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tv   Squawk on the Street  CNBC  April 21, 2022 9:00am-11:00am EDT

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often, the tesla doesn't know what it wants to do. what is it doing? or just doesn't know how to turn. jesus, oh my god! tesla's full self driving software for drivers and pedestrians, it's unsafe at any speed. tell congress to shut it down. a. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber we'll get to tesla, airlines, and the host of others adds fed chair powell gives us one bit of fed speak this afternoon before the blackout begins vix below 20 road map begins with tesla's record quarter crushing expectations. continuing to cautious about ongoing supply chain head winds.
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airlines are soaring this morning. american and united forecasting a return to profitability this quarter as travel demand surges. and starting over. sources telling me that melvin capitals wants to unwind the current fund so he can start a new one with essentially the same money no high water mark. >> we'll start with tesla. up sharmly after posting the record quarterly profit despite the supply chain challenges. during the earnings call, musk expressed optimism about the company's growth prospects. >> inspired to head to $20 million so basically 5% along the way towards our goal and, you know, very, very rapidly year over year and remain calm of 50% annual growth for the foreseeable future for
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basically several years. several of the next years. i've never been more optimistic about tesla's future than i am now. we're obviously not demand limited. we are limited by the production. >> sticking by the 50% annual volume target. all though he said 60 if everything goes right. >> right you have the 20 million car goal i will say this, there was a moment where one analyst said is it possible to have $500 billion in cash? [ laughter ] you know, in a few years and he said, yeah, it may be worth $20 million if you don't get inflation under control. this is the most high level i've seen an executive talk about the world. we'll talk about some of the different issues that aring in ling shanghai coming back with a vengeance. you don't know
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the no steering wheel or pedal car, which is the lowest cost per mile, it's so exciting he does make a joke about how lithium -- do you like pretty money? lithium business isn't for you that's the 90% margins hopefully you have a way around this a find the chemist, a logistics specialist, a globalist, you never want to say to yourself here is a person that can do no wrong. but there were no flaws on that quarter. we can talk about some supply constraints. he has the least amount of supply constraints per vehicle of anyone i follow it was a tour deforce quarter. there were no questions about it. >> no. no new information from him on the call about his bid for twitter. 45/20. nothing new, by the way, to
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share from me on where things stand right now. between him and the board. sure, we'll get more as we move along there. the stock, though, for twitter's part has traded well below the 54-20. i'm looking at the note this morning. adam jonas, we consider him one of the more creative, interesting analysts saying it's not so much the strength of the quarter that is suppressive but the gap to the competition the more we see out of tesla the more we're concerned about the rest of the industry's ability to play catch up >>well, the only thing that i heard -- if you're on the csx call, this was a good call, by the way. they're talking about the next big thing in ev, which is a vietnamese company which is being built in north carolina. i think it will be able to challenge musk, but it's a largest project ever in north carolina but, you know, we'll have ford coming out soon. does ford have the right ships
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they need a deal do they have enough lithium? they need a deal these are things musk saw coming he would say almost no one saw any of this coming almost no one saw any of this coming well, the almost is always musk. he saw it all coming it's funny because yesterday was the day mentxicans nationalized lithium. it's a gaining factor. he needs to think about other metals than lithium. he's kind of like the way you were in world war ii steel isn't working. let's switch to another kind of equipment. he has a level of urgency that is unusual in this world he's very joyful even though he was kind of flat last night. maybe he's tired. >> yeah. i don't know how many companies he's making an unsolicited bid
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he has a lot on his plate. >> the only person in this world that seems to be able to have the chinese where he wants them is musk. only personal in the world that is shaming berlin is musk. and he is having the time of his life >> you know this >> it's joyful playful. the metrics along auto gross margin 32.9. the note points out revenue growing 3x faster than capx. one of the most highly valued industrial company with virtually no industrial debt. >> implies a lot free cash to flow that's an important component. one is going here and the other is going here. >> it's like henry ford. he figured out he could pay his workers more than $5 a day why? he was making so much per car
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than he thought. he was a great industrialist and there's a lot, you know, how many different pieces you need to put together to make the car. and he's figured it out, too the number of pieces he really is, you know, used toik loo the system in manufacturing. he's gone back to the roots of manufacturing. he said he knows more. >> he does he probably knows more about getting a rocket to mars. >> einstein was a smart guy. >> that's true. >> you know einstein is smart. >> he didn't think about products open. he was thinking about realivity. -- relativity. i happen to like jim mcfarland
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he's the guy most likely going to come up with a model. the fact is, when you hear about semiconductors and tesla, thought about it thought about it then you listen to the other companies and it's like wow! >> can we -- before we end, can we come to the stock price itself which is going to be up. >> it should be up. >> i don't know but i asked the question on netflix yesterday. what is an appropriate multiple the company will do? i don't know what the number is anymore now. 3.3 billion profits this quarter. i don't know what it's looking like for the next 12 months. it has a $1 trillion market value. >> it's still constrained in a period where you have many companies that are selling that used to be great faang companies that are selling in mid teens. you have to value the revenue growth. >> you do. you can value on the multiple on
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earnings given the growth rate is it 80 or 90 times i know it sounds insane -- >> no. >> it's growing earnings at a pretty significant rate. >> if he's going to have $500 billion in cash. >> i don't know. >> where did it come from? >> i don't know. i didn't make it up. it's the only growth stock outrunning you have the companies ed like this is good, this is good, and cutting the price target this is the only guy not like that it's not just the cult, it's how he's talking about if they make this robo car it will be the cheapest thing going robo taxi. and henry ford henry ford and not smith. >> got it. huge industrialist historic in a long ways. meantime american expected losses but expect to achieve
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profitability in q2. scott kirby explained why the trends are so favorable. >> it was changes to me. i've never seen in my career, and i've been in the industry for a long time. such a hockey stick increase in demand leisure demand and business demand we actually expect business revenue but business revenue to be above 2019 levels in just a few weeks. >> and both american and alaska see q2 revenue 6 to 8% above q22019. >> supply constraint in every single way seat prices going up prices going up so much but no demand destruction these airlines are all go out and say it's the best it's ever been boeing, if they had planes, if they got approval for some big plane, it would sell a lot the airlines, by the way, are
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all in sync in part because, again, this is a great reopening trade. we haven't had, you know, kind of forgot about it omicron it's so back you think, look, there's a dip in the airlines stocks a couple of months ago. now that dip is being taken away you can buy any unless you think fuel and brian sullivan talking about jet fuel, unless you think the fuel will go overrun the cost per seat. these are selling at low multiples. >> they are but for good reason. there's a lot of volatility in the business it's still not clear things are very good -- going to be good for a period of time now. but, yeah, weapon don't -- we don't know about the return of business travel or long-term we know it won't get back to what it was in 2019. >> yeah. i think we can safely say. >> come on
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really the level of travel people won't substitute -- i'm saying 2019. it's going to be up year over year. >> i'm just saying that the american consumer is so strong what brian moynihan is saying. they seem to have little resistance kind of like on the proctor call they said, listen, we raise price rates. when will people start trading down they said people are trading up. >> an interesting thing you're raising, jim it is. >> i took economics for two years. >> none of the economics which is one of the problems jay powell will have we talked to jim who is probably one of the deeds of business now. other than housing, i mean, there's a big famine story developing all right. and, you know, the fed is not
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going to be able to control it they can't even get us a circus. >> i'm trying to get the transitions from demand. >> what i'm saying is jay powell you look at the fed their stuck with control in housing. they can't control auto. they can't control food. >> right. >> they can't control the price of aluminium these are supply constraints i'm saying listen to the fed's show today, i know that jay is watching every minute. he would say i don't know. what do i do >> hi, jay >> solve the war in ukraine. and, by the way, you say that, you know, if you say putin gave up on mariupol. >> i think quite the opposite. >> exactly the opposite. this is a stalin grab and a tractor factory. it's a matter of time. >> yeah. we'll watch for powell this afternoon. see a few pluses this afternoon,
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perhaps. we'll talk to calvin mcdonald of lululemon. talking about the consumer on the five-year growth plans on the revenue targets. we'll get to interesting stories on land research, carvana is interesting. and futures do look good as the aw, as we said, goes for three in row don't go away. w ways of working bring new threats. that's why we started an office commune. not a security concern around for 50 miles. unless you count the wolves. and all the llama milk you can drink. you know at cdw, we can design a security solution using hp elite devices with real-time threat intelligence to help protect your data from new threats, anywhere you work. anywhere? ring the bell thrice, we're going back to the office! for technology that moves you forward, trust hp and it orchestration by cdw. (vo) for me, one of the best things about life is that we keep moving forward. we discover exciting new technologies. redefine who we are and how we want to lead our lives.
