people at home -- >> you're coming back. >> i'm not accepting -- people at home, don't -- we'll see larry in a couple of months. thanks for being here. make sure you join us -- >> tomorrow, and always to see larry bossity. >> yes is this you? "squawk on the street" is next. >> it is time to go. ♪ that was news, larry, we're going to miss you. good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. congress back to work, apple event, this new stick out of elliott has at&t on the move, good macro on the uk and germany, ten year 158. road map, shares of at&t popping premarket. elliott management with a $3.2 billion stake. one of the firm's largest

investments ever. >> we're closing in on new records in the markets, this amid new optimism for that potential china/u.s. trade deal as you saw stocks are set to open higher. >> and the tech lash heads to the states a major multistate investigation into antitrust practices at google, set to be announced later on this afternoon. david, kick us off on t. >> interesting here. in so many ways. 3.2 billion as you said the stake from elliott, the largest single investment i believe they made at the company, a long letter comes out this morning detailing the reasons why this could be a $60 stock within let's call it three years or so, 2021 is what they're talking about. 65% or so upside to today's stock price. they believe $5 in dividends and $55 stock price, you could get to 10% earnings per share grower with significant margin improvement, what they're calling for. and buyback. something i want to make sure people understand here, it is

interesting, people who know the company well, but sort of are vaguely aware of elliott this morning have called and said, well, they're calling for the breakup, right no they're not calling for a wholesale breakup of at&t. what they are calling for is nonstrategic assets to be reviewed and potentially sold, although again there you are talking about things like the latin american presence for directv or at&t's presence in mexico by the way, they tried on latin america and directv already, haven't found many buyers there, and then they are also calling for significant margin improvement. and i think that's one of the keys here as well, that we're going to be focused on as we go along here 36% adjusted ebitda margins in 2022 is what the company -- i should say elliott believes can be achieved that would be a 300 basis point ebitda margin, expansion, over the next -- there it is, three years, thank you. while we have identified opportunities for savings one,

in excess of 10 billion, it would only been 5 billion in net cost reductions. conservatively designed to encourage at&t to identify savings and invest in growth areas. the other key area they're focused on is management last week we got the word that john stankey will be the new ceo. they're not happy with that at elliott. i can say that in my own way they believe this is an undermanaged company but i think one of the key questions investors have to ask is it the assets that have been put together by this company or is it the management that is the problem? and can you really deliver this higher stock price that elliott believes is easily reached through simply some changes in management, savings, which is always tough for at&t, by the way, in terms of firing people, and nonstrategic sales or do you have to go a different route >> i have to tell you that the tone of this piece, and i know that they didn't spend much time

with randall stephenson, the ceo, but the tone of this is very positive. and, david, something you said over and over again is don't underestimate the acquisition of time warner. they like the acquisition of time warner. >> they do they believe it is a strong asset, to your point, although you and i have discussed many times the questions that are out there right now in terms of their strategy for direct to consumer, whether it is going to work, the trends that we know are taking place and the business in terms of cord cutting and what it means for the cable net works and the like, the loss of some talent at at&t now they have some talented guys there as well. i don't want to take away from that greenblatt, our former colleague at nbc and others. there are questions, jim, and they are about the future for warner and how well they can execute on that future. but, you're right, they're not looking for a sale or anything like that. they believe it is a strong asset, but they also say, listen, 50% of ebitda, this company is still wireless and

they would like them to sort of not refocus, because at&t says focus on wireless, but have that come to the fore again they also outline their disastrous series of decisions, when it comes to acquisition the inability to acquire t-mobile in 2011, which put t-mobile in business, by giving them enormous amount of money and breakup fee and all that spectrum the directv deal which took place in 2014, some $68 billion or so. and what has happened there with directv now, the inability to get the ott product up and launched, huge loss of subs at directv and the questions about warner which took two years to get to the finish line. >> a lot of people said to me, immediately, are they kidding? at&t, it is their large position at&t is this behemoth, you can't change it. i read through this and think that, you know what, maybe some board members are fed up themselves, maybe there are

shareholders, very angry and this gets the ball rolling >> that's a great point, jim oftentimes in situations like this, in some ways, management might not or the board might actually view them as a positive i don't know what matt rose, the lead director, is thinking here. he's a pretty serious guy. glen hutchins on that board, another serious guy we know well you wonder whether this will if they continue to apply pressure and the board despite decicides along with them, results in changes in upper management. but you're right it can sometimes be a positive that said, i couldn't help but think about another large activist investment, very similar size but did not go particularly well in a storied name. >> talking ge? >> i am. ge and triad 3.2, similar size stake. in this case, these guys will say, listen, the dividend is not just -- it is safe, there is no question about that.

you and i had a conversation about that last week i indicated obviously there is any number of investors who i speak to who have different questions, longer term at&t comes back sharply and says are you kidding us our dividend coverage ratio sbe is the best they have been in a long time. we're only coming down in terms of our debt service and perhap a good point. >> i feel they must have been talking to some people because they have a tremendous insight into the number of buildings they have in california, versus what they should the ease with which sthey could get to 5 billion when verizon is at 10 billion. there is a lot of verizon versus these guys there was the disastrous funding of t-mobile, with a breakup fee. >> incredible. and should have known going in that that had very low likelihood of occurring, 2011, when at&t did try to buy t-mobile and enticed them to the altar as a result of this enormous break fee they were willing to give

them to help put them in business you're right there are plenty of ex-at&t employees out there that can help elliott elliott has been working on this for as much as a year. to your point earlier, they have had some conversation i believe with mr. stephenson, but unclear. and, carl, now the president actually weighing in on an activist situation >> he is commenting on the stake. mostly through a lens of politics and media there is a look at his tweet about at&t is an owner of cnn, more interestingly, though, i wonder what you think it says about hedge funds willingness to go elephant hunting to some degree a lot of talk about high cash balances over at berkshire, different story obviously. but maybe some are starting to swing. >> i think that they're going after companies different from ge where they were very friendly >> trian says we missed red --

we were misled. >> they called me during the eagles/redskins game and cnn, you know when i met randall stephenson, i met him in the white house, george w. bush, the most republican -- these guys are the most republican of any publicly traded company. they're overt. and yet cnn has been what the president singles out. to me, i think he could very easily talk about what a lousy stock. but i do think that's covered. >> the president is actually weighing in at all >> he's following -- >> he's probably watching right now. >> sure is >> i don't think there is any consequence his tweet came at the top of our hour. >> no. we appreciate that we welcome all viewers i think we're happy to have him. >> there are some people who probably think why did we spend eight minutes on this. i know on "mad money" we get a huge number of calls because this is an underowned name, as they say.

