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tv   Power Lunch  CNBC  November 14, 2016 1:00pm-3:01pm EST

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you might expect. joe, final trade. >> i want to talk about the fangs. i think the right trade for the fangs is to look at the one that is probably least owned and being used as a source of funds and that would be the n, netflix. >> cisco systems into earnings on wednesday. >> i love netflix. i think you got to buy it, start buying it here. >> erin, good to have you. >> short on emerging markets. >> "power" starts now. >> making your portfolio great again. inside the record-breaking numbers of the trump rally. and the new reagan revolution, you'll hear from one rust best ceo who is bullish on a trump presidency and speaking of trump, he giveth a four. the scary new reality in the housing market. "power lunch" starts now. happy monday. as melissa said, welcome to "power lunch." i'm brian sullivan. the dow, earlier today hitting another record high at the open.
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you see behind us, it is cooled off a bit. the dow is down about 15 points. but keep in mind, folks, we have seen huge moves in stocks, bonds and the dollar. just since the election. and watch out for oil. crude oil hitting a new three-month low. we'll have more on what is driving oil prices down straight ahead. tyler? >> thank you very much, brian. tyler mathisen here. here is what else is happening at this hour. strong after shocks continue to rock new zealand following sunday's 7.8 magnitude earthquake. u.p.s., air maintenance workers, voting to strike as contract negotiations stall. and the transportation department is setting new rules requiring electric and hybrid cars to emit sounds by 2018. so they can't sneak up on you anymore. we got a busy two hours ahead and we kick it off with the market, the dow, as brian mentioned, briefly hitting a record high at the open. it has since pulled back a bit. despite the pullback, there are some notable standouts, often
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are, almost always are. two standouts bob pisani and dominic chu. kick us off with the rally that is fading a bit. >> we have very narrow leadership. that's what the issue is. we're down to bank stocks, which have been phenomenal in the last several days. jpmorgan new highs. but we got a couple of big stocks that are, like, caterpillar, infrastructure group, but that's about it. look at the laggards. great week last week with some of the industrials, ge, 3m, united technologies, they're down today. oil, big problem at 42. oil stocks down. we know tech has been a laggard for a while. another terrible day. we don't have enough leadership to keep the dow moving. bank stocks are going to stall out very soon. look at the bank index, the financials index for the s&p 500 and there you see the 200 day moving average, that little dot there, little lift over the end, very unusual to be that far above. we're almost 20% above the 200 day moving average. that's like four standard
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defendtions away. that never happens. this will stop going up fast, very, very soon here. it has been an amazing run. look at the russell, midcap and dow. this is just in less than a week. those are amazing moves particularly the russell 2000. and since the election, you can see why banks have outperformed so much. there is your financials. that is an enormous move. this is the second biggest group out there along with health care and tech as well here. so financials, they're the last leadership group standing right now. and tyler, i anticipate that will probably stop pretty soon. flat on the dow now. back to you. >> thank you, bob. despite this rally cooling off a bit, a bunch of names are trading at record highs. to dom chu with notable standouts. >> melissa, in this heat map behind me, we have got the 500 stocks in the s&p 500 and among those names we got a slew of them making these kind of fresh highs. so as you said before, let's take a look, 73 new 52 week or 52 week perhaps multiyear highs in the s&p 500.
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22 of those earlier today actually hit those all time, the record levels that you were speaking of. and only three stocks at new 52 week lows. if you dig into some of these, we have the thematic stories developing, bob pisani mentioned the stock picking sector rotation that is going on. look at this, because on the consumer side of things, darden restaurants, olive garden, up 12% year to date. hit a record high today. m&t bank, financials very much a focus there. up 16% year to date. also a record high earlier today. u.p.s. has backed off in today's trade. transportation front, record high. general dynamics on the defense contractor side of things, up 24% year to date. they hit a record high. lastly here as a sampling, martin marietta materials, they make a lot of the construction aggregates, you think things like concrete, asphalt, that sort of thing, a lot of story lines developing, tyler. stock picking has seemed to work so far this year. back over to you.
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>> thank you very much. with stocks sittinger in records, bonding getting walloped, what should investors do here? let's bring in jim paulson, chief investment strategist with wells capital management. my notes say one of the things you begin with is that the election mostly removed uncertainty, which had lowered the stock market and it is now returned to its previous levels before the election. i remember last monday and the market was going up, because there was the idea that hillary clinton was going to win and that that was going to remove the uncertainty that would come in a trump administration. i don't understand how it is now less certain. less uncertain, excuse me. >> well -- >> i'm confused, i can't keep it straight. >> i think leading up to the election we had a fairly sizable sell-off in the weeks leading up and part of it, you know, after the first comey letter and trump
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looked like he was going to win there was a trade in the market right or wrong that a trump victory would be bad, a clinton victory would be good. a lot of that, if you look at the level of the market, we're about where we were prior to all of the election jitters really starting to happen on the aggregate price level of the market. what is really more noticeable is the leadership trends, which have been exacerbated by the trump election. and i think a lot of those trends too were in place prior to the election. you know, we went more risk on, more cyclical, industrial, away from bund surrogates and consumer stocks before the election started. bond yields were backing up. >> less uncertain now than we were a week ago, at least we think -- we think we know where we're going. >> i think so. i think the fact that you know for certainty who is going to be in the white house and when is going to have control of
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congress is a difference from where we were. even if you thought clinton was going to win, you didn't know about the congress. >> right. >> you know, jim, bonds are like vegetables. they're boring. they're important. you need to have some. have you ever seen this kind of a move in the bond market and if so, what is it telling you about the future of stocks? >> yeah. you know, brian, we had these. we had these before. the one of them that really comes, much bigger than this one was, the end of 1986, concern about weak growth and the u.s. economy. and then we got good accelerated data and the bond yield up 3% in nine months in 1987, and the stock market soared up to 2700 before crashing. and, you know, i think that's the most similar kind of environment where there is just a water shed shift in terms of what people think the upcoming economic growth environment is
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going to be like. i think it is a bit overdone. there certainly was an acceleration before the election. we saw after sub 2% growth in the united states, we saw a 3% third quarter and now we're looking at maybe a 3% fourth quarter. we accelerated. earnings growth, negative year on year for a while, turned positive and it looks like the fourth quarter will be even better. global growth, including china, has improved. so there was acceleration which started to create new trends in the market, but that's really been exacerbated by trump election. >> what is the -- have you changed your allocation at all given the new -- the incoming president and the fact that congress is dominated by the republican party now? or is it same old, same old. sounds like you think we're resuming the trajectory that the market has been, even though there has been some major leadership changes in the market when it comes to financials and the underperformance of technologies since the election. >> i think there has been a couple of big ones that are different. we had leadership and financials
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really. yields were going up before the election. that's just been exacerbated. tech has changed. emerging markets international. the biggest thing to me is the dollar right now. there is a universal opinion that the dollar is going higher. that's why international markets and emerging markets are getting slammed and materials and energy aren't doing as well as you might expect. i would take advantage of that. i would right now sell a little bit of financials, a little bit of maybe even small caps, little bit of the industrials, and put some in the international emerging markets, put some in materials and energy stocks because i think the big surprise over the next 12 months is that the dollar is going to come down and not up, even note fed's raising rates because inflationary expectations are accelerating and we're going to get to a point where the fed is behind the curve and that will be a negative for the u.s. dollar. >> hold on just a second. we have news in the housing market. for that, we go and check in with diana olick. >> that's right.
