♪ >> the time is now p&g shareholders to vote on whether nelson peltz should be on the company's board. it's judgment day. good morning and welcome to "squawk on the street. live from the new york stock exchange and carl and david are off today. the procter & gamble annual shareholders meeting under way in cincinnati. let's look at how futures are shaping up on this tuesday there's a look at the s&p, down, nasdaq would open higher, dow by

61 points. what's happening across the pond in the european markets, and it's a mostly lower day as you can see. the ftse bucking the trend up one third of one percent see where interest rates are heading today and there's 236 on the 10-year and crude is holding there. the road map starts with the largest proxy fight ever procter & gamble shareholders deciding whether nelson peltz should get a seat on the board plus, the e commerce play, walmart remodeling stores andaging digital experiences and betting online sales will grow by 40% honnywell, shares rising after they spin off the home and transportation units front and center, procter & gamble's annual meeting getting

under way. shareholders whether to give nelson peltz a seat on the board. he has been seeking changes and p&g officials are opposing saying their growth strategy is on track of the lobbying on both sides has been intense sara eisen will have exclusive interviews with nelson peltz and procter & gamble ceo, david taylor first, jim cramer. it's judgment day. what's going to happen >> i think that nelson is going to get a couple of the index funds and that should put him over the top i think that in a lot of ways what happened here was that mr. taylor was front in center in saying, look, we're doing something already. we're going somewhere. but there is a genuine belief that the net income line has been -- let's just say nowhere

versus a unilever which has been really terrific. i have to tell you, the tough thing for me, i've been recommending procter & gamble since 1985 when i was add goldman. it has done many things right. but the dividends -- the dividend is a huge part of the cash flow. that's not so good they did not do the small brands right. they did make a series of mistakes and because they made mistakes i think it is okay to have nelson on the board prodding them. >> you think they need a shake-up and that nelson is the guy -- to stir the pot up? >> this thing got off track. nelson said he isn't going to -- whoever loses to come back on, he's not saying that taylor has to leave he does believe there's huge overhead at procter & gamble procter & gamble thinks the corporate level is very good in terms of r and d

procter thinks he hasn't come up with any new ideas, he's got new ideas by doing small brands. overall, i wish this had not gotten to where it did i really think in the end, what he did with heinz can help. >> you've spoken with david taylor -- >> i've spoken to everybody and a lot of board members they traz a lot of good questions, we're finally back on track. it's almost as if -- let's just default to a sports analogy. they finally got a head coach who definitely is playing better but i don't think the voters think he's going to make the playoffs and i use that analogy only because everybody knows that you could have a turnaround but not a big enough turnaround. paul pollman at unilever has made a lot moves that producter

>> he's proposed things that could be dangerous to the short term, reorganize the company right now and proposed something very dangerous for the long term future of this company and that is eliminating our corporate r and d. many of the inventions in the process improvements that serve many of these brands and underpin the tremendous performance and efficiency and value they offer, came out of corporate r and d and into the businesses. >> i wish nelson had used the pepsico example. if you go over the really beautiful conference call at pepsico. you'll hear ingenuity and talking about developing smaller brands into large brands and not just resting on their laurels, which is why pepsico has the best organic growth of the consumer product group that's what procter has done wrong. they didn't anticipate dollar shave club which has hurt the share of gillette and did not understand if you do

international markets you have to start small procter is a great american company. when i spoke with a lot -- i'm going to play my cards jim mcnerny was a fabulous ceo and frank blake, total heavyweight. when they left home depot and boeing, they left them with -- the imprint, look at boeing. that is exactly the course that he put them on yes, it's absolutely true that we've got good news from home depot. frank blake set that company on the course you're dealing with heavyweights that said, peltz has done a job when he's in. >> p&g brought out lafley. >> done not a great job. made a very compelling case, again though, i wish that nelson hadn't gone after procter

because i think it's a great company. it was on a slow battle ship course to turn around. nelson will advance it faster. i think nelson should be on the board. >> we're going to find out in short order soon. >> let me tell you how traumatized i was about thby th. i spoke to every great business professor and consumer package goods and everyone was torn and i've been torn but the push went to the fact that procter has not done as well as tryan, even the surge in numbers that indicate they did not do as well i did not like that, i felt to some degree procter did not explain the danger of peltz. he is one man. can he disrupt i think he can add i think that they will be surprised. i think that mr. mcnernny and mr. blake, he's fabulous, they will not be let down by mr. peltz. i think they'll surprise you

we should go to sara in cincinnati because that's where procter is located. >> let's do that sara eisen outside headquarters in cincinnati. >> reporter: good morning to you guys yes, the voting is under way, david taylor just took the stage, chairman and ceo of p&g and introduced some of his key management team, former ceos are here including loply and john pepper who also came out publicly and told shareholders to vote against nelson peltz nelson peltz is in the room as well there are apparently the biggest number ever of paper ballots in a shareholder vote, which i think speaks to the vote that this is a large representation of retail investors, we've been talking about that 40% number. you and i have been talking about how local of a story this is for such a global company front pager, p&g vote, stakes

huge for cincinnati. within that 40% retail number, 25% is actually p&g alum because of the stock compensation plan guys, if p&g does manage to win, it could be because they spend so much to get the participation up from the alum, has 10,000 workers here in cincinnati it's about 10% of the global workforce but higher paying jobs and that's why it's such a big deal the local papers have gone after peltz saying he threatens jobs, wants to take jobs out of cincinnati. >> i wouldn't disagree with that in the sense that if you eliminated the corporate overhead, sara, you know nelson peltz is famous and by the way, ed garden, we should mention that with ge, these guys see costs that they think they can take out that's not necessarily a sin, right? i mean, you know -- yes, mr. --

did come on mad money and said corporate research was responsible for a lot. but mr. peltz wants to have the divisions responsible for their own, sales responsible, leadership responsible. >> absolutely. >> it's hard to blame sales versus manufacturing and it's a clear path and it's a big shake-up, it would be a big shake-up. >> it would be let me also tell you, jim, over the past few years, p&g has been in the middle of this transformation and thousands of jobs have been cut more than 30,000 since the transformation first began in 2012 that comes from buyouts and comes from brand sales and comes from layoffs but they've already felt that kind of pain of cost cutting, unclear how much more of that there is to do and peltz hasn't really pointed to the fact that he wants to have more cost cuts and more layoffs, he's talking more like what you were talking about, focus on small brands and m and a and the three business units. by the way, nelson peltz is

speaking right now inside the auditorium behind me there's a few hundred shareholders taking the stage after david taylor it's going to be close it's exciting. >> i know, it really is exciting i would point out that had this not gotten nasty and had it not gotten nasty, i think what could have happened was that they could have made a deal with mr. peltz. saying, listen, kind of like dupont if we don't -- if we're no good this year, you're on -- >> peltz is on the stage as we speak. this vote he says is a vote for bold and change. you can only imagine the drama in the room with the board and the ceo on one side speaking to the shareholders and what has become a very personal battle, not only ceo versus activist, but the rank in file and the city against an activist from new york being painted as this

outsider who will come in and wreck this company. >> mr. mcnierney feels peltz is a good guy and mr. taylor, a little harsher i think the advisers amp this thing up some of the proxy advisers do you know who's the winner here shareholders >> i was going to ask you if this is a proxy on the current state of activism in general -- >> they are not talking that unilever passed them that's what they should be talking about. how did estee lauder, all ex-pg guys and they are more international. think about it pollman, fabrizio, international people because it's an international business that's what nelson should have talked about i tried, i tried to get that --

you try to interject yourself. >> they just collected the ballots in cincinnati. we may have word of a result within the next hour these things can take times. who knows but we'll be all over it >> cincinnati, they need something, right between dalton -- they need something -- >> i mean, yeah. >> honestly. >> other than a j green and peltz? >> we'll have more on the big movers including walmart and honeywell. live from post nine when we come back alpha in real assets. like agriculture to feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investment management businesses of prudential.