>> underowned institutionally. >> boy, overunderowned retail. >> elliott simply believes this comes to the normal institutional ownership you would have for at&t, that obviously will bring even more buying power >> second most underowned in the s&p 500. >> trading at less than 10 times. but we know the reasons why. and, you know, it is not as though questioning the acquisition track record of this management is something that has not been done previously there are plenty who look at it and sort of wonder what the overall strategy is, it seems ais though randall stephenson for years has been running away from the core business, being wireless we talked about the contract with verizon, other than their poor forays, but minimal ones in terms of buying other businesses and gets a higher multiple by the way, the growth rate overall and the business is not particularly great you talk 10% ebs growth if you're elliott, you think

they'll be able to initiate buyback buybacks as they delever it is not coming from top line growth. >> is there any way you can do an asset like model which is hinted about, where you don't necessarily need all of the equipment that at&t has. because they love the time warner asset and then, david, loaded question, you and i often joke about it, you know throughout this, jeff bewkes is considered to be a great american by the elliott people would bewkes ever be enticed to come back in any way, shape or form >> i have not refreshed on this recently he was very happy -- let's call it six, eight -- the checks i've gotten on mr. bewkes, i haven't spoken to him directly, he's happy doing what he's doing. >> like larry bossity said good-bye john feriola from new core said good-bye it is not fun anymore to be a ceo.

it is just lucrative. >> yes, look at this, the president's tweet. i'm just saying, you're a ceo and you're -- you wake up, you have an activist in your stock and then get the president all over you too it doesn't make for a great day. >> no, but we were talking earlier on "squawk" about andrew ross sorkin, what kind of day is it at&t? i think the kind of day it is is basically i bet you for some it is the day when you have a kind of an aw situation, people are saying, it is time i think that the turnover here, and they got a chart about the turnover, i had no idea. that exodus would not be tolerated at any other company. >> i do think that of all of the places they could have an impact, particularly if you have board members who sort of are thinking along some of the lines as in management wasn't a great reception last week to the idea of mr. stankey taking over. people look and think, well, what was the -- what exactly

is -- with directv and with warner, is he really showing himself? it is early. early on whether he's going to succeed with those assets or not. >> i think it is good that they say the dividend is safe >> safe at elliott. >> they do you and i talked about that balance sheet. >> the numbers will tell you it is safe. the negative story would be that they're going to suffer ebitda declines of significance in terms of the warner business because they don't get it together under -- >> right. >> they start to suffer in terms of the continued suffering and cord cutting and lack of viewers for the cable nets and what not. and that directv now continues to hemorrhage subs and you get to a point where you are losing ebitda as opposed to gaining any or staying level and that becomes more of an issue. that's the negative view i'm not saying it is going to happen elliott clearly doesn't believe -- >> they think this is right here and then they got the ability to take it here >> 2 million subs, i pay for directv. one of the more damming things i saw in this there are 2 million

people who don't, who took it. >> you do because of football? >> yeah. >> what if amazon or some other google youtube bought a huge chunk of streaming rights. >> that would be great i want my money back can we also get the money back from people who are too stupid and would continue to pay for directv versus the 2 million who didn't and that's who you're losing what were they doing with directv. >> they gained a lot of subs, particularly in directv. they said, hey, we got to rationalize this >> it is in many ways the paradigm of what went wrong here and we talk about it all the time directv, they spent a fortune, and amazon. >> i thought it was done to help them secure the dividend and that's been secured. >> amazing story. >> yes the lead of the day, obviously cramer's mad dash, count down to the opening bell after a break look at the premarket, looks good here. we'll get to wework and apple and chipotle and aramco when "squawk on the street" comes right back

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♪ all right, let's do a mad dash now as we get you ready for the opening bell 13 or so minutes we'll stay seated. what do you got? >> two stocks going in that direction today. shows you about expectations

eli lilly had a drug for lung cancer people, felt it was pretty good, turned out to be good pretty good and you do pretty good, your stock gets slaughtered in this market not special and then turns out to be incredibly special, you're going to get a really good number i would tell you i think lilly is an inexpensive stock. a lot of it is candidly, david, the drug stocks have been kept down by the democrats. and the possibility of single payer. lilly has been among them. amgen has been going up because they bought -- i expected better this is the news we had not that long ago travel trust owns amgen. stock was down 8 at one point. before anyone buys these, you have to understand, i don't know

if you saw that elizabeth warren has been moving up in the polls. she is a formidable opponent to the healthcare sector. she hurt the managed care stocks and she can hurt the drug stocks be careful. >> okay. we will be and i know you'll be following it i wanted to follow up, jim, and carl, with a statement we have gotten from at&t we led the broadcast this morning with $3.2 billion stake, taken by elliott, and the long letter which outlines some of the actions they would like to see the company take at&t says their management team and board of directors maintain a regular and open dialogue with shareholders and will review elliott's perspectives in the context of the company's business strategy. they go on to say they look forward to engaging with elliott and note that many of the actions outlined are ones they already, they say, are executing today. they firmly believe the focus and successful execution of their strategies, the best path forward to create long-term value for shareholders, and they also go on to say they have a

unique portfolio of businesses across the communications networks and as elliott points out, the foundation for significant value creation. >> i think elliott is in siege mode at&t may have to be more in siege mode this reminds me of arconic, the old alcoa, the people from elliott bought a stake and said, look, you need to make changes he said he was making changes already. they got board members and once they got board members, the changes weren't fast enough. if you remember how contentious it got, and then ultimately klaus kline feld faded into the sunset they took a constructive approach at elliott, it may be followed up by the need to have board seats to get this done >> that's a great point. and, by the way, something i need to actually fill people in on in terms of when the -- when the window opens for nominations, it will be a while,

i believe, obviously the annual meeting and what not, but you can do that in the next half hour or so >> but i know that it is -- this sounds -- it is almost fairy tale-like that anyone could ever go after a company, we all grew up, the bell system, okay. and we always just felt sark w sacrosanct elliott is saying, very bad -- don't give up on the company, give up on the management. >> it is always worth pointing out 3.2 billion on a 250 or do $65 billion market cap is still a relatively small percent but activists like elliott looking to have a punch far above -- >> telecom italia. this would be a very exciting saga this is day one. i think everyone has to follow the cart because the stock is up so much. you got a good rate of return. i question at one point, up 2.5.

do you ring the register it remains one of the great yielders in an era where you can't find income. verizon, you do feel as though, listen, let me bring someone from verizon back to run it. we know who -- the people there weren't that old who left. >> i hear other names when it comes to at&t. >> what names? do you share them or is it too early? >> john stratton you know who john stratton is? >> john stratton. >>hbo >> no, telecom guy speaking of telecom, we're going to have dexter goya join us. the move into unlimited service. >> he's a young fellow how about him? >> here it how it fits into the growth strategy. he'll tell us about that futures, opening bell 7 1/2 minutes from now 'rba fm stinafter this johnson & johnson is a baby company.

