entertaining the sales team, right? it could be people related to politicians or government. it could be the violation, stuff like that. so what companies are looking at is to make sure that not only are we saving money, but also make sure we don't have any compliance exposure in the company. >> thank you so much we're out of time and with appzen thank you sir. that does it for "the exchange." i'll join melissa lee with "power lunch." which starts now i'm melissa lee, on "power lunch. elon musk arguing his case president trump set to meet top trade negotiators in china at our doorsteps, perhaps? breaking news moments ago with the control for amazon we've got all the details straight ahead plus an exclusive with walmart's ceo. "power lunch" starts right now ♪

>> let's get a quick check on the markets at this hour we are higher right now, at least on the dow jones industrial average but slipping on the s&p 500 to just down by a fraction of a point. it is trying for six straight day of gains we'll see if it closes on that we haven't seen that since february of last year. the nasdaq down by 27 points wall street again taking its cue from washington. a live shot of the white house where president trump is set to meet with china's top trade negotiator shortly bob pisani watching it play out from the floors of the new york stock exchange bob? >> the big question everybody down here is asking is how much more juice is left in the whole trade talk story so look at these sectors here. semiconductors have been huge beneficiary names like nvidia and qualcomm, up 20% to 30% because they get the majority of their revenues from china. you see here, they're down today. trade related industrial names generally up today you have united technologies,

3m, caterpillar up look at boeing there a really big mover in addition to the trade, out of the gate, really one analyst told me the ceo in the boeing max it accounts for 16% of the dow's gains today. ford and general motors moving up 1% a piece. ford's first quarter sales fell 1.6% from a year earlier but sales of trucks, vans and suvs quite strong for brand suvs set a record ipo fraud, tradeweb markets, an electron trading blackstone went public this morning. $34.26 it opened at. whoa that was a premium $27 is what the price was. still moving on the ipos, kelly. >> still holding those levels, bob, thanks. to the drama at tesla where

elon musk is facing a legal showdown he entered the court in manhattan with lawyers to the case asked him to hold in contempt of court for violating the terms of his agreement to have tweets and social media comments preapproved. whether the drug agrees with the fcc and if so, what punishment could make, could he be stripped of his ceo role? philip lebeau will be monitoring any headlines that come out. adding to tesla's troubles, brutally disappointed delivery numbers for the first quarter. that is sending shares sharply lower by 8% right now. the stock is now on pace for worst day in nearly three months with the cnbc news line from bernstein, the number one rated tesla analyst on the street out with a new note today with five key takeaways for investors. tony, great to have you with us. i like the title of your report "not horrible but not good either" and you really seem to hone in on the shortfall that there's a myriad of reasons why

the shortfall existed. should we take it as a sign that there's a lack of demand that cannibalization by the three is taking hold? what should investors think? >> i think that's the big controversy. any time you have units decline by more than 50% from one quarter to the next, that's going to make investors stand up and say, whoa, is there some kind of demand problem and we can explain, you know, certainly parts of it away seasonally, q1 is always weaker. invariably, a lot of consumers bought a high end tesla last year before the u.s. tax credit was cut in half. there were also some incentives in countries overseas that were diminished so there's a lot of explanations and you could certainly see why units would be down by 50 plus percent down is very striking and in the context of model three deliveries being kind of

the inline or maybe at the low end of the range, collectively, i think that's making investors say, is something wrong here either with competition around or the acceptance of electric vehicles, now that the purchases the cars those are the broader questions they're asking today. >> bulls, tony, would say it's about the model 3 and that it was okay, not terrible it wasn't amazing either but in the short-term at the very least, tony, if there's a problem with demand for the s as well as the x, that would conceivably have an impact on the overall margins for the company and revenues for the company. how certain can investors be if this extends and at what point do you start getting concerned about that >> yeah, no, look, you're right, melissa. these more expensive markets contribute to factory

utilization. you have the same overhead that negatively impacts margins and cash flow. so the big investor concern is ongoing cash balance at tesla and started close to 4 billion and could be below $2 billion. and that's getting precariously thin it will continue to be an impediment to cash flow growth going forward if we don't see a pickup. >> how much of the price growth reflects expectations and if those expectations continue to cool based on these numbers and if we get more like it, where should the stock be? >> well, yes i think, you know, our analysis suggests that tesla's stock price is effectively saying this

