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tv   Power Lunch  CNBC  November 16, 2016 1:00pm-3:01pm EST

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three handle. thankfully they had a good earnings report. just opened up the one in penn station, good for me, strategically. >> or bad. >> i get why people are short it. it actually worked as a short since it became public. >> good stuff. we'll see you tomorrow. >> scott, thank you very much. i'm tyler mathisen. here is what is on the menu of "power lunch" on this day. we have taken a wrong turn. so says bill gross, janus' big bond guy. you'll hear from vicente fox. a tale of two retailers. a pair of household names making two different moves. "power lunch" begins right now. >> tyler, you make my dreams
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come true. i'm michelle caruso-cabrera. three hours left in the trading session. dow on pace to break a seven-day winning streak. s&p 500 lower, but still within striking distance of an all time high. you can see the dow lower by 73. nasdaq in positive territory for a change. role reversal. higher by 17 points. oil making a huge about face on news of an inventory build. crude is higher by a quarter of a percent. it has been all over the map today. >> michelle, i'm brian sullivan. here is what else is happening at this hour. senate republicans re-electing mitch mcconnell as senate majority leader. senate democrats picking chuck schumer to be minority leader. that should be interesting. both donald trump and schumer are from new york city and know each other well. mortgage applications tumbling last week as rates moved higher. dropoff in refis accounting for a big chunk of that dip. and bob dylan says he can't make it to stockholm next month to pick up his 2016 nobel prize for
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literature, due to what he calls pre-existing commitments. that must be a heck of a commitment to not pick up your nobel prize. we have a busy two hours ahead. we kick it off with a big warning, from bill gross, sending a letter to clients saying we have taken a wrong turn in america by electing donald trump. bill gross joining us now on a first on cnbc interview. what did you mean by that? you say wrong turn, can you define that a little more definitively? >> i will. i think the turn would have been in the same direction if hillary clinton was elected, but to my way of thinking, the populist play list, you know, is reflective of a declining trend of real wages, relative to profits, both in the u.s. and globally. though i'll admit that immigration issues, which may reflect similar concerns, are as significant as well. that's the populist play list. if so, i think trump's proposals
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have to be analyzed with regard to how they address main street concerns as opposed to wall street concerns. and address after tax wages as opposed to after tax profits. and i simply have a sense that future legislation, we don't know, will focus on reforming corporate taxes and lowering the bite on the 1% as opposed to the 99. we'll have to see. the proposal to lower the corporate tax rate from 35 to 15 or 20 i think will be positive for earnings per share, like perhaps a 10% pop. but not so sure that it will be attractive for populists and their agenda. >> a lot of people agree to disagree with those sentiments. it is the new world we do live in, the donald trump is president elect and so now we have to adjust. the market has adjusted. what do you make of the 1 plus trillion dollar sell-off in mini
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bonds, the stock market rally, the big move in the dollar, the drop in the peso? oil has come down. it has been a tectonic-like shift. what is your position and more importantly what is your positioning from an investment perspective? >> sure. all of the things that you mentioned i suppose if one had known that trump was going to win, you know, would be a natural result of the victory, especially the muni bonds, and the rise in treasury bond yields based upon the potential for higher deficits and higher inflation. so, you know, all of that is reasonable. it is also based on an expectation that gdp growth will increase from the rather 1.5% level to perhaps the 3% or 4%. i simply doubt that. trumps' proposals in terms of fiscal spending are focused on
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not only tax cuts, but corporate infrastructure. and, you know, tax incented corporate infrastructure plans, which aren't necessarily the best way to go from my standpoint in terms of injecting money into the system and putting people it work. that's debatable. we'll just have to see. i don't think we're looking at 3% to 4% gdp growth because of structural head winds talked about with you for several years. but in any case -- >> you're skeptical, bill, it is tyler, you're skeptical of two things. your statement, in trump's case, lower taxation may lower gdp growth, not raise it. and elsewhere in your report, you say that instead of -- that you're skeptical of the idea that repatriating foreign held profits would lead to higher investment on the part of the companies doing the
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repatriating. would you explain both of those stances? i think they go to the heart of why you are skeptical that greater growth would arise from those two specific tax proposals. >> sure, thank you. that does go to the heart of it. you any, the effectiveness of lower corporate taxes and repatriation tax holiday which is probably coming are really hard to assess, but prior holidays, tax holidays, as in 2004, during the bush administration, led to little investment in the real economy, but $350 billion of repatriation and share buybacks and ce bonuses, et cetera. i ask why would corporations need to repatriate $2 trillion at a near tax free rate, 5% or 10% like in 2004 when the cash they now have is invested in share buybacks out of $500 billion clip and why do we need to lower corporate tax rates,
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which instead of the 35% as i mentioned is really only 23%. and among the lowest tax rate globally. so i don't think corporations are hurting. i think they got a lot of cash flow. what they require is some type of forward look that gdp itself will be 3% to 4% and therefore, you know, providing a productive rate of return on investment. i simply don't think that's going to occur. >> bill, the bond market has gotten hammered since the election. what do you do with that? i hear everything you're saying. does that continue? or doesn't it? how do you invest? do you assume it is wrong and if you're right, that's wrong, and you should go against the grain, right? or is it not? >> i think, yes, the ten-year has moved higher by 30, 40 basis points. i think justifiably so, michelle. but let me point out that it is still a global bond market.
