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good thursday morning. welcome to soil soil i'm here with sara eisen and jon fortt. joining us this morning business insider, editor in chief henry blodgett, and -- >> it's 8:00 a.m. in headquarters, also at facebook, i understand a lot to talk about, guys, first of up, some recent ipos, blue apron under our belts, not so good guidance on the second half, not as good as expected, stock is down over 10% nap reports tonight after the bell we'll talk more about that tonight and after -- tomorrow morning, but for now, what does blue apron say the ceo has talked to us already saying there's room enough for amazon and us in this space. >> yes, but amazon takes a big bite out of it i think the market may be small are. it sounds cool, they bring all

the stuff, but it turns out it takes a while to make the stuff, it's not nearly as convenient as premale food, which many options are going out. americans tend to like convenience. it's actually not that convenient so i think a lot of people try the product and say, eh, it's okay, going back to another way of doing it. >> i think henry is right. it's a new market, it's hard to differentiate, right ingredients are ingredients, so if you don't make your own ingredients, you can't differentiate. it could be on delivery, so what is it going to be? on price they're expensive, and amazon entering the market does not bring anybody joy. it can be one, and we have, but i don't see this as a big scenario for growth market. >> can one of you take the other side the reason why this quarter looks back is reduced marketing spending not only resulted in fewer customers, but in customers then spending less

the average retch was less it's not like the lower quality customers who came on through marketing spend dropped off. is there a silver lining i'm note seeing? >> you have to find a model that works, where there's a good lifetime profitable value, and it doesn't sound like they have gotten there >> it's hard when you drop from 300-plus percent growth to 23% growth in less than two years. >> other 18 on revenue this quarter. >> yes so the answer is you're not missing anything, because they haven't found it yet it doesn't mean they can't, but it's difficult so if your answer is we can lose less money than we did before by growing slower, it's sort of hard to say you would buy into that in a moment but these things take twists and turns. >> it's a cost factor. cost of goods sold, 74% to 75% is getting more expensive to bring in these new customer toss grow the company

so i guess the question is, does the economics work >> that is the key question. we'll see. >> for investors, not so much. >> it's to be determined >> moving on to content this morning, facebook announcing plans to unveil its own youtube competitor called watch, a service that would offer a range of video programming, including the social network's own content. this coming as disney announces the launch of its own streaming. the influence of four very large companies. >> i think this is a great project for facebook it's worth trying. we have a part of it, so seeing it from the other side, we're proud to launch a couple shows, very excited in fact four coming out by the end of the month it's a good experiment it will probably evolve. there's no question that people want great content, and this is a good way to feed it. >> i think that's right.

this is a business model decision, mean they need more ad nevin tore and more inventory they can get more money for, and video is that. they need to do it i don't bosch what i would say is the marketplace has said because of most devices, and because of high speed, more and more content gets consumed the question is, does it beat youtube? i don't see any scenario in that case can it hurt people like snap in terms of taking ad dollars i think that it can. >> more importantly, can it hurt television there's still this massive pot of money in tv massive pot. if you look at the younger generations, my kids, older, they just don't watch linear television anymore this is always in their hands. the more entertainment that's baked into this, the more time they're going to spend on it, so all of these companies are positioned to benefit from that. >> here's the challenge for me, i think. when i open up an app on my

phone, there's places i go to engage with people, places i buy stuff, largely amazon, and then there's places i go to watch stuff. very seldom do i go to the same app. i might dip in and watch a short something on facebook, but i'm not generally sitting back and watching something that that's long is that something you think the companies will be able to change >> in the case of facebook, the next generation doesn't have your habits yet. if it's playing the long game, i don't think that's a big concern for them if they immediately needed the revenue, i think it is a concern. henry and i were talking about this a bit the more people that produce content on facebook, the same thing's going to happen that happened on snap everyone will get a few and no one will get a lot it will be interesting to see if the model does help publishers the way it professes to. early on it does, because there's only a few, but over time, facebook benefits from ad