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mortgage rates up again today. this time to a big psychological number. the average rate on the popular 30 year fixed mortgage hit 4% according to mortgage news daily. that after rising a quarter of a point last week. we're now at the highest rate since the first week of this year, matthew graham tells me people were trying to lock loans quickly last week and are facing a tough choice to lock today or hope for a bounce back. he says the situation on the ground is panicked with lenders trying to do damage control. the move, of course, is due to the continuing sell-off in the bond market, rates loosely followed the yield on the ten year treasury with home prices as hot as they are now, if these higher rates hold, and go even higher, we could start to see home prices weaken historically low rates have juiced prices for a long time. now, not so much. >> this, diana, is typically a time of year when interest rates come down in the mortgage market. >> it is the slow time of year, yeah. slow time for the housing market. you see more supply of homes
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coming on to the market. it is generally an easier time for the housing market, not so much competition. but rising rates, going to hit refis and we'll see what it does to home purchases. >> thank you. jim, your reactions to the moves in the mortgage market. >> it has been quite spectacular. i certainly believe that eventually yields will slow some of the economic momentum and the market trends are ahead of themselves, i would anticipate the next few weeks we get a pullback on some of the trends. i would say this, tyler, one of the most interesting things i think optimistically is we're seeing the first time maybe in this recovery a little bit of animal spirits rising up. little bit of confidence in the future for a long time. the fact that the equity market can go up this much in the face of this big of a rise in rates is something foreign to this recovery. i think what we might find is that higher interest rates, the normalization of monetary policy, might well lead to greater confidence which could
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offset a lot of the traditionally negative impact of higher rates. if we actually develop some confidence in the future, finally gearing, we might see behaviors we haven't seen which could carry this further than people currently think. >> you know, jim, i usually have an idea when i ask a question, about what the answer might be. i have no idea on this one. i'll throw it out to you. here you go. ready? is housing a net positive or a net negative for the stock market? because let's say housing slows down. rates go up and fewer people buy homes. i can see it both ways. one if you buy a house, you buy a couch, all this other stuff and it seems good, but on the other hand, homes also eat a lot of available capital. how do you see it? >> good point. i see what you're saying. i think net net though it is a net positive. because it reflects more than just the amount spent, brian. it reflects an attitude, i think. if you're confident enough to enter into a house agreement,
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that shows a level of confidence in the household sector that is going to permeate out into other areas. if you're not, that says there is going to be more conservatism throughout. i think the other thing we got going for housing, brian, is we got this group that is just now reaching household formation, finally getting married and forming household formation rates going up, and they have jobs, the fastest growth rate in job creation is among the millennial part of the population. and their confidence is higher than baby boomers in the future. i think that's a powerful group that is going to drive housing, even in the face of higher yields. >> we baby boomers, we're just ready to sell our houses to those millennials. bring them on. that's what i'm saying. all right, jim, thanks. >> thanks, you guys. up next, crude hitting three-month lows. what is driving oil prices down. that story is straight ahead. later, rust belt revival around the corner. you'll hear from one small business owner and hard hit ohio
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who is betting big on trump. "power lunch" will be right back. did you know there's a way to save up to 95%
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on your prescriptions? introducing blink health. blink has negotiated some of the lowest prices so you can get your same medication, at your same pharmacy, for a lower price. just go to blinkhealth.com, pay for your prescription, and pick up at your regular pharmacy. blink is accepted at nearly every pharmacy nationwide. go to blinkhealth.com and get $10 off your first purchase, promo code: tv. the dakota access pipeline under construction is generating controversy and protests from native americans and environmentalist groups. jackie deangelis is live on the ground with the very latest. jackie? >> good afternoon, melissa. well, we were waiting today for a decision from the administration on the state of the dakota access pipeline and it can't come soon enough
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because tensions are rising. both sides very passionate and very active about having their voice heard on the side of the issue that they stand for. but still no word just yet. the standing rock sioux tribe and others contesting the construction of this pipeline. it is a more than thousand mile pipeline that would transport oil from the balkan to illinois. they are saying that this is about clean water, this is about the environment, this is about not disturbing the peace of their land. on the flip side, you got energy transfer partners, they're constructing a pipeline and they're saying this is about infrastructure, it is about jobs, and it is about getting balkan crude to chicago and eventually to the gulf coast in a safe manner, in the safest manner possible. remember, we have seen a lot of rail accidents trying to transport crude out of the balkan. furthermore, to add to all of this, the decision that is rendered today may only be some guidance on the next steps forward and may not be a final decision.
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so this may ultimately fall in the lap of the trump administration who is already about pro business and said it will do more to roll back regulation and make sure projects like this go through. so what happens here today is very significant. not just for the dakota access pipeline, but for the infrastructure projects in general. >> all right, jackie, thank you. jackie deangelis, cannonball, north dakota. president elect trump has repeatedly called for the u.s. to be more energy independent. he's also denounced the 2015 nuclear agreement between d.c. and iran. so where is oil headed once the president elect takes office? will tensions rise in the middle east? a lot of questions, all falling under the backdrop of crude oil which has fallen back down to the $42 range. lima kroft joins us now. a lot of questions. let's get some answers. first off, oil. 50 bucks couple of weeks ago. back to the low to mid42s today because people say, guess what, opec looks fractured again.
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are they going to be able to come together and make some kind of a deal or is it broken and business as usual? >> i mean, we -- i think it is very important over the weekend, the oil minister out there saying let's get this done. and if saudi backs off, then no deal. but as long as saudi wants this deal done and they're driving the bus, we think it gets done. >> isn't iran iraq? aren't those the two big wild cards? >> here is the question with iraq. iraq is fighting with the occurreds ov kurds over what their numbers are. can iran do much more without foreign investment? and this is where the trump election becomes very, very important. because are european energy companies going to go back into iran and help lift production if they're facing a snapback of sanctions. >> do you anticipate the decline in oil we have seen based on opec optimism, dimming, or the
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dollar index is hitting the highest level since last weiyea? >> i think a combination of the dollar. i think there is so little faith they can get this done, despite the statement of the secretary-general, despite all the opec oil minister, except for iran, saying we want this done. i think there is too much skepticism now. >> what do you see as the likelihood that sanctions would be placed back on iran? and i don't mean just u.s. sanctions, sanctions by the other signatories to that tre y treaty? >> all that matters is u.s. sanctions. sanctions are extra territorial. the u.s. was not in iran, wasn't taking any crude, our companies weren't there. the u.s. congressional sanctions target any company globally that invests in iranian energy sector. says to european asian companies, you want to do business in iran, you want to invest the energy sector, you'll be locked out of u.s. capital.
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>> what about u.s. equip.s. com? >> u.s. companies can't be there now. >> exxon is a minority partner in some joint venture. they can't do anything? >> no. if the sank sanctions on, it w put u.s. companies on equal footing with european companies. >> if we put sanctions back on, total, or italian companies, they have to choose. >> they have to choose. they could do business, but then they run afoul of the u.s. legislation. i think it will give them pause before going back in there. contract terms aren't great. not the easiest place to do business. so you have to choose between iran and the u.s., i think you're picking the u.s. >> you're recommending to investors they buy oil here? >> i think if we don't get it from opec, we'll have an initial sell-off. >> but you are optimistic. >> i'm optimistic, yes. >> your firm is recommending to clients that -- >> we do think that deal will push us into the 50s.
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>> 50s. >> low 50s. >> ten bucks higher from where we are. >> she's not interested in oil. she's interested in copper. >> well, copper was up 11% last week. >> the biggest rally in 30 years or something. >> 30 years. >> something like that. >> what do you think? >> we'll have to see what happens with the infrastructure projects. >> that's it. okay. >> if it is not 30 years, it is close to 30 years, the idea being if we're going to build, we need steel, all the stuff. >> right. and it is not just last week. take a look at copper charts since october 24th. that's been -- >> is the copper run a sign of, a, positive use of the economy or, b, deadly inflation sign that has us worried going down the road? >> time will tell. >> i'm an oil girl. >> lima copper kroft, thank you. fifth avenue is known for great shopping. but you wouldn't know it looking at these photos.
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could the daily protests outside of trump tower have an impact on businesses and real estate. four stocks in focus, the your daily dose of street talk straight ahead. ah, beth. so the elevator is stuck again. with directv and at&t you can stream your favorite shows without using your data. that makes you more powerful than being stuck in an elevator with a guy with overactive sweat glands. sorry, rode my bike today. cool. hey it's your tv, take it with you. watch all your live directv channels, on at&t, data-free.
