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tv   Squawk Alley  CNBC  July 9, 2019 11:00am-12:00pm EDT

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california 11:00 a.m. on wall street and "squawk alley" is live ♪ hey, mr. spaceman ♪ won't you take me along ♪, i won't do anything wrong ♪ hey, mr. spaceman ♪ won't you please take me alon for a ride ♪ ♪ woke up this morning, i was feeling quite clear ♪ ♪ had flies in my beard ♪ my tooth paste was smeared ♪ over my window, they'd written -- ♪ >> good tuesday morning. i'm carl quintanilla with morgan brennan. dre deirdre is here. phil lebeau said he was going to have some news and he has it now from chicago hey, phil. >> reporter: hey, carl we're still going over the numbers that we got here, but the most important information, the one that people are most focused on, whether or not boeing secured any firm orders for the 737 max in the month of
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june the answer is "no. zero new orders for the 737 max in june. so that's three straight months, june, may, april, with zero new orders for the 737 max and in terms of that max backlog, it actually dropped by three, as a customer converted three max orders they'll now be made at 787s. so they are not taking those as maxes, 787s. total for the commercial airplane division at boeing, nine nets orders commercial airplanes for the month of june. so there's the information and you see shares of boeing ticking lower. not a surprise, guise. we talked with dennis muilenburg at the paris air show and he said, look, we haven't gotten any firm orders, and yet there was the iag news about a commitment to buy up to 200 737 maxes, but that was not a firm number and that's why it's not in these june numbers. back to you. >> phil, we'll be watching boeing once again help the dow
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sag a bit after we started to close this morning's gap phil lebeau. techstop stocks rebounding from yesterday's losses, up more than 25% for the year, despite a strong start, our next guest says tech may have become too expensive. and thinks that risk in the group is increasing. joining us this morning, bernstein senior tech analyst, toni sacconaghi. good to see you again. >> good morning, carl zp >> it was a good note yet. you still say tech is a market weight, but you've got to be more choosey within the group. what do you mean >> when we look at aggregate multiples for the technology space, on a relative basis, they're at a 15-year high. they're the highest they've been since the bubble tech's trading at about 21.5 times earnings, forward earnings the market's at about 17.5 times. at about a 30% premium, which is rich relative to recent history. so in aggregate, the tech market is relatively expensive. but what we observe is the highest growth, most expensive
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tech stocks, which we define as the top 20% of tech stocks on a valuation metric, those are particularly expensive relative to history and so we think that there is caution warranted, particularly among expensive stocks tech is more expensive, because investors believe growth will be better returns on capital are very strong, free cash flow is strong so there's so merit to it, but it's always good to look at history. and expectations for the highest growth stocks are very high and valuations are very high, relative to history. >> tony, will growth be better i'm just looking at these notes right now. earnings for the tech sector expected to drop almost 10% on an equal-weighted basis over the next 12 months that doesn't sound better. >> on an equal -- we do have a lot of big names that are coming off verytough comps, a name like apple, for instance a name like nvidia, et cetera. and so there are a number of companies that, you know, had
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really great years last year there was a strong economic cycle. we had tax reform, et cetera so we're seeing earnings in aggregate for the marketplace to be down, but they're a little bit more down for tech and so that, you know, that is part of the reason why the valuations are more elevated i think over the next five years, investors expect much better earnings growth from tech and the broader market this year and next, that's not really the case. >> i want to get your thoughts on the payment space when we talk about high valuations, you take a look at paypal and square, up more than 30% this year, visa, mastercard, as well. do they come down to earth in the rest of the year or keep that run going >> it's very difficult to say in terms of making a sector call. where we found that most evaluated valuations are particularly in mid-cap software right now. and so i think that's an area where, look, there's a move to cloud, there are very robust