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basically, choose what we want our future to look like. so what's yours going to be?
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welcome back to a story we broke last night on cnbc.com.
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it is that one right there of course, involving melvin capital. the well-known hedge fund that got itself stuck in the meme crazy and short gamestop since then, performance has been horrible down 39% last year down 21%, as the end of the first quarter that according to sources familiar with the performance. the story is what next and the what next is the following that mr. plot kin approached his investors and started to have conversations about the idea of essentially closing his fund, so to speak, or allowing those investors who want their money back to take it back as of june 30th only to begin again with july 1st with a new fund. he's saying you can have your money back or you can let me continue to have it. the key differential will be i no longer ahave a high water
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mark in the case of melvin, for example, if you gave him new capital and down 39 and down 21%. you're at 50 cents on the dollar he has to get you 100 cents on the dollar before he can earn the fee. that's the way it goes when jim ran one, that's how it was. you get a chance to get rich, mr. hedge fund manager, and in the case of plotkin that is what happened he became an immensely wealthy man. if you lose our money, you don't get to make money on our money until you make us whole! he wants to upend that and the allocators will say we'll rather stick with you especially because it gives them a lot of time to reallocate the funds. we'll see what the reaction is certainly a key reaction will be from steven cohen, as well remember he along with side dell gave about $2.75 million into
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the fund last year to help steady things about the significant losses as a result of the meme stock crazy. it's essentially saying i'll get rid of the high water mark and begin again what i'm hearing from people familiar with the conversations is that he said he'll keep his assets below $5 billion. perhaps starting with as little as $4 billion. he got himself stick in that at game stop. but had great success for many years. put up strong numbers that helped to attract enormous amounts of capital and this is an old story in the hedge fund business and took him away 23r the kpoer competency. had him doing things he wasn't quite as good doing. we've seen it many times so that, at least, is the proposition to investors saying, yeah, i'm not going to get you back to even i'm not going to work to return your capital to where it was so i can start earning my fee i'm going to actually change my
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approach a bit and get smaller go back to what i know how to do it will let me keep my people. a lot of your people leave because they're not going to get paid even though one would imagine, jim, you can pay them, i don't know if you can give them parts of the sports team or maybe part of your own money to keep your people it would be interesting to see what happens here. by the way, if he is successful, my bet is a lot of hedge funds will try to do the same thing. >> it's not like you're buying back there will be rich people who said i'm with it and other people say, look, this is just i'm out of here. probably take a 50/50 split. i think that's what he's hoping. he's expecting a lot of capital to be returned at the same time i say those who
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allocate for a business, the hedge fund allocators, they probably don't want a huge chunk of capital coming back it takes time to do your due diligence on the other managers and the like it's interesting we've seen hedge fund managers who close done and a year later they reopen. they have effectively done the same thing eliminated the high water mark to make money. st a novel twist on that for mr. plotkin. i have not spoken with. >> i don't know him. one of the things he's a nice cordial man, i don't know how much it gets you in this man i have to tell you, carl, i think a lot of our viewers would say, well, this is just outrageous it's a rarefied group of people in this. they're so rich.
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>> that's true. >> yeah. as is he did he get rich because of their willingness to invest with him it sort of questions that relationship my expectations, for example, mr. cohen probably will go along with this and the belief that returning to his core competency will result in strong performance. we'll see. we'll get cramer's mad dash and count down to the opening bell in a moment take a look at the futures on this thursday another solid premarket. eng llin iabat holds when the opinbe rgsn out eight minutes. [sound of helicopter blades] ugh... they found me. ♪ ♪ nice suits, you guys blend right in. the world needs you back. i'm retired greg, you know this. people have their money just sitting around
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the dow has gone green for the month to the date. s&p needs about 71 points to do
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the same it's going to get a good dent here at the open as some of this fed speak has settled down allowing us to focus on industrial earnings. the ohming bell in about five minutes. i'm dan o'dowd and i approved this message. you are watching actual videos of the tesla full self driving technology as recorded by the drivers. from turning too tightly and hitting a pylon... [ expletive ] to swerving toward a pole. jesus. watch the bicyclist on the right almost get hit before the driver takes over. sometimes it seems the tesla doesn't want the driver to take over. i'm trying. this driver had to hit the brakes when the tesla didn't understand a detour sign. ok. here it almost hit a truck. obviously, i had to take over.
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and here it swerves into an oncoming lane. look at that! often, the tesla doesn't know what it wants to do. what is it doing? or just doesn't know how to turn. jesus, oh my god! tesla's full self driving software for drivers and pedestrians, it's unsafe at any speed. tell congress to shut it down. leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire if you invest in the s&p 500 your portfolio may be too concentrated in big companies. this can leave it imbalanced and exposed when performance varies. invesco's s&p 500 equal weight etf, rsp, is spread equally across the s&p 500, which reduces potential concentration risk and helps keep your portfolio in balance.
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all right. we'll get to a mad dash. we count down to the opening bell two minutes from now. >> yes i love industrial companies that just keep going and going and going. multiple is low and they keep buying back stock. dow chemical may be the classic example of a company that a lot of people felt wasn't doing that well jim has come in and pretty much every single line has been great. the earnings are better. strong demand. he can tick down the fact that this is the time for industrials. there isn't really anything agriculture is doing well. he's worried about famine, obviously. he's a thoughtful person but it
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is their time. even though the stock moved tremendously, believe it or not, it's inexpensive a lot has to do with the fact that this man has done a great job making a company that was a slow mover. >> a lot of plastic. >> yeah. what is so interesting what is he worried about tsmc so many companies are need taiwan semi. it's a customer of theirs. that america just kind of went off the rails in terms of how important tsmc is. >> why is he worried about that? >> it's a big customer of theirs he's worried because he said that's -- you asked where the bottle neck is in this country real one is semis. it's taiwan semiit's not their fault. it's everybody else. [ applause ] it was a beautiful quarter i can see the stock going even
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higher very inexpensive [ applause ] >> we'll get the opening bell. [ opening bell ] you talked about asml yesterday, jim. and semicapital equipment which makes it a bit of a puzzle today. >> it's a much loved ceo and it was -- he starts out by saying i'm disappointed. he's a self-facing gentleman said it's almost 100% supply with the exception of low end ships. by the way he said cell phone chips is being ignored today everything else is all systems go he can't get enough chips to make the chip equipment.