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coming off the first back-to-back weekly wins since july and the s&p is about 2% from an all time high. futures are green. we'll see if we can revisit s&p 3k when we come back 300 miles an hour,

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you're watching cnbc "squawk on the street" live from the financial capital of the world the opening bell in two minutes time busy monday, busy week, as congress returns to work as we try once again to make a run at 3,000 on the s&p and hold it can we do it >> i think that there is so little news and this is often a good period, so i think that it certainly is a possibility absent something that would be against mnuchin's comments in a very pro something breaking. the chinese data last night was very weak. good article in the journal about how even the weak data is difficult give fann the fact ita

command economy. those saying don't worry about china, think that is misplaced the talks could be more positive don't expect a deal. but a positive series of talks, and then congress coulding back, we have to remember that nancy pelosi is not in favor of a single payer she does not want that system. and biden is still ahead, but i am focused on a major underperformance of healthcare group, banking group, those are very large so i think that they can play catch-up, that's what i see happening. >> you mentioned banks, big barclays financial services conference this week ft says that in four of the past five years when this conference has taken place, they brought numbers down we'll see what guidance is like. >> wells talked about interest margin jamie dimon, probably -- look, he got the nod for the gigantic saudi deal but these stocks are cheap and goldman sachs has been moving up, watch that stock. very positive note today and there are many, many things good

there. >> let's get to the opening bell s&p 500, the cnbc real time exchange at the big board, it is eltise usa. we'll talk to the ceo in the next hour. at the nasdaq bellus health, biopharmaceutical company. couple of times now you mentioned pharma and politics. >> yes because i've been looking at let's contrast to united health, very good company. and cvs. the reason why cvs has been able to climb is because the drugstore chain is very good aetna has been a millstone it is supposed to be the other way. supposed to be that aetna was going to boost what larry measure l murlow is doing. this group is so weak, it takes my breath away united health had been a market leader for a very long time. if you look at the makeup of the

dow, you see a bunch of stocks, j&j, i'm reading the piece about opioid and who is at fault for opioid there is j&j again i was arguing with my wife, j&j has a little part of this, i said, are you kidding me, they were manufacturing the product i come back and say, you know what, that is headline risk. she said something very interesting, which is what is headline risk? what matters is that they're under fire and i do look at mallon croft, we have not talked at all about mallon croft. >> no. >> the company is disappearing in front of our eyes >> it has over the last couple of years >> opioid. >> opioid. we don't talk enough from the way society turned out it turned out that when you go into states, this is not google, these guys are public enemy number one. >> speaking of states, big tech will get news today as some of these state ags announce this antitrust probe on big tech as

you talk about policy risk and headline risk. >> i think a lot of problems that the big tech has -- is frankly that they are so good. i think that one of the -- very good fellow talking on brian sullivan's show early this morning, talking about how -- a woman, i'm sorry shouldn't we all be -- shouldn't basically google be paying us? they get our information and what the heck, they make so much money off of it i come back and say, why would they need to pay it? i'm happy with free. what they'll be struggling with are the actual users of these products like them if you're a small business person, i think you feel that it could be punitive. there are a lot of small businesses that have really made their whole business around facebook and alphabet. i don't know i don't know what the attorneys general can do i do think this is not like

microsoft where they really -- the old one, microsoft was cutting out another ompany here, there are other companies and other industries that just weren't that successful. and i call attention to viacom/cbs this was -- if you wanted to own the nfl, you never thought that it would be on cbs, nbc bid against it, how much will espn come in? well, guess what, any one of these companies can write a check and i think that's what a lot of people are worried about. >> they could. would be very interesting to see if they do >> right the ratings may not be good enough >> just because they may -- it is not clear what platform people are still accustomed to watching these things on. >> very good point >> although, i mean, amazon could put it on amazon prime and you would be watching it on your television but amazon already took a shot on a couple of thursday night games, right >> yeah, i'll tell you, i know you don't wear a watch, but when you're in a situation, on a

sunday, where there is difficulties, say, in fights at home about football, it is awfully great to program this for, look, geez, look at that -- >> wasn't a good day yesterday >> daal velvin cook is breaking. >> speaking of accessories and apple, journal piece today argues they need to keep accessorizing because iphone revenue is now down 15% for the first nine months into june year on year. >> there is wed bush saying you want to roll with this, and the china data is good for them, i think service revenue, we had a piece by katy huberty. the only thing i point out is would you wait for 5g? is your phone good enough -- why do i need a phone, an 11, i love my phone, i was at apple -- my daughter hijacked my x i had the 8. it was like going to facebook and not havingwhatsapp or

facebook are you on facebook? >> no. >> that's a loser if you see zuckerbe zuckerberg have facebook. >> you won't see me. i try to see him i wave to him. >> that's good but i want to go back to what -- to what carl said. when there is no friction for trade, and there is no powell talk, the companies themselves are doing all right. most importantly, they're not talking. i went through my game plan, it is hard to find any company of any significance that reports this week. and that matters it matters because how do you have disappointment if there is no companies >> got the s&p up, .13 right now. dow is a bit higher. >> 3 points. >> i think that -- >> look, we have faang up there. to me, it is all about watch,

not aang >> we got some research to look at web bush goes to outperform on chipotle >> i said to myself, where have you been when brian nickle took over, he reinvented the company that got -- i don't know if you sought advertising on the nfl, the advertising is fantastic, big national campaign, will get better and better. delivery, delivery comes, it is pretty much in tact. it gets there, still hot that does matter delivery is huge the through put problems have been solved. if you go there, you feel great. a lot of analysts who downgraded it during the health scare are coming back and saying i missed it, i hope you didn't see i missed it, i missed it why not just say i blew it if michael -- >> sometimes you do get that line. >> you do. it tells you how hard it is for an analyst to put out a sell because, boy, you can be a laughingstock if you put out a

sell there is people, david, right now, who are putting out a sell from church and dwight, but they have a short position. >> well, the gentleman who was making the case for that was on "squawk box" from spruce capital earlier this morning. >> going after the outperformer of the group, right? >> i did not see the stock reacting that negatively, at least this morning story -- >> i love the company forever. and you try to -- they were talking about hidden acquisitions, all i can tell you is that when you go after these guys, you know if you shoot the king you got to kill the king. and this is a king, this is -- very well run company. with a lot of good grants. and he did mention that he was long clorox against it clorox finally coming out with pods, about time >> those who support church and dwight would point out it is organic growth rate year to date is 4.2%, i believe and so it does outperform its peers and therefore perhaps deserving again, these are

the -- those are the positive things, of that higher multiple. eps growth up 8% versus its peers. >> how is ge doing since that vicious attack by an unnamed hedge fund using a forensic -- >> mr. marcopolis. >> was it around 10? >> no, i don't think it was around 10. having gone back and forth with ge during the period, i think that -- i think there were some ill advised positions. >> yeah. >> that were taken -- >> worth coming back to at&t this morning, our lead story, the stock up a little less than 5% in the early prior to the open of the market, it appeared it might be up more than that. if you're just joining us, elliott, the large fund that is known for its activism taking a $3.2 billion stake, unclear how they hedged it, by the way we don't often talk about that

they do hedge. you hedge it through another ownership, some other kind, that moves differently, you hedge these things and they are known to as well. but $3.2 billion stake is one of if not the largest single stake now in a company the size of at&t, where the market cap of some $270 plus billion as of this morning, still very small percentage but elliott has a lot of weight. they have decent following among other institutions they point out, of course, this is a very much underowned name where they talk about it being perhaps second, least -- second least owned megacap by activ managers they're talking about a focus on nonstrategic assets that could be sold. and improvement, they believe, significant improvement that can take place in terms of margins, 300 basis points in improvement over the next few years that they think can be attained and they want better management. some of those names of businesses that could at least

