>> all right make sure that you join us tomorrow we'll be joined by the father-son duo and plus discovery ceo are here big line-up for us hope to see you then it's time for squawk on the street >> good monday morning welcome to squawk on the street. futures are up after friday's record close and a jam packed week awaits us earnings season kicks into gear. europe is mixed. watch for ecb this week. bonds pretty steady. empire was a miss. it's the weakest in 8 months our road map begin with another record breaking run for the dow and s&p setting all time highs will better than expected earnings send stocks higher. >> nelson peltz pushing for a

board seat he's going to join us for a live and exclusive interview in this hour. >> blue apron down almost 7% this morning as the stock is further from its ipo price a lot more on jeff besos competitive muscle. >> stocks are looking to make more history 68 in total and next week will be even hotter. >> make or break and some companies are real stand out i look at microsoft and think they can deliver there's negative commentary about ibm. obviously this is the last conference call for ge let's see what they have to say. this is a make or break week it always has been this sets the tone for the quarter. it is a kind of remarkable time because a lot of these companies are very international and we have really good numbers out of

china last night europe is coming back. some will be saved by overseas retail sales over there. the estimates though, 68 for the quarter. it was 66 at the beginning of the quarter so we haven't had them as they normally do. >> no, that's a big change the domestic economy is stronger and by the way there's tech stocks that won't quit we talk a lot about them that's really important. there's a price pump today and elon musk warning us on artificial intelligence and job replacement and it's going to be pretty incredible. >> i think the governors

association where he in no uncertain terms said it represents a real threat and we need regulation of some kind and i don't want to take anything away from the leader of our states but maybe not on data somehow i doubt it. >> no and ai still stands for alan ooiiverson. we're in a strange juncture. tech has been fabulous but industrials have been fabulous and the drug stocks have been good if oil were to catch a bid which is happening because the minute tral stocks are so strong you could see a nice upside. jp morgan, i refuse to jump on jp morgan however there was a curse word on the conference call. >> we spent a lot of time on that why was city the stand out

why they're performing at four times the gdp. >> talking about you. >> he seems to be saying he is right. he's keeping it all business and dimon went outside the bounds. >> it's refreshing to hear a ceo comment about washington but when you got that giant sales and trading business we'll see

from goldman city de-emphasized that business a long time ago. >> you'll agree it's more porn u.s. leadership in the world, gridlock and policy errors i have been waiting for someone to speak out saying our country is an embarrassment we spent a lot of time in london recently i know he heard a mouthful he's not delivered. >> no john has been very focused on tax reform interesting this morning. reporting that the administration is going to start to unveil a true tax reform

plan. >> yeah but still health care just out there. >> not going to get this much either. >> if we got tax reform the company would do so much better. there was a moment that is listen if you wanted the economy to grow faster than 1 to 2, we could have much more and he said much more to immigrants and first time buyers. it is the people that were struggling i liked that much. >> we missed you friday. you can't do that again. >> i'm going to cancel friday. >> he's going to though. he's planning on it. he's going to miss a couple. >> right now i'll tell you i won't. how is that? >> i feel bad.

the man doesn't have that much time left. >> you'll have another big story to cover that's according to a regulatory filing owns about 3.3 billion in stocks is the consumer products maker and consistently underperforming relative to peers and using market share the move makes them the largest company ever to face a proxy battle and we'll have the interview later on this hour he's underperformed the snp for the last ten years. >> the total return numbers are fairly negative. if you go over the last quarter, procter & gamble they're trying to be able to reduce costs but when you look at the organic growth i think it's grooming

you can see how unilever has done much better and there's a case to be made not really in nelson's page but about emerging growth it's been unilever sarah is on vacation and she's from cincinnati. the reason i mention that is not to be funny but there's an emphasis that perhaps proctor is not worldly enough. >> and or whether they have access to talent or enough of it as a result of where they are. no one wants to take a shot at ohio or cincinnati but that's been an argument what people are also questioning or want to understand here is why fight here if you're procter & gamble you have nelson peltz trying to expand the board and he wants to add him and keep fern he would be replacing by just increasing the size of the board. he's not saying he wants to

break up the company he's not saying that he wants the ceo replaced this does come after what i am told are relatively friendly engagements that moved along so i have asked that question here's the answers that i have gotten p and g felt as though he wanted a promise on an eps number is and they do not want to go to that level they have a lot of fluctuate each quarter seems to be impacted 54 cents last year if i recall and something along the similar lines in the past. they feel as though he has not been a shareholder long enough to be able to ask for what he's looking for although frankly they also admit he hasn't had a white paper as often as the case they put together a very long statement of what they'd like to see happen think ge for example that's not the case here so they're saying well we don't really understand exactly how you're differentiating from the strategy we already have in

place. but nothing different than we're already doing. you would change dynamic on the board of directors and you have only been with us for five months on the shareholder. we want to maintain the flexibility that we believe we need to pursue the long-term plan for this company by not being tied to eps number that we have given you in terms of products that's seems to be why they decided strangely enough fight this is going to be potentially a referendum on the new ceo mr. taylor it's going to be distraction you do wonder why they have chosen to do it. those are at least some of the reasons. >> i did a recent round table. they were so happy to have it in there and i tested this he was

happy to have him on but he was not. >> the counter argument would be you'll always see positive statements having to work with the board members but when you look at the underlying performance of the companies did heinz improve the basis points it said it was going to. maybe once they got bought by 3-g. there's a lot of back and forth about how effective it is although you're right our experience has been when we speak to other people although i haven't spoken to as many fellow board members that it's been a positive one which goes to why not just say sure. >> proctor has a plan in place