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whmade plastics that tmake them lighter?rs
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the lubricants that improved fuel economy. even technology to make engines more efficient. what company does all this? exxonmobil, that's who. we're working on all these things to make cars better and use less fuel. helping you save money and reduce emissions. and you thought we just made the gas. energy lives here. welcome back. time for street talk, analyst recommendations on the stocks you need to know about. we kick it off with clear. clear systems, drexel hamilton
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bullish based on trump. saying the president elect plans to secure the southern border with physical and virtual barriers could be a catalyst for the company which makes a variety of night vision technologies here. they had years of participation in border security efforts domestic and internationally and drexel raising the price target from 4 bucks to 40. >> run since november. it has doubled from its lows about a year and a half ago. the stock has,ba come back a bi and now the trump bump and what a return. the second stock, same vain. lockheed martin, they have been looking for the opportunity to upgrade lmt and now is the time. two part story. a free cash flow is improving situation, and the trump win, they note the joint strike fighter program seems to be going better than some thought. the contract terms were less onerous than some expected. it could boost defense spending.
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they bumped their target on lockheed martin to 290, 10% to 11% upside from here. >> defense contractors like lockheed martin were viewed going into the election as being a beneficiary of either clinton win or trump win. and so this analyst comes out with this rating change now. it is interesting timing, i think. >> a win, win, win. >> win, win, win. everybody wins here. pacific press upgrading square to an overweight. $15 price target. square is set up for consistent series of fundamental surprises. checks on lending and regulation have been positive, which makes the analyst think there is a midterm opportunity for square capital. a check on caviar, delivery service, makes the analyst cautious, but less of a drag, upside if square gets out of the business. >> you may be right, i may be crazy, but it may be -- no, it seems like we're always talking about upgrade for square. every month, somebody upgrades the stock and it gets a pop and goes back. look at that chart. >> the same level.
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>> last stock is called foreterra. they make pipes, gutters, drainage type, sewer systems, based in texas. outperform and a $22 target. he loves the management team and what he calls the secular tailwinds of stronger home and infrastructure construction trends. any increased spending on water infrastructure should benefit foreterra according to wettenhall, who has the perfect name. about 19% upside. bob is a friend, so i can say that. >> three out of the four stocks are trump related bumps. >> i'm sure someone will have an issue with that. >> can never win. can always win with sue herera with the cnbc news update. >> all right, here's what's happening at this hour. a suicide bombing killing at least six citizens in the shiite sacred city of karbala. officials said six suicide
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bombers tried to sneak into the town but security forces detected and killed five of them. isis claiming responsibility for that attack. depression rates are on the rise among young adults and teens. columbia university researchers finding depression increased from just under 9% in 2005 to more than 11% in 2014. and the greatest increases found among teenage girls. a water main break in florida created a hole so large it swallowed an entire car. yikes. crews closing the road, of course, and warning motorists to stay away from that area. they eventually did manage to pull the car out and luckily no one was injured. except the car. which is ruined. that's the cnbc news update at this hour. i'll send it back to you. >> sue, thank you very much. let's get dominic chu in the mix here for a market flash. >> so, tyler, tech stocks remain under pressure in the trading since the presidential election. the s&p 500 tech sector has fallen by more than 2%.
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so-called fang stocks, facebook, amazon, netflix, alphabet, parent company of google, around 2% lower in today's trading. apple the biggest drag. all of these names are weighing on the overall nasdaq 100 and composite, which is down about a third of a percent, the biggest laggard among the industries today. >> the underperformance of this particular group was seen after the election as well. not just a one day phenomenon. they have been underperforming the market since november 8th. >> and that -- you bring up an interesting point. six of the eight biggest stocks in the s&p 500, the majority of which are tech, have been lower ever since the election results came out. the interesting juxtaposition now is whether that large cap technology balances out in some ways with the surge in just about every bank stock that has been out there in the s&p 500. bank stocks remain the third biggest sector or financials broadly, third biggest secretarier in the ssecretary er sector.
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if you look at the names like facebook, amazon, google parent company alphabet, or apple, all of those guys have served to be real drags and weights around the market. the question becomes whether or not people see value here. they fall on quit a bit with the overall market being up near record highs. >> these are -- >> everybody we had on talking about how they love facebook. have to be in these stocks to find growth in this market. >> i would say -- this is a hyperbole. these are stocks that work consistently for the last few years. they were always ones that you could count on. facebook is now the tenth worst performing stock in the s&p 500 over the past month. and i do wonder, i don't know if we call this fake news thing a scandal, but it is out there, i wonder if facebook could be pinched from that. people get their news from facebook. >> the reason for the big sell-off is -- >> it is -- >> rotation. >> stock could be atms in order to buy financials and
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industrials. >> sell tech by banks. i also think amazon might be -- i wrote this up a couple of days ago, could donald trump be a trust buster? donald trump made pretty negative comments about amazon on the campaign trail and talked about the at&t time warner deal. we think of donald trump as pro business and he is, but in his businesses, hotels, real estate casinos, he was always the little guy, always the independent going up against the bigger publicly traded -- >> the marriotts. >> exactly. i wrote that piece. i wonder if he could be a surprise trust buster. maybe he's got his sights set on an amazon. don't know. >> yeah. >> that among many things we don't know. >> the new reagan revolution. you'll hear from one rust belt ceo who is bullish on a trump presidency. if you think politics are getting ugly here in the u.s., check out this scene in the ukraine. full details when "power lunch" returns. ♪ come on, wake up!!! come on, why ya sleepin'? come on!
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president obama will hold a news conference today at 3:15 before he leaves on a week long trip abroad. we'll have full coverage here on cnbc.
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two and a half hours left in the trading session and stocks are mixed now after hitting a record high. dowennes barely holding on to the green. nasdaq down by 9%. much more on apple later on in the show. check out shares of acom, rallied sharply following trump's win. the company slashing 2017 guidance after reporting earnings. the stock still higher by 7%. we were talking about copper before in the massive rally we saw on copper on the notion that infrastructure would get a massive injection of funds and this is another group of stocks, just rallying on this notion of money being spent building roads, walls. >> acom, we had the ceo on for the conference in california in april or may. and they're big in private partnerships. they have done a lot of work. just be careful if you're an
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investor. it is easy to say everyone will win an infrastructure play. a huge amount of work globally. the port of dubai, that's one of the projects, building stadiums for the world cup in qatar. if there is any tension globally, you might see a gain here, but wonder if there will be further contract reductions, not just with them, but with anybody, globally. one of the reasons that donald j. trump won the election is the appeal to voters in the industrial midwest. they're-likie in looking to tur years of job loss. instead of taking more theory, let's go to the source. herb schuller jr. president of general extrusions, aluminum parts manufacturer, herb's father was on "power lunch" eight years ago. good to have you on the program. thank you for joining us. >> thank you. >> we know you've come back from the crisis a bit. business is pretty good now. you've hired back 30 workers. however, from your perspective, what does donald trump's first
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act need to be for you and your industry? >> well, if you listen to your colleague larry kudlow and steven moore and some of the economic advisers he has had, they're talking about, you know, cutting taxes, both corporately and individually. they're talking about reducing taxes on repatriation of funds from overseas. and they're talking about cutting way back on regulation. and if those things happen, you know, if you have sweeping regulation reductions, you know, you replace and repeal obamacare, joe kernen that alan greenspan on last week, last thursday morning, i believe, alan greenspan very vocal about repealing dodd frank, so, you know, if you do all those things, cut back regulation, cut back taxes. >> i'll jump in on you a bit and not ask you who you voted for. as you know, whatever side you voted for, a lot of promises were made on both sides
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including by the now president elect. if you had to lay odds on how much you think -- you mentioned a lot. how much do you think they will actually accomplish? >> well, i think, you know, president trump will have to be big and bold and i think, again, you cut taxes, cut regulation, that does set the stage for a second reagan revolution. we saw it happen in the '80s with ronald reagan in the '60s with john f. kennedy and lyndon johnson. if you free up the economy, and untie the hands that bind us right now, with onerous regulation and highest corporate tax rate in the world, there you go. >> so which regular -- nake the regul -- name the regulation that if it went away tomorrow would help your business most and why. >> the aca clearly. that's a huge black hole for dollars. and -- >> because you're required to pay for -- to provide some
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health insurance for your employees because of the size of your company? the employer mandate in. >> that, plus all across the country you have insurance companies that are bailing out of that because they're losing money and they can no longer do that. that kind of a train wreck is creating an awful lot of financial and certainly for the federal government as well. so, you know, you do that, if you, you know, change a little bit of the regulations in the banking industry, with dodd frank, i think you free up a lot of capital and dollars that the banks then use to loan out and reinvest into small businesses and medium sized businesses like ours. >> i'm surprised you didn't choose a -- i don't know the regulations that pertain to your business particularly. that you didn't name a regulation that affects you in a more immediate direct way. you pointed to dodd frank and its possibility to free up capital or the aca.