be considered, there is a margin expansion plan, which may prove the most important part of this, many people say, well, can at&t really deliver on that aren't they already working on that getting margins up to -- >> they did say they are >> and they say they have identified savings of like 5 billion, could be 10 billion and so there could be even be more they believe that coupled with the ability to buyback shares as leverage comes down will contribute to what they believe could be 10% earnings per share growth. >> that is so high that it makes sense to buyback stock before you pay down debt. i mentioned managed care earlier, talking to carl, david cordani at cigna, he had been a seller of stock, the stock has been underperformed, elizabeth warren issue just terminated his 10b5 plan. he took feels that the group is undervalued. looking for undervalue at&t was undervalued this

morning. healthcare, banks. i do this because if we're going to hit a high, we're not going to do it with the same stocks. we got to do it with the new stocks we got to do it with companies like bank of america, downgraded last week. very, very brutal downgrade. >> was this his personal purchase >> yes, personal i happen to like cordani very much i've been wrong. i didn't really expect that the single payer drumbeat would be taken as seriously given the fact that the republicans were probably still -- >> will control the senate, makes it hard to imagine even if there is a democratic president who wants that >> president or democratic. >> i go with democratic. >> republicans are not democratic in terms of the structure of the government. >> yes. >> this is a semantic word play we hear a lot about. to your point about insider purchases, we have seen some of ge in recent weeks i think manny tariqo -- >> he made a statement by, if you look at the stock, cut in half a lot of the apparel companies

have been abysmal. lululemon talked about china being the best market. and canada goose, the china mark ed is very good. maybe there is something going on with the chinese economy where they're not as export oriented and good piece again in the journal looking at the country from the satellite, but they are domestically there is a lot of business going on. and i think that's important and the best one, estee lauder, do you need to buy expensive cosmetics? the chinese have been a leader these are things that are discretionary if we got these numbers in our country saying, wow, you know what, consumer is turning on the jets, not what you hear >> no, well, the journal today doing a long piece on the fact that trying to get below the numbers, many of which are not believed in terms of those that show economic progress in china and what really the number is. but on the consumer front, it

does appear that consumer and china is still pretty strong >> very good piece now, five minute sound bite about china and supply chain for apple what i would point out, i was doing work with vietnam. the administration has been saying be careful of vietnam a lot of vietnam is trans shipment even though vietnam has great resources, great population, they only have high flung harbor had the first big container ship leave because it is not a big harbor you can move to india, but the harbors are what matters china has these unbelievable harbors that can handle any ship that goes to california. the fact that vietnam has one and it is high fong, wow >> yeah you need a deep water port to get a big shipment in. >> i remember when the united states government mined the high fong harbor because it was so

important for trade with the russians to bring -- it just has been static. and i think people have to recognize, there is a lot more reasons why people haven't shifted than just the belief that, you know what -- it is not -- it is find me a port. >> dow up 33 let's get to bob pisani. welcome back. >> thank you very much had a great week off in los angeles. one of my favorite cities. modest upside led by cyclicals, mr. mnuchin saying u.s./china made a lot of progress, his words on the trade talks you see the cyclical rally here. banks, semiconductors, energy, dow transports, that's your classic rally here and we had a number of things positive in the last couple of weeks overall. the important thing is we got progress on trade talks, that's mr. mnuchin's words. we also have a very strong u.s. consumer out there as well then we have an ecb meeting this week, they're expected to probably lower rates, a lot of

people say they don't need to. i think the ecb is going to go down swinging on this very strong on the rate cuts, fed rate cut, likely next week all this coming together to get us not far from new highs. we're not there yet. if you look here, the dow industrials, this was just prior to the open by the way 2% from the historic highs nasdaq 2.7 i like the to point out the russell 2000 is almost 13% from historic lies. it is loaded up with small company financial stocks that kept the -- the russell 2,000 small cap indices back here. we have been talking about low volatility sectors that keep dominating the markets, consumer staples, reits and utilities all essentially let's not quibble here at historic highs the question is now rotation if that trade story and stable economic growth, big ifs there, continue, can we rotate into the more cyclical sectors that had a tougher time of it recently.

if you look at some of the big names here, like energy and banks, materials, 24% from their old highs. banks, 17% materials and industrials, and jim made a good point, we need new leadership this is where the leadership will come to if we can get to new highs. the banks, the materials and the industrials. that's a big, big question right now. i want to note on industrials, it has been a very rough ride for the industrials. some are doing a lot better than others you got your honeywells and illinois tool works and united tech these are big global names only 4 or 5, 6%. caterpillar had a tough time automotive has been really ugly for them they had to lower their guidance and that hurt them this is a very bifurcated group now. we'll see how that emerges elsewhere, a busy week september is a hot month traditionally for the ipo market that's going to happen

we're going to have six, maybe seven this week. small direct club, one of those at home teeth straightening companies, you think how much money there is in that, this is an $8 billion ipo, one of the bigger ipos, cloud fare, web security, web services for companies that's a $3.5 billion ipo. put it all together, two or three biotech companies, going to be a busy week. a record year? now is the time you start asking that, we were saying that earlier, doesn't look like it, $100 billion the record in 2000. this may be the second biggest year for them, we're not sure, 2014 was the big one it depends how things go the ipo etf up 34% for the year. wework, they may launch this week, we don't know. the valuation of that company has been enormous issue over the last week we'll see if we get news in the next day or so on that carl, back to you. >> bob, see you in a little while. to rick santelli as well at the cme group in chicago

good morning, rick. >> good morning, carl. now that 10s to 2s isn't inverted, not so many are paying attention to it. we should t turned a bit positive everything farther ought you go today is doing better in terms of higher yield, lower price look at one week of two year note yields it also breaking out a bit. see that top rate around 156 last couple of sessions. we're through it look at one week of 10s. 160 represented that level we're kind of through it and long bonds, i don't have a intraday there, but 209 is the area that's still where we're holding. open the chart up to june of 16. see the bottom on the left side, that was the all time bottom close at 209 until recently. that's why it is so significant. i continue to say 30 year bonds will lead the way. and who is leading bonds i would think that europe is look at one week of bunds. take notice, last wednesday they made a low of minus 75 basis points, revisited once, and here

we are now, minus 58, minus 57 1/2 that's a lot of movement for bunds, and it takes me to next chart very important the difference between 10s and bunds is now the narrowest at 18 months since the beginning of 2018. and this is happening with bund yields moving a little bit higher in front of their ecb, it seems speculators may have got and bit too aggressive in the assumptions about how much stimulus might be delivered on the 12th carl, jim, david, back to you. >> all right, rick, thank you. still to come this morning, florida attorney general ashley moody among the state ags probing big tech on antitrust. we'll talk about that. along with mozelle thompsonthom. we're back in a minute

. this look at at&t stock

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let's get to jim and stop trading. >> local technology being annihilated. microsoft is a good example. a lot of them sell much more, but holy cow, you can just see everything being just blotto i think that's important tonight i have zoom and altruix replacing excel. zoom, many have used it for fantasy football it's a great way to be able to communicate with people. after this i'm headed down to a dollar tree. my family dollar which is always not great apparently has been redone i've been going way out of my way to my dollar tree because i didn't like what family dollar gary said if i ever fix it, i want you to come down. gary fixed it. time to go to family dollar. maybe i'll bring you back five

pairs of sunglasses for $5 polarized. not unlike our president >> and the country >> jim, we'll see you tonight. ""mad money"" 6:00 p.m when we come back, the state ag versus big tech. we'll talk with hlasey moody with the dow up 19 free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ ♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging.

