of it. we're all rooting for new york boy, we rooting for new york. >> rooting for new york. thank you, andrew. >> appreciate it you bet. when we come back, morgan stanley's mike whichilson on the markets. what he sees happening the rest of this year. futures under some pressure. dow futures down about 200
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points of course, we were down pretty significantly yesterday and that turned around by the end of the day. dow and s&p setting new records yesterday. s&p down by 20, nasdaq off by 53 let's look at home depot reported quarterly results earlier this morning h $4.53 a share. $41.7 billion. stock down about 3.3% this mor morning. probably just as people are looking to see when will the decline come when will you see more of a concern? that stock has done very well up to this point. we heard from walmart a short time as well another dow component beat expectations and is also trading d
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down, down by 1.3% although, there was nothing in the numbers that would give you any reason to sell off this stock. this is another issue of selling osshesig n tdi this point. the ar rhtowrang at 148.80. "squawk box" will be right back.
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welcome back to "squawk box," everybody. stongs o stocks on the move this morning. wider than expected first quarter loss or loss for the latest quarter roblox kept people at home and kept kids playing computer games rather than getting outside. that stock down 1.6% t-mobile has confirmed hackers breached a company database but hasn't yet determined what information may have been stolen earlier reports said it included names, addresses and social security numbers and i saw license numbers as well, driver's licenses. we'll continue to keep an eye on that joe? >> troubling news. meanwhile, the biden administration plans to recommend that most people in the u.s. should get booster shots roughly eight months after they got the second dose that's according to multiple media reports that say the
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guidance would only apply to t two-shot regimens, like the ones from pfizer and moderna, and could take effect as early as mid-september. that would put health care workers and nursing home residents at the front of the line for those booster shots coming up, mike wilson from morgan stanley on the markets. that interview is next and endeavor ceo at the top of the hour, ari emanual, streaming wars and much, much more "squawk box" will be rhtacig bk. with some strategic advisors. they suggest that we marry our fortunes with...the capulets. blasphemy! fear not. these advisors managed one of the largest mergers in history, creating billions in value. billions? plus, they have experts in global trade. this merger shall be a boon for our spice business. and set a course for growth. here, here! friars, send word at once. yes, m'lord.
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our next guest is raising his year-end target for the s&p 500 slightly to a level of 4,000 from 3,900 what's wrong with this picture that still implies a 10% correction from current levels joining us now is mike wilson, chief equity vstrategist for morgan stanley we have a long history, more than some marriages, mike. in the past i talked about when you got bearish too soon this time i thought you were staying bullish much longer. i didn't realize -- i don't know whether you called it bearish but pulled in your horns to some extent
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3,900, it's gotten away from you at this time when did you go to 3,900 the beginning of the year? >> yeah, joe, we've been at 3,900 since we put the forecast out for this year. it's a year-end target and things overshoot and maybe we underestimated how far it could overshoot in the short term. we try to focus people on the right things and the eternal movements of the market have actually played our mid-cycle transition perfectly m mid-cycle stacks have underperformed, small caps have underperformed, the market has gotten narrow. all the things are happening except for the final piece, which is that the index has to derate lower the thing that's going to make that happen is when the market finally accepts the fact that the fed will have to start typing policy. it's not the end of the cycle. people get so negative when the fed is tight ening policy if the fed is not tightening policy, that means the recovery
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failed this is a normal progression we have a process. we don't get caught up in price action risk/reward at this point. at the index level it looks not that great 4,000, 10% down side not the end of the bull market every year we get a 10 to 15% correction generally that should be what you expect i don't think it's that unusual. >> right i felt it, too i know the inclination that you feel it. and no one can really, you know, ignore the fed's influence on this it just seems like day in and day out that there's some support. and there's just this -- you know, the default move is up almost just about every day. and it's been that way and i know you've seen it. when i said we've had history, i remember last time i used to needle you about being too bearish. you were bearish for very good reasons, but you were able to turn bullish for a reason that wasn't what you were talking about. you were able to get in, and it kind of bailed you out