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e people may see it as a horrible miss. people are worried the fact is, he cannot meet demand at all. >> there is some discussion yesterday of china and russia create what they call i guess now splinter nets. meaning competing web universes. it's going to be for these guys who have to supply everybody. >> yeah. they have a huge china business. he's universally respected as the leader in the group. some people say they missed the number all you have to do is read the first line we disappointed ourselves. but he is a disciple of the great rick hill. he'll make a comeback and they'll get their numbers. the second half should be great. you shouldn't sell the stock it sells about 12 times earnings we talk about companies too expensive. it's not the industrial
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companies. they're like used car companies. you know, they rented the highway, rent the runway, rent the this stick with the good ones i want to get to at&t. stock is up nicely 2.3%. we'll see. reporting a quarter that was messy because, of course, it included the ownership of warner media. that will be over. next quarter you'll get cleaner results. it's fiber builds which they're doing in providing broadband and the wireless business, of course, which is the key it looked pretty good. 4.8% wireless service growth $691,000 postpaid phone net ads. you see it there the broadband side of the business which we've been talking about a lot when it comes to larger cable companies such as comcast.
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at&t is aggressively expanding in certain footprints talking about being able to address as many as 17 billion homes now they grew pretty quickly added 289,000 users of the fiber. we if we give you the price proposition, we typically win the customer maybe or maybe not that's the key for them. of course, they also lay out yet again -- they did it already in the investor day it was only in march they're investing for growth $24 billion in capital investment this year and next. reducing debt on target to get to 2.5 times ebitda by the end of '23 and that $8 billion the year they spend on the dividend but, jim, the last messy quarter. now it's a pure play you can argue given the netflix numbers yesterday, not a bad time to be getting out of a
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competitive business. >> it is. >> when it comes to direct to consumer. >> yeah. there's so many customer stuff t-mobile takes so many customers. verizon. we have to see how they grow but, look, i'm willing to say there is momentum here and the free cash flow is good we'll see. >> the earnings report is not a long-term business make. >> to a business we know well broadband revenue up 6.8%. >> i just mentioned it it's a big number. >> i'm saying comcast. >> right maybe that's the question. are they bringing competition? of the providers or growth overall. >> right because that's been the missing question missing answer because a lot of people felt there is some sort of movement in the population. >> yes. >> that is, you know, the movement in population has been
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extraordinary. got huntington bank on tonight cleveland area is booming. >> really? >>'. cleveland. >> didn't know that. >> yeah. kind of extraordinary. >> yeah. >> you mentioned netflix scott walk we are his report this morning on ackman's response to the $430 million three-month loss netflix has bounced off 212, though. >> yeah. it's up. just turned up. >> yeah. and if you've been doing any work on the different etfs and the various faang derivatives, they pushed everything down. there was a big vacuum i don't know how much it mattered, but there was way too much pin action. faang is something i created and it went out of fashion and they changed half the names. >> now it's -- >> yeah. i think when you look at the
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stocks that went down yesterday in relation, because the etf of the greed and the banks and different cooperations, it's pathetic and hurts a lot of them many investors thought they would be safe. >> warner bros./discovery is down, as well. paramount is not listen, i mean, i give them credit they said basically the thesis changed and learned enough to know at this point when we discover new information on investment that is inconsistent with our thesis, we sell. he decided to exit the position. only took a few months back when it came to netflix. >> yeah.
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good for him great flexibility. >> we mentioned carvana earlier, jim. for the talk about about consumers trading up wefrl look how long it's been since we've seen a price like that 2020. >> yeah. you have a problem in cap. they don't have a mixed model. you need a mixed model auto nation has a mixed model. there's a decline in the price of used cars they have to -- they need asset-backed bonds to be able to continue to grow they have to raise a lot of capital. usually the stock is down 20 then they get out of the jam i would say you need to steer clear of this. big time it's just a powder keg. >> even as tesla with the 10% opening gain it's the best gain since january. >> deserving
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you see a company that was doing better than expected musk is a genius we -- how many times can you say it the greatest manufacturer on the planet. >> speaking of musk, new filing out adding to the 13d in twitter. giving us some of what is our first significant information. answering a question i've been asking me times on the board of twitter will, as well. what does your financing look like take a look. we'll see if shares of twitter are responding. >> is he going to break the poison bill? >> no. >> i'm going through this right now as everybody else is he has a morgan stanley debt commitment letter that would provide $13 billion in financing for potential deal that includes a senior secure term loan of $6.5 billion. it looks like other things, as
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well a bridge loan up to $3 billion unsecured bridge, as well, of $3 billion. so $13 billion in what they're calling committed financing from morgan stanley in a separate commitment letter, he'll get a margin loan for $12.5 billion margin loans and otherwise made available to purchaser. it would be on his tesla stake some specifics from mr. musk in terms of how he would go about financing a twitter bid. it's a question we've had. not that we didn't have the wherewithal to pull it off but how he would choose to do so would he margin more tesla stock. have unsecured lending what would morgan stanley be willing to step for? we'll look into it it adds up to a decent amount of money there. something the twitter board has to consider as it potentially begins discussions with him. i believe he does say that
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haven't had much of any back and forth yet with the company. >> yeah. that's true. i will tell you, david, there's a process going on he's saying they haven't responded to the proposal given the lack of response they are exploring whether the tender offer to acquire all the shares i would only point out you can't close said tender offer. weather it prevents you from exceeding 15% of the stock. >> right. >> you have to have an negotiation with the board that has yet to happen.
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it lululemon announced a five-year growth plan to double revenue. iblgt they'll be able to do this ahead of plan. and the reason -- one of the reasons it's ahead of plan is lululemon's ceo, calvin mcdonald -- >> thank you. >> yeah. >> when you talk about what is doing it you talk about team and talking about something that i found unbelievable the brand awareness of your company after what i thought was one of the greatest people like tesla. people saying i love lulu is 25%. nike is at 80 or 85. it makes me confident you'll do that. >> yeah. we definitely see that's one of the indicators for us being early earnings of the growth and we know we've been testing a lot of different ways to drive that awareness we're excited with how it's
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resonating it's one of the metrics that is exciting when we look ahead in doubling the business that we have ahead of us. >> and then, you know, some interesting big tennis, golf, footwear historically tough businesses. but you think you got an edge in them >> we definitely see an opportunity. what i love what we call the play categories, golf, tennis, and hiking what i shared yesterday is we designed into them as a small collection that ultimately drives the versatility and the core of the product. they're kind of individuals playing those sports in the product we already have but bring credibility to the sport through unique innovation that allows us to lift the core in addition to a unique opportunity to grow the business. >> but someone wins the boston marathon and they're wearing yours. most people it's about how much money they've made this person liked your stuff. >> yeah. it was great to see! it shows the inroads we're making with great technical
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product and activities like run, train, and yoga, which are core activities >> i talked with you off camera about the mirror my daughter said -- you shouted out her name the other day [ laughter ] there are issues that some people thought you paid too much for mirror some people felt it's something you bought during the pandemic like peloton and it can explode. spent $400 million i thought the mirror presentation was one of the more cogent yesterday can you add a path that said we're not peloton. we're better by the way, why not brand more of the product lulu? explain that i think one of the things that hurt your company is a series of articles which i read and referenced which said mirror may not work. >> >> we wanted to take time yesterday to present our position for mirror. the reason why i was and remain excited about the acquisition, and it's about growing our relationship community with our guests and doing it in both a
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digital and physical arena what we presented yesterday is an evolution of the mirror membership we are going to rebrand it, lululemon studio membership. we announced eight new members joining a marketplace platform we'll have more content than any other finance platform out there. we'll launch a digital app that allows our members to engage in it through a digital app experience or through mirror being the hardware but we believe from a content fitness immersive experience, it's unrivalled in the industry. it's very unique we're excited to share that. we'll be launching that later this year. >> i'm a believer! the mirror is good looking it's hard to explain how big it could be you clearly have a vision that will make it to help the 30% company growth rate.