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♪ good monday morning. welcome back markets with a nice little bounce, although off the initial highs. dow is up 39 points ahead of a busy week, whether it's banks or tech, you name it. >> at&t also seeing a big rally this morning and that's what we'll start with elliott management announced it's taking a 3.2 billion stake in the company. >> launching a new unlimited phone plan. >> tech under fire, the florida attorney general will join us on new multi-state anti-trust probes against google and facebook >> we will start with at&t rallying after elliott management announced

$3.2 billion stake in the company saying the stock could be worth at least 60 a share elliott sending a letter to the board arguing for ways the company can, quote, improve its business and re reelize the historic interest in value and cutting cords with things like regional sports network. >> focussing on what they call non-strategic assets that they believe could be sold. they also of course go into the long history of at&t and what they call a poor, to be kind, poor track record, whether it was actually getting deals done or not of course, they go back to 2011, the deal that didn't get done, t-mobile, but the enormous amount of spectrum and just hard cash that was paid by at&t to t-mobile in the breakup fee as a result of that being turned down by the department of justice helping make t-mobile a robust competitor to at&t wireless. and then of course the 2014 deal

to acquire directv and the 2016 announcement of deal of course to acquire warner which took almost two years to actually get done none of which elliott believes have added a great deal of value. they're not focused on a wholesale breakup of the company as much as they are on simply saying management can do better, perhaps different management can do better. they talk about a 300 basis point improvement they think can take place over the next three years and the leverage as it comes down, the ability to buy back stock it's not as at&t is growing 50%. although on the marketplace, people are more focused perhaps on warner and directv and the woes that they're having there. >> i think you're right to point out the leverage here. that's a key overhang for this stock and it has been for quite some time. it's a byproduct of what they've

done if that were to change, that could be a big drag on this stock. and so i think elliott had studied this for about a year before disclosing their letter today. interesting that they did stop short for at least at the moment calling for any board seats or board seat nominations but i think the reaction that you're seeing in the stock today is largely a result of elliott's reputation of really taking on these companies and getting their way. you talk to any adviser who does defense for corporate america and elliott oftentimes, if not always, is mentioned as the most feared activist. >> and they are one of the most active as well this is a large stake for them as we pointed out, probably the largest single economically. unclear how they're hedging it or if they are on that point, at&t's nomination window does open on december 28th closes on january 27th all the directors are up and the meeting will be held or last year was held on april 26th they haven't said a thing about

trying to replace directors. it is a very small stake versus the 270 plus billion dollar market cap of at&t, but elliott does have a lot to your point of followers in the institutional community. they point out of course at&t is the second least owned mega cap, whatever that means. just not well owned. because of the concerns amongst investors in terms of their ability to execute at this point. the elevation of john stanky last week. another thing investors did not point to as a positive and while the company has said numerous times their dividend is safe and they're going to take leverage down to 2 1/2 times at which time they can start buying back stock. in terms of their ability to execute or execute well at warner and what the numbers will look like there, not to mention the wireless business where they are doing just fine, but it's not growing. >> i think the key will be to see how at&t really responds in

earn toe earnest to some of these pro po - proposals laid out. >> the amount of machinery that is being put into place is nothing short of enormous. i will tell you that the fees that company pays and now will be paying for defense to banks all over the place, it's big. >> thanks for seeing green also seeing green, the dow down about 2% from the all-time highs. could this muddle the outlook for the much anticipated fed rate cut joining us now is cowan ceo jeff solomon. what do you think? any less likely to see potential fed rate cut this year >> i mean, the fed is going to cut this year at least once, maybe twice. i think a lot of this has to do with the rate structure globally i think you're got a whole bunch of the develop world in negative rate territory the fed is an out lie ylier given that and the backdrop for the election, the fed will do

whatever it can to keep things humming along and that means by one, probably two rate cuts by the end of the year. >> is the negative rate factor $16 trillion of negative yielding, is that enough for the fed to cut rates or are there things within the economy on a fundamental basis that also support your thesis there? >> i think the fed has said they're going to do whatever they can to extend the recovery to the periphery i think that's, again, a different mandate the fed has had historically, but the chairman actually said it and so i think when you look at this sort of pressure on them to effectively keep things going the way that the rate structure is and the rest of the world, it lines up for at least one and i think, you know, probably two by the end of the year. people are talking about there being four rate cuts between now and 12 months. i don't know if that's going to happen, but i think one or two is probably in the bag. >> tentative trade deal by october, but you say they can wait until the election.

what are you expecting >> our best case is waiting until the election, but a couple of things have changed first of all, we're beginning to see how much actually kpeconomic slowing there is in china. the hong kong thing is not so great either for president xi. he may need a wing here. i don't know that. if you're a china watcher, it isn't exactly great over there and so the president probably needs a win too. the one thing they can really present a monumental challenge to the president's reelection is an economic slow down. i do think he's in a position where it doesn't really work out, we do get a slow down, he can blame the fed and china, but i think all things being equal, it's better if we don't have an economic slow down if it's a deal that gets done, he gets to declare victory, xi gets to declare victory. we got what we wanted according to the administration and everybody moves on i'm a little more balanced than

the last time i was here where i thought china would wait us out. >> you think there could be a deal in principle, something on paper? how tentative could it be? >> take a look at what happened with nafta and the replacement for nafta. is it really that different? it isn't really that different, but it's got a new name. the president said, you know, we got china -- we got mexico and we got canada to bend to our wishes okay he just says it. so i think that there's a perception out there that maybe that actually happened we basically got nafta with a new name i don't see why you can't take that rubric and applyit to china trade. i mean, i'll be clear. i don't think the democrats have really argued that hard on china trade. it's really interesting. >> if anything, they've outflanked him sometimes to the right. >> right so in their mind maybe one of the best things that happens is he goes forward with tariffs and an economic slowdown that creates a window i think with all the things they are arguing about that's not one of them. there's a case to be made that

the strategy of pursuing tariffs has been all in all pretty broad based success. we'll see. >> jeff, let me turn you quickly to our own capital markets you've got experience in the ipo market cowen a key underrighter for smaller mid sized companies. what do you make of the resistance amongst investors to the we work ipo? >> i can't really discuss that one in particular but i think you can actually talk about what's happening with some of the bigger tech names. i just think investors are being public and company investors are saying we need to have a real conversation about valuation i think that's actually the health of the public markets is to do that so if there's a concern that i have, it's about all the private capital that's crowded into technology trades without there being an ultimate validation of that value in the public markets, which i do think that the public markets actually give you the ultimate determiner of

value. and so, you know, whether it's that name or other names, i just think when they come to market, the public market investors have a forum for feedback on whether we want to own that. that's probably what you're seeing there. >> they want to clear a path to profitability and sooner than some of the companies are willing to give them. >> i think if you look at what's happened with uber and lyft and a bunch of these other folks who continue to spend money, i think there's some question on the part of a public company investor listen, i also think public company investors are savvy. there are limited areas where there's growth generally speaking, what we've done and where we've seen growth is with companies that have eliminated middle men and have done things to accurate efficiencies at the end of the day, public company investors understand in the real world you have to be able to show a clear path to a sustainable business model i don't think that's an unrealistic ask on the part of public company investors. >> jeff, thank you so much for joining us. >> good to be here.

