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tv   Power Lunch  CNBC  July 25, 2019 2:00pm-3:00pm EDT

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on this trend of builders keeping the homes they're bui building and renting them out. that does it for the change today. i'll join tyler and melissa for "power lunch" which begins right now. >> kelly, thank you very much and we'll see you in a moment. look forward to that welcome, everybody here is what's new at 2:00 on "power lunch" for thursday big tech on deck amazon and alphabet are get itig ready to report after the bell we'll set the table ahead of those important numbers. plus, central banks around the world releasing the doves. but is it enough to keep this record rally roaring and as global auto sales stall just a bit, the ceo of the third large auto dealer will be here to explain why his stock is not getting stuck in the speed trap. "power lunch" begins right now >> and welcome to "power lunch."
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stocks sitting just off the lows of the session down is dow, s&p 500 down about a half a percent we had seen more than a 1% decline. now down by .9 two big dow downers. boeing falling for the second day as the fallout keeps getting worse. also a downgrade today from wolf research and check shares of 3m heading lower. the stock is down nearly 20% from its 52-week high and shares of tesla on track for its worst day of the year. this after a posting a loss to the quarter announcing its long time cto is moving to an advisory role. >> thanks. the two other big stories today, alphabet and amazon are on the clock because they're r reporting after the bell their stocks are higher this year but with the doj taking aim at big tech, should investors be concerned? diedra is here tracking amazon for us josh is in san francisco looking at alphabet. josh, start with you
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>> so it's up about 8% this year that means it is badly lagging both the market and the tech sector i've checked in with sun trust yusef. he listed three big reasons. one, slowing growth and specifically in the company's bread and butter search business what she estimates is growing in the low teens. sculley says it's due to a maturing segment over 20 years old and advertisers like amazon. in fact, many product searches start with amazon, not google. two, lack of disclosure. the company refusing to offer more insight into how its businesses from youtube to the cloud really performing and three, regulatory threats. sculley say it's too early to tell the regulatory impact is going to be on google, but the threat remains a continued overhang for the stock still sculley is a bill as are nearly 90% of analysts covering this company signing attractive
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valuation and a bet that the company can ultimately keep growing faster than the overall online market. back to you. >> now todiedra who is with us onset. what's the key thing to watch with amazon? >> two key things for you. expenses and revenue growth. those are the headline numbers you're going to want to watch. a.m.son told us this year to expect a return to spending then announced one-day ship, saying it would cost $100 million so that pricing initiative started to roll out this quarter the street is going to want to know if that's getting consumers into the prime ecosystem and get ing them to buy more perhaps more impulse purchases top line dwrout growth, that revenue has been slowing sounds good, but a far cry from the 20 to 40% we've seen from amazon in recent years amazon has delivered blockbuster profits over the last few quarters helped by newer, higher margin businesses like aws cloud services and advertising
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josh mentioned them. eating in on google's territory, but will those be enough to make up for the increased spending and is it now have keep investors happy? we are looking out for talk on increased scrutiny amazon doesn't typically say much, but you have to wonder if today, the analysts on the call are going to want more answers >> they're going to ask. thank you. actually, you're going to stick around let's bring in jason, with open heimer diedra and josh touched on a common theme for both reports. investor concern about slowing growth tackle them individually, but how big of a concern is it for you in light of each stock's valuation? >> sure. a bigger concern for google. much smaller for alphabet and amazon typically with your call when this all started a few months ago, the doj basically said they were going to takeover sight
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over alphabet and apple and kick can be facebook over to the ftc. while antitrust is broad, there tends to be different mandates if you look at the way the app store market works, you could argue those are effectively monopolies on each device. so could there be something there? does alphabet decide to be proactive and change some policies around the app store? i think that's where people are focused regulatory wise there. on amazon, you know again, if it's ftc, the mandate is to make sure consumers are being treated fairly fair prices et cetera. if you think about amazon's mission, it's to lower price of the consumer so we think it would be difficult for anything on the regulatory side to happen for am side albeit the white house has been making antiamazon comments. >> say alphabet makes those changes. does the multiple go up or stay the same just trying to figure out how
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much in the multiple because it's tradie ining at a discounto its big cap tech peers how much is because of the slowing growth concern, which really stumped the stock after the first quarter report and how much of it is regulatory concern? >> it's probably more on the former i think generally, most people think these companies can manage their way through the regulatory process. they hire lots of lawyers. they're kind of very familiar with the process and know what they're willing to kind of give up to keep moving ahead to the business. look at what happened with what facebook announced with the ftc. really feeling more about revenue. it's about cash flow this is a company that search is an amazing business. high margins but every single business alphabet has created has had a lower margin then at the same time, to your point, revenue growth is slow and they didn't really explace of business plain why. they talked about timing around certain products that's vague. so again, really it's going to be one of the numbersing google,
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alphabet if it slows again and they don't announce a buyback to address shareholder value, the stock may go lower >> i want to get so far ahead of myself that it is almost inconceivable to say what i'm about to say how's that >> wow >> all right >> set aside any regulatory. but do not set aside the risk of the investment bank. i bet you there will come a day when investment bankers look at alphabet and look at amazon and they look at businesses that are slow growth and they look at businesses that are fasth growth and those companies split up as a result into the slow growth businesses and the fast growth businesses so it would look natural to me. you've got a slower growing retailer and a fast growing company. bam. >> it's a really interesting concept and it's gaining steam particularly from lawmakers.