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and that many central banks, japanese central bank and the ecb and the bank of england, they all have continuing programs in terms of buying back bonds and in some cases buying back corporate bonds and stock. the japanese rate, ten year rate, is pinned at 0%. and for japanese investors, it is an easy switch from ten year jgbs to ten year treasuries to pick up 50 or 60 basis points without a currency risk. >> so do i hear you don't think the sell-off continues? so, for example, like you just said, japanese buyers would step in and buy this ten year as they have seen the yield rise? >> i think so. i think we're at a plateau, michelle. and, you know, how long does the plateau continue? probably depends upon what the plans are, and how they develop
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through early 2017. but, yes, central banks are buying $180 billion a month. and, you know, that's pretty heavy firepower to date in the past week or so. it hasn't done much to keep interest rates down. but i think ultimately the two forces, you know, the trumpian force and the force from global central banks will neutralize each other at this level. >> so if i could boil down, and i know you won't let me put words in your mouth, but i'm going to try anyway, bill, is it your view that trump's supporters were basically snookered? in other words, the policies he is likely to pursue, specifically with respect to taxes, are not likely to deliver what he said, and, in fact, are more likely to continue the status quo favoring capital versus labor? >> i think so. and i don't want to come across as a bernie sanders democrat,
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but, yeah, i think when voters voted for the -- one or the other, that they voted for change. and trump represents the change, but in many cases, in terms of the stated policies, you know, the change is not labor friendly, it is capital friendly. i talked about corporate taxes coming down, i talked about -- or will talk about obamacare, the change in trade where supposedly it leads to more jobs in the united states by, you know, disavowing nafta or putting a 45% tariff on china, et cetera, et cetera. i wonder because basically manufacturing in the united states has been destroyed over the last 10 or 20 years and will take a long time to put it back in place, if ever. so i think they sort of got -- maybe not hoodwinked, but they expressed their frustration for
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the other candidate, for the nonestablishment type of candidate. and i think that will continue in terms of populism, but ultimately there has to be, if populism is to be validated, in terms of producing more money for wages as opposed to profits, you know, there has to be a selection not just in the u.s., but globally, that favors, you know, policies towards main street as opposed it wall street. >> very quickly, bill, the centerpiece of trump right now, his plan is going to be a trillion proposed in infrastructure. much of that will have to be likely funded by bonds. bond market has to buy them. no buyers for those bonds, no trillion dollars for the infrastructure plan. would you be a buyer of any infrastructure bond that is floated out there knowing what you know? >> sure. and there are bonds existing now. build america bonds. they came out with the obama administration and they were, you know, reflective of the higher yield and not necessarily a higher risk.
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but, you know, an american type program that put infrastructure back into the centerfold. so of course. we'll have another round of build america bonds and i would look forward to at that time given treasury rates to take advantage of it. >> bill gross, always a pleasure to get your views. thank you. see you soon. >> thank you, brian. michelle, thank you. >> thank you, brian. i mean bill. >> you're welcome. happy to be here. the best of times and the worst of times for these two stocks. those names ahead. and sticking with retail, 38 shopping days until christmas. and one retail giant says it is a primetime for deals. we'll explain when "power lunch" returns.