when we come back this morning, got a shakeup in the wireless service space we'll hear from altice usa and on the overall media landscape take a look at some of the top names on the dow walgreens boots. we're back in just a moment. ♪

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altice usa breaking into the wireless service it's $20 a month if you take altice cable $30 a month for non-altice cable subscribers making it the lowest priced offering in the space the ceo of altice usa and he joins me now nice to have you here. good job ringing the opening bell you got your people yelling and screaming. thanks for that. you got a lot of pushback on the conference call when you introduced this ap analysts were saying can you really be profitable for $20 for your customers or 30 and you kept saying yeah. we're not pricing this no undercut the market and lose money. why are you confident you can make money skbl >> if you look at the average usage, probably about 7 gigs a month. if you have the right price point in terms of what you're paying to rent, you know space per gig you can make money.

we're not in this business to go out there and lose money we're pricing this at a gross profit positive. we obviously are going to have a little bit of losses in the first 12 months as we market, but fundamentally it's just really about the mathematics of volume as we get to a certain volume, we're going to be very profitable. >> how long do you think it will take you to get to those i think the question is what's the initial response going to be the initial response has been already very strong. are we going to get there quicker or a little bit later? we've modelled it out over 12 months, but we'll see over the next couple months as we really start launching our campaign actively the next couple weeks. >> how should i be viewing others, my parent company amongst them, marketing their wireless service substantially higher are they not getting it? >> i think you should switch over to ours is what i would tell brian and the rest of the crew i think the whole question is the partnership you'll be able to set up.

we have a different platform and based on gno. >> can you explain what that means. >> we have our own core network. we control the sim card. we're able to manage the traffic that goes on and off the wi-fi network more accurately and seamlessly that allows us to be a lot more cost effective in terms of how much we're paying to our roaming partners those are the basic features there's a bunch of other control features we have when you have an infrastructure base the basic one is we have a better maintaining of cost control on what we're doing. >> should we view this or should your investor base or future investors perhaps view this as another significant part of your business, one that will contribute significantly the same way that broad band and/or video does >> absolutely. we're in the business of continuing to drive simplicity, clarity and better user experience the whole thing about wireless

today, wireless in the home, everyone talks about wi-fi, the entire experience on broad band is wireless. we need to be inside and outside the home and have the best service, clarity, simplicity for our customers. we're building this as a stand alone profitable business. it may have ancillary benefits to our fixed line business going forward, but that's not priced in today to our business model, but we're certain we will see some of that fundamentally, this is going to be a stand alone pillar and we've got a good runway going forward in terms of time to think about other things, what we want to do. >> right and learn about it are you a believer 5g will represent a significant challenge to those who bring a wire into the home when it's able to bring the speeds of what we hear is possible? >> i think it's going to be a complimentary service as opposed to challenge service the usage patterns we're sighing from our broadband cable subscribers, i also think that

5g may end up cannibalizing some of the 4g services people have the wallet to spend on both. i don't think that there's going to be full replacement unnecessarily of fix maybe in certain parts, particularly in rural areas where the fixed broadband is poor you'll see 5g penetration. if you speak to all the wireless operators out there, they're not out there marketing that they're going to have a replacement service. >> no. at least not yet. >> not yet i mean, maybe in the future. speaking of of course bringing broadband into the home, one of your competitors, charter and perhaps others, are de-emphasizing the video business they wouldn't say this, but i will pushing people off because the higher margin broadband business is important to them you pushed back on them. are you de-emphasizing the video business >> no. because it's still a profitable business everyone is a broadband customer anyway, so our fundamental drive

is to continue to get more wallet share and mind share from our customers. so today if people are paying for video and it's a profitable business, maybe the margins are getting skinnier, but we'll continue to deliver profitable businesses to each one of our customers and mobile is an example. >> video is falling off, right >> video is not necessarily falling. we have a very unique footprint in that we're in the new york t tri-state area then a very underpenetrated video market in our historical suddenly footprint which has been competing with satellite. we have kind of a weird effect insofar aswe're actually -- we've had six quarters in a row of better video performance year over year. we continue to see the trends. >> you do continue to see those trends as well the broadband business at this

point, is there room for continued margin improvement, or do you feel like you've optimized? >> i feel on the pure broadband product it's a high gross margin product. if you were just a broad zaiband provider, the effects related to your business start to get sk skinnied down quite a bit. it becomes less when you don't have video and you don't have set up boxes if you were pure broadband, your margins have more movement >> you've obviously, the stock has done very well this year in terms of how investors have responded to that view you and the chairman of altice took over cable vision you're known as cost cutters, people who can come in and identify things that conceivably should be cut. do you think this opportunity that elliott sees in at&t, big story this morning, is your sense having at least done that

at some of these companies that there is a lot of low hanging fruit to cut costs >> i didn't really pay attention exactly to the focus of the letter. >> they're talking about 300 basis point improvement in margins over the next three years. >> i think no matter what, when you're able to take a step back and you're outside looking inside, you fundamentally can see opportunities to do thing given that the management team has been there for a little bit of time and is used to the way things work over there i'm certain there is opportunities to do stuff. i don't know where it would be we don't know the business that well. >> finally, we you know for a while as being an inquisitive company. cable vision among the two that have tributed to your u.s. footprint. are you done when it comes to acquisitions >> we'd love to do more. cable is a good sector to consolidate. >> what's left, though, other than names that are too big?

charter is $90 million market cap. you're not going to do that, are you? >> we're not going to do anything other than focus on shareholder value. today the organic opportunities continue to be very large for us to create a lot of shareholder value. we've always talked about historically can people team up, can we buy smaller businesses, all those types of things, we're very, very flexible in terms of the opportunities we'll look at. >> back to wireless, $30 a month. i'm a non-altice customer. >> let's find you deal. >> my service is going to work >> it's sprint and at&t network supplemented with our network as well it's a fantastic network we really are seeing unbelievable response and great performance of it. look forward to having you as a customer by the way, it's free international. 35 countries, free international. you're not getting that $10. >> right always a pleasure to have you. >> thank you, david. >> ceo of altice, usa. back to you. >> david, thanks when we come back, florida's

attorney general ashley moody will join us she's among the state ags probing big tech on anti-trust dow is up 82 financials leading as the 30 year yields at a three-week high - at southern new hampshire university, we believe in education built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished. - [man] in the military,