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elizabeth warren very interesting when it comes to amazon because the profits of aws have powered all of these other businesses that amazon hasn't been successful at advertising. can amazon continue to be as innovative and go into as many businesses, guloseri rgrocery, o >> jason, am i a horse's ass don't answer that question that's a separate issue. you see where i'm going. you can look wback at media companies, conglomerates over the ages, and see that history tells you they rarely stay in tact zpl it's a fair point. there are you know all these software analysts would love for that to happen >> you bet >> aws business and we would be kickoffing the retail. the e commerce side. amazon, we think is going to try to keep their business in tact for as long as they can and
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remember, netflix got the first competitor walmart, early customer. big competitor, so until you start to see a netflix, a walmart say you know what, we are not doing business with this xwaen, then there's what would be the other reason? so we don't think it happens in the investable future. at least right now >> see you after the bell. >> one tiny issue with your idea these are founder controlled companies, so good luck. hard to break up >> true. >> jason, thanks, and diedra thank you. now the european central bank signalling a rate cut and mario draghi sounding dubbish this morning steve liesman with what he said. >> and a what the market heard and didn't hear. it's a curious case of mario draghi saying very much what the market wanted to hear about stimulus, but many asset markets acting as if they were
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disappointed draghi appears to fulfill the expectation of cig malling that rate cuts and further quantitative easing, it's attempt. >> a significant degree of monitory stimulus continues to be necessary to ensure that a financial conditions remain very favorable and support the expansi expansion. >> the council is determined to act. all instrument as appropriate and options do include new asset purchases. the u.s. ten-year loved it for a bit. but then perhaps when draghi started talking or perhaps when better u.s. economic data came out, it sold off so did the ur euro, which has bounced back and stocks that have remained down one reason could be draghi was fairly down on the economic outlook. another could be the market wanted action now, not in september. melissa's shaking her head whatever the reason, one important impact
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fed fund futures raised the odds of a 25. not sure all of that is warranted. but that's what the market did and that's my best attempt to make some sense out of a really curious trade this morning >> you set it up as manufacturing is terrible. getting worse and worse and ended it by saying there's no reason to be gloomy. session risk isn't that bad. >> he says a low risk of rescissir rescissir recession but seemed to downgrade the third quarter. >> we saw a dip in the markets a couple of hours ago and art cashin made this commentary that maybe market participants war thinking that perhaps the fed wouldn't be as aggressive given the fact draghi refrained from cutting rates, we had better durables and the qgp looks like it's come in what are the risks >> yeah. >> .3. but still at 18 and we're a two. so we're a two i don't know if the market thought it was going to be a one. >> with the string
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capped off would have been a much better string of data >> and a much better string of earnings is there any doubt in your mind that the fed is less aggressive? >> to 25 >> yeah. >> so we put out the fed survey which goes to 40 or 45 participants we asked is it 25 and done or 25 and more to come or if it's 50, is it 50 and done and 50 and more to come? >> so the less aggressive wasn't an option. >> well the no rate cut is always an option you can always answer that like we think the fed is really stupid and shouldn't cut rates >> we've heard someone say that yesterday. >> wouldn't be the first time. so basically what we have is i think the consensus market expectation is we're going to do 25 and think about doing more. not sure that's changed on the day. >> okay. >> all right thank you. >> coming up, we are halfway through summer, can you believe it
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and one hot new york real estate market associated with lovely summers is cooling off those details are coming up. but first, the third largest auto retailer says whaglalt ob slowdown the ceo joins us next to discuss. prevagen. healthier brain. better life.