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hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.
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welcome back to "power lunch." amazon getting an early jump on black friday by a week. it is hard to believe that black friday is a week from this friday. this friday, amazon will offer a 20% discount on its amazon prime service, which offers members free two day shipping and access to video and music. i'm a member. only club that would have me. amazon shares slightly higher right now, as you see there, by $2.12. >> you are prime. retail, a tale of two retailers in today's session. target is popping following a
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monster earnings beat. lowe's is dropping on a bruising miss. michael laser covers lowe's for ubs, let's start with joe feldman who covers target. why do they do so much better than everybody expected? >> well, they really performed quite well. sales did come out slightly negative. the comp was negative .2 but the expectation was for worse. things improved subsequentially. merchandising initiative is resonating with customers. >> translate that. i walk into the store and see what? >> better apparel assortments, better home assortments and millennials like what they're doing in kids and baby departments and seeing adults that are buying women's apparel in the stores. so i think that's all starting to show through and that helped this quarter. >> millennials are starting to have babies, okay. got it. the stock has risen dramatically
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today. would you buy it here? what do you do with this? >> well, you know, they -- it had a very big run. our price target is $82. we see further upside for it. i think there is a lot of good initiatives ahead to come. they talked about hosting an analyst day in new york city the end of february. that will be next kind of catalyst where you hear more good stuff good their future. a lot of things they're doing on the expense side. a lot of ways they're helping to drive gross profit. there is good trends that are happening at target. >> so i'm looking at this six month chart and, whow it has taken off like a rocket in the last couple of days. look at that. i see that and think, wow, i think i missed it here. it is approaching recent highs. is there another name where maybe we might see a similar pattern as they report results? >> well, we have definitely gotten some good results, whoever had good results like dick's sporting goods yesterday, i thought home depot would have been up yesterday, you're seeing
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better trends for some of them. and there is a pop. the department stores last week, same thing happened, trends a little better, saw the stocks pop on that news. expectations were pretty low for target. i think there is still more room to go. >> all right, joe, thanks so much. >> sure. thank you. >> from highs to lows, michael laser from ubs here to talk about lowe's. good to have you with us. what is going right and what is going wrong at lowe's? >> thanks, tyler. what is going right, they're in a good market environment. home improvement spending continues to grow, up 6% in most recent quarter. the -- what is going wrong is that they're not drawing in as many customers as their competitor. and the market is comparing lowe's versus home depot. if you compare lowe's to the rest of the retail sector, this would look far better. still comping up nearly 3% growing earnings double digits and stock is trading at a modest multiple. this represents an opportunity,
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especially if you look out over a 12-month horizon. >> $80 price target on a stock selling at 66. what do they need to do to close that gap with home depot or fox what they're not doing right. >> well, i would say that, you know, their stores are in different areas. at the end of the day, retails are very local business. it is going to depend on how the overall activity is on a store by store basis. i'm not sure it is necessarily fair to compare home depot to lowe's. if we look at lowe's, based simply on the merits of its own investment considerations, the fact that it is going to produce 15% earnings growth, it has a tremendous amount of free cash flow, and relative to the multiple that it is trading at now, that's what we see as really compelling. >> that's good. those are good. 15% earnings growth, love that. love free cash flow. do they need to close stores? >> what they told us is they're looking at a variety of different initiatives to improve shareholder value.
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i think in this day and age where traffic is under pressure, traffic to physical retail stores is under pressure, all retailers are going to be very mindful of their physical retail footprint. and i don't know that lowe's is any more unique in that case. but their commentary that they're looking to improve shareholder value i think is encouraging and we'll hear more about it in a faw weew weeks. >> michael, thanks. appreciate it. still ahead, why corporate america might want to take a page out of tony romo's playbook. what the cowboys quarterback can teach all of us about leadership. that story straight ahead.
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leslie hansen is a business owner in the beautiful northern california coastal town of half moon bay. her shop odyssey sells products related to science and nature, like geodes and fossils. she'll encourage customers to shop small all holiday season. for more, watch "your business" sundays at 7:30 a.m. on msnbc.