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growth rates a lot of investors believe that run can continue, but when we look at relative valuations and we look at -- we have a metric called quality of earnings, which looks at persistence of revenue growth, persistence of earnings and margins, it's really that sector in particular that screens highest to us >> tony, you've got market performs on apple, am i correct? and tesla? and ibm. what does excite you if none of these large names do >> you know, tech hardware is a very difficult sector. and so part of the reason why we have market weights on most of our names is structurally, there's simply less growth so we look for stocks that are ultimately beaten down and we found opportunities in the past with hewlett-packard inc. and hewlett-packard enterprise so really the trigger point for us is when expectations get
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overly pessimistic for i.t. hardware stocks. right now, that's not really the case in apple's case, you know, our price target is 190. we would ideally like to see the price closer to 160 for us to really believe that that's an active trading call. at 200, we think expectations are relatively in line with where the stock price is >> tony, how do you game out these u.s./china trade talks, especially when you are talking about names like apple or tesla or some of the other hardware stocks >> yeah, look, you know, apple has very significant exposure, the most in our coverage universe, in part because china's a big end market it's about almost 20% of apple's revenues and there could be significant retribution in an escalating trade war where china not only makes it more difficult for apple to sell its equipment there, but it also makes it more difficult for apple to produce
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things there so vendors that are like hewlett-packard inc. or apple in our coverage universe that manufacture a lot in china and also have end market china exposure are the names that we worry most about and look, this has been a see w seesaw i think at the beginning of the year, people were nervous. you know, then there was a truce for 90 days, and people kind of forgot about trade and it re-escalated and now, obviously, we have some important meetings later this week. but, you know, already stocks in particular the two that i mentioned are highly exposed to china and very sensitive to a daily flnews flow around those talks. >> tony, is there an opportunity in the ride-sharing names like uber and lyft. no exposure to china uber has an investment in dd, but they're still trading below their ipo prices and if you believe uber is ultimately going
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to be a megatap, there's a long way to go. how are you looking at these names? >> yeah, i don't cover uber specifically, so i'm remiss about commenting on valuation. but look, part of what we see in tech in terms of rising valuations is we're seeing market acceptance for stocks that have little-to-no earnings, but expected very high revenue growth and it's difficult to say what might change sentiment on that we've had a strong growth rally in the marketplace, meaning growth stocks have dramatically outperformed less-expensive value stocks and that's been the case across the market for the last two and a half years it's also been the case across tech it's very difficult to know if and when that pendulum might shift. right now, there's tremendous momentum and acceptance for growth-oriented names. there's tolerance for companies
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that aren't generating earnings or cash flow, but that can easily shift sentiment whether we have any underlying cracks, we could see more of a flight towards safety. so on balance, we are recommending that investors look more towards high-quality, less-expensive names, and look to trim positions in stocks that have higher valuations, whether they are stocks that simply have no earnings or whether they're stocks that have very, very highly valuations. >> lastly, ibm closing its $34 billion acquisition of red hat this morning now that the deal is done, what's at stake now for ibm? how does this play >> this is a big bet by ibm. $34 billion dwarfs its largest-ever acquisition, which was just over $4 billion ibm is clearly making a big bet here this is all about execution.