we're back, walmart holding its own annual meeting for the investment community today the dow component announcing a $20 billion share buy back program and financial guidance that is roughly in line with wall street estimates and walmart also saying it expects net sales at or above 3% for the year ending 2019 and seize a 40% jump stock was up nicely, premarket in a way that walmart doesn't move 2 plus percent in a single session but the sentiment and narrative around this company are so positive. even in the face of amazon threat. >> i'll tell you why because walmart has the scale

and the ability to tell the suppliers, here's how it has to be but they are the only one that can do they are the only one who can compete relatively on price with amazon and remember, they've got the order ahead, pickup, they may be doing delivery in a way we think is seamless most importantly they have jet.com and this is an alpha that can compete i like the way they are playing it mcmillan is a tough guy and raises the wages, no longer losing people left and right what they are taking it to is costco and target. that's what they want. now, costco's number was good last week but people were not happy. >> worried about the margins. >> and also, millennials, oh, my there was a lot about millenn l millennials not renewing their card the way they used to. average age of a costco customer, 52 they don't want that. >> was that the conference call you called a shakespearean

tragedy? >> yes, people would not let up. you know what i say, can we get a camera close to me for a second do we have that ability? do we have any ability >> we're usually pretty nimble. >> look at this. you know what kind of tie this is >> a kirkland -- a costco tie because it's done going down we do not give -- i know you watch, look at this, okay? >> that is -- >> i show respect that the analysts don't not only that bucan you imagine? >> that brings new meaning to a statement tie. >> i have had it with the way that they mistreated him and it's not right and it will come back and haunt them. this is the kind of beatdown you give and when he comes there the next time, let me tell you something, there's going to be a body bag game not unlike ryan, buddy ryan he's going to come back and be

buddy ryan to these guys he knows he knows that they ridiculed him. wasn't right >> back to walmart -- >> didn't mean to disparage, talking about a particular game for those who don't remember there was a game, i'm not trying to make light. you know there was a game. >> there was. >> a game of revenge and mr. galante has to show revenge because they showed no respect. >> walmart has 15% upside from here stock price. >> it wouldn't shock me. it wouldn't shock me they've got a strategy that's all you need is a strategy they've got it. >> do the others have a strategy >> i think costco does, but the problem is costco was late to the game i think target is doing a lot of things right but they don't have the scale. and you're dealing with the possibility of whole foods really offering dramatically lower prices versus costco's lower prices but it is this demographic that i worry about

the amazon demographic is young and costco demographic is -- >> in a whole foods last night and the ground beef -- i'm not kidding, it said new lower price. new lower price per pound. on the 85/15 and 80/20 >> millennials are strapped. >> it's taco tuesday in my house. i had to make a decision on the spot, do i got 85/15 or 80/20. >> andy reed is taco tuesday and you want to know who's 5-0 just saying. i do like walmart here i don't like retail. notice how burlington -- >> retail yesterday had one of the ugliest days in months. >> it was hideous because you cannot compete >> amazon. >> up next it's krcramer as mad dash looks like a positive open

across the board for the dow and s&p and nasdaq and we're keeping an eye on the p&g shareholder vote regarding nelson peltz' bid for a share seat more straight ahead. what started as a passion... ...has grown into an enterprise. that's why i switched to the spark cash card from capital one. now, i'm earning unlimited 2% cash back on every purchase i make. everything. what's in your wallet?

well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh.

feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. ♪ >> less than seven minutes before the opening bell. time for cramer's mad dash to the open. >> some companies are gamers and everybody is saying, maybe tesla is moving away from invidia,

they announced a peg asus computer that goes in vehicles, 320 trillion per second. this is going to change everything they have 225 partners, maybe they don't have elon musk. really scary so this company is going to break out. you know i change the name of my dog to vidia because i needed something with more pizazz, if you have a treat, the answhe an nvidia look at this guy he's ready and going to run. because the street became so enamored because of cryptox currencies wrong this is all about artificial intelligence. >> the dog doesn't feel overbought >> dog doesn't feel pressure at all. doesn't even know what the pressure is. the dog could kick a 62 yard field goal with one second left.

dhl selects nvidia, are you worried about elon musk? i'm not. tesla this tesla that enough already dhl selects nvidia for autonomous delivery. >> it's been a monster. >> more than $100 billion. could it double again? look what intel did in the '90s. gamer. >> game on opening bell just momes ntaway we're back right after this. [vo] when it comes to investing,

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while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife. you're watching cnbc, "xaq t "squawk on the street squt the opening bell is ready to ring in a couple minutes' time what a big day for big brand names? p&g and honeywell. >> i think this reorganization is brilliant those who think it's not enough, go do some research. he's basically to the old honeywell with hvac climate control, health and safety, that's a 3m type thing, the

carrier kind, on other side he's giving you a boeing united technologies business on the pratt on whitney side. this is the kind of thing that gives a higher price to earnings multiple not found by dave cody's plan up 34 cents on the release itself and what they are doing in their numbers and the organic growth, the stock should be higher was there hot money in it? absolutely if honey well comes down do you buy it? most definitely. >> it's not like these moves were wholly unexpected you have been talking about this for -- how much of that is in the stock? >> look, raise the low, 5% organic growth, 16% growth -- a money maker just like his pr predecessor. >> holding on to aero space.

>> second to none. i love it. boeing and united, i wear a pratt whitney jacket when i'm not wearing an eagles jacket. >> to go with why are kirkland tie. >> don't forget the airlines what do we have? we have the banks later this week and transports doing well a large industrials doing well this is our kind of market. >> you're watching the opening bell as the s&p 500 at the cnbc real time exchange january i janice henderson and community banks in virginia and north carolina. >> community banks could do well with this fellow who took off versus dan turulo, ran banking with an iron fist and quarrels from the carlisle group will

give the banks what they want. next thing you know we have companies with normalized earnings in the financial sector should jp morgan sell at 14 times earnings should citi sell or bank of america -- no. no and no. they deserve higher price terms. >> we're a number of places we need to go you mentioned the industrials. >> what else >> one industrial that's been stuck in the mud if not quick sand is ge i would be remiss if i didn't get your point of view on this because the stock is at a two-year low, worse day in a year yesterday we were just talking honeywell. >> shouldn't have. >> and ge may be getting a bounce back -- >> flannery is doing the house cleaning that everyone expected. flannery won he ran health care that means you've got to blow out the cfo and blow out the voice chair people and put your own people in. the fact you put ed garden in, the $2 billion cost cuts are not enough everyone is treating this as if

there's going to be a dramatic reset which is in the stock and two they are going to cut the dividend i don't know about the dividend. it's not sacrosanct any more if you read the tea leaves they said it was a priority that gives flannery the room remember, he was there when they bought oil at the top. he was there when they sold finance at the bottom. flannery needs to clean house. i'm pro-flannery playing my cards i have a lot of high cards. >> does that mean you buy the stock here >> my travel trust owns it, 2 points downside, six points upside. >> the jp morgan analyst reit rated the sell -- >> he's saying -- look, i think the great thing about flannery, he'll look at that report and say, yeah, i agree he's not going to repudiate jeff immelt, you don't come in and say listen, the previous guy

gave me a bad hand that was one crumby hand he was rest with but he had high overhead and they do the cars and airplanes. those are symbolic of it we're not going to tolerate anymore, give up the celtics tickets if you own those, give them up. >> my guys on the halftime show called this stock unanalyzable and uninvestable they don't know john flannery. comes in with a smile and goes like, how are you doing? right? like narcos 6, i don't want to give that away. >> there's a -- >> we have thin tech that comes up every day and talking about the master card visa square, love sara fryer, not on her to do list to do the show yet i'm not on the to do list but the thin tech is being caught up

by the bank tech i've been told -- allergan is not down today what day is it did the browns win >> they haven't won yet. >> okay. maybe it's a mistake. >> toent get ahead of yourself. >> how about the -- i read through the apache presentation and thought it was precise and thought it was powerful. i thought that alpine high was measurable but what do they want? they wanted united airlines and want domino's pizza. dominos they don't call it domi domino's anymore remember there was a quick hit on that. give me a break. i think it turns around. >> procter & gamble because of the proxy vote and they have collected the ballots. >> okay. >> maybe within the hour we'll have a result and it's going to be close but it's interesting, what the stock is going to do on either side.