could be a major luxury car player over time, like a bmw or mercedes which sells 2 million or 2.5 million per year. right now, tesla might sell 300,000 or 400,000 you need continued growth p trajectory and then in the absence of that, a significant contraction. the question is how quickly does hope get expunged, right because there's still lots more coming from tesla. the model y here in a year and a half the tesla semi has been announced. there's an energy storage business, a pickup truck that's coming so i think it will be expunging the belief and mess up and if the 2 plus million cars,

only end up being able to sell 500,000 and that's all people believe, we've got a lot of downside here in the stock but it's important to remember that, you know, there's lots more products coming here in an attempt to address additional big parts of the marketplace. >> there's even an autonomous driving day later on this month. so certainly got their hands on a lot of different things. tony, the worst case scenario for musk and the company happens in court some time in the next day or so. could that actually be a good thing for tesla? knowing that elon musk could may become a chairman of some sort, controlling shareholder and maybe bring in somebody with operational expertise? >> yeah, i think that could be a positive i mean, the dilemma for tesla shareholders is in some senses, can't live with elon as ceo but can't live without him as part

of the company and many expressed a belief that wouldn't it be great to have the best of both worlds? fully engaged to be the visionary of this company, yet have a front person from the strategic planning perspective and the communication perspective and the day-to-day management of the company. i think that would be positively received the trick, of course, is does such a person exist and would elon musk ultimately be able to live in that kind of situation and still be fully engaged in tesla? now, obviously, the board has thought about this they've not been able to come to that determination but if ultimately, you know, the fec were to mandate that, in, you know, perhaps that could be a blessing in disguise over time assuming they could find the right person and continue to

make sure that elon was fully engaged in the company. >> thanks for joining us toni of bergstein. the social media company's plans for the next stage of growth shares are spiking right now by almost 2%. they've doubled this year down 34% since going public a little more than two years ago. julia boorstin out where they announced the gaming platform and the expansion of content. >> they haven't announced just yet but what's driving the stops that move higher that evan anuan announced the snap just far beyond its own app but enable their users to share directly from snap to other apps and allow their users to share from there back into snap to help grow engagement. like tinder and social network house party will be able to have

their users update their profiles with the snap stories they're also going to be bringing content from other apps into snap from within netflix's app, or snap users can share what they're watching or listening to their snap stories and now, snap users can bring their bitmoji to other apps starting with fitbit and venmo another piece of interesting news here, snap announcing to bring outside of the ad platform as it looks to expand that potential ad revenue announcing the snap audience network in the works, still not a lot of details yet but that could be promising and just full disclosure here, the parent company nbcuniversal is an investor in snap >> i was wondering what to do with my bitmoji. thank you, julia boorstin with the snap meeting let's break down the headlines that julia just ran through for us on the cnbc news line is michael morris, analyst at guggenheim and upgraded facebook

to a buy rating today. but first, i want to get your reaction to the snap news. higher on the back of this news to the tune of 2%. you've got a neutral rating on snap does it make you rethink the story at all >> any time we have new information on a company like this, take a fresh look at it and from what we've been able to gather today, pretty interesting innovative announcements all comes down to that large user base they have. figuring out how to keep those people age 12 to 34 and look for ways to monetize them. just dig a little bit more deeply and see how it will impact financially >> is there any danger >> sure. i think it would be hard to say no to that

facebook and the growth we saw in facebook and twitter and snap, et cetera from a user perspective that ran ahead of effective control of those platforms was something that i think is very much on these company's minds as they drop them from a point of having more focus on some security and content management the question is how that impacts their growth whether they can effectively do that and i think these are unanswered questions for these type of products. >> we failed to mention, $200 from $175, michael not only are user trends solid but seems like investors may be climbing a wall of worry when it comes to the spending they'll have to do when it comes to security and privacy and monitoring news feeds, et cetera what will the catalyst be at this point though?