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red hat as garnered a reputation of being an independent switzerland-like swoftware vendor so the challenge for ibm is how do you challenge that in the marketplace so it continues to partner with other vendors, other cloud vendors, yet at the same time extract synergies. because ibm paid a significant premium for that asset and the premium is based on the fact that ibm can benefit more from that company than it can do so alone so that's really the challenge the deal closed today and the imperative for ibm is to try to strike that right balance, where it can remain a switzerland, yet ibm can extract revenue synergies to either accelerate the growth rate of red hat itself, and/or accelerate the products that ibm else along side of red hat going forward. >> hey, tony, before we let you go, we love having you it does feel, though, like you want to downgrade something, you're just not ready to do it
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yet. can we expect some downgrades from, when you talk about high tolerance for no earnings, i mean, are you going to change your rating on tesla in the coming weeks >> you know, look, i'm really not comfortable talking about specific ratings as a group, my stocks have generally underperformed year-to-date now, in some cases, earnings have come down in the case of tesla, so that's warranted in many other cases, earnings haven't changed all that much. so on a relative basis, if valuations go down, i'm, you know, directionally more positive and we've publicly stated, we have a market perform rating on dell, you know, the stock is down from over 70 to closer to 50 in the last couple of months. it's still not quite at our threshold and target price, but to me that actually makes it more attractive. it's a stock whose earnings have actually gone up a little bit, but on a relative basis, the stock has underperformed
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significantly. so i wouldn't -- my stocks are more value oriented and if anything, i think investors should be looking more at value-oriented stocks rather than running away from them. >> yeah. certainly, the focus of your note yesterday, which everyone should take a look at. tony, thanks for expanding on it today. we'll see you soon >> thanks for having me. toni sacconaghi. when we return, as we mentioned, ibm closing its deal for red hat this morning what the ceo told us earlier and what it means for the future of ibm is it enough to satisfy tom siebel we're back after a quick break >> i think there's reason to be concerned about ibm. ibm, i think, is a great national treasure, okay? and they missed the cloud. i'm not sure how you missed the cloud, but they missed it. and they seemed to have missed ai advertising aside, doing a lot of good advertising around watson but there doesn't seem to be much there so i think there's reason to be concerned about ibm, and i'm hopeful that they'll figure it
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out, because if ibm were to disappear from the planet, it would be a sad day of your in. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.
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you need decision tech. xfinity mobile is a designed to save you money. whether you use your phone to get fit or to find the perfect gift, you'll use less data with a network that automatically connects to millions of wifi hotspots and the best lte everywhere else. so you save hundreds of dollars a year on your wireless bill. xfinity mobile has the best network. best devices. best value. simple. easy. awesome. click, call or visit a store today. it's that time of year again. welcome back to "squawk alley. we are getting ready to unveil our 2019 america's top states for business rankings, our 13th annual report on state competitiveness. we'll reveal this year's top states tomorrow morning on "squawk box," but today, we are looking at some of the crucial issues in this year's studio and scott cohn is live in the
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top state, which he's keeping a mystery for now, we're all over here guessing, a look at the important issue of infrastructure scott? >> yeah, it is important, morgan you know, in the 13 years we've been doing this, it seems to get more and more important every year, particularly as the president and congress can't seem to get together to talk about it talking about it separately. so infrastructure this year carries about 350 out of our 25 total points in top states that's a little less than 15% of the total. and with the inaction from washington, some states are getting creative they're partnering with business including one venture that our top state's teams visited, smack dab in the middle of the country. >> reporter: it's a port on the pr prairie. >> this is oceanfront property in the middle of kansas. >> reporter: edgerton, kansas, population 3,500, 30 miles outside of kansas citi and home to logistics park kansas citi, an inland port shipping goods around across the country and
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around the world >> in two days' travel you touch 80% of the population, in three days' travel, you touch 98% of the population >> reporter: opened in 2013, the port has grown faster than anyone imagined, now employing more than 4,000 people, even as the state of kansas went through a budget crisis. it helps that the project is a public/private partnership between the state and local governments, the nsf railway, and north point development. >> as long as they continue to grow, that feeds our palestine and represents a substantial outcome for everybody. >> letting kansas capitalize on its location, like never before. >> it has taken this region as a whole into a completely new focus area of warehousing and distribution infrastructure that we hadn't seen as a huge opportunity in the past. >> reporter: a lot of states are talking about that, talking about location that's why for the first time
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this year, in our infrastructure category, we're looking at what kind of population is within a day's drive of every state that's one of the metrics we'll look at in infrastructure, among our ten categories of competitiveness and we'll see how all the states stack up tomorrow morning on "squawk box. here now is your next top state's hint diabolical hint. nuts to you. nuts to you. you can read more about our top states study,, talk to us on social media usually the hashtag top states the stop states revealed tomorrow on cnbc >> well, that doesn't help me at all! >> it's georgia, scott, we know this nothing? nothing. poker face >> i feel like i'm at a disadvantage here being canadian that did nothing for me. >> maybe it's a fresh viewpoint. >> all right as we wait with bated breath,
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scott cohn, thank you, we'll continue to mull over that hint right there. a few years ago, we were all in washington, morgan, we were talking about that i did guess that one, but it was more of a logistics things and there were camera crews out and about. >> and speaking of inland ports, i've actually been to this port in the past to talk about intermointe intermodal, which is that exchange of goods and cargo -- >> we love when you say the word intermodal on tv >> between investors and transports okay, taking a look at the markets, major end dindexes comg off back-to-back losses and lower again this morning here are the names trying to turn things around in the s&p. you've got advanced micro, dish network, and netflix up 7% this morning. a lot more "squawk alley" still ahead. i'm sorry, 1% this morning more "squawk alley" still ahead. don't go anywhere. at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster.