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china in addition to the other markets is a big part of that. we fast forward to 2026, the second largest market in the world behind the u.s the brand is resonating strong there. we continue to see good growth momentum we have 70 stores. our digital business continues to grow and has through the past few years. >> i'm surprised at the amount of cash you generate you bought a lot of stock. you have to debt your company is doing a lot of things right in an industry where people seem to not be limited. because you understand sweat more they buy more or because you recognize yoga, run, and train is it because that men's is coming on so strong? because there is a level that is -- i usually do not like when we talk about fly wheels thank you for not. you're talking about how early
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innings is the time. why are you doing -- >> i think in place of the strength of the brand. the behavioral changes we've seen in the marketplace is available for all to deliver upon it really plays to the strengths of the brand they are experienced with guest relationships fuels that in a unique way and it plays to our advantages and market expansion. we're early. so i think it's resonating and we're well positioned and the team is doing a great job. >> a lot of companies talk about artificial intelligence and machine learning my eyes glaze over these days. you didn't tip your hand about what it's doing for it why don't you tell us what you're learning. you deal with guests directly. you find out what they're up to. >> i talked a lot about d to c you hear about it.
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other companies that want to get closer and into the market that's the ultimate advantage. it has been and it will be continue to be it's a big part of the lululemon studio program it's the launch of the membership prak aprogram what w do in store and online there's a lot of information through the relationship and able to better understand. as i said, we know how they sweat. we have a front row seat to that it drives our product innovation talk about physical square footage. where does it fit in now >> we're a strong believer in stores especially in the early markets on the international side. but even in north america and the u.s. we continue to see store
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expansion opportunities. new locations as well as expanding locations we have. we take a conservative approach. we have a agile fleet. we go in with seasonal pop ups and validate and open a store. as we prove the store, we add square footage we're managing the productivity. it's a great vehicle to recruit new guests you can swing the pendulum too far if you go digital and lose the soul of the brand. >> but i wonder over time what your goal is or expectations for revenues direct to consumers versus in store. >> we saw a great acceleration of that during the pandemic. we were 28% pre. we hit 44% last year.
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i think we can aspire to a 50/50. i never love to manage on the ratios it's about the dollar growth and the potential. we see both channels growing over the next five years. >> i know we have to run i think that yesterday we had a day where netflix was bad. spotify was bad. people were questioning this subscription model $39 a month for mirror it's the equivalent of one lesson, basically. i think you're coming out with a subscription model that may accelerate do you think i'm being too optimistic. >> i'm excited about the position and the product we're presenting we've add the eight studios and not changing the price national and local known studios
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that people can't get access to or into like dog pound. >> right there there's a waiting list now you'll get it in your membership when you dial up and tune in and want to work out, the breadth of the assortment and versatility is bringing a digital app it will open it up to more people to participate i always felt mirror was about content and about the fitness experience and driving that. it wasn't a hardware play for us. >> you are being to be right that is calvin mcdonald. you've got to look it takes five hours. listen to the darn thing you will know why i think he is going to be right. chief executive officer, lululemon, thank you so much for coming on. >> thank you. as we go to break, a look at "the bond report." ten-year around 288. we are expecting powell later this afternoon to talk about some fed speak before the fomc goes into blackout mode. and on watch for potus, updates on further military aid to ukraine.
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overall, s&p back above 4,500 and above the 200 since april 8th.
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. let's get to jim and "stop trading." >> awful when you have a stock you are up 30, 40%, and then watch the stock go up $30. new core reporting incredible number last night, largest steel company in the country but the right stuff and he said the second quarter is going to be the record quarter. at love the analysts thought they'd make full year, what they are going to make in the second quarter. this company has a history of doubling and then doubling i got out too soon because i thought i was going greedy. >> how do you compare to alcoa >> they have supply chain issues the ceo made an impassioned defense this morning on squawk
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leon coming down for him rn, hes the right kinds of steel the stock is probably not done going high. >> you didn't get to pent air. we didn't get to dover we didn't get to danaher double-digit or close to it, pent air's case able to offset inflation for the first time in almost a year. >> in the end we have to recognize there is the market that was loved before the november pivot by jay powell and then there is the market that is loved ever since the ones that are loved, seven times earnings. >> you are feeling good about -- we got through the banks now into the midst much the industrials in terms of guidance for the year. >> yeah, i think the earnings are not going to be stopped by the fed yet. a lot of people when you are listening to the conference calls about what is going to happen, recession, it doesn't ring true when you deal with csx, union pacific, dow chemical it's like, you know, stop us if
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you can. housing is the only area that's gotten weak. there is not a lot of business, 10% of the economy. >> barclays, jibes with the bigger picture, bull narrative, things are better than feared. might put a dent in the recession thesis. >> i think it does we are talking about a more shallow recession if get a recession given the fact that the consumers are in such great shape. i think american express, important quarter, i think they will talk about business travel, david, talk about going out. going out. service. >> by the way, blackstone shares up 1.8%, they continue massive amounts of assets. talked about the b read earlier this week. he is worried about wage inflation. >> if you listen to the csx -- >> and blackstone has a lot of portfolio companies they see that in. >> they need 400 people to make their numbers. you have to go through 10,000 people to find 400 this is the ship -- you know, putting a coal train together. yes, a coal train. got to work in coal train.
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it's been many years it is a remarkable moment. if you want a job in the country -- >> you got it. what's tonight >> the bank that's the hottest area in the country. huntington bank, cleveland only fitting bit fact that the cleveland guardians are coming to town this week >> that's two guardian mentions in a week. >> why not >> it's an undervalued franchise for disney. >> the "guardians of the galaxy." >> i'll take anything. >> yeah. all right. talk about disney later. "mad money" 6:00 p.m. eastern time dow's up 327, highest level since february 10. awa a awaiting the president's maremak on ukraine we will talk about the ceos of union pacific, new core and philip morris international. don't go anywhere.