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i think the pandemic sell-off to some extent allowed you to get long and stay long, much longer than many of your peers. i wouldn't say i was disappointed that then you went back i have deja vu for you being out of the party too early again and looking for a way to get back bullish again when the opportunity arises. >> well, look, that would assume i was trying to game the system. once again we have a process around risk/reward. >> right. >> it's fair to say the risk/reward on equities broadly is not nearly as attractive as it was a year ago. that's our job, to keep clients out of harm's way and take good swings when the pitch is bad. >> good reasons to think there's some fluff here, they hit us over the head almost every day and we always come back to the notion that there's so much
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liquidity, i don't know in hindsight when the party does at least end a little bit or, you know, where nfts don't go for $8 million, whatever you want to point at that seems to represent the fluff. when we look back at it, maybe it will look obvious that this had a lot to do with the fed staying so long and providing so much liquidity and central bankers around the world. >> it's not just that, joe it's also the fiscal policy. >> that, too. >> that's what's been different this time. and they're working hand in glove. that was part of the reason we were bullish a year ago and it's played out, right? one thing that doesn't get enough air time is liquidity and trying to time when the market will care about that is always a challenge, to say the least. the internals of the market have played out, i think, in a much more forthright way that we would assume liquidity is starting to fade a little bit. let's talk about the fundamental picture here we are seeing the fiscal
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impulse. these packages are wearing off like the monetary policy will have to go the other way look at today's results with home depot i think it's a really good example where, you know, missed the numbers slightly more importantly, inventory is built much more quickly than sales. and i think one of the things we need to pay attention to the next six months is that there's going to be a payback in demand for a lot of these things that were overconsumed over the next year we're not as bullish on earnings the next 12 months because that have potential payback the other thing is you have to pay for some of this stuff, which means higher taxes it's not the end of the world. it's a normal market type of progression through an economic recovery our job is to find places to make money in that environment we've skewed up the quality curve and it's working quite well. >> right do you think the chances for higher taxes have lessened if a presidency starts, i don't
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know, not going as well and i'm thinking about afghanistan, the border, whatever you want to talk about do you think that -- i know that that was one of your -- the things that troubled you, was the prospect for higher taxes, one of the reasons you were at 3,900, i think, on the s&p, or not quite as optimistic. do you think that there's less of a chance of the administration being able to do that at this point >> absolutely. i think that is an upside risk for sure we get to the end of the year and, you know, congress says, you know what? we'll have to find a different way to do this and pay for it later, which, by the way, is the way congress has paid the last 30 years, kick the can down the road if that were to happen, joe, we would probably end up taking our price target up 6, 7%, the hit from higher taxes we built into our numbers. it doesn't get you a lot of up d upside from where we are today, okay that's why you look at the 4,000 number, nice round number, gets people to focus on something. >> if we got that, would you --
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i know you don't like coming on, raising a price target from 3,900 to 4,000 when we're at 4,500. no strategist likes to do that would you, at 4,000, would you say, okay, i'm long again? i'm going up 100% in at that point? is that what you think we need to get fully bullish again >> i think there's a chance we probably overshoot that first on the downside, quite frankly. that's usually the way it happens, the multiples start to contract in a way where it becomes a little more significant than 10% maybe you overshoot it absolutely we're going to be adding this is not the end of the bull market in '19 when we were a little less constructive at the end of that cycle, we thought a recession was coming in 2020 you say the pandemic bailed me out. we were going to have a recession in 2020 regardless. >> and you made that -- i remember you made that point you did. hey, whatever reason it happened, those were good moves and we'll see. 10% is nothing you can do that in our -- i
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wouldn't even want to venture a guess how long it would take that could be face we'll see, mike wilson now the possibility of tapering. we were just talking about the possibility of the possibility of discussing it at some point so now it's getting more real. thanks, mike. >> see you. >> bye. when we come back endeavor ceo ari emanual will join us to talk streaming wars. plus retail sales data in the tus e wnhe oth fureardo aadf ose numbers. stay tuned you're watching "squawk box" and this is cnbc with a hybrid, you don't have to choose. that's why insurers are going hybrid with ibm. with watson on a hybrid cloud they can use ai to help predict client needs and get the data they need to quickly design coverage for each one. businesses that want personalization and speed are going with a smarter hybrid cloud using the technology and expertise of ibm.