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airlines, tesla and slowing
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auto sales phil, le's begin with american and southwest. >> pretty simple american and southwest both are saying look, we want to to have the max as soon as possible. they both reported earnings today. no many are paying attention to the fact they did better than expected it's the outlook at the end of the day b they are not going to have the max at least until well into the fourth quarter and in southwest's case, they're saying we're not planning on it until the beginning of next year >> why do you think southwest had this dramatic reversal >> i can't tell you exactly why, but i think if you look at overall, all of the airline stock, they're feeling pressure right now. i think there's a growing concern about how much the loss of the max is going to have in terms of its impact on capacity. particularly here many the united states. >> why are they leaving newark >> that's pretty simple. you don't have the full compliment of planes you have to optimize your fleet. not going to try to spread it
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too thin they were going to take what we're flying in newark b and take it to the markets where they're flying more. hawaiian route ss a good example. >> i told my sister, better change your plans for the holidays let's talk b about tesla, which is down big today. worse day of the year now. it's not just sort of what they said in their earnings or lack there of it's the departure of a key executive. >> the chief technical officer although he's tran csitioning io an advisory role he goes all the way back practically to the beginning of tesla. with elon musk if there's one person who you could say whoever tells musk how it really is when they're sit ng the room together, it would be j.d. i think some look at his departure and say does that mean there's less of a checks and blans system in place? look, he's still an adviser there. he can still talk to musk. it's not like he's leaving the company completely, but at the same time, there's the kind of
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departure that gets people's attention! yeah, that stock moved, too. finally, auto sales, the headlines don't look great, but the numbers aren't so bad or are they for some of these individual companies, certainly it's been a brutal 24 hours from nissan for ford >> sure. >> right the bottom line is this. we are seeing at a minimum, a plateau in auto sales here in the united states, but if you look in china, sales are down dramatically europe, they're down there's no place in terms of the major markets around the world where you can that's a growth market now there really isn't so all of the automakers are e reassessing how much capacity they have. that's why you saw the big job cuts announced by nissan worldwide. >> thank you very much a lot going on today >> despite that global auto slowdown that phil just referen referenced, group one reporting a big earnings beat on the top and bottom line. and the company is the third
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largest u.s. auto retailer 31 major brands. 184 total deeperships. a really perfect barometer for the industry here for a "power lunch" exclusive is the president and ceo of root one automotive also a former ford and nissan executive. we just mentioned nissan's tremendo trevails welcome back i want you to respond to phil's characterization that auto sales in the u.s. have at a minimum, plateaued. is that what you're seeing >> well, i think so. yes. but you know the comparisons are always against the prior year period and the market's down 2% or 3% but on a absolute basis, historically, the market's still quite good we're still somewhere close to 17 million units and that's pretty solid year in our business >> so is the reason for your stock's performance up 65% this year in a plateauing market?
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your sheer brilliance or basically a geographic accident that a lot of your business is in an area and in a segment, pick up trucks, that is doing very well. oklahoma, texas, the southwest >> no doubt, sheer brilliance. yeah no, it's i think it's because we have a flexible call structure and we have multiple revenue screenings the market has really shift nd the u.s. toward a stronger use car market our used car sales were up 7.5%. our gross profit was up 10%. big growth also, our service business is stronger than it's ever been we grew our service business this quarter by 10%. all time record. first time we hit double digits. so we have multiple revenue streams. flexible cost structure and we can adjust our business a bit to slight changes >> i think i ask you this
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question every time we see each other. a question about brexit and the impact on the u.k. business. you have a footprint there recently expanded it with the acquisition of some volkswagen dealerships. johnseon looks like he's hurdlin toward potentially a no deal brexit are you concerned and what have you seen in terms of the trends? >> you had to go and bring up the ugly part, didn't you? the u.k. is quite calling because of this political uncertainty. really hammers consumer confidence and that correlates highly to u a toe sales, so it's difficult. our service business is growing well there we need clarity on this and of course, tariffs would be terrible and so forth, but what we need is clarity we need to get back to some kind of business is normal. and it's very difficult right now. so whether or not this gets settled at the end of october, let's hope so. and we'll just have to see what happens.