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you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire . welcome back to "squawk on the street." the last breaking news of the
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session. leading economic indicators for march expected up 0.3 of 1% delivers 0.3 of 1% and that sequentially would follow the fact that the last negative month we had was down half of 1% in january then you had to go back to last february to have another minus number this is definitely something to pay attention to as the economy and especially the -- carl, we are going to go back to you as the president is getting ready to speak carl quintanilla. >> all right rick, let's get to the president talking about military aid to ukraine. >> today he is meeting with some of my cabinet members, including secretary of treasury and others we had a good discussion i talked about what about i am about to tell you about today as well as he was thanking the american people for their support, understands it's significant and was -- we wtalkd
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about keeping everyone together in terms of europe, european union, and others in the effort to stop putin's brutality. but before ahead out to the west coast i want to quickly update the american people on the latest steps we are taking to support the people of ukraine and to hold putin accountable for his brutal and bloody war. russian forces have retreated from kyiv leaving behind horrifying evidence. you have reported it by the way, i don't say this often but we should give enormous credit to the folks of your agencies that are on the ground in ukraine, in these spots, and they are really -- i have spoken to several of them we owe them. but uncovering these evidences of atrocities and war crimes against ukrainian people is clear to the whole world now now they have launched and refocused their campaign to seize new territory in eastern
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ukraine and we are in a critical window now, a time where they are going to set the stage for the next phase of this war and the united states and our allies and partners are moving as fast as possible to continue to provide ukraine the forces that they need, the weapons need, excuse me, the equipment they need, their forces need to defend their nation. last week i signed an $800 million package of security assistance to ukraine that included new capabilities like artillery systems and armored personnel carriers, equipment that is responsive to ukraine's needs and tailored to support the intensifiedfighting in the donbas region which is a different war than in other places because both top graphically it's different it's flat. it's not in the mountains and it requires different kinds of weapons to be more effective today i am announcing another $800 million to further augment ukraine's ability to fight in the east in the donbas region. this package includes heavy artillery weapons, dozens of
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howitzers, and 144,000 rounds of ammunition to go with those howitzers. it also includes more tactical drones in the past two months we've moved weapons and equipment to ukraine at record speed. we sent thousands of anti-armor and anti-missile helicopters, drones, green aid launchers, machine launcher, rifles, radar systems. 50 million rounds of ammunition. the united states alone has provided ten anti-armor systems for every one russian tank that's in ukraine. a ten to one ratio are we're sharing and will continue to share significant timely intelligence with ukraine to help defend them against russian aggression and on top of this these direct contributions from the united states we're facilitating, we're the outfit facilitating the significant flow of weapons and systems to ukraine from other allies and partners around the world like the s-300 long range
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anti-aircraft systems that slovakia transferred to ukraine. we are getting them in there we won't always be able to advertise everything that our partners are doing to support ukraine in this fight for freedom, but to modernize teddy roosevelt's advice, sometimes we will speak softly and carry a large javelin because we are sending a lot of those in as well we are not sitting on the funding that congress has provided for ukraine we are sending it. directly to the front lines of freedom. to the fearless and skid ukrainian fighters who are standing in the breach you've got to admit you must be amazed at the courage of this country, the resolve that they are showing not just the military, but the average citizen. men and women, young men, young women as well. you know, the sustained and coordinated support of the international community led and facilitated by the united states has -- is a significant reason why ukraine is able to stop russia from taking over the
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country thus far every american taxpayer, every member of our armed forces can be proud of the fact that our country's generosity and skill and service of our military helped arm and rappel russia's aggression in ukraine. to beat back putin's savagery that tried to seize ukrainian's capital and wipe out ukraine's government the battle of kyiv was a historic victory for the ukrainians it was a victory for freedom won by the ukrainian people with unprecedented assistance by the united states and our allies and partners now we have to accelerate that assistance package to help prepare ukraine for russia's offensive that's going to be more limited in terms of geography, but not in terms of brutality. not in terms of brutality. combined with our recent drawdowns it will ensure weapons and equipment into ukraine the next few weeks however, with this latest disbursement i have element exhausted the drawdown authority
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i have that congress authorized for ukraine in a bipartisan spending bill last month in order to sustain ukraine for the duration of this fight next week i'm going have to be sending to congress a supplemental budget request to keep weapons and ammunition flowing without interruption to the brave ukrainian fighters who continue to deliver economic assistance to the ukrainian people my hope and expectation is congress would move and act quickly. i want to thank the congress, democrats and republicans, for their support for the people of ukraine. our unity at home, our unity with allies and partners is sending unmistakable message to putin. he will never succeed in dominating and bolstering ukraine's assistance, the united
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states is announcing intend to provide dpaeshl $$500 million in direct economic assistance to the ukrainian government this brings our total economic support fire crane to $1 billion in the past two months this is money the government can help use to stabilize their economy, to support communities that have been devastated by the russian onslaught and pay the brave workers that continue to provide essential services to the people of ukraine. you know, these past weeks have seen a terrible human cost of putin's ambition for conquest and control. approximately two-thirds of all ukrainian children have been displaced from thame home. more than 5 million ukrainians have fled their country. it's an absolute outrage the idea this is happening approaching the second quarter of the 21st century is just -- last month when i was in europe i announced that the united states would welcome 100,000 ukrainians so that we share in
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the responsibility of supporting ukrainians fleeing putin's war machine. we've already welcomed tens of thousands of ukrainians to the united states and today i am announcing a program to unite for ukraine, a new program to enable ukrainians seeking refuge to come directly from europe to the united states. this new humanitarian parole program will compliment the existing legal pathways available to the ukrainians, including immigrant visas and refugee processing it will provide an expedient channel for secure legal migration from europe to the united states for ukrainians who have a u.s. sponsor such as a family or an ngo this program will be fast. it will be streamlined and it will ensure that the united states honors its commitment to go to the people of ukraine and need not go through the southern border we are continuing to ratchet up the pressure on putin and further isolate russia on the world stage.
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yesterday, the treasury department rolled out measures to crack down on the individuals attempting to invade our unprecedented sanctions, not just ours, but throughout the west today i am announcing that the united states will ban russian affiliated ships from our ports as they did in europe. that means no ship, no ship that sails under the russian flag or that is owned or operated by russian interests will be allowed to dock in the united states port or access our shores none none this is yet another critical step we are taking in concert with our partners in the european union and united kingdom, canada and further to deny russia the benefits of international economic system that they so enjoyed in the past we don't know how long this war will last, but as we approach the two-month mark here is what we do know putin has failed to achieve his grand ambitionsen the battlefield. after weeks of shelling kyiv, kyiv still stands.
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president zelenskyy and his democratic elected government still remain in power. and the ukrainian armed forces joined by many brave ukrainian civilians have thwarted russia's conquest of their country. they have been pole e bolstered from day one by a supply of weapons, am nicks, armor, intelligence from the nations of the free world led by us, the united states. as russia continues to grind out the military advances and their military advances in the brutal tease against ukraine, putin is banking on us losing interest. you heard me say this from the beginning. he was counting on nato, european union, our allies in asia cracking, moving away he is betting on western unity will crack he is still betting on that. once again we are going to prove him wrong. we will not less engine our revolve. we are going to continue to stand with the brave and proud people of ukraine. we will never fail in our
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determination to defend freedom and oppose tyranny it's as simple as that i want to thank you the american people for their support of the ukrainian people this is our responsibility it seems to me and we have been able to hold the whole world together in this effort. so thank you very much thank you. i am going to take this one, one or two questions i got a plane to catch. >> what does putin claiming control over mariupol mean how significant is that? >> first of all, it's questionable whether he does control mariupol one thing for sure we know about mariupol he should allow humanitarian corridors to let people on that steel mill and other places buried under rulk to get out, to get out. that's what any head of state would do in such a circumstance. so there is no evidence yet that mariupol is completely fallen.
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>> reporter: mr. president, on title 42, sir, are you considering delaying title 42? >> no, i'm considering continuing to hear from my -- first of all, there will be an appeal by the justice department because as a matter of principle we want to be in a position if in fact it is strongly concluded by the scientists that we need title 42, that we be able to do that there has been no decision on extending title 42 thank you. >> reporter: how long can the u.s. maintain the level and pace of this military support for ukraine? >> well, we have the capacity to do this for a long time. the question is, are we going to continue to maintain the support of the international community and keep the pressure on putin to prevent him from overrunning the country, number one.