dollars, but the publishers that -- >> but when your days is 2 billion people, right? independents and when you have 30 billion of revenue and a 55% ebitda margin, you have a lot of money to help producers produce great shows. now moving into digital. >> so is this only going to be original content that's what i'm not clear on, or user generated content i think it's to the fake news questions, and the increasing scrutiny that facebook and others are coming under social media for promoting fake news, dangerous news, terrorist activities. >> henry, you may not better than i do, but i believe at least early on they'll determine who the content creators are, so that will help eliminate those things, as opposed to things that get created in newsfeeds. >> this is curated, not user generated. >> i think they're playing the

long time for that $70 billion, i don't think this changes much of anybody's business model. they have such a giant platform, so much capital and a great management team, that if they want to win in this game, same as they have done against snap chat as related to instagram >> you must have targets in your own head for how many eyeballs you want to attract? >> 2 billion people use facebook a huge audience there. we want to make shows that people love. they will share them and if they love them, we'll continue to make them. we'll see how that rolls out. it's called watch. on by the way, we tease you about it all the time -- >> you do. >> -- but the stock appreciation has noted. what is driving it >> a number of things. first of all the education mark is massive everything we were just talking about. the model of direct consumer is

a model that wins. the education market has been direct to the institution and ultimately to the student, which pulse mutt pallet layers of cost, inefficiency and irrelevance. >> on top of a giant platform, more students than anybody and are creating content that actually helps them make a better decision on what school to get, helps them to get the content for less, teaches them the content, right 40 percent of american students are working 30 hours a week or mo, we're the most convenient, on demand, online, adaptive, personalized and inexpensive the quality is second to none, and students are benefiting, learning from us. >> your stock has doubled in the past six months, up more than 3x, three times higher your story hasn't changed. you're pretty much doing what you said you were going to do. what was it that caused investors to all of a sudden pay

attention? >> look, it's a long road, particularly when you're a small-cap company, and i had the benefit thank goodness of cnbc to be able to tell the story more often than other places i think ultimately what hall when he wade the transition and the model at the end of last year ended the old model, started the new model, and you can see the high gross margins, we're already over 65% gross margins. you can see a profitability. four years ago we were spending $130 million a year in cash. now if the analysts are right we'll produce $20 million in free cash flow less than four years later. i think it's constantly telling the story, going after -- >> coming on cnbc. >> we'll make that into a promo. >> the truth is small-cap companies don't really get that opportunity. there's a lot to choose in when you have a difficult ipo

and changing, there's a lot to choose from. >> are you surprised it's not been stolen or bought? >> i'm grateful it wasn't bought by a large-tech company. it's less than 25% of our revenue. we don't own a single textboard we're a pure digital with differentiated content it would be hard to replicate. we have 10 million questions in or q&a 6 million new once a year, a network of 35,000 people to answer them. 27,000 textbooks in it step by step solutions, now we just added video we have learned from the netflix model. the more you invest, we had over 200 million content views in the first six months in just one of our homework health products. >> you are susceptible to student graduation rates and finances i'm wondering if you're expecting any changes from the trump administration, from

secretary devos, suns they've been in and what that might mean for you? >> we decided to focus on the thing that matters as long as students are going to school, whatever those changes are, they're still going to need help if it turns out they get less help from the government or schools, which they're already getting, that's why we exist that's why we have 40 million visitors a year, 10 million a month. we'll have more digital subscribers at the end of this year than we ever had. so i mean it's -- we're here to help and focus on students putting them first and they are rear warding us. >> so how big can you get? education is a huge market, stocks triple, looking for 10x >> i've been here for seven years, i've never been more excited and the opportunity is getting bigger are day