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>> what do you think about what's going on at your former employer, ford, as they exit basically the sedan business in the united states and anissan >> well, in the ford transition to their new strategy, not a big deal in the u.s. because our ford business is powered by trucks and suvs. we never made any money on most of the cars other than say mustang, so i don't see that as an issue it's bigger in europe where cars drive the market, so we have more concern we have seven ford dealerships in the u.k., so we have to see if they can replace most of that volume with small suvs nissan is just trying to clean up probably a decade of short-termism. they had a terrible culture. it was all about thit sales numbers. we don't care how we do it so they're just having to clean up for quite a few u years of sins in my opinion. >> interesting thank you for your candor. appreciate it. your candor and your brilliance. we'll see you.
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>> bye bye uber loses two more board members. social media influencers fleecing companies and steve balmer is fired up again that's coming up in today's tasting menu "power lunch" will be right back ove us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪
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here's your cnbc news update president trump par tticipated n a review at the pentagon he and mark stood next to each other during the playing of "the national anthem. >> we have best in the world in every aspect of military the sight of american warriors brings solace into the hearts of our friends and strikes fear into the hearts of our enemies our military today is more powerful by far than ever before china, japan and south korea urge iing north korea to returno negotiations with the u.s. after pyongyang fired two short range missiles many believe those firings were an effort to pressure the u.s. into renewing negotiations and prince harry receiving a warm welcome on b a visit to a
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children's hospital in sheffield. he flicked through a photo album showing pictures of his late mother, diana, on the same visit some 30 years ago and afterwards, he met with staff, patients and family members. that's the news this hour. melissa, back to you >> thank you and let's get to our tasting menu taste of some of the stories we're watching today more bad news for uber its stock has been down almost 4% since may and now two more board members have resigned. huffington and koehler no longer have seats on b the board. curious for a company that's been under scrutiny for its corporate governance practices >> she's so busy running her own business that she needed to do that the other departure was unexplaineded. >> would they be in such a hurry to leave in the stock price was double what it is now?
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>> don't know. more brands are paying social media influencers to promote their product. i want to be an influencer >> you can by fake followers >> little do these people know they might be getting ripped off. influencers can buy fake followers and pay for bots to like or comment on their posts according to a new report, this will cost advertisers $3.4 billion. >> you're an actual influencer >> if you were on social media, you would be that's the rub >> that's the rub. >> yeah. >> can't be an influencer unless you play >> you only know based on these followers and you can buy follow ers. >> it's a village of social media. all a facade >> finally, sports team owners are usually happy to stay on the sidelines and behind the scenes, but not steve ballmer. >> i have these note, but i got to say, i'm just fired up to be
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here today pretty cool! pretty damn cool whoa >> the former microsoft ceo was welcoming his two new players, leonard and george, at the team's press conference yesterday. he is as fired up about them as he was about all of his previous microsoft excitement and stage antics that we have seen from mr. ballmer over the years >> he's crazy. the energy level >> the energy level is crameresque. he has changed the culture of that team from being under donald sterling, the place nobody wanted to go, to the place where some of the best players in the league want to go >> think about his reputation now. >> as opposed to where it was. when he exited another little company he ran >> good for steve. ahead on "power lunch," growing uncertainty over the global economy sending stocks lower
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we'll bring you a half trillion dollars worth of investment advice plus starbucks is set to report after the bell and bootleg booze. tainted alcohol causing the death of another person in costa rica and the u.s. government taking notice. all this when "power lunch" returns. here, it all starts with a simple...