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>> well, i don't have a single specific regulation in mind. i have a much broader picture in mind about, you know what kind of regulations are affecting not only us, but our employees as well. and trying to think big picture about how does this set the stage for economic growth for the next four or six or eight years. >> all right, herb, we'll leave it there. we appreciate it. do us a favor, come back on periodically, let us know how your business is doing, we especially want to hear -- your county was one of the key counties that turned the election. so herb, we'll see you soon. thank you for coming on. >> thank you. trump tower at the center of daily protests since donald trump's surprise victory. could this have an impact on real estate and businesses? let's check on bonds after a historic week in terms of the outflow in bonlds. we're seeing today, what is of note here, the ten year yield. we wendt up to 2.3%, the highest
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level since last december actually. so we're now at 2.22. given that up a little bit. 30 year hitting historic levels, highest yield level since january of '09. we're backing off that high as well. that's your bond report. "power lunch" is back in two. will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com.
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it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? i want to correct something i said. these are the highest levels we have seen since january. we're at 2.89% now. >> all righty. trump tower at the center of protests since the election. these are images from fifth avenue. how are the street protests coupled with increased security
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impacting nearby business? let me tell you, it is impacting nearby traffic, foot and vehicular. robert frank is live. >> the protesters seem to have taken the day off today after a busy weekend. and the main issue now as you mentioned is security and traffic. right behind me, that's trump tower, that's where donald trump lives on the top penthouse and the headquarters of the trump organization. we're right in the middle of midtown manhattan. this entire area has been turned into a ring of steel. we have metal gates, concrete barriers, we have a no fly zone over trump tower. a lot of the roads around this area have been closed. a lot of lanes closed. that has created a massive p ii bottleneck for commercial traffic, for taxis. this also used to be or should be a big shopping area. we have prada, tiffany over my right shoulder, gucci, these stores right now heading into
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the holiday season and would normally be packed. right now they're all virtually empty because to get inside these stores, you need to get through police with machine guns. not the most conducive environment for buying diamonds and handbags. the big question is, how long this will last. trump goes to the white house in january. but sources close to the family tell me that he continues to want to come here to new york city to his apartment perhaps on weekends during his term. now, mayor de blasio of new york city saying that would be untenable. but after january, that is trump's choice, not de blasio's. back over to you. >> robert frank, robert, thank you very much. we'll see you soon. time for the good, the bad and the ugly. today's trade. first, to the good. harmon international soaring on news that samsung plans to buy it for $8 billion. on to the bad, duke energy, that stock under pressure, the company agreeing to pay $27 million to settle a lawsuit relating to the firing of its
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ceo back in 2012, who fired hours before he's scheduled to take the job. downright ugly day for puma biotechnology, down 22%. that's news related to a breast cancer drug. let's get to cnbc's meg tirrell with the news on puma. >> puma put out data ahead of a breast cancer meeting in december. this update on the breast cancer drug called naratniv, disappointed investors with the stock trading down 22%. the concern here as it has been for some time about this drug is that the side effect, and unfortunate side effect that causes pretty severe diarrhea in a number of patients taking the drug. they have been trying to control this with sort of preventive regimen and they saw that the side effect looked like it was worse now. and also they may have to add a second drug to help deal with the side effect, essentially. so a lot of folks are concerned it can't be dealt with enough with just one drug alone.
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that they may need two. a lot of analysts are coming out an saying the reaction of the stock is overdone because that two drug regimen to try to help with that side effect works to be working fairly well. that's what's weighing on puma today, down 22%. >> the difference between having one drug versus two is pretty startling. 27% occurrence of diarrhea in patients treated with this breast cancer drug versus 12% when you add the second drug. what is the fear about adding the second drug to the regimen. surviving breast cancer i would imagine would trump -- forgive the use of the word trump -- would outweigh side effects of diarrhea? >> with the second drug, we can manage the side effect pretty well. the other side of it is, this is a lot worse than we thought because we need a second drug to deal with it. it really is a very interesting situation whether people who are dealing with breast cancer want to have to take another drug to help with that, it is going to
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play out over the next year as this drug approaches the fda. >> meg, thank you. meg tirrell. >> up next, the former u.s. ambassador to israel has a big warning about donald trump and he'll join us next f you think politics are turning ugly here in america, check out this video, showed it a few minutes ago, few details when "power lunch" returns. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies.
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politics have always been a kind of contact sport. but look at that. the ukraine, they take ma meaning literally. coming to blows after one of the lawmakers accused the other lawmaker of being an agent for the kremlin. got a big right hand. if you're listening on the radio, it is the one guy was the conner mcgregor of the ukrainian parliament. >> ufc. >> ukrainian fight club. >> all the videos seem to come from ukraine. three countries where we get all the fighting, turkey. >> passion. >> taiwan. >> once a year there is tv. >> very passionate about what they believe in. i guess. or just violent. >> oh, yes. >> good right hook.
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>> one of the key issues facing president elect trump will be addressing the tense situation always so it seems in the middle east. next guest says a trump presidency creates a dangerous level of uncertainty in the region. daniel coetzer is a former ambassador to israel and egypt, professor of middle east studies at princeton. welcome. good to see you. let's begin with iran if we might. what do you see as the risks and opportunities there, if as mr. trump promised on the campaign trail, as president he walks away from that deal? >> this was a very finely negotiated arrangement to try to stop the development of an iranian nuclear weapon, nuclear program. and i think precipitous action on the part of a new administration could realtally throw a monkey wrench into stability throughout the region. iran is a progressive country, fighting in syria, in yemen and the uncertainty of their
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reaction to any quick moves by the administration or by congress would certainly raise the tension level and perhaps even lead to a military confrontation. >> mr. trump called it a disastrous deal. do you see it that way? >> no, i supported the deal. any deal can always be improved if you had enough leverage and maneuvering room, but the best we could get at the time together with our five negotiating partners. i think the critical issue now is performance. can we hold iran's feet to the fire and make sure there are no violations. that's the critical issue right now. and then over the course of the ten years life span of the deal, see if we can't turn the whole program around. >> there have been a couple of -- as i understand it, minor violations of that deal, which you're probably more familiar with than i. but i gather they have been or are in the process of getting remediated. let's pivot to one of the central issues in the middle east, it has been through most of our lifetimes, and that is
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the relationship of israel with its neighbors. there has been some talk that the united states -- the united states under a trump administration would move our embassy from tel aviv to jerusalem. good idea? >> no. it is actually not a very good idea. it is probably one that needs to be thought about quite seriously. look, the israelis consider jerusalem to be their capital, many americans would like to see us support that. but it is one of the most delicate questions in that region. right now israel has a good relationship with many of its arab neighbors. and if the united states were to move the embassy, you would see the israeli relationship with its neighbors go down the drain. the rest of the muslim world and the arab world will not tolerate the move of the american embassy to jerusalem. >> which neighbors would you say israel has a favorable relationship with right now? i assume you mean jordan, egypt. >> jordan and egypt are treaty
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partners and they -- the relationship is warmed considerably. there is a lot of signs of israeli connections with saudi arabia and gulf countries who are as concerned as israel about iran. and that has driven them to some kind of strategic coordination done secretly, but nonetheless some contact they didn't have before. >> who would you choose to be secretary of state under donald trump. >> it is up to the president elect. i would like to see somebody who has experience, who has the kind of demeanor and temperament to negotiate in troubled times in an area like the middle east. i think there are quite a few people out there who meet that criteria. >> newt gingrich and bob corker have been mentioned by the new york times as a potential short list. what do you think about those two choices? >> i know senator corker, excellent chair of the senate foreign relations committee and quite experienced. i think he would provide that
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kind of steady hand that is necessary now. >> mr. ambassador, thank you very much. we hope we can call on you again for your advice and wisdom. appreciate it. >> my pleasure. >> up next why this weekend was a total touchdown for the nfl. and the tv network. "power lunch" will be right back.