you all available, the using goes up. try to find a high school or college kid that -- we're going to turn it from citing to citing can teach you to write we're going to use a.i. and computer learning to teach you to write 30% of students take remedial writing counter. hegg is doing that there's 36 millions students in the u.s., 22 million people who have some credits, but not all of them. so it's just going to get bigger we think the world is moving from learning to earning >> it's a big story. i know you'll be bad. >> thanks for the chance to talk about it thank you, you guys. >> great to be here. north korea considering a missile strike against guam, as rhetoric continues to escalate we'll bring you the latest. but first a quick check on

the markets. dow has been in a pretty tight range, but down about 100 points as we are ckba below 22k back in a moment

for years, centurylink has been promising fast internet to small businesses. but for many businesses, it's out of reach. why promise something you can't deliver? comcast business is different. ♪ ♪ we deliver super-fast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. we do business where you do business. ♪ ♪ stocks are moving lower this hour with major indices down for a third day in a row, the nasdaq down a full percent, this after the dow and s&p had multibalance record highs some retail names leading stocks lower in particular. for more we are joined by ubs

director art cashin, as well as our own commentator mike san tolli. guys, pretty broad-based sell-off can you talk it up to tensions around north korea even though secretary tillerson said we all should be sleeping at night. >> i think those tensions are getting the world's attention. i think that's on the stack of things to be cautious about, stack of things to be more aggressive about i think the stack has just gotten higher. people are looking at the manifestations, whether it's the end strengthening, you see the german ten-year yield receding back, which is a level a lot of people are forkcussed on i think it's up a lot more than really the decline in the indexes would suggest, which means either too many people were caught betting, and have to

scramble to cover. they're fighting this undertow for weeks, and the average to be underperforming the index. >> art, what are you watching? >> well, you know, keep an eye on the safe haven trade. this is a very, very dramatic problem. in some ways marginally existential, certainly for the people in airia. it would appear there's no chance for a surgical preemptive strike, and that they have enough artillery pieces there, 23 million people in the area around seoul, so a miscalculation could see a couple million people at risk. secondarily if it continues to drag on, it may affect trade we here in the u.s. easily forget that south korea is a major trading partner of china, as is japan, and if that begins

to -- what does it do to the chinese economy, and what does it do to -- and what will that do to the world economy? so that's where i think you're seeing it as mike points out, that basic assumption. obviously this market is not saying we're going to war, god forb forbid if it were, they would be down a heck of a lot.

we've seen a lot of missile tests, the market hand -- i wonder what another test from here on out would be worth >> i guess when the market is up a percent and a half, i don't know that you have to jump and say there's some very specific huge looming risk, but i do think that incremental is in the sense that maybe this is going to gather momentum of its own that we could really control that is the concern. >> art, the vix jump from 11 to 14 pretty quickly, but it's still well below 17. i hear a lot of people like to look at -- which matters move? the jump that we just saw or the fact it's still around 14? >> i think it's still -- i think the jump got a big boost very public, making a major bet on the vix, looking to quadruple his money, saying he thought the

vix would go above 10, to up to about 20 so when it started moving on its own. people i think started climbing on board, and so you've got to put the gunlach factor in there somewhere illustrates there's the volt tiff of the vix, the v-vix. that's people anticipating move in the vix that is actually way hot i think a lot of people say over 13, it's sort of take knows. that's a level where you're no longer -- >> fear of it going up thank you. art cashin, mike san tolli, thank you. when we come back, we'll bring you the details on the social network's new roll-out of the youtube competitor called watch. but first, more on disney's own content play after the company's announcement that it would pull its movies and shows

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in the last hour carlos rodriguez came out swinging against bill ackman, who's taking aim at his country. >> kind of remind me a bit of a spoiled brat in school asking a teacher for an extension of their homework i've been the our board i've been co has -- they show up on time and she show up prepared. >> david is back to talk more about that post interview and wednesday again the dance with an activist begins >> of course, supporting his own

record we did talk about that, feeling we had the wind at their back and have benefited from secular trends, the aca, that they could have done even better, but mr. rodriguez is making it clear he doesn't see it that way, and certainly showing a willingness to fight back he may have a strong record on which to fall.

it's rare to see them quite as strong as this the performance of the personal hedge fund that bill ackman runs, it's a stark comparison. it's no secret, of course quickly pivoted to rod johnson there's a lot to shoot at here it will be very interesting to see whether he can gain any ground it even though not apple to apples at all.