but you have to question are they growing in key categories and what is really going on with gillette what's going on with gillette? >> right margins are pressure. >> dollar shave club i know many of us that use it are thrilled. >> when you look at mondelez heinz nestle is there something about food and staples that draws in activist more than any other sector >> there's a sense that all of these companies have challenge growth so they better take down their costs really hard. at the same time if you talk to ben that's been the best that's clorox, much higher multiple what he would tell you is these must be more technologically oriented and you have to be able to spend where the consumer is we have

improved at 26.1% as of the last fiscal year we do have a plan in place to drive down costs and use the money to reinvest in the business and drive down organic growth. >> the counter argument is you have a $10 billion cost cutting program in place previously that didn't seem to benefit the bottom line at all i did not like what he said in the last

quarter which is what do we face slow market growth geo political and economic stability. there is the problem with the stronger dollar. rising commodity costs i challenge this did fwrks eo political and economic stability really impact press? is that really what is involved? >> i don't know. currently impacts on eps fiscal 14, fiscal 16 is 35 cents. >> okay. p and g did have a statement in response to all of this. p and g has maintained an active and constructive dialogue with trian since it made it's investment in the company. they're driving innovation and accelerate organic sales and volume growth and improve productive i think you will be distracted this will be the talk of a long time he had some good ideas when it came in to heinz and i spoke

with mr. johnson i have spoke with a bunch of people on that board of heinz. they love it. >> i know. >> i will say this for now both sides aren't saying they're going to keep it it's going to be a cordial fight. >> but ge they said listen you shouldn't focus on proctor and i hope that proctor is good dividend yield excellent cash management. but holy cow this is a different order entirely. >> it's fair to say they're facing a fight here on the road ahead for rates and the economy

and yellen look at the market economy coming off the year. a third of them have come on friday so far this year. we're back in a minute. >> i have to work friday hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. we created the ripple: the doughnut in a doughnut in a doughnut. right away, it was a success. i mean, it really took off. what people don't know is that it all started with points from my chase ink card. i bought the ingredients, utensils, even custom donut cutters.

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amazon is preparing to enter the market revealing such a plan in the trademark application they're down sharply falling further below the ipo price of

10 we do the prep you be the chef. that's what the sunday times says this application reads. >> we do the ipo you issue this after blue apron's challenge is looking very jenga like saying it's still too early this was one where i could not figure out why did they race to get this deal done would they have known? i think it was reasonable to think that once amazon gets whole foods this would be natural. why not? it was about having 1,200 stores where you'll get this and amazon is, you have to hope you don't wake up in the morning and see amazon decided to get your business i think it's very significant. i think that blue apron will be struggling mightily to keep it's business primed and makes it so you don't have to pay full.

>> what was the alternative though stay private. >> i think so. and now it's done a substantial valuation versions this one. i know but then again the people that bought it, they did still, look did blue apron do great? it was absolutely great for blue apron. not as positive for the people that bought blue apron. >> we still have a very strong growth rate. they go through the customer acquisition and then customers dropping off and having to get new ones is the key of concern the rate of growth it was a very crowded business a lot of people thought grub hub would be annihilated so i'm routing for blue apron. >> we're going to get cramers mad dash in a moment countdown to the opening bell. we'll get to another call on amazon as they take their target

to 1,200 and then later on this hour an exclusive with nelson peltz that spushing for that se seat on p and g's board. and the wolf huffed and puffed... like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler

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>> six minutes before we get started. trading this week. reported executive change. someone you noel that had a big job on the west coast. >> yes, charlie sharp joins bank of new york melon. the stock is up 10% for the year it's not underperformed but charlie sharp built visa into what it is i think charlie would admit to that but he gave him a really good hand. i happen to think that charlie is one of the most forward looking ceos not just in banking but very much of it intellectual and also a tough negotiator. trian had a very big position. >> it did.

so i have a sense that they're pretty excited when you meet with executives you are so blown away by charlie and where he is versus others in terms of technology, in terms of vision he wanted to be back in the east coast and going back and forth. this is obviously geographically desirable. >> some people were trying to take issue and i said shut up. this really proves he likes to be home and that visa job requires being out of the united states most of the time. because visa is truly trying after they bought europe and you know there's big chinese negotiations back in new york very solid franchise. really terrific over many years

almost 2% on that announcement this morning. >> the opening bell and don't forget the live interview with forget the live interview with nelson peltz just a few minutes the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

away he has some really good things to say there's a very extremely negative note about ibm. you just can't be there. it's very interesting. let's just say they're talking about lower, take down your growth so that and admit to the issues you have. it's a very big week by the way, another big pushes

on microsoft really seems like broken out here. >> let's get to the opening bell the big board today. ringing the bell in honor of their 100th anniversary at the nasdaq bank of the ozarks and regional bank leading the bell nice bullish call. >> starting to recommend some of the stocks with green briar and gatx i wonder when will that trickle down to the ge locomotive division which some people including nelson peltz have suggested. perhaps that's not a growth business but they have very much involved with international trade. >> yeah you on friday missed

lorenzo from ge baker hughes, the new. >> that will teach you. >> talking about the oil and gas business. >> i may not have been here even if i had taken the day off i could not speak on friday morning which my wife was thrilled about but you guys would take negative. >> by the way, up a percent and a half as people talk about whether or not they have finally found their legs again here. >> i think oil can go. didn't take down 43. i think it can go back to 50 at the same time that is the five years futures curve it's always hard to get past there because so many of our oil companies then start selling futures furiously in order to be able to make their cash flow

projections. >> finally on ge we have been talking about them all morning but it will be interesting to see if, in fact, at some point a board seat does materialize at ge. >> there's talk of that. >> where one would expect they would not necessarily fight given a brand new ceo unlike what they're doing at png. >> mention procter & gamble and the desire to have any target. remember the $2 price. >> at ge you mean. >> earnings per share at ge that's not materialized. i know they have said point blank not that happy with what's going on there you could recognize there's no reason to be happy. >> not with a $26.73 cent stock price. that's not easy. down 15 plus percent this year at ge.