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welcome back to the second hour of "power." just two hours now until the closing bell. it looks like the trump rally may be fading. after hitting a new record high earlier today, the dow has pulled back, we'll call it little changed. one reason may be oil. new worries about opec's ability to reach a production deal pushing crude to three month lows, back in the $42 range. >> from wall street to washington, president obama holding a news conference in just over an hour from now. before he begins his final overseas trip. he's headed to europe and then to peru. cnbc will carry his news conference live at 3:15 eastern. >> not just the dow hitting new highs, midcaps and small caps hitting new records. an closer look at how the post election bounce compares with others. >> if you look overall at the
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s&p 500 you see we did hit that again, we have backed off, but we hit that record level earlier today. the s&p 500 again showing some real signs of life in the post election period. if you look beyond the s&p 500, bring up other parts of the indices and the market cap structure. check out what is happening with the russell 2000. up a percent so far today, leading things ahead for the small cap stocks hitting the record as well. midcap 400, some managers call it the sweet spot in the market, place where small cap managers look for safety, large cap look for alpha, outperform apps. midcaps up by 1.3% as well at those record highs. look at this, transportation index, again, the highest level since last summer, up again by 2% so far today. fedex, u.p.s., a lot of stocks making record highs in that trading so far. and overall, if you look at some of the other places in the marketplace that are giving some investors optimism, small caps and transportation stocks really helping to lead that way. back over to you.
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>> thank you, dom. the dow hit highs earlier. the nasdaq under pressure over the last month. apple is one of the stocks hurting the tech heavy index, down over 3% today. about 2.8% now. over 11% of the last four weeks. colin gillis is senior tech analyst, has a sell rating on apple with an $85 price target. great to speak with you. we can't have a discussion about april until thple without notin cap stocks are feeling the pressure. last week, the markets rallied hard off the back of a trump victory, fang, and apple, finished the week in the red. what are the calls you're fielding from investors as they have gone into stocks like google and facebook. you don't cover facebook, but these were the favored trades going into the election. >> right. we focus on apple in particular. the concern is that if we have a trade war with china, that apple is going to suffer more so than
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some of the other multinational tech companies. the reality is, apple trades at the lowest pe multiple of any company that has a $200 billion or higher market cap and it is because it is a one product company. does it deserve to trade at a premium? it doesn't. >> but it doesn't, so you have a sell rating on apple, right? >> i do. >> you're sticking by the $85 price target. did you anticipate that, a potential china trade war would factor into the apple decline at this point? you thought other factors would get you to 85 bucks. >> i thought that china and the rebound in china was the expectation for that would be overstated. it is the number one point. there are risks embedded in china, both for consumer tastes as well as government regulations. and you're seeing apple share in china continue to decline. the number one item that is going to drive apple to my price target and my view will be the
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rise of the domestic chinese producers. >> okay, so i get the whole sort of specter of a china trade war. that may or may not happen. we don't really know yet. in the context of a market trading as if economic growth is going to be jump started here in the u.s., which is apple's biggest market, in a market which assumes there is going to be some sort of repatriation tax holiday and apple has tons of cash overseas, something potentially may happen down the road, with china? >> and in terms of the overseas cash, we're very clear that would be a major positive for apple. but, again, i think that is something that investors have expected and have already factored into the price. and the concern of apple's one product, you know, are lack of innovation, lack of founder of fire, perking back up again, combined with the trade wars, is what is driving the stock downward. >> so the risk simply put is that if there is a trade war,
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apple products would become more expensive in the u.s. market, number one. number two, domestic competitors in china will limit its growth there. have i got it in. >> correct. i would flip that order around, being that the domestic producers in china are my biggest concern and the broader point is apple remains a one product company. it is like go perfect ro on ste. >> is this a great opportunity for alphabet? >> yes, we love alphabet. you talk about a company where you have six products, you know, with over a billion users, multiple chances for them to drive new revenue streams, so we love alphabet right here, right now. >> maybe a little out of your wheel house, but i'll ask anyway, the fake news thing, about one third of stories being shared around on facebook and whatever, digital algorithms are going mad. is there any investment play, any trade on this?
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something that is on your radar? >> in terms of large public companies, we would pass on commenting on that. but, you know, if you did want to be involved in the sector, buy alphabet, buy the core google. >> all right, colin, we'll leave it there. thanks a lot. colin gillis. president elect donald trump naming rnc chairman reince priebus as his white house chief of staff. that is not the appointment getting the most attention today. john harwood is live in washington, d.c. with more. john? >> everybody is trying to figure out what exactly the trump presidency is going to be. is he going to turn out after all the talk and the campaign to be a deal-making pragmatist or a hard right provocateur the way he was at times in the primaries. he made appointments today that but rees both points of view. first of all, appointed steve bannon as chief strategist but picked reince priebus as chief of staff, comforted democrats
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because of his ties to the political system, republicans because his ties to house speaker paul ryan, reince priebus said this morning on the today show, this administration will be a partnership. >> we had a great partnership. i learned to get to know president elect trump and steve bannon and the whole team and, you know, it has worked, and it has been a great partnership. he really wants everyone to understand that he wants to be a president for everyone. no matter your background, your race, your gender, your faith. he wants to do well for every american across the board. >> reviews a lot harsher for steve bannon who picked as the chief strategist. yes, he worked on wall street, yes, he worked on -- in hollywood. but he's also been the chairman of breitbart news, a hard right, alt-right news organization. some refer to it as white nationalists or white supremacists. we saw this tweet from john weaver, who is a chief strategist for ohio republican
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governor john kasich, who said, the racist, fascist extreme right will be steps from the oval office. america, be vigilant. that is an indication of the kind of harsh criticism he's getting and, of course, in just a little over an hour from now, president obama will be giving a news conference, he may be asked to comment on this and his efforts to work with donald trump, the president elect, and try to figure out how to minimize the turmoil and damage to his own legacy, which is in prospect from a trump administration. >> you watched a lot of these kinds of internecessarying situations play out, john. how long do you think before one or the other of them leaves? >> well, it is hard to say that so far before the start of the administration. we got to start seeing what this administration actually does. we're at a stage where they can't act until january when they take office. to we're all trying to read things and infer thing from the appointments he makes. everybody will look closely to
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the appointments for national security adviser, for the pentagon, for the state department. but until the rubber hits the road in january, we're not going to know exactly who is in the dominant position and who is going to be unhappy enough, how quickly, to force them to leave. >> john, thank you very much. john harwood. coming up tomorrow on "the halftime report," a big one, former speaker of the house john boehner, guys, their guest. 12:00 eastern time. 9:00 a.m. pacific time. john boehner. i'm sure he'll have a lot to say. tune in into "the halftime report" tomorrow. now back to the american job market. it is a tale two of employment scenarios. where are the new opportunities being created and where are they being lost. let's bring in larry kudlow. good to see you. long seven days or so. so i'm not sure anybody slept for that time. first off, where are the jobs going to be? we hear about infrastructure. i wonder are there people to do