>> he said he would be happy to appear with him. i would love to see that happen. >> and disney shaking up the media industry this week, saying they'll be pulling their movies from netflix well, is this more of a shock about from the streaming customer customers i think them be costs associated

we'll see how that plays out clearly we're seeing that in the market i think it has to be complete do they learn -- and then b, they have a new competitor potential in disney. there's only so many hours a day. that, you know, quiters can watch these actually for now years, we talked about the money -- we sort of now understand why we were kids love it, you know, et cetera, but it's also a stock that at some level, you know, has got that priced in

anything that hits it on the margin has to be directionally negative but they're goinging to a bigger question over time what is the implications comcast, all these companies, how do they look at this -- >> well, sara, that's a really good questioning, interesting think, court cutting hasn't been as big an issue to date, as you look at the video results as you might expect i think the assumption is that video cord cutting, and is directionally negative of course they have that last mile, and i think part of the bet is they can offset video declines with potential price

increases. when all is said and down, they probably came up okay. if we assume it consults, which is going to matter more strategically. or who's got the engagement? >> well, look, it's a good question, you want the best content, right and why it continues to spin more and more. that's another stock we line, that continues to be an president side opportunity you know,s that's where the advertising dollars are going.

>> will, thanks for having me. charged in the hazing death, it is the fourth day of a preliminary hearing, if the case will go to trial it's day three of the trial. she testified this morning that she was definitely groped by david muller, on wednesday smith's mother took the witness stand and described what happened the night her daughter posed for a pre-concert photo. anthony scaramucci says the profanity-laced phone calls that preceded his ouster was recorded by a reporter without his permission

he described the reporters ryan liza as a lowlife on twitter and a faced out of pocket costs more than they expected. nearedly a third of their income going to health care costs that's the news update this hour jon, back to you >> thank you, sue. plenty of retail earnings, macy's, kohl's, with nordstrom set to report. we'll bring you all of those results next, but next blue apron sinking. we're going to tell you what to expect from e althme kick provider, after this break stay with us

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the training that they need to make the scene safe for themselves and for the public. it's hands-on training actually turning valves, turning systems off, looking at different wire systems all that training is crucial to keeping our community safe and our firefighters safe. together, we're building a better california. european stocks closing a few moments away seema? >> down day for european stocks. you can see behind me a long time global investors overlooblgd the geopoliticalsh with a sharp tone and rhetoric used by the u.s. -- and kim jong-un has resulted in escalated tensions

first french industrial production tumbling. in a separate note, inflation in denmark tripling to a more than five-years high. the ftse down. there's been talk of symptom from racing it rates trading at 118, of course this flight to safety sending the yen higher against the greenback in terms of stock on the move, glen coshares falling despite there was no announcement around the different, but the stocks, have had a nice run-up up 10% angloamericas up almost 20%. let's also talk about the uk travel operator reporting strong

results thanks to robust performance in the cruises and hotels, and overall a rise in summer travel to hot destinations in europe line spain, greece and italy. the chief executive said prices and demands for the highly coveted destinations, more affordable like bulgaria and cape verde could rise in popularity carl, back to you. thank you very much, seema watching news out of the wells fargo right now, coming from dow jones. the wire service reporting that vice chair elizabeth duke could replace steven sanger as chair, planning to name at least one new director by labor day, as the bank, of course has come under increased regulatory scrutiny. >> also for those accounts that were opened last year, that big scandal. there have been numerous calls from politicians for him to step down, even though the company those -- saying the former ceo