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ibm closing pits $34 billion acquisition of red hat this morning, its largest ever. both ceos joined us earlier this morning on cnbc. take a listen. >> this is really chapter 2 of the cloud. and many people thought, everyone thought was going to just the public clouds, but that's not what clients need chapter 1, they put a lot of client innovation out there. think of it front ends of many systems, but then they bash into these back ends of all of their current i.t., and that has to be modernized that's 80% of the workload still out there, mission critical work so this is going to allow us, and we are the only one that has a hybrid, multi-cloud platform based on open source which really simply means for a client, i have an existing house. i can renovate it piece by piece. i can write something once and put it on any cloud, public or private that i want.
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>> shares of ibm currently down just over half a percent faber made the point earlier this morning, it's rare that you see two ceos come on, on the closing of a deal, not just the announcement, just a marker of how important this deal is to big blue >> very, very important, right jenny remeddy has been trying for years to turn aren't this ship first it was all about watson, now it's all about the cloud and i was listening on the last earnings cloud, watson mentioned just eight times red hat 17 times cloud was mentioned 104 times. so ibm has done this shift away from watson and artificial intelligence based on some of the things that have happened there, fully into the cloud. and as tom siebel said earlier this week, maybe it's too late, but we'll have to see. a hybrid cloud will be a unique position for them to be. >> and jon fortt has covered this pretty voraciously, that hybrid cloud is the now and it is the future. this is where the cloud is going. but it will certainly be
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interesting to see -- execution will be the key. we just heard toni sacconaghi, who covers ibm talk about this now comes time, roll up your sleeves, get down to business, find the synergies and continue to run red hat as, you know, a company that's been very highly repudiated, which probably explains why you have both ceos on >> and will it grow revenue again, finally they had a few quarters where they actually grew revenue, but the trend has been shrinking meantime, annual alan and co conference kicks off tomorrow. so who are the newer names that will be there? julia boorstin is there in sun valley, didaho, with a look >> the alan and co conference here in silicon valley isn't just for media moguls and tech titans to talk about potential mergers and attend panels of thought leaders, it's also where those power brokers and other deep-pocketed investors learn about the next wave of innovative start-ups, such as
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youtube, that was featured here before it was acquired, or the likes of s.n.a.p. and uber, whose ceos were here long before their ipos on this year's list of attendees are airb&b, uptake, zip line, and biotech company, ginko bioworks allen & co's inclusion of these start-ups shows where they value innovation rekur rekurgs pharmaceuticals, flatiron health has a tech platform, which is aiming to fight cancer and kallyope biotech makes connections between the gut and the brain. and there are two firms that provide women's health issues. and what would a gathering of
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billionaire investors be without some flying cars the aviation start-ups are electric air taxi company joby, which can take off and land vertically and personal company, kitty hauk there are other start-ups that are focused on artificial intelligence, virtual reality, a bitcoin wallet called zapo, so we'll have to see which of those entrepreneurs are sought out and spoken to by the likes of jeff bezos and softbank's massa san, who we also expect to be here. guys, back over to you >> if one thing is for certain, i think scott cohn is probably not in idaho, because, julia, that backdrop is just breathtaking so thank you for being -- >> it is very beautiful here, morgan >> thank you for bringing us that report and i know you'll be bringing us more headlines over the next couple of days. julia boorstin european markets are set to close momentarily. seema mody joins us with a breakdown of today's action.