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it's time for our etf spotlight. looking at the ticker xlc getting a slight boost top holdings mixed but at&t holdings strong after elliott management announced a $3.2 billion stake in the company. at&t on pace for its best day since july, 2017 and its best year in over a decade. that stock now up more than 4% meantime juul and e cigarettes facing major health concerns that could impact sales for big tobacco companies. frank holland joins us with more on that. >> before vaping concerns surfaced, big tobacco had had a plan "c" to debut another cigarette alternative also designed to convert smokers. heated tobacco is expected to make its u.s. debut this month

the phillip morris product will be sold with a store in atlanta. it takes what looks like smaller cigarettes s cigarettes and then heats them to release nicotine as opposed to po burning them sales grew 37% last year globally for phillip morris heated tobacco is only around 5% of the company sales. iqos received approval in april. it has fewer toxic chemicals than traditional cigarettes. they have what's called a modified risk product under review it is also under the same restrictions as traditional cigarettes when it comes to advertisi advertising. british americans glow product is now the chief rival international to iqos. last quarter the company reported 17% growth and a 3.7% decline in cigarettes. japan tobacco has a product with

a nationwide rollout in japan started last month it trades intokyo and imperial has a device being tested in japan japan as well. according to research, heated tobacco has a more than 70% conversion rate for former smokers. you can expect a lot more companies to try to get into this business especially if it sees a lot of success here in the u.s. >> that is true, although it's interesting to see big players try to enter new markets where so much of the discussion about potential health risks or the study of potential health risks. >> absolutely. that's one of the selling points at least for phillip morris and altria is that the fda said this product has fewer toxic chemicals. however, the application says it's safer than cigarettes is under review that's a high bar to meet. >> we'll watch that space closely. getting awfully interesting. let's send it over to sue for our cnbc news update. >> good morning, everyone. here's what's happening at this

hour the international atomic energy agency meeting in geneva confirming iran is preparing to use -- which is a breach of the 2015 nuclear deal. iran had announced that step as it tries to pressure european signatories to find a way to maintain oil shipments and ease the toll of u.s. sanctions thousands of students forming human chains outside schools across hong kong to push for more democratic reforms. this after violent weekend clashes in the territory they were joined by graduates wearing trademark black shirts and masks. british airways says it has to cancel almost all flights as a result of a pilot 48 hour strike over pay the carrier has offered a pay raise of 11 1/2% over three years. >> very, very sorry that due to the cynical actions of the pilots union we found ourselves having to cancel flights affecting thousands of

passengers this is by all means a nongoal of punishing our customers it is punishing our brand. >> you are up to date. that's the news update this hour i will send it back downtown to. >> sue, thank you. when we return, the florida attorney general will join us exclusively next a new multi-state anti-trust probes against google and facebook "squawk on the street" will be right back don't go away. when did you see the sign?

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officially a coalition of attorneys general investigating possible anti-trust violation saying we will use every investigative tool at our disposal to determine whether facebook's actions have endangered consumer data, reduced the quality of consumer choices or increased the price of advertising

joining us this morning is the florida attorney general ashley moody. thanks so much for your time good morning. >> of course good morning. >> we've sort of established the scope of the probe in that intro, but can you help us understand on a ladder what is the most important to the group of ags >> well, we 1200 history --

things like tobacco and pharma and mortgage lending is there a case study you're trying to model this group after? >> with the last question you can see it's an entirely different way of dealing with a monopoly

we have to bring the resources together of all the states that have the capability to do that not every state has the talent or the size in order to dedicate resources to this issue. i can tell you that florida is committed to making sure that consumers are protected and that we do, in fact, have competition among these social networking platforms. >> you mentioned resources the federal government is already expending some of them in similar investigations. is there any overlap or cooperation between the states and the federal government or are you duplicating efforts that you don't necessarily need to be duplicating? >> well, i can tell you anytime we have a number of states that get together and lead these investigations it is to prevent duplicating effort we don't need to duplicate we have met with the department of justice we will continue to share information as we work through

this investigation and depending upon what we ultimately find, that may indicate how we further collaborate, but i can tell you right now the states leading the investigation are working together well and as we receive the information from subpoenas, we'll be able to better determine where we are and what types of remedies we might be seeking. >> is it going to stop at facebook >> i can tell you i'm meeting with attorney generals as soon as i leave this interview and we'll have further announcements today. >> we'll be looking for more on that attorney general of florida, ashley moody thank you so much for your time. >> thank you for having me. >> let's bring in the former ftc commissioner and former facebook advisory board member. also with us, scott is the anti-trust bureau chief in the new york ags office who consults on big techs practices good to see you both thoughts on what is about? >> well, what's interesting is

that attorneys general regularly get involved in anti-trust actions, but they usually do it in a coordinated fashion it's not clear what the roles are going to be here yet it's not clear the extent of their involvement. i recognize, for example, that states have limited resources and as you pointed out that the federal government is already involved in that so let's see if their approach is different i thought it was interesting hearing today about fundamental change in antitrust law. i'm not sure that is something that i've heard expressed before, but it will take a lot of people to be involved in order for that to happen. >> you think they're over their skis as far as what doj has defined as antitrust >> i think it's very early yet, but what you'll also see, you saw in the ftc what they've done recently in terms of privacy if there's a split even in the commission about what they think

the role of size and power is in technology so we're going to see that develop over time. what i recognize is the attorney generals, they run for office. so that they are involved, but there also may be an array of points of view on this particular subject. >> scott, does this make sense to you, particularly in light of the resources question when you have the federal government looking at it and there's plenty of things state ags can go after in terms of a company price gouging and could impact the consumer as well. >> i think it does make sense. states have a longstanding history of getting involved in major antitrust cases with investigations that often ultimately lead to cases being filed. i think the most famous example here would be microsoft where not only doj pursued monopolization case, but also a coalition of states were working side by side and to a substantial degree hand in hand with the federal government.

>> why is it that microsoft hant been wrapped up in thismost recent round of scrutiny in terms of tech? >> we're in a new world. we're interested in platform, especially online platforms that sit as middle men often between users and purchasers on the one hand and advertisers on the other. this raises new concerns that are familiar in certain ways, but have some new aspects as well we have new, the last 15 to 20 years with firms with large market positions and possibly conduct that needs to be investigated. >> you point to the large market conditions regulators approved facebook's acquisitions of instagram, for example, because the market environment didn't look at the time like it does today. if you're a deal maker or a regulator or a lawyer advising companies today, how can you pursue deals when in the future you've come under attack for the

market environment changing? >> it's a good question. as your question anticipates, a big part of the investigation with facebook is likely to be to look at these previous acquisitions, especially instagram in 2012 and what's happened in 2014 by and large deal makers can rest easy to the extent that facebook is unusual in a lot of ways for one thing, as general moody suggested, facebook might be a monopolyist. if you don't have a strong one of becoming one the investigation into facebook doesn't have much relevance to your business. >> also part of that is understanding that those companies may not -- those subsidiaries may not be as strong without the development of facebook. so you have to balance that out too. that's an interesting challenge and i don't know what's going to happen there what i also thinkis really important here is that i hope that no one loses sight of what the middle of the bell curve is. in other words, a lot of people