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good morning stock futures point to losses at the open, this on a big day for the retail sector. earning out from home depot and walmart. new data due in half hour. plus, president biden defending his decision to pull out of afghanistan what will be the impact on business and stability in the middle east? kyle bass will join us to talk about china's top priorities there. and despite the resurgence of the coronavirus, we're still starting to get a glimpse in the post-pandemic entertainment industry in a few moments we'll speak to
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someone who knows that business inside and out endeavor ceo ari emanuel the final hour of "squawk box" begins right now good morning and welcome back to "squawk box" here on cnbc i'm joe kernin along with becky quick and andrew ross sorkin feels like a monday, doesn't it? >> not for us. >> feels like monday on steroids. >> feels like a monday for me. >> you weren't here and i was out for i don't even know how long i don't remember how long i was out. i was out. i'm back now all you people that thought i retired, sorry to say, no, i did not. most of them were like, god, i hope he didn't you don't have to worry about that google andy rooney see when he left u.s. equity futures are down
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about 203 points or so a lot of that is home depot. just do the math with the deviser. down half or just under half of the sell-off we're seeing due to home depot walmart initially was trading a little bit higher. higher, but now it's down a little bit it's bounced off the lows as well treasury yields, now that we know that the fed might have a plan at some point to talk about planning a plan about maybe tapering something some time in the future that's kind of where we are. i think i listened to steve's report and that's what i gleaned from it, becky, at this point. >> which is why you haven't seen more of a market reaction based around any of this stuff it's like, yeah, we thought this would be coming at some point around this time this is about the least you could do given the strong numbers we've gotten in the data la lately a lot of other stories out there this morning
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first up, u.s. health authorities are expected to recommend covid-19 booster shots for americans eight months after receiving second doses of the pfizer or the moderna mrna vaccines that's according to multiple reports that have been pu published. an official announcement could come as early this week. later for johnson & johnson's vaccine. it's likely that nursing home resi residents, elderly and health care workers would be among the first to receive those booster shots. just yesterday, pfizer said it submitted early data to the fda to get its shot fully authorized in the united states for everyone aged 16 and older right now covid-19 vaccines are only approved on an emergency base meantime, china taking further steps to reign in its tech industry not trying to influence users' choices online
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companies would be barred from spreading misleading information to damage competitors' reputations. chinese tech stocks are under pressure biggest decliner is alibaba. i take it bacidu is off 5.5%. spirit canceled close to 3,000 flights between the end of july and august 9th that was because of weather, staffing and technical issues. the airline says it's making what it calls tactical schedule reductions for the rest of the third quarter to try to soften the blow from the staffing shortfalls they faced. that stock down this morning andrew >> meantime, thanks, becky, take a look at roblox, missed estimates. one of the companies benefiting from people staying home during the pandemic that's turned around somewhat as covid vaccinations have ramped
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up and people are getting out. i wish i could tell you guys that it has changed the tra skrektry of the usage of roblox for the sorkin boys but they are back from camp and back on their ipads and trying to keep them from it, but doing so unsuccessfully meantime we're about 9 0 minutes away from the opening bell dom chu joins us with a look at key premarket movers this morning, dom are you on roblox? >> i am not, had nothing to do with any of the game on that platform i feel like i'm out of touch i still have, though, an x box at my house, which i use pretty much as a dvd player i still play those every once in a while and, of course, an app hub. that's basically it, andrew. anyway, all right. i will do this for you i am going to take you through the big earnings movers this
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morning. they're the ones that are headlining this retail week of earnings we'll start off with walmart those shares are down roughly, call it a percent or so, just about 00,000 shares of premarket volume the biggest retailer out there reports better than expected profits and revenues, and same store sales. stores open for at least a year. what disappointed some investors was a slowdown in its e-commerce growth and for many traders and investors over the course of the last couple of years, it has been that e-commerce growth number they've really keyed on walmart did up its forecast for the full year as well, but not enough to get a little bit going here those shares, by the way, on a year-to-day basis up roughly 4% right now. from walmart to home depot, better than expected results there as well. profits, revenue, same store s sales did come in a little worse than expected. people didn't go there as much over the quarter those pandemic trends of do it
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yourself have cooled off slightly although people did spend more when they went to home depot home depot shares down 3% right now in trading and then we'll end on an interesting initiation of coverage by credit suisse. 23 and me up 23% right now as they assigned a price target they think 23 and me's database could lead to big discoveries down the line and have a lot of competitive advantage here as we talk about this, joe, up 3% right now, big coverage initiation by credit suisse. i'll send things back over to you. >> all right, dom. i'm tempted. i'm always tempted but i'm not going to do it today i'm just going to say good-bye thank you for that great report. you know, i always like to talk to you about some things golf golf usually is what i'm talking about. but we've got to get to this story, which has just been a