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>> european stocks trading lower despite larry cud lowe telling cnbc that the u.s. are in talks to move forward on a trade agreement. there's one stock in focus today in europe and that is german chemical giant basf, cutti intis profit forecast, citing the trait dispute between the u.s. and china and growing weakness in the global automotive market. it now expects earnings to decline up to 30% this year. notable weakness in the chinese auto market. and you are looking at shares of other european chemical producers trading to the downside on basf news. now let's also talk about airlines coming under pressure after the french government announced it would introduce an ecotax on outbound flights air france strongly disapproves of the tax shares of air france, easy jet, and ryanair all falling about 3 to 4% on the day the uk's privacy watchdog planning to fine marriott international 199 million pounds
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or roughly 123 million over last year's breach of the starwood. the hotel vowing to contest the charge shares of marriott down almost 1.5% on the day. carl, back to you. >> thank you very much let's get to sue herrera this morning and get a news update. dow is down 93 good morning, sue. >> good morning, carl. good morning, everyone white house counselor kellyanne conway telling reporters that president trump hasn't spoken to or had any contact with billionaire financier jeffrey epstein in years and years and years. >> the president told me this morning that he hasn't talked to epstein, doesn't think he has talked to him or seen him in 10 or 15 years. and he like everyone else sees these charges, the description of these charges against epstein as completely unconscionable and criminal, disgusting, really >> british ambassador to the u.s., kim darroch found himself
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uninvited to a white house dinner last night honoring the emir of qatar. he said he would no longer deal with him calling him, quote, a stupid guy european regulators ordering inspections on some a-380 super jumbo lines after some cracks were detected in wings on the world's largest passenger aircraft but the company confirmed that small cracks were found, but said the air worthiness of the fleet was not affected you're up to date. that's the news update this hour back downtown to you guys. carl >> sue, thank you very much. when we come back, virgin galactic's public plans. what sir richard branson told us earlier this morning later, youtube is back on fire tv. how the dispute between google and amazon came to a tv. s&p almost went green. down two points. we're back in a minute but we'ra company that controls hiv, fights cancer, repairs shattered bones,
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welcome back to "squawk alley. we've got a big commercial space deal to tell you about today sir richard branson's virgin galactic will merge to create the world's first and only publicly traded human space flight company proforma enterprise value, $1.5 billion. shareholders of sch, which is a public investment sfleevehicle l own up to 49% of the combined company and social capital's pal
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happ pa pa palahapatia will become chairman >> this things looks like a software business under the hoot, even though it's flying people to space. so this is, i think, a really compelling risk/reward even taking a general step back, i think i've had a really good track record of being a little bit ahead of some big trends, whether it was the transition to amazon or backing bitcoin, things like slack. and i generally don't put my own principled capital on the table unless i think there's a really compelling risk/reward and i think i'm doing that >> virgin galactic is a space tourism company charging about $250,000 to take customers to the enl dge of space that is a service it expects to begin offering with 600 million people offering 120 million in potential revenue. those people already signed up and another 2,500 people apparently expressing interest according to branson
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palaha palahapatiya expect to become profitable by 2021 and in the next five to ten years, it won't just be about trips to the edge of space, but this could also be about hypersonic travel around the world. key question for right now, with vg poised to be public before year's end, is this a turning point in commercial space investing? human space flight, keep in mind, incredibly challenging vg has had their share of setbacks, as well. but as chad anderson, the early stage of space angels tells me, this is a company that's making great progress they've already been to the edge of space twice, but still building a product that can be more difficult to do as a public company. quote, time will tell how they're able to manage a human space flight development program on a quarterly time horizon. and that we haven't seen this before and there are certainly a lot of potential upsides, but also, perhaps, less margin for error. regardless, guys human space flight, the tourism piece of this is definitely a