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to tony romo offering lessons in leadership. this is the first time he's spoken out since he was named backup to dak prescott. here is what he had to say about the replacement. >> he's earned the right to be our quarterback. as hard as that is for me to say, he's earned that right. he's guarded our team to an 8-1 record and that's hard to do. dak knows i have his back and i think i know he has mine. ultimately it is about the team. it is what we preached our entire lives. >> wow. tough moment. >> he was put in that position. his owner said, basically, jerry jones, you're not the starter anymore.
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so -- >> that was gracious. >> it was gracious. disappointed, but gracious, absolutely. >> things you have to do at certain moments when you know the transition should happen and i give him credit. >> is that a political comment? >> no, it wasn't, actually. >> one of those moments like when drew bledsoe was injured and tom brady came on and that was the last we saw of bledsoe until he went and played then, i think, with the dallas cowboys. >> i will make a random guess, nothing to do with anything i know, i bet tony romo is the new york jets quarterback next year. >> i wouldn't be surprised. there or denver. >> do they need them? do they need one? >> the jets need everything. >> okay. coming up, former mexican president vicente fox has openly criticized donald trump during his run for the white house. really strongly. unbelievable stuff. guess what? as you know, donald trump won. so what does vicente fox say now
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that donald trump is president elect. he'll join us after the break. and divided on united. a pilot intervenes when a political argument breaks out on his plane. what he said coming up. ous mome? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis.
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hi, everybody. i'm sue herera. here is your cnbc news update for this hour. a minnesota police officer has been charged with second degree manslaughter in the killing of a black man in his st. paul suburb. jeronimo yanez shot the man. workers removed the trump place signs on the three building apartment complex in new york city today. nearly 600 residents signed an online petition asking for the sign's removal, some calling the trump name an embarrassment. apple's latest product went on sale today, but it is not an electronic device, it is a book. the title, designed by apple in california. the book is filled with 450
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photographs of apple products, chronicling the company's 20 years of product design. comes in two sizes. small for 199, perfect for a stocking, and big for 299. and the man that is reportedly the heaviest in the world is preparing to undergo treatment in mexico. 32-year-old juan pedro weighs 1,102 pounds. he's largely bedridden. threats to his health from diabetes and organ failure prompted the hospital visit. we wish him good luck. that's the news update at this hour. back to you. >> thank you very much, sue. let's look at where the markets stand now. they're mixed. the dow taking a breather after seven sessions of gains in a row. off about 80 points now. the nasdaq is the best performer for a change. it is up 12.75 at 5288 and change.
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financials, which have been doing so well lately, they are moving the other way today. despite today's drop, the dow is on pace for its second best month. of the year. donald trump appearing to back off on his threat to build a massive border wall between mexico and the u.s. here's what he told 60 minutes. >> are you really go to build a wall? >> yes. >> they're talking about a fence in the republican congress. >> sure. >> would you accept a fence? >> for certain areas i would. but certain areas a wall is more appropriate. i'm very good at this. it is called construction. a fence would be -- could be some fencing. >> meanwhile, former mexican president vicente fox not letting up on his criticism of president elect donald trump. he joins us now via skype from his office in mexico. sir, good to have you here. >> a pleasure. a pleasure, thank you. >> you were so ardent in your
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criticism, which is extremely caustic of donald trump while on the campaign trail. when you found out he actually won the election, despite your efforts to dissuade americans to elect him, what do you do? you're going through the five stages of grief? how did you react? >> well, i think it is time to talk business, with our relationship, mexico and the united states, and people to people. if he goes ahead with what he proposed to his electorate, the first affected and loser will be the united states and the u.s. economy. if donald maintains his plans to build the wall, to deport mexican immigrants and not penalize american companies that invest in mexico, the first affected and loser will be the united states. that's what he has to learn and i hope he changes his attitude
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up until now. >> there have been a lot of advocates for trade on cnbc for sure. and for not bulling the wall. if you were still the president of mexico, what would you do right now? >> i think that's what our president has to do. he has to get a meeting with him. he has to confront him face to face. he has to have clear information of what nafta is all about, that he doesn't seem to know. not the same thing doing business for a corporation than running a nation. it is not the same thing to trade, import or sell through a corporation, then the trading in macro economic terms, which is a high benefit to both of the players. united states and donald has to understand that if he affects nafta, he will be affecting