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take a check on the markets. we've got the dow, s&p 500 down by half f a percent. technology is is the weakest sector nasdaq down by .8, but we are off the earlier loss of 1% take a look at the new stock on the block. that's up more than 40% in this first day of trade >> thank you very much melissa. with the ecb signalling more easing ahead and a rate cut widely expected from the federal reserve week, can central banks keep pace with investors high expectations for help? bob pisani here to break it down for us hi, bob. >> hello, tyler now if you think earnings are the big movers of stocks, you weren't really watching this morning. did you see what happened? just as draghi was speaking right about just before 9:00, markets drop ped as he was
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delivering a dubbish speech saying they would do whatever it takes to prop up the economy, including more rate cuts or asset purchases, yet european and markets dropped on that. so what happened here? there's a lot of debate. were investors spooked by his negative tone? he said europe was getting worse and worse. were they disappointed that he didn't cut immediately and that it implies the fed won't cut 50 buoyant points next week do they think central banks are reaching the limits of what they could do to help out and it doesn't matter anymore at this point? there's no lack of dubbish commentary of the major economies we're seeing here. so there you see europe getting worse and worse so all sorts of possibilities about what could happen here's the key here. banks are a lot more dovish than they have been in many years eight have cut rates since april. more are expected to do so central banks seem terrified of the prospects of even a garden variety recession. maybe they should be with rates at or below zero in many
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countries right now. so a lot of debates about what's going to happen next week with the fed, so if you get for example a 25 basis point cut, does the market drop two or 300 points on that there's going b to be a lot of disappointment back to you. >> absolutely. we'll pick that right up banks, what are the biggest risks? we've got over half a trillion dollars worth now. we bring in charles swhaub and wrad at commonwealth financial network. omar, you know, it's there's two different ways we can ask the question will they or won't they and should they or shouldn't they. are you worried about these distortio distortions? >> well, you know you always have to worry about anything that disrupt the stability of the markets and suddenly, the ecb message today is something that we have to you know analyze further because draghi was clearly make iing the signal th
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yes, they will do whatever it takes to maintain the stability and reunite growth, but at the same time, think made it sound like a recession was not too far out given the data they are serving. and i think the market is taking this more as is the ecb enough to maintain and prevent a recession. a thing. whether it's getting the market into a place where it's prepared to be and the global bond yields is making it very difficult. >> brad, how do you allocate client match up? do you say avoid fixed income? do you like the stock market talk about how what do you think is safe to ip vest in in this environment? >> i think the u.s. economy is still solid. when you look abroad, certainly we're seeing slower growth in europe but at the same time, all that slower growth hasn't taken into account the effects of the stimulus when draghi says yes, we're going to do what it takes and the guard that's the next head,
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clearly, governments aren't going to go down without a fight. so i think there's still given valuation concerns, it still makes sense to allocate internationally as well. >> international stocks, bonds >> when you look at bonds, the whole point is you should get paid for holding that paper. i don't like negative yields i would tend to focus on u.s. yields, particularly u.s. sovereigns because there's no currency concerns. particularly for u.s. investors. when i look abroad, i think credit makes more sense because there you're getting a positive return and you're not being tie ed into some of the actions of the central banks. >> i don't know how you can avoid omar, the actions of the central banks, so your final question, how do you think investors should position right now? >> i think the advice we keep on taking our b clients, to try to avoid chasing returns. it's very easy to get excited when the markets are all time high, to be searching for given
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the prospect of cutting rates, so try iing to stay calm, keep risk low go back to your original strategy and your risk profile because the likelihood that we're going to have a pullback in the next few months is probably high giving everything that's been going on between the bond market and potential changes in the monetary policies that componee leads us to declis for the sake of returns and always trying to chase yield for the sake of yield. >> thank you both. >> well, folks, the summer is hot. sure was last weekend. but the hamptons housing market is is not. after the break, we'll take a trip out to the vacation spot for the super rich and see what is driving the slowdown there. ♪ (gentle music)
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- my degree from snhu has helped me tremendously. the flexible class schedules allow me to go to work full-time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we, at southern new hampshire university, are the ones who succeed. we are the ones who break through.
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talk about a cruel summer. the number of homes for sale in the hampton ss is at the heist level since 2006 let's go to robert frank for more on what's driving the slowdown >> thanks, guys. well sales fall ng the hamptons for a year and a half straight now. it was the worst spring in eight years. prices down 2.5% compared to the same a year ago. that's accord tog a 234u report. now the hamptons under a lot of is is is same pressures that a lot of high-end market rs under. an oversupply of luxury homes. unrealistic asking prices. a lack of foreign buyers and the new tax law hitting the high tax states and it's unlikely to get better anytime soon. number of homes for sale jumped 84% in the quarter there is now a three-year supply soft luxury listings and the big houses are getting the biggest price cuts here's one house in montauk listed for a mere $34 million.