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big, highly anticipated area, because it's not just virgin galactic, also jeff bezos' blue origin that's working on this and space-x is doing their own space tourism ambitions, working on those as well >> something he said, really caught my eye, my ear. looks like a software business under the hood is that true i would have never thought that about the space business >> we'll have to see i mean, it definitely got a lot of attention, particularly in the space community this morning. i mean, keep in mind, this is still a wrr business, space is still very hard. and i think a lot of that will hinge on them getting those toouss up to the edge of space, how quickly they can do it how many aircraft and spacecraft they can roll out and basically the price on those flights being able to drop and the scale being able to increase >> that is certainly one s-1 i'm looking forward to >> the risk factors! that's -- the insurance costs. that's going to be an issue. >> skpubs something really interesting this morning
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you said, there's actually more demand than supply, right? they can actually afford to be pretty choosey about investors, which i thought was really interesting. >> we'll see another case in point would be elon musk's space-x, which is privately held, but since december has done three rounds of funding and they have said, the ceo of that company has told me in the past that that is a company that can afford to be choosey when they take on new investors. there does seem to be growing demand, even potentially pent-up demand for some of these types of investments, as some of the, what was once sort of seen as sci-fi or even farcical visions of these space billion nars now actually become reality. >> within the next year, he's right about that >> i've said it before and i'll say it again, space is the next internet >> well, from space to potentially the next internet, bitcoin, right, is the krcrypto craze back bitcoin trading up over 200% as
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investors continue to monitor facebook's move into the market with libra, already facing some early regulation scrutiny, but how much is crypto filling the void left by the traditional financial sector joining us now, coinless cofounder and president, andy bromberg andy, thanks for joining us today. when we talk about regulation, filling the void, this was really interesting to read that there's been comparisons to what we've seen this week, the big layoffs at deutsche bank thinking that maybe this could benefit cryptocurrencies in some ways how does that play out >> i think you're absolutely right. i think what we're seeing here is that existing financial systems are struggling a little bit and going through these booms and busts and crypto may be countercyclical there so we're seeing this bitcoin run-up and broader cryptocurrency run-up. i think that's inaddict ty dica what we're going to see moving forward. that's a really exciting concept to have crypto as a hedge
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against broader economic downturns. >> we've been talking about all week about even with a cryptocurrency like libra, if you want to call it a cryptocurrency so how does it get there it still seems like we're a very long way off >> i agree, it feels like we're a long way out and the lead was right, space may be the next internet, bitcoin and block chain may be the next internet too, but that means it's at its earlyiest stages just yesterday the s.e.c. and finra released a joint statement detailingsi detailing some of the open questions they have around cryptocurrency and that's a big step forward, but all of these questions need to be resolved before we get to a place of finality here >> andy, i want to go back to this idea of crypto and bitcoin as a hedge against other asset classes. how much has that contributed to the run-up we've seen recently in the prices of bitcoin and some of these other cryptocurrencies
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and how does that play out as you get more coins that are asset backed and being seen as utilities, for example >> yeah, i think that's a great question i think, again, we're in the early days of this asset, so that means we see big booms and big busts. and a lot of that is driven by the narrative around the space when we start to see momentum like we did in the past month, it starts to drive up more and more as more interest pours in i think as the space matures and we see more asset-backed tokens, we'll start to see that even out a little bit right now, the crypto space is highly correlated. we see bitcoin rise at the same time as etheorem and most other tokens do and fall at the same time so i think that uncorrelation where these different assets start to rise and fall on their merits will be really interesting as that starts to happen in the next couple of years. >> andy, thanks for being with us this morning. coinless cofounder and president. well, still to come, instagram introducing a new feature to prevent online bullying we'll discuss that next.