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amount of jobs in the united states. what mexico imports from united states accounts to 10 million u.s. direct jobs to u.s. citizens. he would lose that immediately. my question is when is he going to replace that? >> president fox, what are they talking about in the halls of power in mexico, privately? >> well, preoccupation is the name of the game today. because this guy is -- nobody knows what he's going to do. and so uncertainty is a terrible ingredient in doing business. if you are general motors and you invested in mexico, so many billions of dollars, if general motors has found a way to be competitive, that he lost, five years ago when they went broke, if all of that has been done, you cannot erase doubt because
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one guy has to change it. so there are so many interest -- so many good things we have built together that it would just have to continue. i hope he will moderate at the very end he has two options. one is to become a reasonable guy. or the alternative is to go crazy. as he was when he campaigned. and we are ready to play whichever game in mexico. we are prepared, we're the 12th largest economy. we have extremely good fundamental of our economy. we have a very strong trade balance. one of the largest in the world. we have 43 trade agreements with other nations. so we're ready to play the music, the game that he will select. he's going to make a big mistake. but working on that wall, by
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throwing out mexicans, that brought competitiveness to u.s. economy, i ask him who is going to -- >> we want to get more questions in here. hold on one second. >> okay. >> do you believe fundamentally he's an authoritarian, an autocrat? do you believe he's a racist? if you believe either of those things, how could people in power in mexico do business with him? >> right now i think he's an illegitimate president of the united states. >> why is he illegitimate? he just won an election. >> he would have to -- he didn't win the general election. he's got too many people against him. and they have shown out on the streets. but anyway in mexico, we are also -- we can be rude also. as i said, we're strong now. we're going to defend our people. whatever they are. in mexico, or outside of mexico, in the united states. we're not going to let this guy
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offend them anymore, to offend the dignity and to deny the enormous contribution they made to u.s. economy. >> did you -- were you relieved in any way when you saw the interview on "60 minutes," i assume you did, when she asked, are you going to round up all these illegal immigrants? he said we're going to focus on the ones who committed crimes. and he talked about the wall, maybe a fence in some places. he appeared to already to be walking some of that back. does that give you hope? >> how can you be president of any country if you don't have security, if you don't find criminality. of course he has to go after whites, minorities, african-americans, mexicans, muslims that violate the law. that has to be done. we understand that. but to speak about 3 million, to speak about 11 million he doesn't know, even united states
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security agencies don't know who they are, don't know where they are, so this might be very dangerous to just start kicking out the first one that crosses him, in front of security agents. he better be careful. that cannot be done. >> what did you think of the american people when they decided this? >> well, i think that american people, the ones who voted for him, he cheated them. he told them so many promises, like a real populist, but he will never be able to comply. i think we should register today the unemployment rate in the united states and compare it with next year's. i'm sure that the very good condition on employment that president obama is leading he will not sustain. let's check next year whether he imposes a 35% tax on imports of automobiles to united states, i
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don't want to speak again about a bankruptcy for general motors, ford motor company. they cannot compete manufacturing in the united states. this guy has to open his eyes, invite real people, not the ones he invited, real brain people, talented people, and experienced people. >> certainly the numbers will tell the story and there will be plenty of people looking at exactly what you pointed to, unemployment rates, growth rates and so forth, to see whether whatever he is able to get done. and i take your point that a president's power is not unlimited. and there are three branches of government here. if the u.s. becomes a less reliable trading partner or less robust trading partner with mexico, what does mexico do? who takes our place? >> okay. mexico has 43 trade agreements. we have become through nafta very competitive. nobody can produce and
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manufacture right now better at a lower cost and higher quality than what we do in mexico. i just came back from dubai. and from the emirates visiting and they are more than willing that we build a bridge and we're going to do it here in centr central -- next month, how can we trade among ourselves without the united states? so many, many opportunities will rise. south america, central america, europe, we have a trade agreement with europe. so, yes, we're accustomed to trading with the united states because it has been good for us, but we don't have that, we will have work to trade. >> thank you for joining you -- joining us. >> a pleasure. thank you. good luck. >> vicente fox. skype has gotten really great over the years, huh? holy moly. >> very dangerous for a president of a former president of a company to call our president illegitimate. >> yeah. >> i held my tongue.