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down from 62 million when it was first listed a new years ago it's on 20 acres on the water six bedrooms, four baths and that gorgeous walkway to the beach. guys, back to you. >> robert, thank you > hamptons reality typically follows the rise and fall of the tok market, so what is slowing real estate deals in the hamptons let's bring in cody. the firm focuses on harp ton real estate deals worth at least $10 million. great to have you. >> thanks so much. >> there's a 15-month supply of listings are we seeing prices drop steeply? >> yeah. in certain sections. it's almost necessitated in order to drive momentum. been an oversaturation i'd say in the commodity level of hamptons homes if you're looking at these micro market, you have to be very
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specific about the nature of how certain properties are priced. because we don't use quantity fiable metrics in the market, it's easy for someone to be pioneering or to put it out in the higher number in the hopes that they can capitalize on someone's pure desire to take the asset down so i think if you're looking at the hampton, you have to look at it as a triangle and at the base of the market rs been a tremendous push of supply. at the same time, a huge proeshuation in pricing but there's certain pockets of the hamptons that are performing quite well and that are where they should be in comparison to the tra jktry of the year's prior. so i think as a whole, we've seen a cooldown but in certain areas, there's definitely rarity elements of the market that keep driving the prices up. >> there's this home that i think you know b about, beyonce and jay-z rented it for $400,000
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a month. it took a 10 price cut seems like a lot i think think a home like this would be at the tip of the triangle and maybe $10 million, maybe wouldn't get cut that much >> believe it or not, not at the tip. i represent the home i'm very familiar with it. i think a shifting demand in what people are looking for and that home in particular has a program that you can never get again. it has a lot of preexist, nonconforming element, but at the same time, the sellers are looking to capitalize on the next chapter of their life so they're trying to be more price sensitive to the market. they're trying to give somebody the sense of value so that's the reason for the price cut. i think if you are looking at all of these major swings in prices, there's typically a story behind it. you know sellers in this category are at the tip of the pyramid or middle section. they don't necessarily need to ever sell these homes. it's more about desire and motivation whether they're buying a home
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somewhere else or they're making a trust for their kids whatever it may be. you have to look at it on a circumstances basis. >> cuts at the high eest. >> could avoid decades ago >> making a lot of money let me squeeze in one more quick question before we have to do. you talk b about different micro climate in terms of the real estate market. what's the weakest right now by way of price point
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>> i think a lot of section of developers were look iing at quality location, two acre parts of the land. they're buy iing for or $7 million. building for 4 to $6 million and they were trying to make a 30 to 40% margin that portion of the market of new construction homes has been lingering in the mid to high teens. we've seen the most stagnant in that portion of the market but at the same time, it's been a great portion of the market after they've gone through the learning curve providers have capitalized on taking those assets and making them their own i think it's just a matter of timing on that section of the market until they come down to i'd say a more realistic correlated number to thedemand >> all right cody, thanks for your time >> thank you so much >> starbucks reports earnings after the bell today, but as the stock sits near all time highs, one analysts thinks it's about
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lost and stay tuned for closing bell. kyle bass lloiusorn clive interview today at 3:00 p.m always interesting with kyle bass ♪
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starbucks set to report
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third-quarter earnings after the bell today kate rogers tells us the most important things to watch. >> hey, melissa. analysts are projecting eps of 72 cents on revenues of $6.67 billion for the third quarter, same-store sales are expected to increase by 4% globally, 4.3% in the americas, and 3.4% in china, asia-pacific both u.s. comps and china will be key numbers for a read on the consumer china in particular has seen two straight quarters of 3% comps. consumer attitudes towards american brands in china are of interest as starbucks continues to expand there in the face of ongoing trade tensions there's also, of course, competition from luckin coffee to keep in mind. starbucks made two announcements, an equity steak to offer access around the globe along as an expansion with the partnership with uber eats so those two topics will be in focus. another thing to keep an eye out for that i'm very interested in is here, plant-based meat. dunkin' made the announcement yesterday, so analysts will be
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all over that on the call. we'll see what they have to say. >> all right, kate thank you very much. let's dive deeper into starbucks, shall we? always like to do that joining us is nick setion, a senior analyst at wedbush. hold a neutral rating. either you like it or you don't like it! $88 price target thanks for being with us appreciate it. >> thanks for having me. >> let's talk about the business i'm interested in their partnership with uber. do they charge a surcharge to have it delivered, and how much is it? >> well, we don't know yet exactly what it's going to be. in the markets, we haven't seen a surcharge, in some markets, we have in others but we haven't decided what the exact form of the rollout is going to be. >> they have what would seem to be very impressive same-store sales growth for an established brand, both in china, which is their, reputedly, their main growth market, and in the united states where you would think