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airwaved and flooded with president biden standing behind the planned withdrawal of u.s. combat forces from afghanistan he is coming under heavy criticism after those disturbing images from kabul's airport yesterday. cnbc's dan murphy joins us now with more. good to see you, again, this morning here anyway, dan how are you doing? >> hey there, joe. well, the president continues to defend the u.s. mission in afghanistan and, of course, defending the troop withdrawal there, despite the chaotic scenes that we saw at kabul airport yesterday as america's longest war continues to wind down much calmer scenes on the groun in kabul today and at the airport where we continue to see those evacuation measures under way. new images are emerging that give you some insight into just how deadly and how chaotic that erack situation was. i wa evacuation was. i want to give you this inside a
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u.s. air force c-17 aircraft on a three-hour journey from kabul to qatar inside what appears to be hundreds of afghans packed on to that american military jet, desperate to escape afghanistan under taliban control. we're told this is one of the largest crowds ever flown on a c-17 military cargo plane, at least according to defense one this image and others that we've seen in the past 24 hours from the airport highlighting just how frightening the situation must have been for these men and women, and those that they left behind at this hour, we also understand that the taliban is continuing to strengthen its control over kabul and over afghanistan earlier today, we heard reports that the taliban had been asking afghan civilians, as well as anyone in uniform on the ground in kabul to hand over their weapons. they've been taking over police posts and army posts on the ground, too. while this is taking place, we're also hearing reports of a
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potential negotiation over a new government what this is going to look like, of course, remains to be seen. certainly, still a number of days before we get clarity on what the new command in afghanistan is going to look like but we dond that militants do want a peaceful transfer of power in afghanistan talks under way aimed at bringing nontaliban leaders into a potential new government but, of course, what that looks like is anyone's guess at this point. back to you. >> okay, dan thanks we have a long delay so we can't really have any cross talk, but just reading some of the -- the way they're going door to door is just so scary. you know, guys -- and i'll talk to you, becky, there is some conjecture coming out of afghanistan that maybe they're going to give some amnesty or that the worst case scenario might not happen. >> maybe. >> there what do we -- >> taliban fighters are guarding
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the entrance to the international airport in kabul there's been an incredible, crazy web that anybody who has wan wanted to get to kabul to get out has had to kind of navigate. and that's probably the biggest criticism. if you were going to do this, you needed to find a way to get out those who have helped the americans and allies through all of this to make sure they have a better way out safely. >> any way there's a light touch for anyone that may have been an interpreted, i don't know whether we could count on that, given the history. i don't know given the history of the taliban. >> that's the level of desperation, i think, from the people trying to get out you saw that play out yesterday. >> right. >> and it continues. when we come back this morning, we have a pair of interviews that you definitely don't want to miss. endeavor ceo ari emanuel will talk to us about streaming in hollywood, second quarter results for his company. and later, hedge manager kyle bass' take on the collapse of the afghan government and how tuioa could be eyeing the
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siatn economically stay tuned you're watching "squawk box" on cnbc
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heavyweight endeavor owns ultimate fighting championship and represents some of the biggest stars, people like dwayne johnson, halle berry and matthew mcconaughey. while they posted a net loss it did raisity guidance for the full year. ari emanuel says endeavor is uniquely positioned for what he sees as a strong second half of the year when he says all of hollywood can get back to the business of entertainment. ari, good to see you. >> hi, beck. >> really big bounceback in the second quarter for all three of your major businesses. >> yeah. we raised our evita and guidance and revenue guidance for the end of the year. we're feeling pretty bullish right now. >> what happened we know pandemic shut down live events all kinds of problems came back from that. are we back on normal footing at this point or is the delta variant going to slow things
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down again >> here is what i would say. in 2020 we did $3.4 billion, hit our evita numbers and roadwayed our evita numbers for this quarter. and we raised them for the end of the year, and our revenue nu numbers for the end of the year. we actually all learned how to operate, whether it be in content, sports representation or sports like the efc from the delta variant. we've taken this under consideration and raised our guidance with regard to evita and revenue. we're feeling pretty bullish about our business i think people are beginning to operate in the live events business, get vaccinated in sports people are understanding how to put sports on right now which affects our production business, sports business and gaming, gambling business and also in the content
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business, we've understood and figured out how to create content inside the covid situation. so, we're feeling pretty strong about it. >> you said some really bullish things last night on the earnings call. when it comes to competition and talent, you said you haven't seen anything like this in 26 years. >> right. >> why is that what's happening >> i think we all learned how to operate inside the virus and you now have six super competitors, disney, soon-to-be warner's discovery, apple, netflix, amazon, now paramount plus and they're all bidding, as they said, for content. they've all roadwayed their economics and how much they're going to spend on netflix, that it was up to $17 billion i think that's up 44%. and they all need talent to drive new audiences to their services and they've indicated at the beginning they weren't able to do that. that's why some of their numbers