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and number two, make sure we continue to maintain the economic sanctions which over time -- and we are beginning to see it -- are devastating their economy and their ability to move forward so most important thing right now is maintaining the unity so far, so good. thank you very much. >> that is the president announcing another 800 million in military aid for ukraine, artillery, armored personnel carriers on top of the it.6 billion that has been approved even as putin claimed some victory in the city of mariupol. kayla saying that he might have to go back to congress for more as he tries to make sure the money there and the political will is there. >> carl, he says his authority is nearing its end of what congress has already earmarked for ukraine. congress returns to washington next week. he says he will be asking for more money he also made a slew of other announcements. he announced $500 million in
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additional economic aid. he announced a ban on russian ships docking at american ports. and also announced a new refugee program for ukrainians to come to the united states which he is calling unite for ukraine and we'll expect a little bit more detail on that in the days to come interestingly, these announcements came after yesterday the president met with his top military officials, many generals have suggested that the military conflict in ukraine could last months or even years, but president biden calling it a critical window of time coming up in the next few weeks to be sure, western intelligence suggested that russia wants to be able to declare victory by may 9, which in russia is the victory day where they commemorate the end of warner bros. discovery and then the may 18 deadline, the end of the current closure of russian airspace in the section of the country that borders the eastern part of ukraine. so those are two dates that are on the calendar of the white house and top military officials
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where they believe that as the weather starts to turn in ukraine and some of those critical dates near that the war in ukraine will enter this next phase and president biden outlining some plans there from the united states, morgan, to actually respond to this next phase. >> and i think just the fact that you are highlighting those dates speaks to the fact that we are seeing an evolution, albeit still pretty careful, where some of these weapons systems are concerned and how this military aid is actually evolving here, this idea of new capabilities including artillery systems, artillery rounds, armored personnel carriers, officials saying that they are training ukrainian forces on how iitzers made by bae, the javelin missiles that are made by lockheed and raytheon. i wonder baseld on your reportin whether there is a sense that we could continue to see more of
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this type of aid ratchet up. there has been a lot of focus, for example, on aircraft and we know aircraft parts are starting to get shipped into the country, too, but that has been a key area, for example. >> well, morgan, i think there is broad bipartisan support for the type of aid that so far has flowed into ukraine. of the west continues to rebuff ukraine's pleas for some of the most powerful weapons like fighter jets but there is a belief within the white house that so far the aid that has been provided has been successful you heard president biden right there say it is questionable whether president putin holds that city of mariupol and he also said dev finitively that ukrainians have won the battle for kyiv, this belief that russia, because it has so far not secured the capital city of kyiv, that it will not, carl so having that type of confidence coming out of the president of the united states and of the white house suggests that they believe the aid that has flowed so far has been
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successful, although as we get into this next phase of the war you heard the president say he is going to be asking for more of the same. >> appreciate that very much important development for the markets and the situation in ukraine. let's get to tesla this morning. by now record quarterly profit beating on the top and bottom line. elon musk on the earnings call cautioning while he thinks inflation is roworse than reported, reporting not to raise prices. >> the current pricing is anticipating what we think is the probable growth in costs and if those growth -- if that growth in costs does not materialize, we may slightly reduce prices. so currently we don't anticipate making, you know, significant price increases. >> let's bring in -- the stock
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is off of the highs. colin, a lot of the material being written today suggests that they once again put a little more white space between them and their legacy competitors in terms of operational efficiency is that fair >> absolutely. and this has been building for multiple years this company is rooted in materials and software engineering. we are seeing the net result of that that has been over a decade in the making and they are really changing processes, fundamental design on the vehicles and transitioning from not just an automaker into a full blown data driven company as well as their fst, leveraging all the cars that they have on the road. >> brian, we talked a bit about this this morning, how to value it now on earnings or something else how are you getting to your target price right now >> yeah, i can't deny that they have actually did quite well
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i think there are some headwinds away we will see how q2 plays out between shanghai down and commodities. when you look at the gap between the trillion dollars valuation and our $300 billion target valuation, there is a lot of fluff built in around robots, robo taxis, energies, which are all very speculative. >> brian, what would it take for you to change that rating? >> well, you know, this is what i think the company is worth now, that being said, we try to make calls in our notes and i would point out it's a very difficult stock to short as long as the narrative of executing well as an automaker continuing, which i can't deny it doesn't really have, we think, a netflix, facebook kind of moment. so sometime in '23 we see if all the class they are adding in china, europe and texas can be sold to the margins we saw in 1 q and the volumes that those factories would need.
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>> finally, colin, last night he talked about new production facilities being launched in a period where they are smarter than they were, for example, when they first got shanghai underway i wonder if you think that learning curve continues to slope up >> yeah, i think there is still another couple legs to it. clearly, going from fremont into shanghai was massive change for the organization we will see how it goes with both better anyoberlin and aust. so as we go forward we are expecting them to continue the learning process and i think the leaps will be a little bit smaller. i think at this point with the changes in the design and process are getting to a place where they are going to accelerate the volumes and continue to drive costs lower, which i think continues to drive a lot of march the next four to five years. >> we will keep it a little bit short today. we lost time after the president speaking this hour we appreciate it very much colin and brian, see you again
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soon >> thanks. staying in the musk universe, we have gotten important information from mr. musk a half hour ago on plans to buy twitter. filling in a lot of the blanks when it comes to how he would finance said transaction, and in fact morgan stanley, which is advising him on this approach, on this unsolicited bid, is leading a $13 billion debt commitment along with many other banks, bank of america, barclays, citi, credit suisse, cibc, many banks a lot consortium of banks as well as a $12.5 billion margin loan, which of course would be backed by tesla stock, and then 21 billion in equity there it is. financing in a third teen d filing that is detailed along with attachments that detail the commitment letters as well for
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the debt financing from mr. musk amounting to more than at least the market value that he would need to actually hit if in fact twitter accepted his bid right now twitter has not responded at all quote, twitter has not responded to the proposal. given the lack of response by twitter, the reporting person is exploring whether to commence a tender offer, of course, under which he would acquire those shares at 54.20. remember, twitter has a poison pill that kicks in at 15%. nothing would stop musk from undertaking a tender and it would have the effect of putting pressure on twitter's board to respond even if he couldn't close that tender because of the pill and so he may move to that, that next step, but this is a clear one here delineating the financing that many of us at least have been asking for, wanting details on not really questioning whether
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he could do it, but how he would go about doing it. an important point here. unclear whether the board has any interest in accepting 54.20 or which his best and final will remain best and final. but we'll be watching closely as you see twitter shares up ever so slightly. >> i think the whole world is watching closely, david. quick question for you you have covered hostile takeover processes before. the fact that the twitter board hasn't responded yet, is this a regular normal amount of time or is musk -- musk is moving quickly, or is it surprising that we haven't gotten a response yet >> i wouldn't say it's an enormous amount of time. you typically do a stop, look and listen, take a little time you want financing specifics nothing says that they could not have approached him and asked and he, obviously, saying that there has been no response to his proposal it's noter clear there means there has been no discussion between some members of the board and musk in terms of nuances or other parts of it
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so, no, i wouldn't say it falls to the unusual category but at some point the board has to fully engage and make a decision as to about whether it meets the parameters for fulfilling their dut toy it get full shareholder value for the company and a change of control or not that would seem to be the next potential step here. >> we didn't get the filing on 4/20 close enough. nucor posting the most profitable first quarter in the company's history. up 7.5, almost 8% now. joining us nucor ceo leon topalian great to have you back on the show. >> thank you, morgan. >> let's start with the quarter and just sort of a breakdown given the fact that you did see some strength increased
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profitability in your steel products segment and raw materials, but nonetheless some softness in sheet metals how does it speak to across the steel landscape in general right now? >> thank you for having me back. we are coming off a record year in the safest year in the history of nucor, the cleanest in the history of nucor. q1 was the most profitable quarter in our history you mentioned sheet as we headed into the back half of the year, early start of the first quarter, softened a little bit as did plate but the downstream businesses in nucor has over 20% of our steel consumed internally remained incredibly resilient. as you asked to the future, as we look at all of our leading indicators for 2022, the demand picture in the united states for steel remains incredibly robust. t i think our earnings potential is getting warmed up i'm excited about the future.