let's say -- let's say producter wins give me each scenario. >> procter wins is goes down 2.5. >> really? >> 2.5 because there will be a belief that the pressure is off. peltz wins, i think it goes up about 75, 80 cents. >> the stock is literally not moving, up one third of one percent. the investors are clearly waiting to see how it shakes out in cincinnati. >> the stock has been in a horse in a group that's been awful look at kraft hines and general mills -- it's like looking at the eclipse. it's that bad. you look at kellogg, they keep changing their ceos. it doesn't matter, the dogs won't eat it new improved, when you put any improved on a dog food can, you think the dogs say thank you wow, yeah, that's new and improved no, it's a pantry product. >> nvidia can see through that. >> nvidia is stupid as all get

out but they know how to run >> we're talking activism -- >> sellers are coming in give me a break. this ad in the quts new york post -- the 9:30 question just came out from -- >> shareholders make injure vyo count. web cast tonight, going straight to the people. another widely held retail stock. >> put out the question today, he's got the daily question and yeah, question for -- okay, so he's got the power point presentation -- >> talked to him last week. >> the company is not an under performer but the company could have dominated i have work day on tonight and people say jim, come on, that's cloud, they didn't have to -- if you wanted to dominate, you should have been service nell and work day look at the multiples. avp versus -- finally did it,

begged him to do it against work day and here it is why don't you compare it to work day and stop comparing to paychecks and he took my advice. what's my -- >> people listen to you. >> my wife didn't listen to me distracted everybody >> what you have coming up tonight? suki, the same guy -- >> there's a man, another guy who is not a sign post there's nothing, not a plaque for souki for what he did, but now he's got a second ct there are second act -- this was the third act he decided to export natural gas is dirt cheap because it's so warm did you notice that? >> that was an interesting

segue. didn't sharif get the i con? >> most guys you say listen, it was time, it was right i get to be with my family i said what happened he said i was fired from the company i built. it was -- >> icon was there, right >> icon fired him and here he is right back he had a vision. this man had a vision and the vision was that we can export in bulk and it's being realized the trains are not what you think. i'm going down to see -- i know how to go. i was going to do the launch then souki got fired. >> launch of the first export. >> yeah, then souki got fired. that got ugly. souki told me oil would go -- it was big time -- oil was going to go to 50 when it was 80. people laughed at him -- remember, some people believe

it's going to change gee toshio politics and going to be so many of these liquified natural gas going to poland, he won't say that oil holds at 50. >> that's your call. >> with the sell and sell -- apache was selling 50 puts you should ask them about unusual option activity. >> i will, i'll ask them today >> guys told me to take the vikings d and almost wrecked my fantasy. >> i fell for that too. >> everyone did. they are right about everything else they should stick to options >> all right, bob pisani is following the action on the floor. dow is up 55 nice reversal. >> new highs essentially, not just here but all over the world. this is part of the reflation trade, new highs everywhere. look overseas, we've got the nikkei at a new high and hang seng new high and philippines

new high vietnam highest since 2008 these emerging markets have been really strong as well. this is a global expansion that we're seeing here in the united states, all 11 sectors of the s&p open on the upside but semis are strong and nvidia is up 3%. consumer staples and energy industrial stocks all on the upside as well there's the market leadership here, apache notwithstanding energy as we had opec optimism there. oil is up 2% right now remember what's driving stocks the broad themes going on hoere. number one, record earnings, we'll see it again, even if it's not as strong as the second quarter. stronger economic numbers generally and that whole reflation trade and sector rotation we've been talking about. this is a broad rally. not just the rotation thing we were talking about a few months ago. it's not just big caps, small caps are hitting new high and mid caps are hitting new highs, all caps hitting new highs, not

only growth but value hitting new high not just high beta stocks but low volatility stocks, this is as broad as it possibly gets you can't even talk about rotation anymore and market internals, what i look for in terms of the sign the market will roll over imminently, it's -- roll over is not imminent you could look at the advance decline lines set a record high and that's a real important indicator and rolls over first selling pressure is really low and sentiment, not overly optimist optimistic, i'm being kind, most hated it for years now internals still intact as for stocks moving, you heard the guys talking about walmart, the 2017 guidance and giving guidance in 2018, we're up 17, 18% for the year that's a little better than the dow has done, a little better than the s&p, walmart is performing but it's the $20 million buy back i want to concentrate on they are doing it over two

years, about 8% of the stock outstanding. these are enormous drivers of earnings this is a small group of companies i call them buyback monsters, 15 or 20 in the s&p 500, every year aggressively buying back stock. 2002, walmart had 400.4 billion and drop to 2.75 a 38% reduction in stock in the last 15 years. look at the other companies, ibm cut their stock outsanding and 50%, kohl's 50%, target 20 all other things being equal the earnings are lower by what you're seeing here because of that reduction you can say buybacks are good or bad we should do other things or capital expenditures, that's a valid debate if you're a stock owner, this has helped increase the earnings situation for the companies here so these are just a small group of them. lots of buyback announcements, 20 billion sounds like a lot but it's not even close to the

biggest one, ge did a $50 billion, apple did a series of $50 billion buy backs and microsoft did a series of $40 billion buybacks and they have to follow through with them, the key. generally on the big one they do you might say let's buy stocks with big buy back announcements and we'll outperform the market. it sort of makes sense and didn't really work it's not clear why there's an etf you can buy the buyback etf that consists of companies that have the highest buyback ratios, but if you see, there's the white line compared to the s&p in the last year. these companies that include the ones i just showed, they haven't dramatically outperformed the market a lot of reasons why that might be but sticking with the s&p, probably the best long term strategy new highs in the dow jones industrial average. >> strong day for the dow up 84 as we speak. the bond pits where we find rick san telly at cme group.

>> yesterday the bond market but you can see we're hovering in the mid 230s, we've done a lot of hovering there. we made a move towards the 240 but we failed at least on a closing basis. and you can clearly see their line in the sand is 48 to 52 basis point area when it comes to the long end of the boom market, we concentrate there. but the shortened is fascinating also minus 70 basis points. sometimes that doesn't sink in i thought i would toss this chart. the last time we had any action above zero basis points in positive territory you have to go back to mid-year 2014 i think that's appropriate to look at as we talk about october, what mario draghi and balance sheet and policy may do at a time where it certainly seems as though our essential bank is forging ahead. as you think about that, i've

talked that we've failed a bit on two previous attempts to get back to unchange, which is 2.44. what's fascinating, toss a dollar yen chart on top of the 10-year note yields year to date and you'll see how nice it's tracking seems there's so many weird correlations going on, not that it's weird between interest rates and foreign change but how the markets as managed as they may be, the managed aspect is contagious to so many other relationships. both present and past. finally, let's look at the dollar index if you look at this chart since august 1st, 94, we keep failing on a closing basis at 94 big article on the dollar index, the chart was wrong though, nowhere near 94. the dollar versus the yuan,loo at this chart, maybe the markets are looking at the couple of things and letting them sink in. trade may be changing from a global basis and so is the

structure of u.s. interest rates, hence the relationship with their dollar, the green back jim, judge, back to you. >> all right, rick. >> great stuff. >> thanks so much. we're keeping an eye on the p&g vote sara eisen will have more. "squawk on the street" will be right back