>> verizon and ge have been terrible anchors. >> horrible. >> we mention blue apron and amazon in the last half hour ubs did take their target from 1,100 to 1,200 as they refresh their earnings model looking at what they're calling increased shopping velocity among prime members. not to mention aws dominance and the idea that investors are going to focus more on opportunities than costs in the back half. >> i think that's true amazon, they play with it different. we used to think they play with it and many people actually think that amazon web services is the real jewel but if that is the jewel it's the front side that you see as a user we've all come to see amazon as i like the term eco system. how many times a day or week are

we on amazon i'm on it probably five times a week >> they didn't do as well as i thought they would. >> no, we talked about that on friday. >> is there something that you didn't talk about that i can weigh in on. >> you missed it all. >> we named our dogs invidia >> i'm going to ungauge it all weekend everything that's my dog. >> what your dog's name is. >> he was chopping at the bit all weekend. he wanted the market to be opiate but i couldn't have that happen. >> are you now watching the price of bitcoin today as proxy for amd. >> yes and i'm surprised it's hurting amd more than invidia. it has a far more broader pull

because of artificial intelligence people have been playing it. they have to be concerned. >> when you introduce something like that i happen to like them as a competitor to intel there are other forces but they did get caught up and bitcoin seems to be plummeting i don't know who is going to start buying bitcoin at this level. there's a very interesting piece about china this morning and how china is apparently cracking down again a lot of people are able to take it out. it's part of ransomware but they

say are you crazy? bitcoin is the only solid currency in the world and everybody else is printing money it's a nice way to be able to play this change in what i regard as sentiment about the value of currencies worldwide so i'm going to give the bitcoin people that. >> shares of sprint on friday. again a day that jim wasn't here or anywhere at cnbc. the man that runs soft bank which controls 80% of sprint was in sun valley where he had an opportunity to speak about a potential investment in the company.

although it seemed unlikely but what i would say is when you simply put it down on paper as to how that would work a lot of people question what it would actually look like he has a thies coupon and the opportunity at a very small premium given what he confers on a company he's able to get those kind of terms. here though where do you end up? talk about a negative free cash flow company with 32 or $33 billion in debt. not looking to pay some sort of a coupon on a $10 billion deal and by the way one would anticipate if a buffet were to come in it would actually be not as much to give leverage to any talks that do take place in the future with t-mobile but to help structure the balance sheet

properly for the talks to be able to take place almost contingent on a deal itself so whether or not they had conversations it would be something difficult to get to a deal that would be amenable and work and might be dependent on a deal no talks right now as people know the exclusivity period for print with another couple of weeks on it with the talks taking place with our parent company comcast and charter about some sort of mobile virtual network operation agreement. >> what do you think about the weakness in t-mobile. >> i don't know, how much fire power does sprint really have? there's no doubt that he has helped to turn the company

around and they're still dealing with an enormous amount of debt in a highly competitive industry and it's clear that a deal would be the best opportunity for them because they can take so much cost out the question remains will regulators ever allow that to happen. >> it would be something the personalities at the top of those are both really out sized. >> but he would be the one that steps aside. ledger would run it. >> are you sure about that >> i'm pretty sure and i don't think they would necessarily disagree >> he could find soft bank in a very senior role i don't think that's the issue the issue is more what kind of value can you deliver and assurance can you give that if they don't -- if they do get turned down that they'll be in a descent place? >> i don't know. i think t-mobile, the stock has come down big. that doesn't make a lot of sense to me other than the fact that it's part of a cohort that's within bad t-mobile is one of the reasons why the other guys aren't doing well but you're right.

you could combine, there's tremendous competition in that business but how great is it that this is one bill that has come down to the point where you're cpi, consumer price index is actually impacted by it and i think a lot of people are thr l thrilled this is the same reason i heard will frost come at it this morning a very interesting discussion and the answer is how do you get involved with amazon when they're keeping our prices low how do you get involved with t-mobile and let that sprint deal happen when it's been so good for the consumer. so i don't know. >> let's get to our big story of the morning. nelson peltz putting the pressure on procter & gamble he launches a proxy fight against the company. wants one board seat the company of course is enormous it's a market cap of $220 billion. it's the largest company ever

nelson peltz joins us on the phone. great to have you anyway you come to us including on the phone. >> good morning. great to be with you guys. >> and carl too. >> and carl. >> nelson, are you -- well let me get to it you haven't been a shareholder long enough. five months. they don't feel like you really have the aging, so to speak in your shareholder position that they'd like to see they claim that you wanted them to promise an eps target and they feel like you would change the dynamic on a board that's operating well what do you say to them? >> first of all i want to tell you david that p&g meets all the criteria that we at trian look

for. a great company with phenomenal leader but one that hasn't lived up to that potential for quite some period of time. if you look over the last ten years it is low if you look at market share it's for a ten year, five year, four year, whatever period of time you want to look at it is losing market share. but it's the only company out there that has over 20 billion plus dollar brands but when you have that many brands they start to get

commoditized and you have those brands that grow and take market share p&g because of its bureaucracy and it's matrix organization has been unable to do that it's structured improperly for it to to that. so if you want to talk about the fact that i haven't been in the stock long enough well it's been about nine months which is the gestation period that probably got us both here and that's long enough and as far as my age i think i'm older than probably anybody on that p&g board i'm still kicking. >> you are we know it and you're a very clear thinker as well. no white paper here from you guys it doesn't seem as though you have a differentiated strategy from what they have right now so

why not just simply allow them to continue to follow that what about having you on the board is going to change anything going on at the company now? >> if you looked at the board that we have been on and let me give you a couple of facts we'll be putting out a long white paper that will put all of you guys to sleep but if you look at our short white paper on page 19, you'll see that we talked about the fact that when i get on a board in the consumer space, annual eps growth has gone up 780 basis points above this is 780 better than the s and p 500 and it's grown