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>> the broader u.s. economy given how many end markets you are supplying your steel products, to i guess walk me through what you are seeing in terms of areas of strength, in terms of areas where maybe there is some softening. economists try to gauge where economic growth is going here. >> yeah, absolutely. if we think about the green in digital initiatives how we are building out in this country, the cold storage, the digital warehousing, the warehousing in general remain incredibly robust so the non-residential construction in this country again our backlogs at record highs. our order activity inquiry rates are incredible as we look at inflation and some of the other factors in the united states, jobs are being let at a record pace right now and so the renewable space also is an excellent space for nucor.
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think about onshore and offshore wind we are starting up a new mill providing 9 #-% of the plate products needed for the renewable spaces while automotive is down because of the supply chain issue around chips, nucor continues to gain share and being the only eaf steel producer to win the coveted supplier of the year award from gm four years running as well as the overdriveway ward for supplying net-zero steel to general motors, that interest for those products remains incredibly strong and you think that's going to continue to grow as we move forward >> i am curious as to where you are sourcing your carbon for your electric car furnaces i ask because russia has been by far the large he st provider. no more. are you able to get anthrosite effectively, and i would assume
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if you are, you've got to be paying a lot more for it >> yeah, certainly the supply chain crisis, and you know, david, if i step back for a moment, the situation in ukraine first begins with the humanitarian crisis. so whatever supply chain interruptions are impacting our business or the u.s. economy really pale in comparison to what the citizens of ukraine are facing now however, our flexible supply chain model is meant that the day russia invaded ukraine we stopped all orders coming out of russia nothing is coming there. we pivoted quickly, moved to other sources around the world and specifically an though site, sourcing even domestically here. while those prices are up, dave, adds you mentioned, nucor's got a very, very highly variable cost structure as we see prices increase that typically flows through to end prices in steel, and that's what
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we've seen in q1 and will continue to q2. >> leon, what is your outlook for pricing this year and beyond >> you know, it's hard to predict. we're a commodity business and supply and demand drives and deng dictates that. we are building out our capability for our customers so we're going to continue to invest the largest state-of-the-art sheet metal in west virginia. we couldn't be more excited about getting home to the mountain state and building it that facility there. we just announced a new facility in hexing ton, north carolina, that we'll build as we build out with the on coming infrastructure bill that we see come into earnest in 2023. nucor is really poised, morgan, to continue this earning potential well into the future. >> leon topalian, thanks for joining us today. >> thank you very much. >> shares of nucor up almost 9%
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now. nine time, after the break we will talk with a former netflix executive on what the streaming service needs to do to turn things around. netflix is the biggest laggard on the s&p for the year, not far from 212, the low yesterday. we are back in a couple of minutes. fo what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. ♪ ♪ nice suits, you guys blend right in. the world needs you back. i'm retired greg, you know this. people are taking financial advice from memes. [baby spits out milk] i'll get my onesies®. ♪ “baby one more time” by britney spears ♪ e*trade now from morgan stanley.
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. welcome back to "squawk on the street." another earnings mover, american airlines, phil lebeau caught up with the ceo this morning and has more on the quarter. >> like so many of the other airlines, american seeing a real switch in terms of demand. when you look at the outlook for the second quarter, this is the reason the stock is moving higher today they are expecting to be profitable in the second quarter and for the rest of the year they didn't give full guidance record revenue in the second quarter. record best quarter ever in the 96-year history of american, that's what they are expecting corporate travel is increasing
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as well. here is the new ceo talking with us this morning on "squawk box" about what he sees in terms of this increased demand. >> people have been cooped up for a long time. they want to get out and explore. they want to make connections. and for us as we take a look out into the future, demand is going to continue. three years airlines have been, you know, with no growth whatsoever while the economy has actually, you know, increased considerably we have to make that up and actually more. so i view demand as being robust far into the future. >> you combine that demand with what we are showing you here, which is that basic increase of airfares going back over to last nine months. this is the industry average you add in things like people paying up for premium cabins with all of the airlines, including american, that's why you have all of them reporting extremely upbeat forecasts for the second quarter that's the expectation you take a look at shares of american, they are not yet at
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full capacity relative to 2019 still down 6% to 8%, waiting, obviously, for international routes to open they don't have all of their aircraft back for a variety of reasons. one other stock to keep on a eye on, alaska, moving up today after the company reported q1 results. a smaller than expected loss as well as better than expected revenue. but like the other airlines, it's the guidance. that's what people are focused on we are going to be talking exclusively with the ceo coming up on the exchange you don't want to miss what he has to say in terms of what they are noticing particularly on the west coast they are seeing a lot of growth in markets that they were doing well, they're really down well into the spring and summer back to you. >> phil, while we got you, any insight for us on that tesla quarter that you perhaps want to share? i'm sure you heard mr. musk also continuing to add some details
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on twitter financing i won't ask but that give me a quick take on tesla with the stock up 9%. >> two things. one, everybody's pointing out the fact that the gap between tesla where it is now and the competition is widening. that is a testament to where they are in terms of battery production, battery supply, their design, everything that they put in place over the last ten years. the second thing, you hear a lot of people talking about, oh, the potential of robo taxis or the optimist humanoid robot that they are working on. we have been hearing about this for years, david i understand that if there is some analysts who believe that it will ultimately pay off, that's not the reason i think most are excited about tesla they are excited because of what they are seeing the company is doing when it comes to electric vehicles and manufacturing and you have to take your hat off to them they really are accelerating while others are just starting to get into the ev game. >> yeah, a lot of -- a lot to value in the real world and world to come.
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we still got two big interviews this hour the ceos of both philip morris international and union pacific as the transports are up five of the last seven days, i believe the dow is extending its gains, close to a three-week high up 250 here. check out the top gainers for the index for the week some of them, a lot of them, m 1ally, earnings related with ibup1. we'll be right back.
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den den anthracite with an earnings beat this morning, cutting the full year forecast citing the pull back of russian operations and higher costs overall. joining, philip morris international ceo jacek olczak we have been watching a list of companies for whom russia, ukraine is material and it's hard not to argue pmis are near the top of that list. >> yeah. russia and ukraine about 8% of
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our revenues last year so that's a pretty material and significant contribution >> so talk to me about how it weighs on guidance you are essentially removing it from your earnings guidance for the year, right? >> yes i mean, we start to communicate in the investor community on pro-forma basis, excluding completely for the last year and this year russia and ukraine hence, you know, lowering down but at the same time we are very pleased that the other parts of the business contributing to the strong growth, especially on the no noncombustibles. but it is what it is the situation in russia is complex. the situation in ukraine is very tragic situation and our focus is on how much more we can do to
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help the ukrainian employees, their families and the population and such. this is where the focus is today. >> right so if we ex out that situation for now, we mentioned higher costs. you were keeping the operating march target up for the year if you exclude russia and ukraine, right? >> yes, lower the initial estimate but we do first made the adopt the 100 basis points of operating income margin. this is despite the inflation and supply chain pressures which we have. also exacerbated by the russian and ukrainian situations we also in part of our aggressive productively against programs and it helps us to offset this inflation under pressures. >> it's morgan looking through the results, you talk about the reacceleration of the noncombustible business, but also that it was come meanted bit, quote, robust performance
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of t combustible business, meaning cigarettes are people smoking for >> you have -- last year due to the covid situation. so as we can see a modern geographies coming out of the covid, which is very much, obviously, in some parts of asia, the covid situations we see a stronger cigarette volumes. it helps in this period for the results. but other focus always was to maintain the shares in a combustible, you know, continue growing, accelerate the noncombustible and we have a spectacular job on a noncombustible business. it's a very, very strong double-digit growth. we are reaching now the revenue coming from smoke-free products and it will continue despite all of the challenges and headwinds which we have, you know,
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confronted as we will speak. we are continuing aiming at 50% of otur revenues from smoke fre products by 2025. >> talk about pricing and the trajectory there >> pricing is getting a bit better ahead of our expectations at least expectations for the beginning of the year. we will see how it's going to unfold, continuing for the remaining parts of the year. when we look at the pricing on one hand, we look at the inflation and the inflation pressure, and we have to look what is happening to the income level. so what we see today is a lot of inflation and the cost of living you know, the inflation, but we also have to start seeing what's going to happen to the income levels and, hopefully, they are going to somehow mirror the inflation in a real terms. and then we can be more confident with the pricing opportunities. but we start -- we did start the year with stronger pricing than we initially thought.