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>> president trump speaking out once again about the nfl national anthem controversy. this morning he tweet quoted, why is the nfl getting massive tax breaks and at the same time disrespecting our anthem flag and country? change tax law jerry jones, jim, says players who kneel won't play trump tweeted last night in

support of that. so this controversy does not seem to be going away. >> no they are keeping it alive -- the president is keeping it alive, you would think it would have moved on the tax breaks have changed a bit. there are people who feel the nf remember, he did own a usfl team, the president, so he's familiar with the finances of pro football who am i to say he should focus on, say, north korea or tax reform who am i to say he should focus on health care who i am to say he should focus on trying to get the money back in our country who am i to say he should focus on infrastructure when the nfl is - >> the nfl gave up its tax exempt status in 2015. >> yeah, i know. >> obviously, they get breaks by, you know, the local, maybe in the local market. >> right >> in various ways >> and it's a big issue for, you know, at least probably like maybe like 150 people are really

focused on this versus the middle class tax break we're hoping for and senator corker, getting those two together senator corker is a good friend of peyton manning. and peyton manning is a good spokesperson for the nfl i think peyton manning, senator corker, and president trump play golf at bedminster, and all of this - >> i don't think that's going to happen based on the latest trump tweet from this morning about senator corker >> everything can be forgiven. there isn't anything that can't be forgiven in this world. if they play golf, a round of golf, it would be very good. very good for the country if they played a round of golf. i'm out there saying that. >> this is the latest. here's the latest tweet right now. >> that's going to hurt tax reform >> from earlier this morning the failing "new york times" said little bob corker up by recording his conversation was made to sound a fool that's what i'm dealing with that's the president firing back at corker. >> look, "the new york times" is

just pennies from its 52-week high so it's not as failing as the president thinks senator corker doesn't seem that little let's save that for the little rocket man this guy is one of 100, you know he's one of 100, corker. golf just like tip o'neal had a beer with reagan. they need to play golf president trump, i know you watch the show it's not an insult you play some golf with these guys maybe you win. okay whoever wins gets to do tax reform >> it's all riding on a round of golf >> well look this nfl obsession, i mean >> all right >> look, i think he should be talking about thursday night football and how bad those games are. >> you guys are up next week >> we don't have enough time but howie and coach pederson, frank wright, they're going to -- they're no pushovers >> going to name the whole coaching staff

>> groe, who is a wide receiver coach. that's everybody i can tell you, he has to complain about thursday night football that's what people are upset about. >> all right next, stock trading with jim. we're back after this. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management. aggressive styling, so you can break away from everyone else. the bold lexus is. experience amazing. [he has a new business teaching lessons. rodney wanted to know how his business was doing...

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time now for stop trading. >> first major mistake duce staley, number 22 let me throw to the equipment manag manager. i left them out. that was a big mistake caterpillar, look at this. down to sell amid an extended commodity downturn by goldman sachs. that's the january 22nd, 2016, piece. they're using a 51 target. neutral to sell. this one is probably better. same guy he says now he's using a 158 target >> street high >> street high, so he says 100-point swing. that is mean of me my wife is going to say, how could you point that out i'm going to leave his name out, but yeah >> you threw shade all over the browns >> he's one great owner, and my sister was in the box. and saw the seat that he pulled out of pops and sent to me jeff laurie, best owner.

did i leave anybody out? greg i got the equipment guy. >> you literally named everybody. >> brian, who helps. gave me the escort, police escort >> are any of the front office staff members on mad money tonight? >> i have an unbelievable show tonight. unbelievable show. you will not -- i have aneel bhusri the man who was the idol of bill acuman and charif souki and don't forget, brian westbrook, number 36, is still my favorite alum okay other than brian dawkins, number 20 it is a pleasure to do the show with you i like the bank stocks going into the arnings >> it's going to be a big week this is really going to set the tone for where this market is going to go. >> this is going to set the tone like you wouldn't believe. like you wouldn't believe. >> you guys are going to have -- my provision is you guys are going to have trouble on thursday night >> could be a trap game.

don't be so conceited. trap game. >> blow out. >> coming up, it is more on decision day for p & g shareholders stay tuned for sara eisen's exclusesitmriv wh . peltz and david taylor more "squawk on the street" when we come back throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise

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welcome back to "squawk on the street." i'm sarah season live today in cincinnati, ohio, at procter & gamble headquarters site of an incredibly tense shareholder vote that vote just closing behind me shareholders are meeting on whether to add trian's nelson peltz to the board the company has fought it. he has fought back we're back at the new york stock exchange both carl and david have the day off. we start, though, with procter & gamble, guys the vote has closed, as i mentioned. we're hearing it's incredibly close. ferocious vote counting going on in the building behind me from both sides and the independent

auditors we're hoping to get a decision on this today. it's interesting for a number of reasons. the biggest ever company to face a proxy battle a sluggish consumer staples industry a town, a hometown of cincinnati that has rallied hard behind procter & gamble we heard already this morning just in the last hour from trian's nelson peltz about why he want in on the board. listen >> the gloves came off on one side and i was praise worthy of david taylor as a person i thought he was a gentleman i think he was an honorable gentleman. i felt i could work with david i still feel i can work with david. >> and here is david taylor, the chairman and ceo of procter & gamble addressing shareholders >> the board does not endorse trian's nomination of mr. peltz and recommends you vote for the company's nominees

>> guys, i know you have followed your share of proxy battles, and scott, i know you followed activist investors for a long time. i think it's fair to say that corporate america and investors are watching this one as a test of how big a company an activist investor can go after. and how much support he can get from key index funds which represent 17% of the vote. three of them still major question marks it is assumed that peltz will get the wall street institutional vote and p&g will get the retail mom and pop vote. a lot of them p&g alum mystery and intrigue hopefully we'll get something this hour. >> also sort of wondering whether this, sara, was in its own right, as you just said, a proxy on the current state of activism the kind of company, the size and scale that procter & gamble represents, the fact that it has such a large retail shareholder

base so an activist is in a sense more so than any other time speaking directly to the rank and file of this company, to the individual shareholder, the mom and pop, to a town how many company towns are truly left in america. it's just an interesting time for the big picture conversation >> don't you think he's already won? nelson peltz has already won even if he doesn't quote/unquote win, if the vote is so close, almost too close to call, think back to 2004 michael eisner faces a proxy fight. 43% withhold their vote. he's running unopposed and 43% was a big enough number where the board said we have heard the shareholders to be at nearly 50%, especially with the numbers you point to with being the hometown favorite, right? it's really significant. it shows just how upset a lot of p&g shareholders are about the performance. >> i think you can point to

another example, which is peltz's last proxy fight at dupont lost the vote, 46% of the vote, though, went to him. so he would say he won the war allen coleman stepped down he worked with ed breen. so there are a lot of similarities there and yes, if it is a very close vote, 50/50, it will be interesting to see how much p&g management takes from that and starts to make changes the whole argument in this entire fight from p&g has been, we're already going through a transformation david taylor has been ceo two years. give him a shot. already, we're starting to see some of the results. and we are seeing some of the results. it helps that the dollar is weakened, but they say give us time the question is, if they get, say, half of the vote, even if they do win it, which we're not sure about that, there might be changes. peltz has advocated for focusing on smaller brands, for pursuing more m & a, like unilever, which

scooped up dollar shave club and some of the other faster growing bands. for relying less on the insular culture and not hiring insiders as ceos, as the company has a track record of doing, and not just ceos for upper management we have seen p&g respond they say they're in the vetting process of new board members and they're looking for board members with cpg or consumer package goods experience something peltz has said is required, is not on the board. p&g says we're going to look for the next generation and peltz is not it that's one of their key themes so yes, peltz can claim this company is different and the stock price has done very well cramer said it last hour the big winner is the shareholder. >> when you look at honeywell andifies epfizer announcing tod you think these big conglomerates look at this and say we better do something

before somebody else starts getting in our business? not just there today, but dupont, the list goes on and on. ge, for example. they're worried about these guys if you can go after p&g, which is so huge, nobody is safe >> i do, though, to some respect think the narrative on that may have changed with peltz and dupont they stood up and gave peltz the heisman, and maybe that emboldened other companies because the scale of dow and dupont together to be able to do that, that it emboldened others to say you know what we're not going to do something. the something we're going to do is tell the activists to get lost >> i'm thinking about the fact eventually they plan to break this up into three smaller companies. this whole idea of having to force the transformation sara is talking about so specifically with p&g, but every single one of these big companies asking these existential questions of themselves how do we best build shareholder value right now? >> i think -