>> i think a couple of catalysts and then the end of april. i think a bit more specific point, there's three reasons we're more constructive. increasingly more comfortable with the regulatory risks. consumers and advertisers through our checks continue to use the platform at a growing rate when we were neutral on the stock, the headline risk was going to result in either both or consumers moving away from the platform and just not seeing it they're innovating, consumers engaging with instagram and you're seeing stories with the business a big portion of that investment is going to be in platform health and very big investments into new products i think with

high revenue potential and that's not reflected in a consensus estimate to this point. >> some embarrassing data breaches, rarely turned consumers off in the long run but any weaknesses in how facebook is running its business >> i go back to the comment i made before about the pace in which these company's businesses grew relative to their ability to get in front of some of these security and data issues that i think, you know, hindsight being 20/20, the investment would have been made up front in the safety and security but a will the of these problems are new within the business community and the tech community and unfortunately, addressed a little bit after the fact. but a couple of things ceo mark zuckerberg put the op-ed in the "washington post" earlier asking or implying that maybe more regulation should be put in place, an interesting approach since most would believe these companies don't want regulation but the unique thing about facebook is the size of the company, the size of the

budget they have to tackle or address infrastructure relativ to rules put in place. when i look at facebook, i think they're closer to being on top of making progress on the issues and if you were to have that regulatory situation, they're the resource company that could address it. >> michael, thank you so much. >> thank you >> michael morris. coming up, just about two hours away from a crucial meeting on trade as president trump hosts china's vice premier of the white house what the trade deal could look like we'll discuss. what are the markets hoping for? dow higher today boeing a big piece of that and the bezos divorce being dema public a big sigh of relief stay with us on "power lunch." when you rent from national... it's kind of like playing your own version of best ball. because here, you can choose any car in the aisle, even if it's a better car class than the one you reserved.

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that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. welcome back details of the divorce settlement with jeff and mackenzie bezos. robert is here to break it down for us. >> bezos keeps 45% of the shares and then mackenzie 25% largest shareholder. will own 12% of the total company. mackenzie has 4% she's now the third largest shareholder of amazon. more importantly, and this is the big part, he will retain voting rights over all shares including those by mackenzie and keep blue origin and the "washington post" and nothing

changes for those two assets mackenzie in first communication of the divorce tweettweeting, grateful to finish the fourth richest woman in the world with $4.62 billion, not too shabby but not the $80 billion some people said could happen since technically, legally, she could have had half of the shares. not 25%. >> a lot of questions. you know we do stay with us bring in deirdre bosa with some takes on how this sort of eliminates the uncertainty and the worst case scenario would have been to divide those voting rights, right deirdre? >> reporter: that's right. i think the important thing throughout the divorce proceedings since we got the announcement is not just would jeff bezos be able to keep his vote in control but also, whether he would be distracted you haven't seen the share price, any major moves indicating shareholders thought

he was lufziosing any kind of distraction but now can focus on the business with this settled and speaks to what investors speak to one of amazon's greatest strength which is stability at the top bezos got a team of executives that have been there for 20 plus years like andy and jeff i think this is all in all a good sign for investors. he can continue to focus on the company while retaining board control. >> the bezos empire, as defined by origin, washington, amazon, it remains in tact, firmly under his control. >> reporter: that's right. and he is the first biggest shareholder, after this, i believe some 12% the next largest shareholder, vanguard has some and then mackenzie. amazon doesn't have any super voting structure one share, one vote. so that's why this is extra important but raises a lot of questions about maybe some other

companies if you see marital problems, divorces, when you do have these super voting structure, what happens in this case, bezos has come out >> it was notable that she did not request, but that's something shareholders were worried about as the third largest shareholder, she might have requested one and she's not. clearly, she says, jeff, this is your thing i don't want to be involved. >> or a bargaining chip for other assets in the divorce she wanted more. >> it's possible, but again, she could have gotten half she got 25%. so clearly, she didn't want to mess with what's working which is jeff bezos creating a lot of wealth at amazon. >> could have had up to $80 billion and a board seat and so far, walking away from all of that and giving him voting control over the remaining shares. >> except for $37 billion, $36 billion. >> wow >> and clearly guys, a lot of money at stake there, right? maybe she prefers having jeff bezos manage that $38 billion that she now holds in the company but we should note when we first got word of their

divorce, it all seemed, it came from a tweet from jeff bezos and it seemed kind of to come out of nowhere. then the stories happened from the "national enquirer". it didn't always look amicable. >> how long since that tweet >> january 11th was the initial tweet. >> lightning fast. really thank you. disney may have another blockbuster as "avengers end game." also coming up, the ceo of lmt,waar doug mcmillon joins "power lunch." you should be mad at people whos forget they're in public.