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those jobs? >> yeah, i think there are. infrastructure is not a huge sector of the economy. and i think people make too much of this so-called stimulative efforts. you create jobs and lose the jobs. people can do them. you have people laid off in manufacturing and hard goods industry. you got people in the construction industry that have not been employed, the housing recovery has been menso, menso. infrastructure is one spot. i myself think technology, anything to do with technology, sully, will be the biggest job creator and probably second would be the -- anything to do with the health care industry. >> you're, you know, know the thinking of the trump administration or future trump administration on jobs and immigration. all the attention has been placed on illegal immigration, 60 minutes, big part of the
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interview last night. what about h1b visas. every tech ceo will say we need more visas, we need smarter people. is there any chance that actually opens up? >> yes, i think that will be one of the key elements of the policy. i mean, what mr. trump has said, nobody thinks about this, because they're worried about throwing illegals out, which, by the way, he's not going to have a deportation task force or anything like that, but skill based, skill based rather than family based is go to be a key theme in the immigration policy. there is a unanimous view about this, not only from the trump campaign, but also congress. skills based. you'll hear more about that. and, yes, with respect to legal immigration, e-verify cards will be part of this to make sure they don't overstay, but there will be visas for high skilled people and i think also for
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people who come in and say, look, i want to start a business, i've got this much cash, i want to invest in it, other countries including canada have tried that. so i think the skills based theme will be crucial. >> you're one of the spiritual fathers that gave shape to mr. trump's sort of growth agenda. i think one thing that he certainly has been most applauded for is the focus on growth. and since he won the election. and that that may have been the reason why he won the election. what do you think is a reasonable growth pace for the u.s.? >> well, by the way, mr. trump on 60 minutes and elsewhere this past week has put tax cuts and growth right at the top of his list. it pleases me no end. look, if he can get his business tax reform through, large and small businesses, 15% tax rate, maybe 20% from the house, we'll see, but if any of that stuff gets through, plus the increase, the lower taxes for individuals,
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i think it is reasonable off a low base that he could run 4% or 5% real gdp growth, not forever, but probably for something like three, four, five years, which is really we never had that kind of rebound coming off this difficult recession. so i think that's likely, i think that's plausible. and, you know, to sully's point, i think if you have faster growth, you're going to have much faster job creation. frankly across the board, okay, services are going to be very important as well. i mentioned tech and i mentioned health care. i also will add construction. i this i growth, nk growth is k wages picture and almost everything else. growth solves a lot of problems. let me add deficit reduction. >> all right, larry, thanks, appreciate it. good to see you. >> thank you. president obama's press conference expected in just about an hour from now. we know he's got a lot to talk about as he enter the final days
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of his administration. we'll take you there live. should you jump in now and buy at these battered levels? "power lunch" will be right back. they say the world does not revolve around you. but today, maybe it can. i am helping 1-800-flowers find the perfect gift out of trillions of combinations. and working with the new york genome center to find treatments as personal as dna. and i am helping sesame street make education unique to every child. hello, my name is watson. working together, we can outthink anything. hello, my name is watson. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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welcome back to "power lunch." emerging markets down 9% since the election. news out in the past couple of hours, hedge fund manager stan druckenmiller doubling his position in eem. is this trump yield downturn in emerging markets overblown?
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let's bring in tim seymour and zach caribo. if we're to believe that rates will go higher, isn't the emerging markets trade dead? >> first of all, how are you doing? secondly, it sold off 10%. there is an anticipation it is dead. as tim knows well, there has been huge strength in the em this year after three years of chronic underperformance. is this sell-off in anticipation of negatives, trade wars with mexico, higher import goods from china. is that being priced into this trade my take is it is being priced in. >> so it is not dead? >> it is not dead because i think it is being priced in. i think overpriced in relative to what is going to happen in global trade.
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>> tim, you look at some of the chinese stocks, the trade here in the united states, alibaba, for instance, they have been getting pummel llpummelled. the do are those pies buys in any way. it is a regional company and as the sings dat le data shows, it down to valuations and it,s down to a lot of macro fundamentals that on some level as jack pointed out, em economies have already adjusted. the current economies across em, turkey and south africa, under pressure. but the other side of this whole trade is this has been a reflation trade, a resources trade. if you think about the move in copper, that's good for peru, for chile, parts of latin america.
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think about the relationship with russia. we may have a reset -- >> you like bhp or picasso? what are some plays? >> i think if you're playing global integrated minors you have some diversification. bhp, rio tinto, even volley. look at ion ore, you can say an improved balance sheet is working . i think the chinese consumption stories are alive and well. >> zach? >> so the flip side and tim is right, if you charted an eem decline of 10%, you would see free port, mcmorn and copper as tim pointed out going up. one trade doesn't make sense. either the commodity trade benefits the domestic economies. or the trade wrong and the commodities side. i think it is probably the case that a lot of these eem names will do quite well.
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alibaba down from 110 to 89 today. i own a little of this personally. that's beside the point. i think this is deeply overshot relative to the domestic chinese consumer. india stocks, down a lot. hardly impacted by any of this. >> we'll leave it there. thank you. tim and zach. maybe the critics were a little too quick to write off the nfl. big ratings this weekend. some cliffhanger games. we'll discuss that. the most important one is the redskins game. porsche making big moves to hold on to luxury car buyers that may be buying teslas instead. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation?
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why invest in average?
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with leases starting at $319 a month. infiniti. empower the drive. welcome back to "power lunch." i'm sue herera with this news alert about gwen ifill, anchor of washington week has passed away at the age of 61. miss ifill was suffering from cancer. she died in hospice care in washington, d.c. earlier this morning. as i mentioned, she's the co-anchor, was the co-anchor of the pbs news hour, managing editor and anchor of washington week. "power lunch" is back in a moment.
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welcome back. i'm sue herera. here is your news update this hour. trump campaign manager kellyanne conway says to expect more appointments to be announced this week as president elect
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donald trump prepares to take over the white house. and she defended his picks so far. >> it is very important for president elect trump to have those around him who were with him to this point because loyalty is very important to him. he's loyal to people. they're loyal to him. but also it was a winning formula. i'm really happy that reince priebus and steve bannon will make the sacrifice to go inside and serve the president. a new study finds no evidence that celebrex is riskier than two other prescription strength pain killers. it is similar to vioxx, a drug pulled off the market after it was linked to heart attacks and strokes. but a new study finds celebrex does not appear to carry that significant danger and might be less risky than priescription ibuprofen and naproxen. ruth bader ginsburg making her opera debut on stage at kennedy center for the performing arts in the production of the daughter of
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the regiment. she didn't sing, but nonetheless, she brought many in the audience to their feet. good for her. that's the news update this hour. i will send it back over to you, ty. >> boy does kate mckinnon do a good ruth bader ginsburg. >> she does. yes. big bounceback weekend for the nfl. not alas for the packers. the game on nbc, seahawks and patriots, highest rated primetime game since we can one. fox says the cowboys/steelers game, highest rated nfl game all season. primetime or not. maybe that's because the election is over, maybe because both games were really good and close. if you tuned in, you weren't going to tune out until they were over. i did tune out, because i fell asleep during the night game. comcast is the parent of this network. 21st century fox owns fox network. their stocks both higher today. >> is that good? you fell asleep. >> i fell asleep. i was tired.