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fell down. that has kind of increased the economics for content and for people that create content, whether it be actors, write rs, directors, people behind the scenes and that's a good thing for our representation business and for our own endeavor content and for that reason, we're feeling very bullish about the marketplace. and the bidding war has been insane across those platforms. >> bidding war in terms of getting new content? >> yeah, getting new content the talent, everything so, prices are going up. and we've solved the economic issue recently on friday we made an announcement, we figured out the emma stone deal with disney. warner brothers, as you put, i think, about 12 movies direct to consumer that were in their stable prepandemic they paid out $200 million in back end to talent the economics is getting sorted out, too and our representation business is a very big part of our business
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and that business has actually grown. we've roadwayed our guidance this quarter and into the second half we're feeling very good. >> you made a pretty bold statement there. there are big changes that are taking place in how top talent is getting paid. because as these businesses move to streaming, the deals have to be rewritten so that those top a actors, top directors aren't getting paid off the back end, just from things that are shown in theaters. it sounds like there's still a lot of friction there. i know the deal with emma stone was just cut what about scarlet t johansson, is that a one-off, or are there other talent who are feeling like they got ripped off by what happened the last year or two? >> i'm not sure about what the representative for scarlett johansson did or dewpidn't do that's their issue we negotiated all three possible scen scenarios, direct to the theater business, whether there's theater and streaming or just streaming. there's probably a fourth iteration, lifetime value of a
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sub, but that's coming down the line every studio now knows they have to do this talent is not not going to get paid they're the driving force, the seeds that make all of this happening. they are getting paid baseecause their competitors will pay them. i'm not sure about the scarlett johansson situation so you'll have to talk to their representative. >> these deals are going to change, it's tough and tricky to see the future what's your best guest in terms of those four iterations you laid out where is the consumer moving how are we going to see these th things in the future >> i would say william morris is over 100 years old we started with vaudville, r radio, tv, and every iteration people would say would hurt one or the other i think the pie is getting bigger, there's more definition of what content is, and talent is always going to get paid in those situations
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so i'm very comfortable in what means for our company. the rest of the competitors, whether -- i'm distribution agnostic in these situations for our talent and our clients, we're going to negotiate very tough deals so they get their economics, and we have. >> endeavor content, i know you guys have started shopping around for the 80% of that business you're going to sell as part of the agreement that you reached with the writer's guild. where are talks going at this point? you see deals like hello sunshine get down with 100 billion valuation and it make people think what's happening? >> i have a smile on my face we just started the process. it's going good. we had several, less than half a dozen meetings but we're feeling very confident about what the outcome will be for that 80% especially with the high demand. again, probably one of the
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biggest dependents out there you have vertical integration of that studio. they need to bring talent in we would be -- endeavor was kind of one of the only outside entities supply ing. we're feeling very good with that negotiation i didn't want to sell it but we're feeling very good about what the outcome will be. >> mr. emanuel >> oh, boy. >> i'm not surprised your represented business is doing well because you represent real talent including -- >> you. >> including me. >> the real talent on the show is becky, the only one i don't represent on the show. >> anyway, with that caveat, before the pandemic, ari, i was fascinated at the power centers in hollywood that you represent, in a way that endeavor was able to package things. the writers -- we talk about content and did off camera a little bit because they're geniuses i don't know if they get paid enough but they felt like they hadn't been -- i look at "breaking bad" or something like
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that the actors are important, but real content has to do with the writers, and it almost looked like those packages, you're representing two different sides that are involved in the negotiations almost as if sometimes you're against some of the people you represent because you've got another hand that you're playing. and i thought that was going to change, but then the pandemic changed everything where is that situation stand right now? is packaging going to be something that's very lucrative and you do in the future and are writers going to be on board with that? will it change >> the prior writers, not the current one shall it was agreed upon that we could package it's always been agreed upon that we can package. packaging will end that's one of the restricted things that we cannot do any longer but the prior packages will exist, as you can see by like peacock made a deal for "the office," with a client of mine, greg daniels those prior ones will exist.
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on a go-forward basis that's part of the restricted area. you know, we started out as a writers' company we love being in business with writers. and so we thought endeavor kind of was a good thing. they didn't. we made a deal and we're now just moving forward. >> ufc, i love it. and maybe i'm not the perfect person to talk about it, but i really do worry in the way we're moving as a culture and as a society that it's just -- you know, we were worried about concussions in football and conc concussions in boxing. i watch ufc, and the blood and -- as woke as you are, do you ever question whether the business model for ufc did you see -- i know you saw it, because you were in the front row. you saw connor mcgregor, that was almost a compound fact fracture that would have probably boosted ratings.