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welcome back to "power lunch. i'm michael santoli at the new york stock exchange. goldman reiterating a buy on disney calling this the dawn of a new era for the company. disney shares also breaking out this week, edging closer to record highs goldman one of many bullish on the stock. 12% upside todd gordon and michael bapass are your "the exchangsho "tradim how is the position here

on a net basis, the stock hasn't done much in a few years >> two primary trade that are there. and usually three good primary pushes in the direction of the trend. i think the third is ahead of us to skip the boring details here, generally, the percent change that you see in the first push would equate to the next one i would see goldman as 142 and actually raise it up to 192 when it's all said and done that's the monthlies down here to the daily, you mentioned, big time consolidation here over the last four years i hold half a position of disney when we break through here, 120, i'll add the other half. i like it. >> michael, so maybe the stock hasn't done a lot but the company has been very busy obviously, absorbing this fox acquisition, launching direct to consumer media app so where does it leave you in terms of thinking how the business is positioned right now?

>> you said it it's been range bound for years now. we think for multiple reasons, ready to break out that fox acquisition is huge it creates a real media powerhouse but they also give all of the assets and only paid half cash, half stock the second part is disney plus, the focus on the streaming business to compete with netflix could really drive revenues. the economy's cooperating. they raise ticket prices by $10 a ticket and no one even seems to blink we're also hearing that mickey and minnie are focused on driving revenues higher. we think it's a long-term hold and buy. >> i guess everybody is pulling within the company right now guys, thanks very much at least for today, that buy disney sell netflix trade is working really well. in the green for the moment. "trading nation" or on twitter @tradingnation >> mickey and minnie want more profits. two hours until the trade

meeting with china's vice premier. close tor to a final deal? plus, walmart's ceo doug mcmillon when "power lunch" returns. >> the latest from tradingnation.cnbc.com and a word from our sponsor. >> for entries into breakouts, some traders use buy stop limit orders placed above resistance levels unlike regular buy stops, they turn into limit orders when the stop is triggered. thus, if a stock closes below the stock price one day and opens far above the limit price the next, the adtrer will not buy the stock. i'm lee bowel and schwab is the better place for traders

welcome back everyone. i'm sue herera here's your cnbc news update at this hour. the house voting to end american involvement in the yemen war rebuffing the trump administration's support for the military campaign led by saudi arabia the bill now heads to president trump who is expected to veto it the white house says the bill raises serious constitutional concerns the preliminary report from ethiopian regulators on the jet that crashed last month states that the flight crew performed all procedures from boeing

correctly that they still could not control the jet. boeing responded by saying it will take any and all additional steps necessary to enhance the safety of the aircraft ohio representative tim ryan announcing he is running for president, making the nine term congressman the 17th democrat to enter the 2020 race. he rose to national prominence as one of house speaker nancy pelosi's chief antagonists winning support from one-third of house democrats in 2016 in an effort to topple her and a cargo ship carrying more than 3.5 tons of food, fuel and oxygen and supplies launching from kazakhstan for the international space station. according to nasa, it will stay docked at the station for about three months you're up to date. that's the news update this hour melissa, back to you >> thank you very much, sue herera the automakers getting caught up in president trump's border battle with mexico ahead of his big meeting with china's top trade negotiator in just about two hours time eamon javers is live at the white house with the latest.