>> i think that's especially - >> go ahead, sara. >> no, i was going to say, it's especially acute, your point, in the consumer staples business. food company, beverage companies and household products companies have struggled with top line growth for years that's why they have been such a ripe target for m & a and activism they have all been in cost-cutting mode, and investors are now looking at this sector and starting to say, where is the growth think about how many ceo turnovers we have seen from companies like coca-cola, general mills, just in the last year or so and the question is, what's next and p&g had to prove to its shareholders that it has a plan, and the right plan they slimmed down from 200 brands to about 65 and they say that is allowing us to turn this company around. peltz says it's not happening fast enough. and it's not being done efficiently enough you have to break into three sort of global business units. and this will be a test to see whether investors like that outside perspective or have the

faith in these big conglomerates to execute a plan in this very fast-changing consumer environment. >> maybe we'll have some answers soon sara, thanks we'll be back to you momentarily. the markets have opened higher today the s&p 500, dow, and nasdaq all hitting record highs once again this morning wall street enthusiasm for tax reform continuing despite some potentialpitfalls from washington joining us is david. good to see you again. >> nice to see you >> the markets march higher. a broad-based rally, if you look at all of the areas of the market moving. what's the most impressive part of the rally to you? >> well, the focus of portfolio managers continues to be on the big cap tech stocks where the bottom line is with respect to sara's observation, most companies grow their revenues at around nominal gdp, roughly 4% some of the large cap tech companies are growing their

revenues at 15%, 20%, plus four to time times faster and importantly, they have manage e margins that are twice as high that's a fundamental argument on why there's so much emphasis in an economic environment which is a modest groethd that's really i would say the principal question about those companies. we would argue and i would argue they're not particularly highly valued they're certainly more highly valued than the market, but relative to the past ten years -- >> that was going to be my question they're not expensive at this point. because all the characteristics you point out about them, about their faster growth, is why so many people have piled into them >> there's no value anywhere in the market everything trades at high levels and everything trades in a well ordered fashion. if you look at higher roe companies, they trade at higher prices to book there's no value anywhere. the question then therefore is is there growth. and that's the principal argument i would put behind some of the technology companies.

this quarter will have earnings kick off tomorrow. and we'll have technology companies growing earnings at around 11% the rest of the market, 5% big deceleration 14%, 10%, 5%, now to be fair, the run of that, some of that is affected by the hurricane and the financial sector >> what number gets you nervous? what valuation would you say, okay, now is the time to put on the brakes >> here's a way to think about it for the overall market. late august, it was not clear at that time that there was going to be tax reform or the prospect of tax reform. >> still not clear now >> absolutely. the prospect was lower the market traded around 2,450 around 17.5 times. the 85th percentile of historical valuation that value and the level of the market at 2450 if you were to roll forward now, 30 days later or so, there's the expectation by many that there will be tax reform if you had tax reform, that could add $8 a share to

earnings okay we understand that that would put you at closer to 2,600. if you look at where the market is trading now, it's trading around 60% of the way there. so the market has not embedded a full expectation of tax reform that's consistent with the goldman sachs economics, which is around 65% likelihood there will be tax reform you see some of the debates and disagreements in washington. not clear that there will be tax reform probably fairly valued in the expectation of higher taxes. >> exactly where i wanted to go next, because we have been asking almost every market related person who comes on the show, any number of shows, what percentage of tax reform is in the market already >> 65% >> you think 65% is in >> yeah. and that's based on the valuation. we went through that arithmetic. the market was trading around 2450 around 17 1/2 times forward valuation. if you were to apply a higher level of earnings, closer to

150, that would lead you to a market trading north of 2,600. so we're in the market trades, it's around 65% of the way there. >> are people getting there with economic being proven in the economy, earnings growing, just from the economy alone without the $8 to $10 of tax reform? 65% sounds like almost a street high view of where tax reform is in the market. >> that probably ebbs and flows on a daily basis given the dynamics of washington, d.c. we're pretty comfortable that is slightly better than even odds at this time, given the expectation some of the agreements in the senate obviously, a lot of variables between now and then in terms of the details of what will be on the table for tax reform but the basic issue is there are very few opportunities in the market it's really labor sensitivity and margins. and there's the taxes. those are your two principal debates. >> somebody watching right now, i think would hear buy stocks.

>> you could buy technology stocks, the fang stocks is an example. >> some that are not ridiculously valued. >> what's the principle concern we have, the idea of higher rates. the idea of the fed looking to raise rates between now and the end of 2018. goldman sachs economics looking for five hikes the market is pricing it at one to two hikes >> you assume when they hike at the short end, the long end is going to rise, too, because that's when you think of valuations of stocks with high multiples, it's the long term interest rate that can change your view on whether or not they're worth buying >> even when policy rates are tightening, rates are going lower, not higher, and there's a premium there. if we think about the risk of higher interest rates as a headwind to valuation, a question then is where are you getting your top line revenues we have a good sense that margins are at a plateau level they have been there for five years. unlikely to go higher than this

level. in order to get growths, it's going to come in the form of sales growth where are you getting the sales growth that's where you get technology. the other side of the margin story is higher labor inflation. you saw that wage inflation in the latest labor report was up 2.9% >> finally >> goldman sachs economic wage tracker is saying around 2.8%. so the indications are that there are wage increasing and pressures and the companies that have low labor costs as a part of their cost structure, you can look at some of the tech companies, facebook, alphabet, visa, examples of companies where their labor structure is relatively low compared with their revenues oerdz, there are lot of companies that are higher. >> what group then is the most vulnerable in your opinion >> bond proxies that are basically at risk for higher, a higher rate. utilities, real estate companies. you have the tele com companies. those companies which have an

inability to raise prices. >> by the banks then >> financials would be beneficiaries also, in the throws of returning a lot of capital. this year, you'll have $40 billion more cash, 40% increase in the amount of cash returned to shareholders as a result of the ccar, allowing them dividends and shared purchases >> david, good to so you >> nice to see you >> we're following a developing story out of california. at least ten people are dead and thousands of residents have been forced to evacuate as a string of wildfires sweep through northern california's wine country. our d.t. roy is in santa rosa. she has the latest >> hi, michelle. it has been absolutely devastating here case in point, take a look at what used to be a home there's barely an empty shell that remains of this house this is where the driveway is. and the garage used to be here you can barely really make it out. it's turned to rubble. and behind me are countless

other homes in this community that has been decimated by these fires. a total of ten people have been killed in these fires so far 20,000 people have had to flee their homes, have been evacuated. what makes these fires so distinctive is the fact that because of high winds, they have crossed barriers like major freeways and have threatened urban areas and critical infrastructure the fires are burning in nine counties, most of them in northern california. 1,500 homes and businesses have been destroyed they include hotels and wineries that make up that critical tourism industry here. the local wine industry provides about $50 billion in annual economic impact in the u.s. alone. some of the big names we have been hearing so far include the fountaingrove hotel here in santa rosa also hearing reports that the hilton hotel in santa rosa was destroyed. the paradise ridge winery also reportedly has suffered some major damage and in napa, there are reports