880 basis points better in terms of psr that's my track record for companies like sis ccisco, wend heinz, mondelez. i know you talked about some of those companies earlier but those are the facts and what happened at heinz from the time our proxy fight ended to when 3-g bought it you will see 32 straight quarters of organic sale increases there isn't a company that can make that statement from that period of time >> it's 15.5 in round numbers.

he's announced going to 17 to 18 by 18. those are dramatic increases we have a track record at trian in the spaces that we operate in happy 75th birthday. when we compare to a competitive average weighted by sector our costs are more than 100 basis points lower we reduce by 50 basis points these sound like good numbers to me how can you do better than that? >> let me give you some real numbers, okay? p p&g's average selling price across the product line is 40.

4-0% higher than the rest of the industry they are also number 1 but their margins are right up with the top guys in the business they're bigger than anybody else they have this 40% price advantage. 7 billion of the 10 billion with fortune exchange if that's the case i'll take his word for it. where is is the other 3 billion? who cannot find that anywhere? so that $10 billion savings hasn't done anything for us. it hasn't done anything for us in market share where we are

losing all across the world. country by country we're losing market share over a 3 year period over a 5 year period. and it hasn't been anything anywhere so i can't find that. so now they have embarked on a 10 to $13 billion cost safings plan which i applaud but i hope it's not the first and we find nothing. the fact is that david taylor is a gentleman. he's a guy have the upmost respect for. we spent a lot of time together and the fact is when i met with him the first time they said why don't i wait a year before asking for a board seat and see if things don't go well. i said first of all a year isn't a good judgment factor the fact that i asked the targets is not accurate because if you look at the he e-mails i can provide you, i say we're

looking for 2020 i'm looking for p&g in 2030. i want boards and management to act like their entire network is tied up in that company. that's what we're looking for so we're not looking for the next quarter. we want them to wear bifocals. the next quarter is important but what you have to really keep your eye on is the long-term and if you take a look at png and say if 5 billion of the bottom line between now and 2020 and they grew along with the market and you got your dividend that might give you a tsr of 15%.

i don't think they're going to do that. we're thinking about where is this company going to be beyond 2020 how are they going to compete the big and the small. they have a matr kpirks organization and a matrix organization is the depth of accountability and what we want and we juan one man or one woman responsible and get all the functions out of the way

and came in and left and he found that unilever and i doubt if it's much different he found people that thrive in a matrix organization they learn how to operate. >> let me ask you, if you said here's an example of where you're getting hurt have you point blank said to them these are products you're losing share on and this is what you should do. >> i have spoken to exgillette people they were all fired basically but i spoke to a lot

of the exgillette guys and they said if dollar shave club and whoever the other guy is were around when they were running gillette they would have put a group of them together and say how do we put these guys out of business that's what should have happened years ago. didn't happen because you replaced gillette people with p&g people very different culture. very different organization and you have people at p&g for the most part. not for the most part. 99%, who have never had another

job but pnp&g. i'm talking about those that run the organization you should have a soft target that at least 25 of them come from other companies because these guys only know one play book at p&g. and get together to solve a problem do you know what they're doing, they're talking to themselves. >> well when you talk about culture, i mean, for years the p&g culture was considered a standard highly militarized, highly structured the power of brand managers it took years to work your way into those positio positions. when did their culture become outdated >> do you know something, you can say the same thing for ibm but you have to change you have to move with the times.

you have a bureaucracy there that is oppressive you have functions that the only power if you're running a function, the only power that you have is to get more people inside of that function. what you need is and yes they have a unit structure. we'd like to, we've seen way more success with the geographic structure. now we're saying if we get on the board we want to do a real study and understand what works better but we find that geographic structure works best you have people on the ground that know pricing, know competition, know packaging and they can correct those things right there.

>> nelson we're running out of time so listening to you it's clear to me how you differentiate your own view of what the company can accomplish from what they're currently seeing and how you might make that impact on the board but again they would respond to some of the things you have been saying by saying we have got a 360 basis point expansion since 2011 we're at 26.1% virtually everyone what's your problem? not to mention we're always dealing with the huge currency

and the hardest thing to do is regain lost market share and they are doing it every single quarter. and you look at the market share we got it in there by country and you can see that 41 of 60 countries they lost market share for three years and for five years. that's a lot of countries. that's a lot of product. so you have to be able to walk and chew gum at the same time. you're getting some margins but i don't see it in eps. >> right >> well, you know, to eps, you during this interview, of course you said you want the long-term. you're talking 2020 and beyond and they seem to however believe you want them to commit to an eps target which conceivably

would take them off of their overall strategy to sort of in their words create the self-generating profit engine where you have cost savings that then go into product development and then lead to organic growth. and then an eps focus like the one you want them to have would not be good for the long-term. how do you respond >> i respond that it's completely inaccurate. i suggest you look at the e-mails and you can see the e-mails where we say in our he e-mail that a one year target is way too shortsighted and we're not interested in that because we talked about the concept of waiting a year to see how we would do and we talked about measuring that year and then further our response to a one year target was too short-term so that's just inaccurate. >> nelson if we can just for a

second, where are you with ge? i know we're switching topics but there's a place where fresh blood on the board might make a difference how are you doing with getting them to have it. >> i want to be invited back another day and another day we can talk about ge. i think our resident expert on ge is jim gardener today is p&g day okay and we'll talk about p&g it's the largest proxy fight ever. >> fair enough take advantage of it because we know you have a strong view there. >> you know what, given your experience in proxy fights so frankly you haven't waged that many of them are you surprised, were you surprised that they chose to