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>> all sports have injuries. we've had injuries in our sport, football, basketball all sports have injuries it's actually a sport that's been around for 26 years, and there has never been a series injury like in other sports. so we are comfortable in the sport. and we're constantly -- we have performances, we're constantly trying to improve the sport as it relates to safety and we will continue to do that. >> well, i mean, very little can get me to stay up till midnight anymore. >> maybe we'll get you to vegas for pay per view. >> very little gets me to stay up i watched -- you can bet on draft kings, and the women are amazing. >> right. >> the last one you had, the big event for ufc, the one where i saw you, every fight was phenomenal, watching it. >> the interesting thing is, the ufc is having its best year in the first six months in the
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history of the sport every metric is up, sponsorship, international sales are over 100% you mentioned gaming we only have actual ly, though, had three live events. and we're significantly up in all areas, also in own sports category, which is bull riding and international basketball out of europe. the sports business in general is growing at a very nice clip right now. and we say either on the representation side or on the own side in a great position and it's very bullish for the future. >> thank you for joining us today. it's good to see you and hopefully we can all get back together in the studio soon. >> i look forward to it. thank you very much, becky. >> thanks. >> bye. >> and joe and andrew. coming up, new retail sales data on a morning that's already been a big one for retail earnings the numbers and market reaction
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and that's exactly why you should join. welcome back to "squawk box" this morning on cnbc seconds away from new retail sales data futures real quick before we get you there. we are down across the board, dow off 230 points, s&p off 23
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points the ten-year note right now, we are sitting right now at -- we're going to flip it around and you'll see that at 1.227 right now. rick santelli is standing by at the cme in chicago rick clock is about to strike. >> andrew, we've already traded -- we've already traded under yesterday's low yields in tens right off the bat, that sets the table. now this number is expected to be weak because michigan was week many expect that the delta variant will impact the u.s. psyche of retail shoppers and we're expect ing a number down about three-tenths it's taking a while, which may mean it's better than expected that's rust me thinking out loud the dollar index counterintuitive with its recent strength considering what rates have done. still don't see the data of course, we want to pay particularly close attention to x autos. autos have had a very special
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set of issues that have impacted supply chains, chip issues so, many are expecting that autos already deteriorated so x autos is what the most important number probably is most are citing big data as showing a big slowdown that's a split decision as well. some of the mastercard trackers show that in line with about 10, 11%, if you look at online and in-store sales of course, that excludes gas i don't see this number popping up anywhere yet, andrew, on any of the wire services we do think that the control number, which is plugged in to bigger data up the data food chain, so to speak, will also be negative so, two out of three expected to have a minus sign. and here it comes. and, well, it looks like they were correct minus 1.1% that really was the whisper number of many this is really the first retail sales number where the delta
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impact is maybe most obvious, just like the big drop in michigan still don't see x autos, x gas or the sales group number. what are yields doing with that f first kind of shobing minus 1.1? it's not the weakest we've seen. we had minus 1.7 in may. the point is that we really want to see how much impact there is. all right. the control number is out. and that's a biggie. down 1%. we're expecting one-fifth of that down 1% is pretty large, until you look at the recent trends, of course. the recent trend was up 1.1, prior to that, just like headline number, 1.4 i'm going to kick it back to you. yields have moved up a bit, which really goes to show much of this weakness was expected. still don't see x autos or x gas, andrew. >> we'll keep our eyes on that thank you, rick. straight over to steve liesman who joins us with more as well what are you thinking, steve >> i'm reviewing the data here
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x autos down 0.4%, worse than the 0.2% that was expected x gas was down 1.4%. what i'm seeing here say big drop in motor vehicle sales, 3.9% that seems to be not because of a lack of demand but lack of supply that's the supply shortage hitting retail sales gasoline station sales up 2.4% that's probably most likely higher gas prices but also people hitting the road a little bit. the question becomes that we don't know -- i'll give you a couple of numbers here, clothe ing down 2.6 that's been up 43% year on year. nonstore retailers also down, marylanders down a little bit. very strong retail sales up until this point what we don't know is was this data too early to pick up any impact of the delta variant, whether or not it is going to show up in the retail sales numbers we're looking for here this is a big miss we've had a lot of volatility
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that's been related essentially to when those stimulus checks come and when they run off andrew >> okay, steve we'll keep our eyes on how the market reacts to all of it this morning. kyle bass on china's evolving situation in afghanistan don't go anywhere. squawk rur aerhi etnsft ts.
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breaking news that could have a massive impact on the spac world, lawsuit filed argued by former s.e.c. commissioner robert jackson the suit says that the spac is an investment company and should be regulated as such similar to the way that is an investment company per the investment company act of 1940 would be it would be a substantial lawsuit and could vn an implication if they were to win against any investment manager that has a spac. part of the argument being made in this case is that this spak was buying securities in the context of buying universal music group. just as importantly makes the argument that the back end services were being run by pershing square. a lot of investment managers,