eamon? >> reporter: melissa, that's right. here's how this unfolded last week, the president threatened to seal the u.s. mexico border if mexico didn't cooperate in terms of cracking down on migrants coming to the united states and then sort of changed his demands midweek this week and said that what he really wanted was democrats on capitol hill to pass legislation related to immigration, threatened to close the border if they didn't do that and then today, he backed off that threat entirely suggesting that he's not going to close the border this week as he threatened to do instead, he's going to give mexico a little bit of leeway. here's what he said earlier today at the white house >> we're going to give them a one year warning and if the drugs don't stop or largely stop, we're going to put tariffs on mexico and products in particular, cars, the whole ball game is cars it's the big ball game, with many countries, it's cars. and if that doesn't stop the drugs, we close the border >> reporter: so a significant

walkback there for the president who threatened to close the border this week now it's a year away but first might be tariffs imposed and some metrics on drugs coming into the united states as well so that's a relatively far off threat from this president the walkback comes in the wake of the pressure from the u.s. chamber of commerce which were concerned about the huge economic impact that closing the southern border would have on the u.s. economy now wait to see what the president is going to do on the china front. we'll be seeing the president in the oval office with lee we'll see if we can get an indication of where the negotiations stand i'll be with the president for that event later this afternoon. any questions for him, let me know and i'll try to pass them on >> i'll let you know, eamon, thank you. >> what exactly would a trade

deal with china look like? eurasia's head of research and eunice yoon and under secretary for international trade. welcome everybody. stefan, i'll begin with you because you actually think there could be real and demonstrable progress in changing how we do business in china, for example, what gives you that confidence >> well, i do think we're now in sight of a trade deal and if the meeting today goes well, you can imagine actually a summit between president xi and president trump being scheduled soon, so the tea leaves, pun intended for chinese negotiation i think are looking quite good that being said, i don't think this is going to be a panacea but i do think they are going to be able to make progress, not just on the purchases of u.s. goods and services, but on the key structural issues. and those structural issues are around market barriers, the support of state enterprises, the theft and counterfeiting of intellectual property and forced

technology transfer. if they get at those, albeit, not solve it completely, i think it will be a real success for the administration and a win >> meredith, do you see signs that change on both fronts as happening? >> i think, first and foremost, the latest reports are that president trump does not intend to announce a summit meeting date with president xi during this afternoon's oval office meeting with liu he. that's important that the time deal is important. this is a chief indication that the gaps between the two sides on some of those core structural issues we're discussing are still viable enough to where the end game is not yet here >> the other thing that's happened in the midst of all this, eunice, we got pmis out of china with some sort of upturn there was hope that the stimulus is working

does this make the chinese less inclined to come to the table wanting the make the deal because they see the stimulus on the economy is actually kicking in >> that's something we've been hearing, that the stimulus is something that the chinese are looking at, hoping that they'll be able to bide time and also, that because the tariffs are not currently being imposed, it's not completely threatening them right now, that they see that there is a reason for them to keep waiting and because 2020, the election campaign just around the corner that a lot of chinese think that, maybe we just wait this thing out >> what do you think about what stefan said about their support of state-owned enterprises, is that really likely to change >> i think there is probably going to be some sort of deal. it seems like the incentives are this overall, the chinese would want to have the tariffs lifted because of the uncertainty over the economy but to make it enforceable and have the implementation, a really big question mark. at the end of the day, the economic agenda, you're talking

about china deciding that it's okay they're going to have the u.s. impose from the outside. >> i completely agree with that. two fundamentally different systems that are not going to get aligned overnight. and whether or not the outlines of the deal already exist, and i think we can, we're all guessing to some degree it does strike me that based on some of the comments made on both sides largely in place, there are two big stumbling blocks left. one is, do we lift the tariffs the $250 billion of tariffs that are largely in place i think to eunice's point f it would be very difficult politically for president xi to agree to a deal but from our perspective, times have been in the past where the chinese have not necessarily lived up to the representations they've made in past negotiations so keeping our foot on our throats of the chinese, and two, how do we

enforce whatever agreements going forward and then do tariffs get snapped back, don't they, are they unilateral, not unilateral i think those are the two big issues in place even after we reach agreement on the deal. >> yeah but having the foot on the throat of the chinese is something that is not going to be something the chinese would want to have and also, to be seen to have at the end of the day -- >> that's the political issue. that's the difficult political issue and the president has kind of gone back and forth on this, right? which is, we might take them off, we might not take them off. i think this is, it will be interesting to see how this one issue ultimately plays out. >> the latest, he wants to keep the tariffs in place for a substantial period of time to make sure there's some sort of follow-through on any sort of agreement. doesn't sound like the chinese have a lot of incentives if we believe the tariffs remain in place and that we're going, they're going to have to invite the u.s. back in to monitor progress, and various