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and later, why nintendo is moving all of its switch production to vietnam. "squawk alley" returns after a quick break. the dow is down 94
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let's get over to the cme now and rick santelli for the santelli exchange. rick >> good morning and thank you. there's one question that pretty much everybody wants the answer to in various forms. how good is our stock market and i'm very serious how good is our stock market one would think that jay powell
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and company, that that would really be in the foreground of all the decisions and processes that go through to try to nudge the economy on the right path. how good is the market i don't know that we know the answer to that many believe it's all about the fumes. it's all about priming it's all about the fact that sustainability is still something people question. if you're a poker player, sometimes it's best to check to the highest bidder the federal reserve needs to focus on the big picture and the only way they can focus on the big picture in my opinion is to stay pat, to see the response in the market how much of what we are seeing on a day-to-day basis at these levels is froth. i personally think that if the fed did nothing and kept rates exactly where they were, the markets may get jittery, but in
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the end, i think it would be okay but we need to know that as a matter of fact, the road to transparency started by alan greenspan has really been a bumpy road, because all of a sudden transparency is synonymous with all investors basically saying, what are you going to do? what are you going to do that's not transparency. transparency is about the process, not the answer. and, all the micromanagement, seriously out there, if the stock market really is running on fumes and taking back december, is all of that important? then i think we have more to worry about. there's so much to demand in the globe. maybe more of it comes here. one other thing. there's been so much debate. whether the fed's democratic, i mean, seriously! we're not a democracy. we're a democratic republic! we're a bunch of independent republics. they were very focused not to make it a democracy. they wanted to also protect
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those that weren't in the majority you know, the civil liberties and the rights of all individual citizens so what about the supreme court? hey, anybody out there vote for a supreme court justice lately yet, i don't think it's not a nondemocratic or undemocratic organizati organization we vote for people that pick them same with the federal reserve. it's as independent and democratic as it needs to be just, stay macro, because with global debt, china debt, central bank spleets, negative rates and a long in the tooth expansion, micromanagement is a done deal move on, look at the big picture. carl, back to you. >> thank you very much, rick art laffer on line one nintendo is the latest company to shift production out of skmoochina and into vietnam, saying it will move part of its switch console production to the country this summer. they say it's intended to diversity risks and not to escape potential tariff hikes on
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the u.s., but it is a trend we continue to see. one of the themes from our recent trip over there, which was largely about apparel in this case, but to see nintendo do it on the heels of what we know is happening between the u.s. and china is very interesting. >> yeah, but you definitely talked tech, too on your trip. to me, the key was this y idea of diversifying risks. there are so many companies that are reconsidering their supply chains and wondering if they need to move some of that manufacturing around to other places in addition to china. >> and you've got to wonder if vietnam is really diversifying your risk, because the president has now spoken out about vietnam. they could be ripe for tariffs >> and tweeting today about india tariffs on american goods. >> america >> is that your next stop? >> the whack-a-mole tariff game is certainly in place. >> coming up on the show, quip cutting its teeth in the dental insurance game the ceo joins us right here at post nine after the break. stay with us ♪
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now to talk about this welcome. >> thank you >> so, an insurance alternative. what does that mean? >> so, we're trying to really change the way that people think about dental benefits and dental care completely from the ground up so, i think for us there's a lot of issues with the space, a lot of transparency. you don't know what you're paying or getting. how you're covered and how your insurance may cover what you're paying for so, at the core of everything blow up that transparency and make everything very clear what you're getting and how much you're going to pay and then make the whole experience more like it is when you do everything else in your life nowadays using your phone it is very simple and easy to pay for pretty much everything else in your life and we feel if we can bring that kind of modern experience to the dental world and then add on that layer of price transparency, we can change the way people think about dental care. >> how are you able to provide transparency now a very notoriously murky and