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tensions over the election are running high. >> it is our system. >> can you imagine if george bush said the current president of mexico was illegitimate. >> he didn't understand the electoral system, clearly, when he said he didn't win the general election. >> tensions are running high. how high? 30,000 feet high. united airlines pilot had to intervene when a fight broke out on friday. >> we're going to be in a metal tube at 35,000 feet to bring up politics. okay. i understand everybody has their opinions. that's fine. if you support him, great. if you don't, i understand. however, we're out here to go to puerto vallarta, have a good time, and what i do ask is that as people we have the common decency to respect each other's decisions. >> here, here. >> well, the pilot went on to say if anybody has a problem
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with this, they can take another flight. nobody did. the flight went on as scheduled. i think that was emblematic. you look at that video and see there is a couple of people arguing, the majority of the people on the plane were not. it is kind of like analogous to the internet. couple of people stir things up, most people are fine in life. and are sane and rational. none of them are on twitter anymore. >> would you please be quiet and leave the rest of us alone? yeah. gold prices closing for the day. dominic chu tracking it today. >> gold prices are falling, just about flat now. the dollar surges to a 14 year high. that's putting pressure on the gold miners etf. down 2% today. you have anglo gold, newmont, gold corp., all of those names lower on this day. this month the gdx is down by 14%, lost a third of the value since the highs in august. still, gold prices and gold
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miners a focus given the election outcome. >> thank you very much. cadillac sales red hot in china but struggling in the united states. we'll check in with cadillac and ceo live on the l.a. auto show. first, to rick santelli for today's bond report. >> one week of tens tells you a lot. we have run up against some resistance. and intraday around 230 on a closing basis where we settled last year 227. one month of tens, yes, a big move. we can debate why. here is something you ought to realize. look at one month of the spread between our tens and gilts. look familiar? look at one month of spread between our tens in bunds. look familiar? if we are going to go up, and the rest of the world's yields aren't, the way we all went down together, that is hugely significant. and the dollar, the dollar is truly king. if you look at one month chart, excuse me, let's go to april of '03, i'm looking at 100.46 last.
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anything over 100.33 is going to be a new high close going back to '03 and that's been the one market that has not paused at all. "power lunch" will return in two minutes. 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. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.
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consumer trends are shaped and it is a market that we pay a lot of attention to. >> china is the market so many people are talking about had it comes to cadillac. sales there are red hot right now. you pointed out to me it is very similar to the u.s., isn't it, in terms of what is driving that demand now. >> we have in china interesting situation in that very strong demographic shift, new young buyers coming in, average age 34 years old and cadillac brand and its pedigree is resonating well. but very extensive investment in the chinese market with expansion of dealer networks and also localization. >> shanghai. >> in shanghai. brand-new state of the art cadillac plant and all of these things are really fueling the growth that we have seen in china. >> and yet here in the united states, your sales have been struggling relative to china. in part because of what you're seeing with the sedan market. you drop the third shift, where
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you make the ct 6, not the ct 6, but the -- >> cts. >> cts and not that demand for sedans. what is happening here? >> in the u.s. market, it is a global phenomenon, but pronounced in the u.s., there is over the last three years a very sustained shift from passenger sedans into crossovers and suvs. and the majority of the cadillac portfolio is -- with sedan entries. we have one crossover, one suv. so the development at the grand rapids plant is reflecting that reality of the market, but at the same time, we have got both the xd 5 crossover and the escalade suv running at three shifts. we created new opportunities. it is a reflection of the trends in the market. >> i know tyler has a question for you. go ahead. >> i'm curious, what your mix is, your product mix in china, where you're doing so well.