benchmarks, identi90 days, 180 , whatever you call it, why would they come to the table especially as their economy looks like it's actually turning? >> you hit the point here and there's been a immedian immedia on one or two issues but really, there has been broader pushback since liu he went back to beijing to try to sell the deal he agreed to with bob lighthizer the chinese have been pushing back and the meetings we've seen last weekend in beijing, this week in washington, rather than assign that the deal is imminent, this is a sign that both sides intensifying their negotiations because those gaps remain and from washington's perspective, if beijing is not able to sign up to the kinds of structural reforms they say is necessary to address the 301 concerns, washington is comfortable just leaving those tariffs in place so the eurasia groups, the fairly robust probability if we

don't see a comprehensive deal by the end of june, by the g20 summit in japan where both leaders are set to meet, the risks of a deal being indefinitely delayed and those tariffs remaining in place for a good part of 2019, those risks will rise considerably. >> eunice, final point monitoring the progress in china of what's happening there, does that seem unlikely to you? and if that kind of a verification sis unlikely, then are tariffs the only likely outcome? >> seems unlikely because the chinese won't want to agree to that, to having this type of monitoring they feel like it infringes on their sovereignty and then also because of the way china is structured it is so difficult to be able to make sure that you have the entire, people look at china and think the government is one giant group. you know, but it's just that there's so many local players as well and it's difficult to make it all happen. i was talking to one official

who consults a lot with government officials and she said we just want a strategic partnership with the u.s kind of have given up on the idea of a friendship make sure we can just work together on important issues. >> guys, thank you all good discussion. meredith sumpter, eunice yoon. appreciate it. rick santelli is tracking the action at the cme. >>. >> reporter: hi, melissa lee the march report could loom. 2 year year note, they're down a basis point or two the three day of tens, also 250 down a couple of basis points but still in the upper range but the lower part of it as of late and that is significant. we're not giving up more ground. finally, a lot of eyes focused on the dollar index. a third of a cent away from 21 months but let's look at the

reverse. here's a two week chart. you see two days ago, flirted under 112. we haven't closed below it next chart since the summer of 2017 the last time the dollar index was one-third a percent higher than it is now we want to watch these levels especially knowing tomorrow's number could give us early market volatility. kelly, back to you >> rick, thanks so much. wynn's top shareholder testifying before regulators in boston right now we'll bring you the latest after the break and a live and exclusive interview with walmart ceo doug mcmillon. that's up ahead. "power lunch" back in two. i'm working to keep the fire going for another 150 years. ♪

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wynn resort's dirty laundry aired at a hearing in massachusetts. elaine wynn testifying right now. wynn shares have been on a tear lately rallying today and up 20% in the last week contessa brewer joining us live from that hearing. contes contessa >> reporter: elaine wynn is the largest shareholder of this company. required to meet suitability

eligibility requirements for this massachusetts gaming license. she's taking the stand right now and being asked what she knew about her ex-husband's behavior. i'll get to that and want to describe to you the kind of pressure that ceo matt mad dox was under this morning while continuing testifying. not only what he knew while steve wynn was his boss and mentor, but the actions he took as ceo for instance, authorizing the undercover surveillance of a former employee who had become a main source for the "wall street journal" article and revealed some of the allegations. the commissioners pressed him on why he'd pay for severance to the existence of these settlements and allegations and also, for even though lost the trust of employees

>> it seemed you made excuses for high level folks who failed to do their job. >> i am sorry you feel that way. maybe call it an excuse but it was the truth. >> reporter: it was also revealed there was undercover surveillance of employees who were known to be on team elaine and in fact, surveillance of elaine wynn herself. as testifying, being asked about her ex-husband she said a history of different kind of mood strings, accusatory conversations with employees that described as bullyish in nature her qualifications for this gaming license judged as well as matt maddox. >> what about if they don't get that gaming license? i've asked you this whole week because the stock has been really rallying. it seems like investors are more focused on the positive numberles we've been getting out