of damage at the silverado resort all these damage estimates, we're hearing the damage estimates. they're still coming in. everything is very preliminary now, but we'll no doubt hear names of big wineries and hotels in the area coming in. in the meantime, also another big fire burning to the south of us 500 miles to the south in anaheim, california. we are still awaiting more on that as far as damage estimates, but again, still a very volatile situation up here, especially in northern california. no word on the cause of these blazes back to you guys >> yeah. tough human toll and financial toll thank you. when we come back, walmart's analyst day is under way as the company announces a major share buyback. a big bet on ecommerce, and more we have all the details and keeping a close eye on the p&g shareholder vote which is very close. the vote count continues sara is going to sit down exclusively with trian's nelson peltz, and later david taylor as

well you don't want to miss those exclusive interviews quk x,"sawonhe street" will be right back stay with us

under way in arkansas. announcing a $20 billion buyback program and much more. stock is at 4%

courtney reagan joins us with the latest details >> they're actually in a break right now, but walmart's ceo and e-commerce head also wrapping up the presentations to analysts. this is what we know now the world's largest retailer announcing a two-year, $20 billion share buyback and reiterating adjusting earnings guidance and a range that brackets the street's expectations and for the following fiscal year, 2019, forecast earnings will grow at about 5%, so the high end of the 2019 guidance does match analyst consensus. walmart says it sees sales growing by about 3% or more for fiscal 2019. expect it to be propelled by e-commerce growth as well as growth in those comp store sales. e-commerce sales are expected to grow at about 40% in fiscal 2019 that's a pullback from where we are right now, in the most recent quarter, and the e-commerce related expenses are expected to decrease after this year, fiscal year 2018

capital expenditures in line with last year you might remember, that was the big surprise two years ago at this meeting when walmart announced a big increase there now, the number of stores that will have walmart's grocery order online store pick-up is expected to fla ee eed to nearln 2019, so about half of the u.s. walmart stores that's a key focus for the company because the grocery space gets more and more competitive with amazon buying whole foods and the u.s. expansion from competitors now, mcmillon spent time going through walmart's progress, explained how it will continue to use the stores and e-commerce together, saying, quote, he wouldn't trade places with anyone, meaning any other retailer one fun fact brett bigs said shortening the length of the receipts you get at checkout saved walmart $7 million a year back over to you guys. >> wow >> that's in paper, right? >> yes >> they should give cvs some

tips >> that's what many others said as well. >> i mean, hello >> they're all long. it's crazy courtney, the stock is making a notable move >> it is >> of all the things you told us, what do you think is exciting shareholders? was the buyback bigger than expected, the ceo someone who really motivated them? >> you're hitting all of it. i think the $20 billion buyback is pretty big. i also think walmart nicely telegraphed the earnings guidance this morning, so they gave it to us very clearly today, they're just using the time to really explain it. and then all the analysts i spoke to in advance said we're really excited to hear from mark lo laurie he's been there for just over a year really where he's been getting his hands dirty and he's done so many things, from all of the acquisitions, we talk a lot about bonobos, but even for parcel, the company they acquired to help with urban deliveries in new york city specifically as the first market i think shareholders are excited walmart is sort of getting

really good, back to basics on the fundamentals, but also has a clear eye on the future. and it does seem like walmart is a little hands-off when it comes to laurie and his team, meaning they trust him to do what he does and innovate while the rest of the team really works on making sure that retail fundamentals are in place. >> i wonder if any of it is a relief rally in the sense that you said they come in at the high end of their 2019 guidance. >> yeah. >> how many retailers out there are coming in at the high end of anything >> that's true also, to see sales and revenue grow i mean, walmart puts up sales at $485 billion a year. so to grow that number by 3% or more is pretty impressive and something that we aren't seeing a lot of retailers do. we talk a lot, scott, about sort of maybe two horses in the main retail race, especially in e-commerce amazon, of course, but then you have walmart they have been logistically sophisticated, maybe the most logistically sophisticated in the world for a long, long time. mark laurie said their ecommerce

sales are about $11.5 billion. pretty small still compared to the $485 billion, but there's belief they can get there, that they can get there a little faster than maybe anyone else. >> all right, thank you so much. courtney reagan for us >> walmart's purchase of jet, we'll go back to sara and the criticism from nelson peltz, you didn't go after certain brands oftentimes when big companies do acquisitions, they kill the small brands, but this jet acquisition seems to be working for walmart. >> it does 4%, you said when have you seen that you don't see it that often. let's go back to sara, in fact, at the p&g shareholder meeting with a look at what's coming up. >> i can tell you it is very, very close that vote. even closer than both sides initially expected too close for either side to claim victory. so will shareholders of procter & gamble choose to add trian's nelson peltz to the board? when we come back, i'll have an

update and remember this from peltz on "squawk on the street" last month? >> i don't even know how to spell lose, okay so i'm not going to discuss that what we're hearing from the shareholders is thank you for getting involved

let's send it over to dominic chu with a quick market flash. >> we're watching the airline stocks leading the s&p 500, overall, united cont tental shares up the most after they reported better than expected travel metrics shares up more than 6%, on pace for their best day since august of last year american airlines higher after the company raised their revenue for the third quarter. those names along with delta, southwest, the majors out there, helping to lift the dow transportation index also watching the iyt, the big transportation etf that tracks it, also moving ahead in today's trade. back over to you guys. >> okay. dom, thank you so much let's send it to sue herera who

has the news update for us >> from chu to sue here we go here's what's happening at this hour president trump to have lunch at the white house with secretary of state rex tillerson and defense secretary jim mattis today. in an interview with forbes magazine, president trump suggesting he's smarter than tillerson and that if tillerson did call him a moron, the two should compare iq tests. president trump says he knows who's going to win that one. police say 19-year-old hollis daniels has been arrested following the fatal shooting of a texas tech campus police officer. he allegedly shot the officer after being brought in on suspicion of drug use. he fled on food before being captured gunman killed two employees at a technical university on kenya's indian ocean coast in a suspected extremist attack the assault occurred as kenya's president campaigned in the coastal region for the upcoming presidential elections later this month opposition leader has withdrawn his candidacy for president.

and north korea marking the 72nd anniversary of the founding of its ruling workers party. crowds laid flowers and bowed in front of statues and portraits in front of kim il-sung and kim jong-il, the grandfather and father of kim jong-un. >> you are up to date. that's the news update this hour i'll send it back downtown to you. michelle, back to you. >> thanks very much, sue let's get back to sara an update on the key consequential p&g vote sara >> david taylor has just announced, that's the chairman and ceo of p&g, a short recess he's just coming back to the stage. shareholders are still in the auditorium this likely means we should have a result just moments away i can tell you according to a source that this was super close and came down to 10 million share votes, which it was expected to be close even closer than expected here again, what we're watching in terms of the breakout count,

okay, we just got word that nelson peltz lost the vote and will not be getting a board seat shareholders voted against nelson peltz in what was the biggest ever company to face a proxy battle we heard it was close. we'll wait for the vote count to give you, but it does appear that we have the final verdict it's a win for p&g their board members re-elected, nelson peltz rejected to p&g's board after what was a costly, long running, months-long, often ugly and personal fight. if we look at the share price reaction, falling on this news pelts's engagement with p&g really goes back to early this year in january. we started learning that he had built up a stake of $3.5 billion worth of p&g stock, 1.5% in the summer, a little ahead of the summer, we started learning he was going to fight for a board seat, that the company would fight him back

both sides have spent a total of more than $60 million on this vote peltz has said they need an outsider to come on the board, shake up the company, split it into three units, get them more focused on smaller brands and m & a and cost cutting the company has fought back that that would just be a distraction and they're already in the middle of a turnaround what we're getting today with this result is a vote of confidence in p&g's management, in david taylor who has been the ceo for two years, in the board. some of them longtime board members, current and ex-ceos, that they are on the right track. it was close, so it will be interesting to see how p&g reacts to the fact that almost half of their shareholder base voted that peltz should be on the board, but it does look like a loss that means we're waiting to hear from mr. peltz who will come out here after this all wraps up, talk to us exclusively mr. taylor, david taylor, who