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beat. >> i with liould like to watch football but there is a hole in my tv where -- my wife suggests i clean my mouth out with soap. it was not a nice moment in the sullivan household. >> brian. oil market closing for the day. to bertha coombs. >> that game would have been better with seahawks and the patriots had the score been different for some of us. at any rate, we had a turn around today here in terms of oil prices that strong dollar, beginning of the day, early in the session, when the dollar index went above 100 really putting pressure to the downside on oil, wti, nymex, crude, to the even mark here at the close. but brent continues to be under pressure and the issue continues to be production. opec, certain sense, before trying to get to the meeting at the end of this month, has surged in terms of how much production, how much oil they're putting out there. and iran continues to maintain
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firm that they want to bounce back from the post sanction era. meantime, natural gas today was the standout in the energy complex. we got some colder weather coming to the east coast, and we are seeing a nice bounceback for the third straight session after two big weekly losses. back to you. >> thank you. i agree on the score, thank you. one of the hottest carmakers in the world is porsche. they set another sales record last month. they continue to bring buyers into the showroom. let's find out what porsche will do from here and go to phil lebeau with the ceo of porsche in california. >> thank you, brian. i'm joined by dr. alan blooma. we're here at the porsche experience center for southern california which you're opening up. why is this important and what do you hope people get away from this or take away from this experience center. >> big honor to be here,
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especially in california. and for us it is very important that our customers have opportunity to test our cars, go out to the limits and test car on a track like this and this is the second one, we have in the u.s., first one we have in atlanta, and atlanta, big success, and now we are continuing here in california. >> this is different from atlanta. it is bigger. it certainly is more clefrn i challenging. i was out earlier. what is it about this market that is so important for porsche. explain for people who don't fully appreciate how competitive this market is and why california is really ground zero. >> we sell in california, and especially our customers in california are very passionate for our brand. this track is a good opportunity
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and yesterday i had the opportunity to drive the track, it is very tricky. i think our customers will love it. >> you were talking about the balance. you want to get people a challenge, but at the same point you've got to be careful because many people are coming here, may in the be a porsche owner, and they're really tasting it for the first time. you said something inside. you want people to come away and say trust the car, right in. >> yes. you can do everything. you have a racetrack, handling track, and you can do safety things with our construction. and i think to get closer to our brand it is a very good opportunity. >> you're developing an electric vehicle. you expect to launch it by the end of the decade. a lot could change in terms of the appetite for electric vehicles by then. the election of donald trump has some saying maybe this next administration won't push electric vehicle development as much in the united states. any concerns about that? >> i think both of them is
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important. we think the electric vehicle will have a big future, but the next you'll have -- combustion engines and electric engines. in the future, when we're talking about electric, this will be a real porsche. >> you're saying the person who drives a porsche now, you believe they'll want the electric vehicle as well? >> of course. you go into the car, you can drive an electric car, look a combustion engine, and the most important thing is you are the genius of racing cars, design, driving abilities, and that's important. >> dr. alan blume, big day as they open their experience center out here. you'll let me go out in the car again? >> i think we have to do it. >> i got the okay to go again. i got the okay once. >> have fun, phil, thank you. shares of kohl's, trading at
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levels not seen since august 2015. it has been a good few days for retail stocks in general, up 9% in a week. what is causing this recent bullishness? our next guest says trump's victory might be giving a bump to retail stocks. joining us now to discuss this is paul, the senior analyst at citi. you upgraded a bunch of stocks today, boot barn, chicos, limbed as well as kohl's. you look at it in many different ways, but primary driver is reduction in taxes on the corporate level and personal level, individual level. you also single out the companies because they have high corporate tax rates and so they could benefit the most, high percentage of domestic sales. talk to me about the extra dollar, though in the consumers pocket. why should we believe they'll go back to spending at conventional stores. we have seen the shift to online and to experienced spending. >> sure. thanks for having me. i think the -- there is no
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question that everything we have seen from the trump campaign, would indicate that more consumers will end up with money in their pockets and i think that's likely to be across the board. not to turn myself into a tax expert. but i think if we listen to the campaign speech, that is certainly something that we have to consider as we think about the potential for this universe as a whole. what we have in my universe, the specialty apparel retailers as well as department stores is a group that has been struggling to kind of get their fair share of the wallet. so it is not it say that they're going to win out over any pure play, that's not our call. our call is more simple than that. more of a rising tide, everyone will end up with more money in their pocket. we think some of that finds its way into the retailers that we highlighted today. >> so it is not the assumption that that incremental dollar and the consumers pocket will go to the areas that had suffered
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because of what seemed like secular change -- people saying people don't want to go to department stores anymore, they want to buy online, spend on trips and restaurants. all of those will also benefit, basically, on top of these stocks you upgraded? >> right. it is a rising tide. i think people had to be a little bit more particular about where they spend their money, they have been spending it more on places like travel, and prescription services, things of that nature. and not so much on stuff we might say. little bit more money in their pocket, we think some of that money might find its way into the more traditional retailers that we cover and let's not forget, our retailer have online businesses as well. not like they can't compete. >> we'll let you go. are the connects a little testy here? thanks for joining us. paul edgeway of citi. coming up, we're continuing to look at how donald trump's
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impact will play out across various sectors of the economy. he made his money in real estate. what will his administration do for the real estate industry? a big jump in interest rates since that election. where are bonds headed. even if you don't own them, it matters to stocks too. we'll ask the trading nation team after this.
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welcome back "power lunch." you were talking about retailers. this is home depot. we're nearing our lows of the trading day so far, down by over a percent at this point, this ahead of the third quarter results, due out before the opening bell tomorrow. home depot with other companies been under pressure due to weakening consumer activity. shares down 4% this year. the home improvement trade, guys, one of those ones over the past couple of years that really helped prop up parts of the market, gave people optimism about the consumer spending picture as they were going for
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bigger ticket items, shares to watch in today's trade. >> mortgage rates hitting 4%, also worth noting that this home building complex did decently well last week off the back of the elections on the notion that just people might get a tax cut, things might be better for the economy. whether it be home depot, whirlpool, home builders, all did well. >> of course. that home improvement trade, the materials trade, basic materials building type trade played out pretty well. the interest rate picture will play a bigger part only because people tend to sometimes go for the home equity lines of credits, taking out second mortgages, using those checks to then make improvements to their bathrooms, kitchen countertops, that sort of thing. home depot gets business on that front. so yes, the outright sale of homes a place to watch, but the refinancing market also because people use that money perhaps sometimes for those home
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improvements. >> you got to be so careful. these algorithms are picking up sector trends and selling everything. some companies are going to have more business overseas, maybe overseas rates are going to go down. like there say basket of stuff, rates are up, so sell everything, the house, the kids, the car, they're never coming home. got to be careful because all the companies are different. whirlpool makes stuff overseas. maybe the change in the currency, the countries they build it in will mitigate any sales decline. >> of course, the revenue mix, lows are home depot, maybe not as geared toward places in europe or asia or elsewhere. >> retailers 100% right. >> for those particular outfits, you talk about whirlpool or durable goods manufacturers for the housing trade, different of a story. with home depot and lowe's, we looked at them so often, you
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wonder if this is a canary in the coal mine at this initial stage with markets at record highs like they are now. >> dom, thank you. dom chu. let's stay kind of on this topic. today's trading nation, making sense of the big move in the aforementioned bond market. max wolf, and boris schlossberg. boris, you just heard dom's report and our retort, agreement, sort of, be careful. do you think it will be that simple? the bond market sells off and everything interest rate related is doomed. >> no, not doomed forever. i do think that this could be very much the death nell of the bull bond market. we broke above 2% with vengeance now in a ten year. i think the one thing that is sort of universally clear is that rates are going to be headed up. the key question going forward, though, is whether the trump economy is going to be like the reagan economy, we have growth, which means equities and bonds, equities will perform well and
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yields will go up or a car economy, stagflation, high yields but not enough growth. that could be very, very negative. that's a nonquestion now. we have to see how the policy shapes up. >> all right, if you got a view on the bond market, can it back up any further? what is the interest rate risk here? the is market overreacting, underreacting? >> i think we had two risk horizons, the way we saw the 55. we try to stay on top of these things. we don't know anyone who understood how the election was going to go and who would win it. we see that cautionary tale as a vindication of being broad and humble about what you don't know. there were two risks. one the election itself. usually not a risk, but for a host of reasons seen as risky, we thought there could be fallout and then the bigger risk of the four years of a new president who we don't know. we got the president we know less and we spent five days being excited about imagining every way it could go well,
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having imagined every way it could go badly during an unusual nine day slump. all of that tells us we're trying to find our feet. we don't know where our feet are. the other thing that happened here is we saw short covering and i saw the beginning of something much more interesting that no one wants to talk about, u.s. sovereign credit losing its position since world war ii as the no risk asset. money started leaving for that reason, started a trend or momentum and people followed into it, and plugged it back into the world they knew before. we now live in a riskier world. our mri or risk in, proprietary 55, and 20 or 30 other metrics tell us the world looks riskier, certainty is down and we're trading like we know when is going to happen and it is good. my guess is we'll be one for two if we're lucky. good time to tap the brakes, be diversified and have a long-term strategy, not a short-term relief. >> all right. >> boris, final comment.