fight here that they would see to your request? >> yeah i'm quite surprised and very disappointed because i think david and i really developed a very positive relationship together. i'm not just saying that i like the man we've had several meals together and i respect all of that but you know what we have found is that whenever there seems to be a direct correlation between a company that is doing quite badly to a company that's going to fight us to the death and if you look back over time look where we got board seats and look where there was a real fight to keep us all what i'm hoping that will come out of this and hope springs

eternal and and i like the people that i met and i respect them and i just think we can show them a better way and hopefully we can open some mines but i think you'll see a direct correlation between those who were fighting and those that have bad tsr, bad market share issues we said we weren't going

away we didn't go away. we bought more stock and look what happened. >> last word and we'll wrap it up. >> i said it all you guys are great i appreciate the time. i know we'll be talking about this a lot but i hope if there's any shareholders out there that happen to be listening today and i know you guys draw a big audience so i know you are if you believe that we can one seat on the board from trian can be a help, i urge you to flood the lines at p&g in cincinnati and call them and say why waste this money on a proxy fight why don't people get back to

work all we want is one thing. we want the company to get better that's why we put the list of knocks we want to make sure that all the pr people understand and not have to speculate what we are not looking for. we're looking for growth and earnings and market share increases. thanks a lot. >> the contest has begun. >> bye bye. >> thanks to nelson peltz the founder and ceo of trian. >> whose side do you take? >> they're giving her all she's got but they have not done as well as others in the industry so you can't really be against the facts.

i have not talked to the dr. pepper people. they're all really happy >> and the broader lesson about management and executive tenure and how that appears to have effected growth at other large cap companies. >> i think there is an issue we talked about people that worked at proctor and then left and that's not an unusual, i have found there's two ceos i deal with that worked at proctor. it's an excellent company with a great dividend but unilever is taking it to them. >> it's going to be an interesting battle even though it may stay on a very civilized plain. it's going to be interesting to watch. >> why not have them on.

it's like what happened with game of thrones last night. >> no spoilers. >> no but took down netflix. more about the mechanics. >> they had challenging times but he's not had as challenging a time and that really comes down to it >> what are you going to do tonight? >> have to talk about this one obviously but i have this company, this thing is up 235% and then believe it or not i have rover.com and that is not related to it up 2 i got to see what's going on.

>> see you tonight >> we'll get back at you when we come back the always outspoken former dallas fed president richard fisher dow is in a muted range this morning. we are back. we, the people, are tired of being surprised with extra monthly fees. we want hd. and every box and dvr. all included. because we don't like surprises. yeah. like changing up the celebrity at the end to someone more handsome. and talented. really. and british. switch from cable to directv. get 4 rooms with hd, dvr, and every box included for $25 a month.

earnings kicking off transports though are notably weak down 1% it's going to be the worst day of the month. >> our road map starts with a mixed open for markets this morning. the record breaking rally stalling a bit we'll discuss the road ahead for stocks as we get ready for a big week for earnings. >> nelson peltz seeking a board seat get you highlights with him straight ahead hitting the pause button due to health care. we have the details. >> first all wall street looking to the next fed meeting after janet yellen's dovish tone and testimony in front of congress joining us is richard fisher the former president of the dallas federal reserve and cnbc

contributor. great to have you back, good morning. >> glad to be here. >> thoughts and reflections on the testimony last week and do you agree with the general consensus this week that they did lean dovish? you're beginning to see price demands in labor but i think this is what they're watching. they're still mindful and she still expects cellular communications to see that 2% target being approached and i didn't see any shyness about pursuing what some are calling quantitative tightening or reversal as they invest the rollovers in the fed portfolio so i didn't see change there

it was the reaffirmation of the direction they were taking a lot of what they tried to put in place including the rollover issue in the portfolio has been well communicate sod there was nothing new and there was relief on that front. i still think the market is digesting the possibility of tax cuts if not reform and maybe something on health care still seems to be holding things up

but we'll have to see. what they do day by day minute by minute i don't think gives you any sense of direction whatsoever. >> they tried to pin her down on asset prices she said we try not to pine on whether they're correct or not correct. she stepped in that before would you expect that their cross hairs shift to how expensive assets are. >> they have been worried about that in fact going back to my time we were discussing it then so they're getting more expensive they're very mindful internally in my view if my memory is correct it goes back 2015, still are expecting some price reset at some point and does it effect the economy or is there difference in real economic activity. that's what they're looking at

>> i'm not sure if we had you on since his name has come to the forefront. i'm sure you heard the criticism. he's not an economist. >> another goldman sachs guy. >> here's what i wonder about somebody like that to the question of asset prices criticisms have been lobed at the fed. you're trying to get the inflation within wages would he have taken away the punch bowl sooner because it was driving it higher rather than the contemplation the fed wants or are you kidding me? a guy that runs an investment bank do you think he's ever going to take away the punch bowl early what would that be that's a way to say is he going to be more hawkish or dovish if he ever takes over the fed. >> he's a good guy and good man.

i would have moved earlier he's going to be the key decision maker if there is a successor to her we know who the candidates are there's people out there campaigning really hard for this job. i doubt it will be anybody on that list. the self-coclaimed next fed chairs but we'll see i'm comfortable with having him as the key factor in the decision making apparatus here he's a good man. >> there's talk that the white house does have their act together when it comes to tax reform reporting that they learned from health care reform that they have to get on the hill and get everybody on board at this point. you mention that you think the

markets are pricing in a real possibility still that it's going to happen. what do you think? >> they're going to have to deliver something here the fed has been carrying the ball monetary policy worldwide has been carrying the ball now it's time with all the liquidity available it's still priced very cheaply. the ten year is still in the 230 range. to activate that money and put it to solid good productive use you have to have fiscal and regulatory policy that's conducive of business activities this administration has done a good job on the regulatory side. they made good appointments.