has got to be feeling good, will also be coming out to talk to us about what comes next for the company and the engagement with peltz, as still one of the top shareholders >> until david taylor comes out, sara, and faces the reality of exactly what jim cramer said would happen if p&g won the vote, that is a falling stock price. and what does this investor reaction mean for the future of how david taylor should feel about how this vote came out the stock is down 2% it's near the lows of the day. what does that say, that okay, p&g won the vote are investors in p&g shares, a large number of them, retail invest investors, really happy with this outcome >> they're not winners today >> well, we know that peltz had wall street on his side. the institutional investors, the hedge funds and pension funds and mutual funds that included calsteres, of course, and the texas state teachers board

he didn't have quite the retail vote and what we're going to look for in the breakdown is which way the index funds went overwhelmingly, it does appear they did go for p&g because if peltz had gotten two of the three major index funds, that would have been seen as a more likely path to victory for him it doesn't appear it went that way, but we'll get through the vote count and let you know. the stock reaction is telling. >> i wonder if the stock reaction is telling us they don't believe there will be as much growth as there would have been if nelson peltz had been on the board. the number you cite, $10 million. that's a teeny, teeny percentage to lose for nelson peltz when you look at the stock reaction, you have to wonder if the board, be careful what you wish for >> absolutely. and just how much the current management, taylor, is going to be amenable to working with peltz. they took several meetings in the past before peltz waged this

proxy battle does that engagement continue? does pelths hold on to his shares of procter & gamble stock. that could also be in some of the investor reaction. but clearly, there's a feeling out there on wall street, and peltz's point clearly resonated that having an activist investor with new ideas and some that he outlined in there would have been a good thing for shareholders >> and what are they afraid of one guy on the board once he's on the board, he can't complain in public anymore >> i want to let you know, trian, by the way, is telling dow jones that the vote is still in their mind too close to call. >> interesting >> they're waiting for a certified vote and an outside inspector as well. they're not ready to concede >> they're looking for hanging chads or something >> they're not ready to conjust yet because as sara said, this vote was too close to call for some time, so they're not ready yet. >> sara, we just had courtney on live from the walmart meeting, and she talked about how the

acquisition of jet is helping to reinvigorate walmart i wonder if there's a metaphor for procter & gamble an old school company like walmart could have brought this company in, brought this guy in, and stifled him. how often do you see a big company do an acquisition and the small company dies because they're killed by the big infrastructure that's around them that didn't seem to happen at walmart. they're letting this guy invigorate their e commerce, and wonder if there isn't a metaphor there, what nelson peltz sees for p&g as well. >> that's one of his complaints about p&g. if you look at the roster of top mampgment for company, they're all lifers he's been with the company 40 years, the cfo, same story that's one of peltz's complaints, when it comes to looking on the inside and upper management, the company has shot back that that culture has changed and that's an outdated view of the company. they cite their general counsel

who came in from the outside digital, to your point, is going to be one of the biggest challenges for p&g and all of these consumer brands. that is, they have fought for years and years for shelf space, from the likes of walmart. their scale helped them negotiate on that front. and in the last few years, consumers in the last few decades, consumers have changed the way they have shopped. now going online p&g would say, look, it still helps to be a big brand and our strategy is working. if you go to amazon and search the laundry detergent, tide products fill the first page and we're still dominant there and they tout a lot of the innovation but there are questions around innovations. when was the last big one since the swiffer, i think, is something that peltz has pointed to in his critique >> did they invent pods for the laundry? >> yeah. >> i love pods >> the tide pods, and also the scented pearls, which they're very big on right now, the downy pearls for laundry >> that's the worst day.

>> those are going to be questions. >> it's the worst day since april, by the way, for shares of procter & gamble, which are off their lowest levels of the session, but they're still down by better than 1% today. we have a press release from trian, by the way, which is just crossing trian believes in p&g's potential and wants to see the company grow market share again, it says, and deliver long-term sustainable value for the benefit of steakeholders we feel strongly that a share holder voice is needed and trian's approach will help revitalize p&g, is what trian is saying, even though it appears they have lost vote, yet nelson peltz is not ready, nor are the folks at trian to concede. at least at this moment. they say they want an independent review, that it's in their minds still too close to call i wonder -- it sounds like we have nelson peltz is getting his microphone on as we speak, getting ready for the exclusive interview. >> give us a minute.

we're going to mike up >> we hear you >> p&g should be embarrassed shouldn't you be embared you won, but share holders are telling you you lost the war he's going to have to make a good case to talk about what they're going to do to answer this >> i think mr. peltz, who by the way, moments away, so don't go anywhere, as you heard, just getting his microphone ready getting ready for this exclusive interview, is going to cite the stock price and the reaction to this vote and what it really says, the statement that investors are making today >> what i find interesting, we have had conversations with activist investors who have told us one board, one board seat, almost isn't worth it sometimes for them because once they're on the board, they can't complain out loud it's really hard to make change because you don't control that many seats right? you wonder what p&g was so worried about, having a voice to invigorate the conversation in the room >> yeah, especially somebody like nelson peltz, who, if

anybody knows packaged goods and this kind of space, it's nelson peltz. obviously, his track record speaks for itself in what he's done i wonder what this ses about where activism may go from here. you have an activist taking on a huge company the largest proxy battle ever. and yet if the index funds in this case turn the tide and turn it towards procter & gamble -- >> tide. >> pardon the pun. when can you ever win? when can you ever win? in a world where the index funds, the black rocks, the vanguards of the world, if they vote with management, as they so often do, what does an activist take from this particular case >> i think he's won today. i think activism wins today. okay, he didn't actually win the vote but when sara reports there's only 10 million shares out of 2.5 billion is the difference in votes, that is a very, very

small number and remember, as she's highlighted, the individual shareholders are very, very big in p&g in a way that is not necessarily typical of a lot of the big industrials. right? so any other company maybe he would have won >> yeah, well, let's go right now, in fact, to sara, who is standing by with nelson peltz. sara >> yes, scott. i am here with nelson peltz, just stepped out of the shareholder meeting. are you disputing this p&g has called this a win for them >> well, our numbers don't say that our numbers say it is as close to a dead heat as possible i think our numbers show we were in the lead this morning we don't know what they came in, they don't know what we brought in but if anything, it's plus or minus 1% we need to really count it and understand it. but you know, i sat in that meeting, and i think you heard

it the dissatisfaction on behalf of the retirees and the old-time shareholders was amazing they are so -- we sit there and you hear all of the rhetoric of how things are going, how well things are going and then you look at their 10k and all five business segments have lost market share this year and last year. so people are not fooled >> the stock is falling, nelson, on this idea >> not surprising. it happened at dupont. >> what do you think is next how do you think the company will respond >> look, i spoke to david taylor and jim mcnerney in there, and david said he wants to continue to talk with me. we'll wait for the actual numbers to come out. but as i say, i think they're plus or minus 1% i think if i were them, i would have said it was too close to call but they do things their own way. i think no matter what happens,

i think david should put me on the board. because even if they win, which i'm not sure they did, think of what a pyrrhic victory it is think about it i mean, everybody but the current employees voted for us up and down the line >> is that what you hear what did you hear about the index breakdown? >> that's either the linchpin one way or the other maybe that's why they keep so much overhead. >> do you think they were surprised by how close it came >> i don't know. i don't know look, they saw numbers coming in today. this morning, we were up about 175 million votes. we knew that they had about 100 million votes, we didn't know how that was going to break up, of arissa and so forth they also during this campaign, they bludgeoned the banks and the custodians and all that. we saw that.