of the gaming license. >> they were predicting $250 billion for the boston property. the 5 billio or 6 billion in ebidta every year it's an expensive property they definitely made an investment but again, phil sautry, the chairman, had testified this license is important to the overall business and a consultant said that it was the financial stability of the company was contingent on them retaining the licenses in las vegas, which they will, in boston and in macau where this issue is also under review >> contessa, bottom line, does it look like they're not going to be able to open up this boston casino? >> listen, they are already accepting reservations binning in june at the end of june so they are counting on keeping this license they're operating and have continued to do so even with it hanging in the balance as though

they will get it and they're pointing out the positive economic impact that has already happened to everett, washington, employing 4,000 union members for the construction and some 4,000 casino members once the casino opens. and there's a lot of pressure i think on this commission to recognize the important work that has already been done economically by telling them and yet these commissioners are relentless in their questioning. they are not letting any detail go uncovered and it was a tough morning for wynn resorts >> contessa, thank you contessa brewer joining us from massachusetts. a big retail conference is under way this hour in arizona joining us now for a cnbc exclusive is courtney reagan joined by doug mcmillan, the president and ceo of walmart courtney, take it away >> thank you very much, melissa. we are at the global retailing conference in tucson, arizona with doug mcmillan, ceo of walmart. doug, thank you so much for being here this is the global retailing conference lots going on in the world

walmart touches a lot of it the president's talking about closing the border with mexico how important is an open border with mexico and frankly a trade deal with china to walmart's business >> yeah, we sort of hope these things get resolved or don't happen in the case of mexico the flow of fresh food in particular comes to mind and in stock levels i heard jimmy fallon joking this week about avocado out of stocks and we don't want to see any of that happening everybody knees their guacamole. and china seems to be headed the right direction based on the news this week but as you know it's been pretty volatile. >> speaking of food, amazon is getting aggressive with its whole foods stores, lowering prices, potentially opening a new supermarket chain. could walmart afghan to win the price war in gresries? it's 56% of your sales >> groceries are very important to us but price competition is not new to us. and i think what we've been doing these last few years to drive our productivity loop, to make sure managing our expenses, increase our units per labor hour, that kind of focus, helps us be able to continue to lower

prices as we have been these last few years >> what about the health of the u.s. consumer? in december when you joined us you said the consumer's in pretty good shape but we hear the concerns that get discussed on cnbc every day, things like slowing global growth or potential worries about economic data paints. what are you seeing? >> that i think the customer's still in pretty much the same place they were in the fourth quarter. during the first quarter you experience the flow of tax rebate checks, different easter timing and other things as a retailer that creates volatility in the numbers we won't release the first quarter for a while now but generally speaking the customer's in good shape >> when it comes to sales growth walmart had for the u.s. comps last year the best year in a decade this year you're acting for more growth but at a slower rate than what you saw last year what's going to be the key sales driver and frankly the biggest risk to that growth? is it the u.s. economy >> i think in the case of stores the job that the team has done to improve our store experience and reduce prices has created

customer traffic and some really positive momentum there and the team just continues to execute i got into a store here this morning and just so encouraged by how our teams are feeling and the work they're doing in stores and then on the e-commerce side we were pleased to go with the 40% target we had last year. had a stronger fourth quarter at 43 as we forecasted this year, that number is coming down some but it will still be a high rate of growth. and that's great to see. the magic for us is in how we bring the two together i was just speaking with this group that's here including a bunch of university of arizona students which were fun to talk with about digital transformation and the change we're going through and the way we work and how we put our assets to work which really results in an omni channel experience that's seamless for customers and i think that's our advantage. that's what we're working on as long as we continue to execute against our plan, i think you'll continue to see strong growth from all parts of our business >> and speaking of digital, obviously a very important part of the growth but still a small

part of the overall sales. and you've talked about how online sales doubled in the last two years or nearly so so you've gained some share. but it comes at a cost losses are going to be higher this year for digital than they were last year how do you change that and when could that possibly happen >> you saw our fourth quarter results. i think there are some things underneath those numbers that are encouraging. one of the great things about walmart is we've got all these letters we can pull in multiple countries and multiple businesses to build an e-commerce business takes? time and it does take some investment we're committed to that, making progress against that plan and store productivity is continuing to improve and some of the things we're doing with automation and the way folks are learning to work in a lot of ways causes me thoi we could make these pieces come together and work >> speaking of bringing thees pieces together grocery is really important you're make strides when it comes to delivery. you're continuing to add the locations for the pickup but you're also saying your most profitable customer is the one