>> that's in the hands of the united states. it's not in the central bank policy i don't think the central bank should have everything on their back. >> finally last week or the week before jamie dimon said try not to make predictions from balance sheet adjustments. i wonder if you think bank ceos understand the effect that quantitative easing has had on their business, on deposits and if they're really ready to go the other way. >> well, as you know, i think barclays is ready and i know jamie very well and spent a good deal of time with him. he thought this through very carefully. everybody is hoping for a spread out in net interest margins. we're all worried about the pension fund and insurance world

so it's actually something that i believe is constructive for the financial sector and we have seen it reflected in the price of financial stocks. it is a change in direction. we're seeing it in the comments so i would say this. the central banks are no longer your complete no questions asked friend and i hope it obtains that way i want to mention one more thing. the new phrase that just came out today in china, as you know, a shares suffered 500 stocks, 10% limit down yesterday but they came up with a new phrase guys. it's not a black swan it's

called a grey rhino in china. >> another thing on our plate. thanks for bringing that to us we'll see you later. >> earnings and revenue falling below wall street estimates. leslie has been digging through the numbers and joins us with more. >> black rock raked in 104 billion dollars during the quarter to put that into perspective if black rocks net flows were a stand alone fund they would be the 26th largest in the u.s. however 80% come from money going into black rock's index fund which charge lower fees in the more actively managed products they have been lowering fees as well to capture more share that's a big part of the story during the quarter revenue and net income both

increased but they missed analyst estimates. while analysts were expecting $5.40. the firm posted revenue of $2.97 billion versus estimates of $3.02 billion the way asset managers make money is changing with the shift from active to passive and not necessarily in a way that's better for them. for the first time since 2008 at the beginning of the financial kprie sis revenue pool and profit of traditional asset managers fell worldwide in 2016 according to a new report by the boston consulting group. 2 of the biggest beneficiaries of course have been black rock and van guard which dominated net flows last year bringing in $371 billion to survive in such

a winner takes he all market cut costs and invest in technology and well, merge. >> leslie thanks for the run down and what bloack rock did let's talk about that. >> it's emotions ble mattthe en. you have a buy on black rock what does that say about their future and whether or not they're the best place to invest when it comes to financials right now. >> as far as the asset management industry that's the only secular growth story that you have and the reason is the passive franchise. it's the only one growing and

the only asset manager that i have a buy on. >> so yeah a clear winner. >> selling off by nearly 3% right now you would tell people to get in there. >> i want to say the stock is up over 50 or $60 so running from 380 up to 440 or so not surprising to see it pull back a little bit as expectations got ahead of themselves. the fundamental picture hasn't changed but the pull back here is allowing investors to have a sbr entry point. i doubt if estimates move all that much on the back of these results. so i think $25 in 2018 is quite doable >> david what happened to black rock it's problem if you want to call it that to any degree

emotio emblematic does that explain why 25 record highs for the dow and the s&p. we got confirmation theory and yet it doesn't feel all that juro euphoric there's a lack of excitement about this market. >> that's reflected in the low levels of correlations but more broadly the low levels of volatility the economic data looks okay the earnings data looks good and as investors come to term with the fact that the outlook is fairly robust we see them continuing to pile up so there's more room for this market to run but the fundamentals need to stay in play in order for that to occur. >> one of the lines today that got a lot of attention was this idea that there's a significant amount of cash on the sidelines what evidence points to it >> that was mr. fink's comments

where he was highlighting europe and large portions the fact that many use their bank accounts instead of markets when they stock away their extra dollars that's been true for a long time it's not going to play into a thesis that i have one of the things that i point out that's circular in the argument that you're having if we're going to have more and more assets go over to passive passive doesn't rotate the way active does so you might see volatility i don't have an investment view on that but it's an interesting point for discussion >> what about goldman sachs? your thoughts there. >> they report tomorrow morning. we had jp and city on friday and so i think that what's interesting about goldman is we have seen over the last two weeks earnings estimates come

down and yet the stock is up between 1 and 2% over the same period to me earnings expectations are very very low among investors. the fact that numbers have been coming down it's clearly already digested and the buy side is already there so i they this is a very very unusual set up for goldman. we'll have pretty weak results i'm expecting them to trail yet again. it's going to lead to a difficult conference call if that turns out to be the case and yet it seems like they're already positioned for that negative outcome. >> we'll see if we hear any comments on that conference call thanks guys. >> thank you >> when we come back, nelson peltz mounting a fight for a board seat at procter & gamble highlights from our interview with him a few moments ago and what it meanfos r p&g. we're back in a minute whoooo.

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advantage. something is wrong. >> he believes there's a number of things wrong and there will be a potential fight although both sides seem to be indicating they expect it to remain very respectful the talks they had so far have been those but they did not result in the out come that he was looking for namely a friendly agreement to put on the board. also spoke about the insular culture at p&g and the fact that it takes a toll on the ability

to innovate and consider other alternatives take a listen. >> you have people at p&g for the most part. the 99% that never had another job but p&g. you should have a soft target that at least 25 of them come from other companies because these guys only know one play book at p&g and when they get together to solve a problem, do you know what they're doing, they're talking to themselves. >> some surprised that p&g chose to fight here. typically a proxy fight is a distraction. it could end up as a referendum on relatively new ceo david taylor and it is not as though peltz was asking for them to split the company or do things they might be really strongly