you know, look, this was a big fight. you know, we fought one of the biggest companies in the world i'm very proud of the results no matter how they come out because it is as close to a dead heat as you can find hopefully, the numbers when they're finally counted will come out in our favor. but if these guys really cared about shareholders, and they heard what was said inside that room, they would say, you know, enough fighting. come on the board. make it 12 how disruptive can you really be >> what if they don't? what if they win and they don't invite you? >> if they win by such a tiny margin, look what happened to dupont let's go over that really carefully. the night before the annual meeting, the stock was 75. five months later, it was in the 40s. ellen coman stepped down the board front -- i haven't met -- there were eight

directors in the room i never met. >> you only met with certain members of the board >> with mcnerney and david taylor then i met once with ken chenault for 20 minutes. he just said hello and good-bye. there was no interaction there whatsoever >> you feel they didn't give you a fair shot? >> not at all. i didn't show them my white paper. we didn't go through the white paper with them. they didn't do their job they absolutely didn't -- they should have sat with us as a board in whole or in part, and we should have taken them through our white paper. they complain that we didn't give them the white paper, you know, early. we said we wanted to give it to you in may, june, july, august the board was not available for us >> they took it personal i mean, they went after you, your track record. >> they did. >> it got a little nasty >> it got nasty on their part. i think we were -- i think we were gentlemen the whole way i'm very proud of the way we behaved. i sent a note to david the other day, and i said david, it's very

lonely on the high road. because we both agreed that we were going to stay on the high road they couldn't quite stay there but look, these things happen. i'm not mad at david i'm not mad at jim mcnerney. i don't think they're serving their shareholders properly. i don't think they have a structure today that's right for that business. it just really is wrong. and they will continue to miss i mean, they'll spend a lot of money on advertising this quarter, so they'll gain a market share this company is struggling to stay even. >> what do you expect to see in terms of results because the dollar has weakened. that should really start to help them >> it's also a tailwind for kimberly clark, colgate, all of the other companies. so where they cried about it before, you know, now they won't tell you anything about how good it's been. but their competitors is going to have the same benefit

>> some analysts would say win/win either way you're still a major shareholder that they will continue to engage whether you're on the board or not, and it just puts more pressure on them to deliver. >> there's no question, but i like the first win rather than the second win >> what can't you do as a shareholder instead of a board member >> i can't see inside numbers. i can't really evaluate things that we usually do when we get on a board and i can't have interaction with management. the way david is going to be available to me, but, and he said that to me today. and i believe it but i don't think we will have the interaction with general managers and other people like that and financial people, which we do, which every director has a right to do. >> we made a number of points that you argued, smaller brands, more m & a, aggressive cost cutting that shows results, the three business units what point resonated the most, would you say, with the

investors you have been meeting with >> i'll tell you what resonated the most i said i don't want to move this company out of cincinnati. but what resonated - >> this is a city that has felt threatened by you. >> i know that i'll say that again. when i do ultimately get my board seat, i'm not moving them out of seat, i'm not moving out of cincinnati, okay? but they have about 10,000 people in corporate. and they say they have gotten rid of the matrix. well, you can't get rid of a matrix and have 10,000 people in corporate. our goal was to take those 10,000 people and put them inside the gbus, so those gbus can make those people accountable, they are part of a pnl statement, not just an "l," and i think they would be happier. i think most of the employees at p&g today, if they were pulled out from under this suffocating bureaucracy, look at it, i mean, then i think they would be --

the good ones would excel. and i think they'd be happy to have the handcuffs taken off >> you say when you get the board seat, so this is being contested right now. what do they look like, hanging chads, like florida? >> that kind of thing. some people voted twice, some people -- so forth, and they have to go through it very carefully. our numbers, as i said this morning about 9:05, had us up 175 million. we knew that they had some orissa votes we didn't know how many of those. some were registered that they could vote, others weren't we didn't know how the breakdown was. >> you knew it was going to be close, did you know it was going to be this close >> i knew it was going to be close. this is a giant company. we run $14 billion in assets this thing has $250 billion in market cap, unfortunately going down now because of what happened in there. >> what's that tell you?

>> tells me the shareholders are unhappy. that's what happens all the time they want change if they were happy, the stock would go up. >> they want change. the company responded a bit. they are trying to turn it up on the transformation they say they are vetting new board candidates that are focusing on consumer packaged goods and digital. >> right, right. some of the things we have to mention, okay. >> but they did not want you >> they did not want me. you know why >> why >> three-letter word, ego. >> ego >> ego, okay i threatened the hallowed walls of that boardroom, and how dare i do that, and the fact is, that the board needs refreshment. i didn't even call for that. the board needs to really look honestly and openly and say what's wrong with this picture this picture today is such an old-fashioned company, and they are talking about end to end and

making these changes these are just operating on the margins. needs bold change. >> and they fought back and said this is a prestigious board, we go through very strict vetting processes. it's a lot of ceos and ex-ceos, and you can't just say you want to come on the board and why not. that's been their big argument >> it's correct. i was a ceo of a fortune 100 company, one that i built and one that we fixed, and that we sold to benefit all shareholders very profitably. they know my background. i don't have to explain that to them it was ego they spent $100 million to -- of our money. >> they say less >> they spent roughly $50 million on mailings and so forth, and then they have four investment bankers now, those investment bankers, if you ask them today, they would say they are charging zero

you and i have been around a long time. there were no investment bankers who know how to charge zero. and if you strap the lie detector to their chest, they'd tell you the real deal is, you're not going to charge us much here, but on the next financing, the next deal, the next whatever, we will make it up to you. and they'll make it up big, okay, because those are -- investment bankers, right or wrong, were working feverishly through this >> even if -- it's certainly very close, and even if it's not a win, do you see this as a tipping point for activism on the size of a company that you can go after >> absolutely. you know, we're a pioneer, sara. might be arrows in my back temporarily, but we're a pioneer. the fact is, there is no company today that can't be called to task not one. and heretofore, all of these

companies, you could buy something from them if you were private equity, but you couldn't call them on the carpet. that's changed and that's changed forever so there isn't a big company out there today that doesn't have to think about its shareholders, doesn't have to think about its margins, doesn't have to think about its tsr. everything is open now everything is on the table, because whether win or lose, it's 1% one way or the other >> which speaks volumes. >> that's correct. >> you see this as a new competent vote for them either way? >> of course, of course. >> thinking of another big company with roots in cincinnati, ge with general electric, aviation is here they have a different approach to trian >> yes, we work with them. very happy ed has a board seat there. >> stock dropped 4% yesterday. >> i understand, but they fired three vice chairmen and one cfo amongst them and that probably lost some confidence in the market, and i can understand

that but i think ed is going to bring a fresh mindset into that boardroom. flannery has told him that everything is on the table there are no sacred cows, and hopefully that company will start to run the right way and the board will get more active >> you didn't see that as any judgment of ed joining the board at all >> judgment in terms of what >> the stock price >> no, no, i think the stock price reacted to friday after the market closed. look, people are probably nervous, you know, when the cfo takes it and quickly departs, people get nervous, and i can understand that. >> people are nervous about that stock and about p&g right now. >> well, they should be nervous about p&g right now, because until the count is qualified properly and until we know where we stand, it's going to be more the same >> you told us last time you didn't know how to spell lose. sounds like you're not giving up >> no, sara, i'm not giving up

i love the ice cream here. >> raiders >> i had it last night >> pumpkin spice and cinnamon are the october flavors. >> black raspberry chip, that was the best >> nelson peltz, thank you for coming out straight after the meeting. of course, that is nelson peltz of trian as we await to hear from david taylor, ceo and chairman of proctor and gamble we'll be right back with "squawk alley" this is not a cloud. this is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. this is a financial transaction secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. this is not the cloud you know. this is the ibm cloud.

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