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private equity executives, venture capital executives, that typically are regulated as investment companies are st starting spacs which have typically been considered operating companies. if, in fact, these operating companies were to be considered investment companies, the regulation of them and, yes, the compensation that they would receive and how that compensation would work and the governance of the boards would make the spac world a will the more difficult bill ackman gave us a statement this morning about this lawsuit. he said yesterday evening a plaintiff filed a lawsuit against pershing square holdings and its elect ors. the complaint bases its allegations among other things in the fact that it has owned u.s. treasuries and money market funds that own u.s. treasuries as do other spacs while in the
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process of seeking an initial business pst has never held or opened u.s. treasuries and money market funds that own u.s. investment securities being brought and effectively argued by the former s.e.c. at a time that the s.e.c. itself is ra raising questions about spacs is going to create real questions we'll see if this has any kind of chill on the spac market. i know a lot of people emailing this lawsuit around, literally, in the past hour as people try to make heads or tales of it one of the ironies i will say of this whole thing is that i would argue the bill ackman, pershing
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square version was more investor friendly than the others pay for performance perspective, there were warrants and they only got paid off if the company was successful in the case of the universal music group deal, they weren't even getting warrants. there's a lot of of course the s.e.c. tried to block the deal with universal group which could make the whole thing moot, too it's very complicated. >> look, the spac industry has chilled to a huge extent depending how you want to look at this. what's interesting, andrew, is what you brought up about how it affects compensation if it's an operating company versus an investment company, is that tax implications as well as how this all goes down
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>> i think it's more the way these things are governed and an arm's length deal of how this is organized and how the regulators will look at these compensation sch schemes. these boards are not independent boards by the way, most boards of spacs have historically not been independent. full disclosure, there's no claim here that it's being -- that they've misled the public or that it's a fraudulent conveyance or anything like that just that this unto itself is effectively illegal because the investment act of 1940 would make it such if that were to happen, it would chill this environment and make
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it less attractive. >> spac is supposed to turn around and make it into an operating company. if you haven't successfully made any investments it is money that's just sitting there. obviously, you know that getting into this when you're investing in a spac. that's one thing that's always raise aid lot of questions, how long does this money sit around? >> i think that's -- you know, in this case, by the way, it's not illegal to own treasuries or things like that under the investment act i think that component part of it may be less of a concern for the s.e.c. when a company effectively becomes a public company this is a vehicle become a public company and whether it's similar or in this case not
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similar. that's what gary genzler is most focused on, i think, when it comes to these deals during that 20-month period that spacs have the opportunity to buy something when that cash is effectively sitting there, you can get that money typically right back and that's part of the deal. that's why so many people have been financing these specs >> again, we've seen spac activity drop pretty significantly. we'll see. obviously, people watching this one, too when we come back, what does the taliban takeover of afghanistan mean for the governments looking for economic advantage in the middle east we'll ask china hawk kyle bass what he sees happening as beijing's top interest stay tuned "squawk box" will be rhtac ig bk.
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♪ someone once told me, that i should get used to people staring. so i did. it's okay, you can stare. when you're a two-time gold medalist, it comes with the territory.
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the taliban takeover at this point hasn't had a noticeable impact on u.s. markets that doesn't mean it's not a significant economic event waiting to see if beijing will use its financial power to wield more influence in the middle east joining us now to talk about that is kyle bass, hayman capital founder and chief investment we don't even need to go and spread out the entire middle east, i don't think, kyle. afghanistan, not everyone knows, has got a lot of natural resources that we don't talk about. people may not know about. rare earth medtals you know a lot about this, and realize -- and actually associate it typical to africa war lords controlling very
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precious resources and a population that's not able to participate whatsoever in that prosperity. >> right so, the u.s. pullout is creating a power vacuum that china will move in to right away. when we talk about the architecture of afghanistan being a landlocked country and being mired in vicious civil wars, what most people don't know is that civil wars are about war lords fight ing for resources. and afghanistan is plagued with the, let's say, curse of plenty. they have, we think, upwards of over $3 trillion worth of minerals u.s. state department believes -- excuse me, u.s. pentagon believes that one province in afghanistan, the ganzi province, has the largest lithium deposit in the world, rivalling that of lithia we have a trillion dollar plus
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lithium deposit, few trillion dollars worth of minerals and the war lords end up fighting each other for these resources and china will move in under security and diplomatic guise and really integrate afghanistan into their death traps when you think about how the u.s. thinks about afghanistan or more importantly how we think about central asia, we always look through the afghanistan lens when china thinks about central asia, they think about our resources and their proximity to the region where the genocide is going on in china which, of course, borders afghanistan, pakistan so it's a very large problem i think the economics of afghanistan matter very much to its own country and to china to us, what we were trying to do was an honorable mission we would enter to remove osama bin laden and his al qaeda network.