opposed to but there's a feeling he wants them to agree to eps targets. and they believe he would be able to change the dynamic on the board. >> i was coming down to stairs so i couldn't hear the whole interview. did he ever confirm and or deny he wanted them to commit to an eps number >> so he referenced us to an e-mail exchange that we haven't been able to locate. >> right. >> so i'm sure we'll get it. he said no we were talking about a year out however in my conversations the indication has been that p&g fully saw his desire for them to make an eps promise. they're a company that's had a lot of fluctuate due to currency but they simply also believed they need the longer term strategy that involves cost cutting but then reinvesting to grow the business and not being die verted by having to make an

eps number quarter to quarter. >> he has a tremendous track record when it comes to these companies as he highlighted repeatedly in the call with him. i don't see the stock moving much are you surprised by that? is it because it's the largest proxy fight ever could he make a difference >> i think overtime he could he believes he would at this point there's question as to whether he will be successful and or the fact that frankly he's not embracing something that necessarily would result in a very sort term quick move. >> a lot of specifics. >> not talking about a split >> let's bring in the senior vice president calling for a p&g break up since 2015. with us from chicago this morning is erin lash good morning to you. let me start with you i remember

talking to you about what was then a fairly controversial call from you a couple of years back where you said split this thing up where do you come down if you listened to mr. peltz's argument and i know you spent time with management. >> the facts don't lie the company has clearly underperformed it's peers in a big way whether it be for market expansion or top line growth, et cetera now it should do better. this is a company that throws it's weight around a lot and does extraordinarily well when it does so the weight has become an anchor. i think you can lean it up quite significantly and make it a much quicker decision making organization the world is changing. pg isn't changing quick enough there's a lot of potential to be h had. a break up is probably the right slus all the arguments of scale have not come through there's no scale of margin it's the same if not worse

low share in some categories that are close to it that doesn't close so i they the scale argument hasn't played out. i think nelson is probably more patient than i am. nelson believes that maybe in a couple of years they can right the ship and things can improve. there's improvement potential but this needs to be broken up you won't get full response from the management team. and that has to be the path overtime nelson may be more patient than i am i have seen them try and try and try. >> to the point of margins p&g says listen we have improved margins by 360 basis points since 2011 and our margins are fairly high compared to our peer group. is that a correct argument or is there a lot more room?

>> we think there's more room for improvement. they have taken complexity out of the business and we think the combination of the brand nationalization as well as efforts to extract another $10 billion in cost could lead to some margin improvement however we also anticipate that the firm will utilize some of those savings to reinvest behind the brands both from a product innovation and it's been quite lackluster they used to say we could never do $10 billion of cost savings 13w8ds of cost savings on a $65 billion sales base is 18.5 points of margin improvement they're not committing to that really hitting the bot to line.

>> where is it all going >> reinvestment if there's cost cutting associated to it and moving from one bucket to another bucket isn't cost cutting. it's a very good set of brands it's a very good company but people there are extraordinarily good this isn't a problem of the people in the organization it's a problem in the culture. a problem of what is brewed there. there's a complacency and lack of accountability and that has to change. now that could help that but has to go throughout the organization. >> he made it sound like having a billion dollar brand is some kind of liability. when did that become a problem a brand that everyone knows your name. >> it's become a liability. >> we have run tests on it it cleans just as well it's half the price so consumers feel like they're getting more

and more dooped so consumers feel like maybe this isn't the best brand i'm looking at the process and function functionality. >> is this a big thing with food companies. we see so much going on here >> we think the top line growth from across consumer products both household and personal care has been an inability to respond fast enough and that's accelerated by the fact that small niche operators are doing that and gaining traction with consumers earlier on and that's plagued household and personal care firms. >> you're more of an activist than beltz

appreciate your insight. >> good morning, good morning, everyone here's what's happening at this hour a military court in jordan has convicted a jordanian soldier of shooting and killing three u.s. soldiers at the gate of an air base in that country the defendant was sentenced to life in prison with hard labor the three u.s. army green bar rays were killed as the convey waited at the base gate. they were killing two and injuring 7 more. the taliban claiming responsibility for that attack south korea proposing holding interkorean military and red cross talks in a bid to ease tensions in the north. the proposal was announced by the defense minister at a briefing in soul today and the duke and dutchess of cambridge and their children arriving in

poland as part of a goodwill tour world war ii veterans and polish and british business people. william and kate will meet the former president tomorrow. that is the news update at this hour i will send it back downtown to you carl. >> all right sue thank you very much when we come back, netflix as you may know getting ready to report results tonight after the bell we'll talk about what we might expect dow down 19 n'gowa dot ay. you always pay

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>> netflix is set to report second quarter earnings after the close. the company expected to have added 2.3 million new subs up from a year ago international expansion and grilling competition of course let's bring in the manager director and senior analyst rob sanderson. this is going to be fun. rob you made the point that going into the print the relative underperformance, you

like the set up as we like to say. >> yeah. and the stock had a big move in the past ten sessions making up some of that underperformance but i like the set up because of two reasons. one is typical seasonality in the third quarter is a big rebound off of the low if q-2 and it seems to have a lower than normal seasonal bump and management told us to expect that the manageship impact will be greater than the back half of the year so i think the set up is attractive. >> yeah that adds to what some pointed out before. >> you could argue that. it's a volatile stock around earnings a lot is priced in at a pe here of 160 times i think they're

doing great. it's important for the stock near term but so much is baked in that it makes me think about chasing this aggressively after the run the stock had at this point. >> what would you want to see in what would you wait for? >> i think we have seen u.s. sub growth decelerate and we'll see if they're able to company the early launch push that they had. is this a reacceleration story if it is and we start to get more subscriber growth and acceleration that would be surprising and something that could get me interested and we did some checks, google search volumes heading into the quarter and things were accelerating a bit and i think it's tied to the content and we'll think about