of general mills and has been the chairman of wells fargo. blue apron, by the way, out with the first earnings report is a public company, the stocks dropping further, our aditi roy talked with the ceo and joins us with more. i asked about the stock reaction this morning current troubles, quote, a moment in time it was so i asked him about that. he told me we admire amazon as a

company and we take them seriously, big or small. that being said we are competing in a competitive and large market the grocery and food marked is one of the largest that exists, and it's not a winner takes all market hesided in fact he thinking of amazon as their ally in the fight to bring more grocery stoppers online. just about one month after going public, as c.o.o. stepped down to senior adviser. here's how he responded? we created a new team that didn't exist before, a consumer products team, which changed how we decide or response among the management team and reorganized the way our product -- in order to focus, but also on customer monetization as well the company lowered its guidance for the rest of the year because of the higher costs and delays

with their new fulfillment center back to you guys. thank you very much. professor, good to have you back what do you think of blue apron? >> the investors have to be singing the blues, because everything is wrong and nothing ain't right. >> so, professor, it looks to me, you've got this executive it order that aditi was mentioning, shall shift in logistics where they're moving from one spot in new jersey to another how upset should investors be? if they tried to do it next

week, i don't think they could float it they knew about moving it from -- that's not a surprise. president that's deliberate, that's until their control like a century-long movement. >> do you think this was a mistake to go public >> no. they needed the money to fight the battle it might have been a mistake to be a buyer of the ipo, but i think, you know, going public, i think they -- that was probably a good move for the company despite the fact that their embarrassments are now all public

to go out, but at about a $3 billion evaluation about a $1 billion evaluate. so the inside investors would take -- >> we had some business model problems not a lot to do with amazon. i imagine you argue those business model flaws were in place prior to the ipo nothing has happened since late june >> the meteorite didn't fall on the factory. it wasn't tainted food the economic -- getting more and

more expensive, getting more and more expensive to keep customers. on top of that, their food costs are going up, not down, and there's really not a way -- not this huge business that was said in the earnings call, we hope the company will be involved in every american household eat in. >> just below that, the questions remain to be asked good to see you. s. when we come back, other retail stories, macy's and hl the biggest losers, what

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everybody's looking for an opportunity to deploy cash at better levels. we might be getting it >> are stocks. >> have never been rewarded. the market wants to rotate, maybe this geopolitical storm may actually be the tipping point. i'm scott walker here's what's coming up on "halftime report" today from the new york stock exchange. oak tree's howard marks is with us at post 9 and much talked about warning to investors. mike mayo is back at a new firm, with a new call on a stock he says can double in the next few years. we'll find out why also why nvidia's earnings could hold the key for the entire tech

trade. we'll debate what is likely to happen a lot of people already watching that. thanks over to the cm -- rick santelli for the san telle exchange good morning, thank you, john whether you look at the south korean stock market, the nikkei, they really don't look that much different. you could argue ours is a bit less developed, but they're all kind of roughly the same pretty much you pair up against the yen, the yen is improving. if you look at the dollars versus the yuan, it's one of the first charts that look good. if you pair the yuan against the

yen, of course the yen wins. the reason i'm bringing this up, yes, there are moves and they're logical with respect to the frame of north korea and the issues of the geopolitics involved with that country and all others countries, specifically the united states/guam. here's the things historically it's hard to peg, but this time around, i think we need to acknowledge there's a bit of a difference if you're trying to push a big anvil and you have about a block to go before the edge of the mountain, you'll have a hard time if it's sitting on the edge, you good i have it a push, down it goes there's a vulnerability there, the markets, whether it's nine, ten days i guess what i'm getting at is in this instance, many of the flight to safety moves have been easier, because