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we want ed to make sure they didn't die of old age and we achieved that objective. and we also wanted to set up an afghanistan that had proper economic, diplomatic and institutional architecture so that it could thrive one day but what we learned is that the vicious civil wars and the corruption is endemic in our system unfortunately, it's built on kind of a house of sand. so i think that going forward, china will move in and take over as we've already seen, china is already say ing they're going to recognize the taliban as the official government despite their brutality and their blatant disregard for human rights, and that's putting it lightly. >> and you point out that, you know, people might argue -- and i don't adhere to any of these thoughts -- that we have human rights -- we have human rights issues, obviously, in this country. but china and their record, they're probably much more comfortable getting in bed with the taliban than we could ever
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be, as you point out kyle, you also point out, what did you call it? the way that we exited it was like the opposite. first you want to destroy everything, sensitive, critical documents. then evacuate keepers, slowly evacuate military personnel, then announce an end to the fight. we did it in reverse and it's going to matter. >> yeah. >> in terms of how this plays out. >> i think it's important to note that, look, even u.s. special forces have what they are taught early on as a blowout plan if they have to retreat and leave a hot site or sensitive site they have a certain order of operations that they must go through, which you just covered. removing sensitive data, documents, evacuating key personnel, allies, and people that helped us in the fight. then you slowly evacuate military then you announce an end of
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fighting unfortunately, look -- and, again, this is apolitical. trump started by signaling, we're pulling out. and then biden finished it this doesn't fall on either political party but we executed a reverse blowout. we told everyone we were leaving first and then tried to backfill we did exactly the opposite of what we teach our special forces and we're suffering for that botched operation. >> as you point out we've got 50,000 troops in japan, 35,000 in germany, korea, italy i think the other thing people don't understand is that not all these fighters are fighting for the caliphate. we think of it that way. many are fight ing, you think, because they're paid, for bribes and china will be able to move in there, no problem, in terms of bribes for lithium or rare earth metals and have no com compunction about doing that whatsoever. >> yeah. that's a great point, joe. and i think that in talking with
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many of our special forces troops that were in theater for the last 20 years, many of these guys are good friends of mine. they tell me that they never got into a firefight with al qaeda or taliban or any of the terrorists on a face-to-face basis. they would drop their guns and run away from them the only fighting that engaged in afghanistan were ambushes and ieds and things that were not traditional firefights you have this scenario where the basic architecture and makeup of the afghan terrorist networks are surprise, sub version and ambushes and they're not real fighters everyone believes they fight for their religious beliefs, caliphate and rid the land of infidels in reality, it's a power play for money. they care about two things money and power. more importantly, money, power and violence
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and if they believe that potential power and violence is there as u.s. troops exist ing provide that relief system, they can maintain peace we removed osama and al qaeda, financing a terrorist network and brought some peace to the region and it gets to a point where we realized we need to pull out, but need to execute it properly. we executed that improperly. the people there on the ground believed afghanistan can never stand on its own two feet because their basic value system is so shallow. >> and china will fill that void and that vacuum. any way that doesn't happen at this point, kyle >> no. i mean, china produces 97% of the world's rare earth minerals.
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in a cnbc report that brian sullivan did, which i thought was fantastic, brian covered the whole rare earth, mineral complex in the u.s. and what we're trying to do to reverse that but afghanistan is the euphrate of rare earth minerals, and china sees that and will immediately integrate afghanistan into the belt road initiative china is the best in the world at bribing, lying, cheating, stealing its way through the world, because they do everything for their own good. and so when you look at what china has done to exploit the natural resources, of, let's say, kenya, or the drc in africa, oruganda, go talk to those governments. it begins with the honeymoon period in this case, there will be a big honeymoon because china is
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our enemy and afghanistan is taliban and war lords are our enemy. therefore our two enemies will be friends and they'll have a great time and china will come under the guise of security and cooperation and economic development, and they will lead a path of economic destruction for afghanistan. i will say that afghanistan will never become economically viable china will just pay the war lords and take all the minerals, which is what they do. >> based on this, and we don't want our troops nation building around the world, but to keep 2,500 troops in to maintain -- they seemed to have been doing a pretty good job with their power to support the afghan forces you could almost make a case that just economically, and with so many other ancillary benefits we would have had, you could make a case that that was the wrong move to just, you know, cold turkey pull it right out for september 11th, to say i'm the president that got us out on
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the anniversary of september 11th. >> yeah. you see this flag on my chair behind me? this is the flag that flew over the u.s. capitol on the 10th anniversary of september 11th, which someone sent to me as a present. i keep it here in my office. but i think that when you think about the philosophical argument of how to either project force or project stability, it's the way the fed works. the fed never gives very specific, in my view, guidance about exactly what they're going to do. they talk like the oracle, r right, very broad, interpretive comments on things to try to engender stability and confidence and when you think about our presence in any country that the taliban was very afraid of our forces because of the success that we had throughout their country. when they heard our virtue
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signaling, first from trump then from biden, that we were just going to leave and abandoned afghanistan, that empowered them people wonder how 75,000 taliban overtook 300,000 well-trained afghan army troops and it's very simple it's just their -- it is their constitution and the way that they're built from the bottom up their architect wasure was easey get them to lay their guns down and let the taliban walk in. we signaled we were leaving. we should have never signaled that but who am i? i'm some wall street guy in dallas i'm nobody. >> rare earth minerals and lithium was not something i was thinking when watching kyle, thank you. we appreciate what you just filled us in on. that will do it for us this morning. i'm going to toss it over to squawk on the street after a quick break.
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good tuesday morning i'm carl quintanilla jim cramer has the day off home depot underwhelms u.s. retail sales data does suggest that the delta variant may be impacting the future.


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