what that means longer term. >> is that the key me trick? watching for subscriber growth and what about the cost of content or do all the recent awards justify what they have been spending on it. >> rob. >> sorry that's right. i think the subscriber me tricks are critical that's the market open ended and moving a lot faster i think the ultimate question is about earnings power whether it's reaccelerating or not what does it grow into and what kind of cash flow can it generate when it gets to the scale that we think it will and we just look at the subscriber momentum as a check post along that curve and it's extremely volatile and we get a good indication that the international markets are still open ended >> how do we judge

i just started glow. we had hastings on at the code conference at the beginning of, i guess the beginning of june. it's one of the few shows that he pointed out by name rob, how do you judge the slate as we call it in typical tv land >> there's a big portfolio of content and i had a chance to look at that program and a number of the new originals and their fitting niche interest i'm not sure that that's for everybody but they have had a very hot hand in terms of allocating the programming budget and that's the important key here is they spread it around and have viewing habits and they make smaller bets on average. they do have an information advantage and they're a better aloe kay to of the programming budget. >> do you buy that because historically when you watch, you know, long-term the roadcast

networks throughout dozens of pilots that cost so much money to produce all of them is all of that data but aside the gut that the studio audience has is that giving them that much of a leg up to reduce the number of, you know, high cost stuff that doesn't work? >> yeah. i think there's two parts. the other thing is they're not confined to 16 hours of primetime like a linear programmer they can cultivate it because of the amount of inventory they have they can aggregate audience better you can get people involved in a story more quickly than having to wait 7 days for the second hour and another 7 days for the third hour of what can be a

complex drama with highly evolved characters. >> especially when that next episode automatically starts to play what an engineering idea that w was. we'll see what happens tonight appreciate it. >> thank you. >> quick programming note as we head to break tomorrow, 10:00 a.m. eastern time, the chairman president and ceo of coals will be with us. don't miss that interview. also taking a look at stocks at this hour. haven't seen a lot of movement flat, dow lower by 6 s&p higher by 1. nasdaq higher by a little more than 5 squawk on the street will be back after this quick break.

thanks for taking the time. >> good morning. >> whether it's the federal reserve or jamie dimon's rant both have a common denominator messaging. when it comes to the fed there's been a lot of talk that they have been messaging what's going on with the balance sheet but i personally don't think it's an issue that messaging is going to give us any information on because i don't think the market can process it until it starts to occur your thoughts. >> look. i agree. we're in a period where central banks pumped up a lot of liquidity that even their own models don't work anymore and we

still want to be able to hike rates. what they're telling people is it will take more and more take more and more risk and bloat bubble up more the worst thing that can happen is it popping af deflated bubble i think the central banks need to really get their act together in terms of trying to create a more clear message in terms of looking at dynamics in the market whether it's the data points that are going to be tied to their actions and so far we're not seeing. that we're still guessing a lot. >> you know, the speech is getting a lot of speech among some of the traders down here. they really understand and have been talking for years about the message she had which is basically other central banks' policies can be a problem when you're trying to make the turn around the corner. your thoughts there? >> i think that's exactly right. so you have the fed that -- look, there's a big problem right now which is that the fed

is telling us they want the nominal terminal fed funds rate to be 3% the market is saying it's under 2% why is that case that rates continue to go down and why has central banks lost control of the back end of the curve? the first place i look is look at the ecb ecb maintains very easy policy they continue to flood the markets with liquidity that is dragging global rates down which is keeping financial conditions easy at a time when they should be becoming a little bit more tight i think that's the challenge central banks -- particular lit fed, is having a hard time actually trying to tighten in this market. and that might be a problem that, you know that, stays with us for a while >> i completely agree. finally, who can argue what jamie dimon says of course i'm oversimplifying. but, yeah, things are not getting done in d.c. i think it's messaging i think if you're watching, jamie, maybe you should talk about the average person doesn't get the message that they need changes in tax policy.

that they need changes in infrastructure nobody is putting that message out. jamie, maybe you can put a little pressure on the major channels, the major papers to open that whole world of what's going on in the public your final comment >> look, we need a government that's going to work for all people one of the key components is fiscal stimulus. we need tax reform we need health care reform we need all the various things we need a bipartisan solution is what we need anything that comes single party tends to fail a couple years later. we need people working together better to get the fiscal stimulus that we need to get more organic growth in the economy. and that's the way i see it. until we get that, it's very, very bumpy >> yep yep. couldn't agree more. politics may be fascinating in the november runups, but in the end, after november, something should work together to get done thank you, jim karen michelle, back to you. >> thank you, rick let's send it over to john fort and see what is coming up on

squawk alley >> sexism in tech and investing become a big topic we're going to talk with the co-founder and ceo of rent the runway she has an important story to tell on that very topic. mi u, plus netflix, amazon congp on "squawk alley."

will the s&p 500 soon rise to 3,000 that's what one long term eck stor says. chit out online. more "squawk on the street" coming up.

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welcome back markets are a little mixed with consumer discretionary stocks leading the way. one stocks leading the way higher, topter formers are beaten down retailers like ravel lauren and macy's, kohl's and michael kors as well they're up 3% in early trading to day another notable stock to keep an eye on is signet jewellers they're stabilizing after falling earlier on news that ceo is leaving there are health reasons this comes as light is at the center of lawsuits alleging gender discrimination involving signet jewellers

the stock is down 1% we'll see as the morning progresses that does it for this hour of "squawk on the street. we send it back downtown for the start of "squawk alley." back to you. >> all right thank you very much. good morning, it is 8:00 at amazon headquarters in seattle 11:00 a.m. on wall street. and "squawk alley" is live ♪ good monday morning. we're here at post 9 with us to day is the executive editor kara swisher, a lot to cover with kara this morning we'll start with