the markets werevulnerable i'm not saying that other than to think these moves, the indicate list might have been flight to safety, but they may have occurred already. we shouldn't be shocked that the equity has had a couple down days the point is there's quickly, a they didn't. today's ppi, and we've heard this many times, but i can't stress how important it is record jolts, two months of good job reports. that was a june jolt okay that would leave one to think that we might see a greater stretch. so the missing piece, if you're looking to handicap central banks activities specifically are fed for segment and december, make cpi that much more important we had a cool ppi, all of these these trends we've seen will get a renewed life with fundamentals and conversely, if we get a hotter cpi, i guess what i'm saying is no matter what, this seems to be melting away a bit does that make sense sure when you look at the japanese

and korean markets at the epicenter of all of this, the moves there have not been that large. john fort, back to you >> rick santelli, anvil metaphors, the wiley coyote could understand coming up, retailers hurting this morning more from macy's, kohl's, and dillards after this.

for years, centurylink has been promising fast internet to small businesses. but for many businesses, it's out of reach. why promise something you can't deliver? comcast business is different. ♪ ♪ we deliver super-fast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. we do business where you do business. ♪ ♪ several major retailers reporting earnings our courtney reagan joins with us more.

the stock price reaction is almost as interesting as the results themselves i guess these executives didn't make the case on the conference call >> yeah, exactly even beating those expectations is not enough for investors when it comes to the department stores today both macy's and kohl's beat expectations, but those metrics are still below what we saw last year macy's reaffirmed it's prior full year guidance but didn't update is forward. shares for both sharply lower, i spoke with macy's coo before the earnings call and he's not ready to declare when macy's will get back to positive comps when asked why not update the sales guidance if that new loyalty program is expected to lift sales, and he said, when you look at what we did in the first half, we have to show improvement. we're on track for that based on the second quarter performance we have more confidence we will reach the previous guidance. macy's is expecting a bigger gain from asset sales which works out to lower earning guidance traffic and stores still down.

tourists heavy stores worse this quarter than last. 38 locations with the backstage though, seeing a 6% sales lift on average, kohl's sales improved across all categories and geographies still lower than last year on the call coo kevin manziel said it was driven entirely by better traffic and improving traffic is the retailers number one priority. the active business grew midteen digits increase, underarmor, nike, adidas, higher dillard's missing by a wide. revenue was slightly lower, comps down 1%, coo says significant mark downs led to a disappointing loss as we deltd with inventory which ended up 2%, carl >> what a day on your beat, cour tnkou st,ha yo much more "squawk alley" continues after the break. i was wondering if an electric toothbrush really cleans...

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that the state would lose money on the deal until it finally paid for itself in 2042. so that's going to be a local state house race to watch. >> and we raised this on "squawk alley" when the numbers were first coming out about the amount of expenditure per job. i mean, when the republican head of the state senate, according to to the journal is saying it's striking, these numbers, on how long it's going to take to recoop the cost, that's not a great sign. >> although it is supposed to create thousands of jobs and according to scott walker, he says that that could actually create even more than the 3,000 jobs initially promised as much as 13,000. so that's the toss-up. you go for the whole -- the fiscal hole that this is going to create. i think it's $3 million in incentives and taxes and other incentives for foxconn once in a century opportunity. >> they say that 2042 projection is assuming that all of that goes right >> we're going to watch that closely. we haven't had many 1% declines on the s&p this year

we're thereabout right now, of course, it could change everything both ways tonight all right. that is going to be a big one. it's been a hot stock, the gaming market has been doing well expectations that they should do quell and they've been doing well >> and snap is coming out last quarter, it went down 20% on the earnings they got another chance, we'll see if it can lift the ipo mood after blue apron shares are down 15%. >> let's get over to wapner and the half and welcome to the halftime report, live today from post nine at new york stock exchange. we are watching stocks have their worst day in a month, many blaming increasing tensions with north korea, as one of the reasons for today's selloff. here's how we look at the moment, dow jones industrial arch down by nearly 130 points been really a triple digit loss for much of the session today.