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things might be even slower. how have they done that? >> it's primarily been loyalty-driven 40% of their tender is coming from, you know, did their loyalty members -- the expectation for this quarter is that there's something else going on, that over and above the recent trends, i've been hearing numbers of 6% comps in terms of expectation, which is why the stock has been acting really well. but over and above loyalty, the expectation is there's something else going on. it may be that, you know, some of the products have been seeing a little bit more attraction than in the recent past. it could be that we're seeing a step up in nonloyalty members. i think if i were to take a guess, i'd think it's the latter but ultimately, at least this quarter, expectations are it could be as high as a 6% comp growth to the 4% expectations. >> that's a high expectation i was struck by beyond meat's partnership with dunkin' because that seems to be more of a
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quote/unquote lifestyle match for starbucks. how big of a problem is it that dunkin' will have these products first, before starbucks? >> i don't necessarily think it's, you know, it's necessarily a big problem. i think there will be some trial early on at dunkin', but ultimately, it's not, you know, that big of an issue to roll it out of starbucks once. and i feel like the supply chain will be ready to go. i do think that supply chain remains the main concern, you know, around rolling out that product. starbucks has slightly a different type of a supply chain than dunkin', which allowed dunkin' to be first, but ultimately, starbucks will catch on i'm not necessarily sure that you're going to see too much trial away from starbucks, just given that the customer is such a different, you know, customer for dunkin' versus starbucks i don't necessarily think it will be a problem, and if it is, you know, it will be on the margin, and starbucks will be able to catch up relatively quickly. >> nick, i just ordered you an ice vanilla latte. it's arriving soon by uber.
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>> thank you. >> nick setyan of wedbush. if you thought bootleggers disappeared with prohibition, you're wrong why washington is looking at counterfeit booze when we come right back
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welcome back leaders in the liquor industry are taking to capitol hill to discuss tainted alcohol after this recent deaths in costa rica and the dominican republic for more, frank holland is here with the details on the story. >> hey, guys we're talking about illicit spirits. that includes counterfeits, moonshine, and painted alcohol
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it's a huge problem globally the deaths of 20 people in costa rica since june linked to spirits tainted with methanol, which can be toxic and even used as fuel. at least nine americans have died in the dominican republic this year. counterfeit and tainted spirits are being investigated as the causes it's estimated 19% of the alcohol in costa rica is illicit, 29% in the dominican republic spirits here in the u.s., they are heavily protected by regulation, but not the bottles. online there's a robust market for empty bottles of pappy woman vinkle that's a hard-to-find bourbon whiskey that can sell for more than $15,000 mark brown, ceo of sazerac says crooks use these bottles to sell counterfeits on well-known sites. for hundreds of dollars, you can also buy empty bottles of macallan, louis xiii and many others. >> craigslist and facebook and ebay are enabling a bypass of our system, and in doing so are
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introducing risk into the system that we're going to have a methanol counterfeiting problem in the u.s >> the wholesale spirit and wine association is sponsoring a briefing on capitol hill today it issued a warning in may about illicit alcohol overseas they say globally it cost the spirits industry $45 to $50 billion a year. >> i didn't know this was such a problem in this country. >> globally. >> yeah. >> and where does -- is the state into the investigation into the dominican republic deaths and you said ilissil alcohol's being investigated what do we know? >> right, as a possible cause. i actually just got off the phone with the chairman of the western hemisphere subcommittee for the house. he said they're just actively looking into it no clear answers yet, but he met with the ambassador for the dominican republic and let him know he's very concerned about 3 million americans go there every year so while it may be a local problem, it's a problem for us americans as well. >> all right. >> especially so in costa rica i mean, there it sounds like more the local population where it's been an issue, but dominican is clearly tourists who are coming in and out.
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>> exactly. >> frank holland, thank you. big night for tech earnings, of course. >> alphabet and amazon the two companies -- >> and interet -- >> i say should be broken up by investment bankers in our lifetime. >> that's your conviction. you'll stand by it. >> i state with aplomb. >> thank you for watching "power lunch." >> "closing bell" will pick up where we leave off, right now. ♪ welcome to "the closing bell." i'm littwilfred frost. i'm at the boeing post, they're sliding and it's been a bad week rerl renewed fears for the 737 max stemming from the airlines shlg but broader markets are selling off as well. lots to discuss from central banks to earnings with 59 minutes of active trade. >> i'm sara eisen. welcome, everyone. let's look at what's driving the action lower this hour, the final hour of trade. european central bank today leaving interest rates unchanged, signaling a future rate cut, more monetary easing didn't do the trick, though, in terms of exciting the stock market earnings fallout from tesla and facebook weighing on big

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