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>> finally, i want to read this line from the stifel report about moving russia from guidance we were surprised the company took the step seemingly indicating a desire to ultimately exit russia all together in the future has that been decided? >> we are the most decided by the executive team here and we relentlessly working on how to exit everyone is more familiar with the situation in russia. we appreciate this is a highly complex sort of transaction. i would characterize it as the most complex tran actions every in the pmi confronted with if you want to address all the interests of the shareholders, employees in russia and we have to always have this bear in mind that there are significant -- the exit plus variety hurt others and try to reconcile the
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interest this is becoming a very complex situations but with better minds to exit the market for a variety of the reasons and the results of the -- you know, from a supply chain perspective but also everything. i don't think anyone can think about the continuing business as not more as usual after all this happening. and as i said. we are focused today my focus, you know, focus of all our employees what else we can do to help our ukrainian colleagues and all of the people who are suffering in ukraine. >> appreciate your candor. it is truly complex. good to see you again. thank you. jeh of pmi. coming up on next tech, how investors might play tesla from here and netflix as well the two names moving in poteopsi directions we'll be right back.
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welcome back to "squawk on the street." union pacific, the largest railroad on the u.s. beating on the tom and bottom lines this morning. thanks to volume growth for the quarter as well. moving between gains and losses this morning, just below the flat line right now. here to discuss union pacific chairman and ceo lance fritz lance, great to have you back on the show >> morgan, thanks for hosting me this morning >> all right so, revenue per carload up 12%, freight volume increasing 4%, pricing power continues to be in your fafavor walk me through it. >> yeah. the economy is fairly strong actually it's very strong both the industrial economy and consumer economy that's giving us some pricing power. we, of course, price to the value that we represent, and
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with trucks tight, it's been a very good market to price in >> have you been able to take share from trucks? >> we have as a matter of fact little bits here and there, singles and doubles, but our commercial team is working really well with the operating team to develop new business, whether it's a new steel plant that just opened up near corpus christi or smaller pieces of business yeah, we are incrementally taking share. >> we have seen a huge jump in fuel prices as well. how are you navigating those >> yeah. so fuel has been a big hit of course, it's the biggest single cost increase that impacted us in the first quarter. and there were some cost increases, as you point out, because our service product in the back half of the quarter degraded a bit and what we're doing is we're focussed first on the service product and getting it back to where our customers need it to be and where we expect it to be. that's first and foremost making sure we're making good use of our crews, crew utilization,
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we're hiring we've got 500 new crews in the pipeline right now and we're also using our transportation plan to make sure we're using our resources wisely we've injected more locomotives so that we've got them ready when a crew is available to run a train. and then we're also taking a look at how we can reduce excess freight car inventory in the network. we're talking to our customers about that and we're taking action on our own cars, the cars that union pacific owns. >> lance, it's david you mentioned you're hiring. during the conference call you spent a decent amount of time talking about that and in fact, admitted that i think you were more fragile, you said, than we gave ourselves credit for when it came to having available crews what have you done to change that how confident are you in the current pipeline, so to speak, of potential employees that you'll not be able to face those problems >> yeah, david i'm very confident we have a grip on the situation that our pipeline with 500 people in
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training right now and with a 1,400 target for the full year graduated new conductors that we're going to hit those numbers. and that they are the numbers we need to hit in order to run a fluid network. you referenced just exactly right. we were taken aback a bit by the impacts of covid in the back half of last year. we thought covid would kind of get perpetually a little better. it didn't. omicron showed up. that really got into us in terms of crew availability and then we, of course, started the hiring pipeline to handle growth this year but once we got congested, we just did not have the recovery capacity to get decongested quickly. that's what we're fighting through in the second quarter. i'm very confident we're going to make progress through the quarter and into the back half of the year. >> and is wage inflation a part of that confidence, the ability to attract people because you're paying them more >> you know, we have collective bargaining in the vast majority
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of our employment, all of our craft professionals about 85% of our employment and we're the middle of a national negotiation that's drug on for over a couple of years. so, wages aren't really the big pressure point they will be i anticipate. and what we're doing right now is we're finding ways to try to help our employees who are facing lots of inflation but not necessarily seeing their paychecks change because our negotiation hasn't concluded so working with our collective on the railroads for bargaining, the nccc, we're finding ways to be able to advance some money to our employees so that it kind of takes some of the bite out of inflation. >> lance, let's talk about intermodal and what you're seeing that part of the business which is more consumer focusened and tends to speak what's going on at the ports. which you and i have talked about given the congestion we
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have seed on the west coast. what does that look like is it easing given the fact we have seen these lockdowns in china, are you expecting another surge of congestion >> yeah. our international intermodal supply chain is actually pretty good right now now, it's not normal on the backside where customers have to find truck drivers to take boxes off our intermodal ramp and get them to a distribution warehouse and unloaded, there's still a bit of a labor shortage there both in the trucking community and in the warehousing and distribution center communities so we need more labor to take those jobs but it is a bit better than it had been and on the railroad side, we're actually quite fluid right now between ports and our intermodal ramps. and dwello boxes on ports directed at union pacific is about normal it's really not that bad so we're encouraging our ocean shippers to put more boxes on the rail and get fewer of them trance loaded in the l.a. basin.
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now, you bring up a great point, morgan, that is with the shutdowns that are going on in china, both at port and at production facility, we could see a slug of imports hit again, like happened call a year plus ago. that won't be good for the supply chain it will have a hard time swallowing that because there's not a lot of excess capacity built up right now >> something to keep an eye on in the meantime, we'll take the improvements where we can get them lance fritz, thanks for joining us. >> thank you you know, morgan, to end here, given a wage question i asked of lance as well, i thought i would just play some sound from squawk box from john gray, the ceo of blackstone. the stock is done, not about the performance of the company it was about wage inflation. take a listen and then we're going to go to break. >> the one area that's impacting really all businesses are rising labor costs. we're seeing that now not just
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at the c suite but through entry level employees. our portfolio companies are talking about the scarcity of labor, the cost of labor and my concern is that as companies respond to that, as they raise wages, of course, they'll then start to raise prices. so the idea that this inflationary pressure will go away quickly, that seems tough to us. >> that will it for us right here on "squawk on the street. "techcheck" starts now ♪ good thursday morning, welcome to "techcheck. i'm deirdre bosa with carl quintanilla. jon has the day off. today, tesla shares they are rocketing higher, up double digits the bold bear debate on that stock. speaking of tesla, elon musk details the financing he has for twitter bid. pressure on the board to respond now. more on that. plus, the netflix hangover akman flees. should you carl we're going to start with tesla up s

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