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opaque area in terms of services and what those services actually are? >> we just work directly with the dentist. over the course of the last five years wilding quip, the personal care side of the business we have 30,000 providers through that relationship. we have been working for years and what works for them and what works for their patient and what doesn't work for them and their patient and field a real direct relationship with them and the balance between what the patient should pay and what the service really costs and the dental insurance industry is a lot more opaque than even the health care industry often the limits on profits and profit margins on kind of control or set in the same way as health care a lot of space in there to make something for both the provider and, of course, for the patient, as well. >> and, of course, i forgot what i was going to say >> i have a question $25 per month, right
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that's relatively more expensive and slightly more than what i pay for dental insurance are you trying to get costs down what will make people pay and people who don't have insurance? >> the core of what we're launching is a platform. an app on a platform that doesn't have a monthly fee free to join, free to browse and what treatments cost in your area we set rates lower than the average rates in the area on top of that. so with quip care app you pay as you go for those rates or you can go for a plan such as quip care plus which is where you pay $25 a month and covers your preventative treatment within that cost. >> are you trying to get that down was my question >> over time, i think we're really looking from this launch and as we grow it to kind of see how it's received in new york and then as we grow beyond that see how things go.
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we use an independent party to look at millions of transactions that happen in new york and across the country to work out how we can get to this 30 plus percent lower rate and, of course, we're looking to bring in new ways and new plans and ways of paying down the line that open up the platform to more people. whether that be employers or to individuals and whether it is insured or not insured >> people are, i think, generally nervous to switch dentists would you expect people who are onboarding to switch their dental provider? >> i think we look at it two ways, one, there is nothing better than a professional and the patient referral of their professionals. i think 80% of dental appointments are actually referred to from friend to friend and we see it the other way around we work very closely throughout the membership that we have already with the products to help us build that network through their referral with that said, we're also working very hard to curate this
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network. this is a new way, although it is kind of modern way of dealing with services is very common in a lot of other areas of your life, in the dental industry it's extremely offline >> i still get a paper bill in an envelope. it's crazy >> yeah. and happy birthday >> exactly >> so, we are really looking to work with the providers to understand how important it is to modernize the consumer experience and that will then kind of service them as the ones that can track those patients and keep them coming back. >> simon founder and ceo of quip, thank you for joining us today. >> thank you. market continues to try to close this gap here. s&p is down about three points of course ahead of powell 'rba ile tn re wee ckn sshathe mns.
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a new feature this morning allowing users to block online bullies and banning comments on posts and hiding those comments from everyone else but the commonter. restricting will help users avoid escalating the situation by publicly blocking someone instagram plans to roll out and restrict soon following another
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an anti-bullying feature asking consumers if they want to post the comment in question. instagram was considered safe considered to others but they are dealing with some of the issues that twitter has been dealing with for a while >> i wonder if that is the new head of insta out in san francisco some really good reporting around this. that makes it seem like he is really serious why does he have this objective and does mark zuckerberg have the same thing for facebook. i think it's real interesting. the company is willing to make decisions that people use instagram less if it keeps more people safe. >> boeing where teenage users are concerned. we all know people who have been affected by it i think it's also noteworthy that meantime you have the ruling out of the federal appeals court saying that the
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president, president trump can't block twitter users either and that the first amendment does not permit a public official utilize the social media account to do so so, in general, just seems like there is a bigger and bigger battleground here taking shape >> interesting decision out of the second circuit we'll see if this goes any farther. let's get to the judge >> carl, thanks. scott wapner front and center. the powell possibilities and what the fed will say on capitol hill tomorrow. whether it will be enough to keep stocks climbing it is 12:00 noon, this is the "halftime report." on the eve of key testimony on capitol hill, what will fed chief jay powell say and how will the markets react another wall street powerhouse releases its stock outlook. which way do we go from here plus two big calls on two of the biggest names in the market. apple and facebook the alim


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