are using these technologies they're using them well and successfully they've had some real benefits to people in connecting in ways they never used it before. it's going to be an interesting challenge to balance what people think might be harms with what they think might be benefits. >> scott, how long in your sense will these investigations actually take? i know that's a hard question to answer, but i ask it in light of investors at least wondering when are we going to know yes or no whether there's going to be an opportunity to move forward for state ags or the federal government >> i would not expect a lawsuit or conclusion of the investigation in this calendar year antitrust investigations are big, heavy expensive things. the facebook investigation might be a little bit different in the sense that it's been widely reported that facebook is in the process of integrating their messaging services and one possible implication of that would be to make antitrust

action more difficult. anticipating that potential problem, you might expect regulators, whether they are state ags or the federal trade commission or the doj to act more quickly than they otherwise would. >> what's being said finally at agencies today about this? >> well, i think one of the challenges you have is that you have differences of opinion, real differences of opinion between agencies, but within agencies like i said before, the split at the ftc about their view of technology we're going to see how that plays out. but at the same time, you also have very interesting discussions happening on the hill where this issue has been politicized and will continue to be throughout the next year. >> we're bracing for that and this adds a new wrinkle. gentlemen, thanks for that scott, good to see you both. appreciate it. by the way, a quick programming note louisiana's attorney general is going to join us later on today on the closing bell at 4:00 p.m. eastern time join us for that meantime, a letter from the fda

to the ceo of juul, the electronic nicotine assistant product talking about requirements from the fda. if you are a new tobacco product that you undergo premarket review and receive authorization from the fda permitting the product, sale and distribution prior to being offered a delivered for sale into interstate commerce, asking for a response from juul to the fda, but it just adds to the layers of scrutiny that juul, because they're the biggest, but also a number of other players have gotten in recent days, guidelines from the cdc and the strange gcase from hundreds of vaping illnesses to which doctors seem to have no real clue. >> it will be interesting to see what this does and when it has an impact on their business. juul is one of the most highly valued unicorns there is right now. i think it's about $60 billion brie privately based on its recent

investments. if you have so much overhang, this is a nightmare scenario for the company as it grapples with the safety of its products and the intense scrutiny that it's receiving from regulators. >> it also figures into those talks i think between phillip morris international and altria of course, the merger of equals that we talked about that is being negotiated still juul is a significant economic state for altria might figure in its future although they have no real control there. they do have some board seats. they haven't gotten the full approval i don't think yet >> certainly one to watch. as we go to break, take a look at shares of chipotle getting an upgrade. the firm also raising its price target on the stock to $980 per share. chipotle already up around 100% so far in 2019 more "squawk on the street" when we return. i can.

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a bullish trend could be unfolding. a top lysanfalt explains what tt could mean more "squawk on the trestreet" s coming up. it was sophie's big day. by the way, she's the next mozart. as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius.

because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places. china trade tariffs effecting everything from big tech to lobster sales. contessa brewer joins us live from maine with more contessa >> reporter: hi there. coastal maine as you know is famous for its lobster when the boats bring back in their hauls, turns out these guys fetch more in china thaninn maine. that's why they invested heavily in opening the chinese market, and business was booming until last summer when the trade war erupted. fast forward to first half of the year, we saw exports to

china plummet by 60% the dealers in maine saw sales plummet, had to layoff workers, cut hours. >> we have many less employees, probably half our full sales staff. i have more time to spend in my garden this summer so that's great. but no, my sales will be down 45% this year. >> reporter: you know who is really benefitting from the trade war with china the canadians, because their exports to china have gone up 40% the first half of the year they invested heavily in infrastructure to make the trade more efficient the problem is, the distributors in maine say they lost chinese customers to canada they don't think they're getting back guys >> so contessa, if they're not able to export as much as they used to to china, is there an excess supply of lobsters in

maine, have prices come down as a result >> reporter: interestingly they have actually increased their exports to canada by 130%. so leslie, there's people on the ground in maine and canada who have said to us they suspect the maine lob sistesters are shippeo canada, sent to china as caught in canada, avoiding tariffs. but enforcement on or gin and labeling is lack there's no proof that's happening. >> are lobster men losing jobs as a result of this? >> reporter: lobster men are like farmers, they're in family businesses that they invested in over a long time so they're coming back they're finding markets. but lobster here don't catch the same premium as lobster in china. they have relationships with the lobster men, they have to keep those, so they keep buying

lobster, even though they're not selling lobster for as much in connecticut or new york city as they would if they were sent to china where it is a premium product. >> all right contessa brewer in maine for us. thank you. let's send it over to morgan brennan with a special look at what's coming up on "squawk alley. >> hey, leslie, we have a big show coming up we are revving up for it scott wine will join us, ceo of polaris. the company celebrating 65 years. we're going to talk about all these vehicles and products, health of the consumer, trade and tariffs. so much more coming up leslie, i'll send it back to you. >> all right. keeping our eyes on at&t, that stock one of the top gainers today. guys, what do you make of all of this stock price reaction with regard to elliott being the key fulcrum in the situation i have to imagine if any other

activist came in, we wouldn't see this type of stock price reaction, up now 3.4%. >> you made clear the reputation elliott has for getting hands dirty, the size of the stake, relative underownership of the name itself, and probably the suppressed stock price in the past few months, right david is well koicoiled for a m like this. >> at&t has been a strong performer this year, underperformer in years past, no doubt there have been plenty of questions about the acquisition strategy that elliott makes a focus in part of its letter over the last number of years, whether it is worth having done, i pointed out moving away from wireless as opposed to embracing it the way their competitor has. shares are up again. not nearly as much as earlier. i think that's interesting as well perhaps more of a wait and see approach from investors. the key will be what engagement

elliott gets with the board. i think that's got to be sort of what the focus is. the lead director is matt rose, of course, known for having run burlington and we'll see where they go there, whether in fact there's alignment in terms of two and what elliott is looking for and what some of the board thinks board and management don't have to be aligned as well. if you sense it as an activist that there's a rupture there or room, you may want to exploited it. >> elliott is known for intense research they use tremendous resources to get their way, known for getting their way in fights. they were able to raise $5 billion in 24 hours as a result of some of their successes in the activism world they've gone after warren buffett, taking on the encore acquisition last year, they've taken on argentina, gotten their

way there. >> samsung. >> samsung. >> you talk to jonathan bush, he has some views, we have in terms of at least -- they have tried to have sort of a kinder, gentler approach of late, i think it is fair to say, than some of the more bullying, scary tactics they may have employed in the past. >> worth noting we don't often see them, this is the largest position ever. we rarely see them, if ever, in a company that's this size while they have been successful in the past, and you mentioned this earlier, david, at&t has these to shell out to prevent this behavior. >> they do, you're right, it is a mega cap they have not typically played in mega cap space the way other big activists have done. >> which cost p&g millions to

fend them off, and after both that, both sides spending hundreds of millions, it still was an incredibly close contest. >> so close. p&g has done great. when we come back, apple gears up for a big event tomorrow we'll tell you what to expect. goldman doing well ba ia dsrep.gh as yiel a u ckn moment

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