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>> just to add to that, max is right, the sovereign safety haven risk is pretty serious. and the more we go towards more inward, less trade, less -- the less the u.s. dollar will be a haven. >> max and boris, thank you. appreciate it very much. welcome back, everybody, to "power lunch." donald trump made his fortune in real estate. how will his presidency affect that industry? diana olick takes a look at it. >> the most immediate effect as we said in the last hour has been the big jump in mortgage rates. hitting 4% on the 30 year fixed for the first time in almost a year, that is thanks to the sell-off in the bond market. the rest of the trump effect will show up if he keeps his word on deregulating the financial system. mortgage lending has been tight due to big bank fears of putbacks and lawsuits. the cfpb has a lot to do with that. dave stevens, told me barring a
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change, it is hard to imagine we'll see much change in the near term. he also said republican leadership is not eager to see fha, the government ensured low down payment loan expand and we could see an fha rollback. then there are fannie mae and freddie mac, still under government conservatorship. their stock moved higher last week with some thinking they would be recapitalized and released. but donald trump said nothing about the two during the campaign and now we have a republican controlled congress and the mortgage giants generate billions that goes straight to the treasury. that money could be spent on the infrastructure projects donald trump promised. why mess with that. so far the trump effect on housing is that housing is a little more expensive today. back to you. >> diana, thank you. we're waiting for president obama to hold a news conference at the white house.
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what will he say today? what will he do for the final two months of his administration? we'll take you there live next on "power lunch." and now the latest from trading nation.cnbc.com and a word from our sponsor. >> a strong dollar is often viewed as a net negative to the economy. but that's not always true. while export driven companies will often struggle under a strong dollar because their products are less competitively priced abroad, consumers will benefit because imported products will be cheaper and because the u.s. imports more than it exports, from an economic perspective, a strong dollar is an overall positive.
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welcome back to "power lunc lunch". president obama will hold a news conference at about a quarter past the hour. and we will carry it live. john harwood is standing by at the white house before we get to the president to discuss what he may talk about and the remaining weeks of his term. sad news about the passing of your friend and colleague, host of washington week and of course the news hour. >> it's incredibly sad and
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shocking even though we knew that she had been sick for some time. i've nope gwen for 30 years. she worked as a colleague of my father's, went into broadcasting as i did. we've been working together me as aen appe panelist on her sho the last 15, 16 years. and, you know, she was so strong during the course of this illness even while she was undergoing treatment, but it takes your breath away. and i would expect president obama to talk about her at his new conference. gwen wrote a book called "the break through" that was about not just president obama but over african-american politicians. and she was a breakthrough person herself, one of the most accomplished people in all of journalism. and to do so as an
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african-american woman was all the more impressive. and we will miss her terribly. >> i think that you are exactly right there. we forget sometimes how different the times were in the '70s and '80s coming up through the business. and how the idea of an african-american woman covering the white house was -- today we think of it as normal course of events. at the time she was doing it, it was something very different indeed. let's move on to the president's news conference. this will certainly be one of the last ones he will have as president. how long do you expect him to talk, what will he likely be asked about, and what do you think he will say? >> well, i would expect this to be a full length news conference. an hour or so. in addition to offering a tribute to gwen, i would expect him to talk about his meeting last week with donald trump, about the new administration and his efforts to try to persuade
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donald trump maybe to back off from some of the pledges that he made during the campaign to roll back elements of the president's legacy. i would expect him to address the appointment not just of reince priebus as chief of staff, but steve bannon from breitbart as chief strategist. and given the criticism of steve bannon as someone who is a proponent of the alt-right, white nationalism, various terms applied to this, that sort of adds a special note of urgency i would expect to president obama's tone in talking about pry to go bring the nation together after the election. >> let's bring in david knock more are a of the "washington post" to talk similarly about what he height expect to hear the president emphasize.are a o post" to talk similarly about what he height expect to hear the president emphasize. i don't know if you were able to
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hear, but the roll what i thiwh topics, appointment of mr. bannon and mr. priebus and obviously other things of interest. >> this news conference is taking place just a few hours before the president leaves on what is billed as his final foreign trip to greece, germany and peru for a summit of leaders from around asia. and so i think foreign affairs also might be on the agenda because i think the president wants to send a signal not just to the folks in the country about sort of looking toward sort of a peaceful and orderly handoff of power, bialut also t the world that america will still be a leader did diplomatically and sort of maintain its alliances despite some of the rhetoric donald trump has used on the campaign trail. >> and lame duck session, what if anything will get done, david, you first? >> well, i think that the biggest overriding thing is to extend the government's ability to keep the government open, spending bill.
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but other than that, not a whole lot. the big trade proposal that president obama hoped to get done during the lame duck session appears for be off the table. >> and i agree. nothing but keeping the government open. no tpp and no merrick garland to the supreme court. >> and we are awaiting the president. "power lunch" will be back right after this. eese. trees? eese. xerox helps hospitals use electronic health records so doctors provide more personalized care. cheese? cheese! xerox healthcare services... ...soon to be conduent. that's it. how was your commute? good. yours? good. xerox real time analytics make transit systems run more smoothly... and morning chitchat... less interesting. xerox transportation services... ...soon to be conduent. about tempur-pedic mattresses... is that they contour to your body. it keeps us comfortable and asleep at night. shop our biggest event of the year, including all tempur-pedic mattresses. save up to $600, now thru november 29th.
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yess!!!! puppies! ooh! i love puppies! so do, i. actually...pets can teach important lessons abou- dancing! elmo loves to dance. okay then, let's dance. (everybody cheers) yeah baby! welcome back once again to "power lunch." i'm sue herera with this news
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alert. russia president vladimir putin has apparently according to a kremlin news release reached out to president-elect donald trump. the two once again talking, mr. putin congratulated the vehicle tore, mr. trump, on his presidential election, wished him success and also says that he is going tovehicletore, mr. presidential election, wished him success and also says that he is going to apply the principles of equality, mutual respect and noninterference in the internal affairs of each other's countries. so mr. putin reaching out to president-elect trump, they discussed a number of things including what mr. putin called the poor state of russian/american relations and they talked in favor of joint work to normalize and remove the direction of issues between the two countries. a rough translation from the tr kremlin news release, but once again mr. putin has reached out to president-elect trump. >> and of course the definition
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of noninterference, what constitutes internal affairs, may be defined very differently between moscow and the united states. whatever, it has been a rocky relationship. >> thanks for watching pow"powe lunc lunch". "closing bell" starts right now. welcome to the "closing bell." i'm kelly evans. >> and i'll bill griffeth. if they hold to schedule, we're about 15 minutes away from a white house news conference, a full blown one. president obama will be taking questions before his final foreign trip as president. he will be heading to europe, going to greece and germany and then on to peru for a summit of asia leaders. we'll bring you that event live as soon as it gets under way. >> after the bell, president-elect trump is reportedly considering dismantling dodd

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