that comes to the store, does the work themselves in the store. so what's the balance there by offering that to shoppers, not losing that profitable shopper to these new services? >> well, when a customer comes to the store and shops, you know, transactionally that's true but it's also truett overall relationship is what really matters. and as we've shared before in analyst conferences and other places customers who shop with us both in store and online do twice as much business with us and they do more business in stores so we're not going to get hung up over which way you want to shop today if you want delivery, we're going to get that for you. if you want to pick it up, we can do that too. and if you want to come shop in a store, we're going to have the best supercenters that you can choose to shop in. so i think that's the way to think about it, is the holistic relationship not just a piece of it >> inside in your presentation you were talking about change. and you've been the walmart ceo for more than five years the company looks a lot different now than it did in january of 2014 before you started. but your stock price is up only about 30%. s&p 500's up about 60% in that

time do you think investors have not really appreciated the transformation that walmart has gone through is it appropriately valuing what you've done? >> that's for somebody else to decide i would say probably partially but it's a fair world and our results speak for themselves so our point of view is you know, if you make us choose between long-term and short-term we're going to pick long-term. both matter. the quarters matter to us. but we're trying to position the company for another generation and trying to be good stewards as we do that, manage our costs, manage our concept capital, deliver an appropriate return during that transformation period but no doubt we're making a bet on change. we're going to build this e-commerce business. we're going to make the most of the food opportunity that we have but we're going to build a non-foodie commerce business too and put them all together and that will take some investment i'm pleased with the investment choices we've made in our people we've raised wages we've invested in training our retention's getting better wages are going to continue to go up and they're continuing to

go up within walmart, a market at a time. and that's the way that we'll approach that. but we'll also invest in these training academies we've got 200 of them now. we'll invest in equipment as we have been that our associates can use in store there's a people investment, there's a technology investment, there's an e-commerce investment but we have to make some other good choices as i believe that we are to drive productivity so thatgets funded by ourselves t the greatest extent possible and that's what we're trying to do >> so it sounds like you don't see it necessarily to do another big wage increase. you're doing it market by market or store by store as necessary >> right now that's our approach that could change in the future. what we must do is together with everything, and starting wages are important but they're not the whole story. our average now is over 17.50 and we have a nice quarterly bonus program. we have great health care offers we have changed our leave policy a birth mom can now get up to 16

weeks paid leave it's not just starting wage. it's the whole thing and when you get the balance right and the whole system that you have retention will go up. and that's important to us strategically because we want our asofts to be with us longer so they can pick up these new skill sets as tasks change and automation takes hold in certain jbz. i was in a store this morning talking with an assist whose job had been eliminated and a new one had been created and her name was grace marie and grace marie said you know, i've been with the company 28 years and this change is hard but these new stills that i'm picking up i'm committed to. and the one thing i've leashed from walmart is we're family and if you embrace change everything's going to be okay. that's the kind of person we're looking for, and to have them stay with us there's a balance of investments, not just the starting wage rate >> i want to clarify something quickly. you said the average rate was 17.50. that's with pay and benefits or that's the average rate just pay? >> that's pay with cash bonus but not with health care >> you talked a little about the change with grace marie and

changing jobs. how do you see the current job market you employ 1.2 million people around the world the largest private employer will walmart always need that many associates with all the technology of -- >> that's a good question. i don't know for sure thatwhat this will look like over a longer time period but so far what's happening is new jobs are being created like the fernls shopers we're using for grocery pick as other jobs are being changed or in some cases eliminated so i wouldn't rule out still needing a really large number of people but i do stress that for us retention and training are part of our strategy if we can handle the rest of this through attrition because we're just not hiring these new people -- as many new people, we'd rather do that than to lose the people that have been with us for a longer period of time >> as we wrap up we talked about it earlier it was wrabd into several questions. but now we're going through the end of the year. how do you see it? >> i don't know that i can call the whole year i think as i mentioned before the consumer is in