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do you sell prey scisely the sa makes and models there that you do here? do you have different ones? bigger ones? smaller ones? what? >> no, the range is the same, with the exception of escalade, which we do not offer in the chinese market or cts. so the big volume drivers is ats, xds and now with the introduction of xd 5, our new crossover as a locally manufactured vehicle in china for the chinese market, that is able to capitalize on the strong consumer demand and the big expansion that is taking place for crossovers. >> one last question here. when you look at the pinnacle program, your program for your dealers saying we need you to invest in your dealerships, so that they're more competitive with the other luxury dealerships in the market. how long will that take before you start to see the fruits of that investment so that people, when they go out in the market say that cadillac dealership is as nice as that bmw or whatever
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dealership it might be. >> first thing i would say is that we have a very large and diverse dealer body in the u.s. we have about 180 stand alone exclusive cadillac -- that are ever bit as nice as our peer group. what pinnacle is trying to achieve is to kind of contract the variability in the ownership and customer experience at our stores, so that all can be supportive of the kind of brand environment we feel is cultivating the right brand experience for cadillac. and it aims to set image appropriate standards for all our dealers, and then reward them very handsomely for compliance. >> global head of cadillac at the l.a. auto show, cadillac, if you saw the growth numbers in china, we showed them to you earlier, pretty remarkable. think about this, just starting to expand the portfolio of suvs and crossovers there. when that happens, interesting to see what happens with sales there. back to you. >> certainly.
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thanks, phil. stocks are under pressure now, bob pisani is on the floor of the nyse with more on why. >> it is a consolidation day, not a bad thing given the gains we have seen. take a look at the sectors. banks have had the biggest gains and they're the ones that are under the most pressure, that makes sense. industrials have nice gains. energy having a hard time with oil around 42 to 45. health care a little weak. telecom interest rate sensitive, doing better today. the banks, no surprise here, look at bank of america. these stocks have been up, some of them double digits in the last seven or eight trading sessions. so no surprise we're getting a little pullback, a number of the big analysts came out and downgraded some of the big banks in the last few days. baird, and bernstein, and morgan stanley and guggenheim all downgraded big key secretary electoral and money center banks in the last 48 hours. sectors, well, we had big gains, for example in pharmaceutical stocks recently. metals and mining stocks, oil service names, and home builders, they're all down a little bit. home builders, mortgage yaps
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were down on higher rates overall. look at the s&p. since the election, we're up 2%. this is a consolidation in the last two days. it is healthy for the markets to move sideways for a few days after we had big gains in the last week. no signs of big deterioration, good for the markets now. back to you. >> all right, we'll watch for more of those good signs, thanks, bob. we have four stocks in focus. your daily dose of street talk is straight ahead. [vo] quickbooks introduces jeanette.
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and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. street talk today. michelle, kick it off. >> we're going to start with disney. walt disney. deutsche bank upgrading to a buy from hold. they remain cautious up to this point due to weakening performance in cable and consumer businesses. but they're more confident in disney's outlook. the analyst says espn subscriber numbers improved and they expect solid home entertainment performance from disney. the price target $112. 98.89 here. >> wall street can't make up its mind yet. upgrade last week, then downgrade, now this. second stock, juniper networks, goldman sachs bullish, more
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bullish. they add juniper to their conviction buy list. the stock has underperformed by 20% in the past year. but the analyst believes the long awaited upgrade to the product cycle is here and should drive meaningful upside and estimates and reaccelerate top and bottom line. confidence in this because seeing a jump in deferred product revenue. their target on jmpr, 31 a share, 20% upside. >> next up is bank of america. barrett equity research downgraded bank of america to neutral. firm says despite the recent post election rally, tremendous, they're waiting for more signs of actual structural improvement in the sector. analyst says they like bank of america's improving operating leverage, steady risk adjusted growth, and more prospects for more aggressive capital return potentially coming. but they would wait for a larger pullback before adding to any positions. in the same note, barrett is downgrading capital one and bancorp. >> stock up 41% in six months. wow.
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>> they're waiting for the -- >> only morgan stanley has done better, among the really big banks. finally, smaller cap call of the day is ingevity. they make carbon that controls auto emissions. sun trust getting more bullish, raising the target price by $6 a share to 58. 18% upside. the analyst says over the next few years, the carbon business should benefit from a combination of tighter auto standards in china, talked china in cars, cadillac ceo and easier and mpg rules. overall, five analysts cover the stock, sun trust even more bullish on north charleston based ingevity. that's street talk. back to you. >> i like how you did that. something not adding up at facebook. and it has advertisers paying close attention. that story coming up straight ahead as we close in on hour number two of "power lunch."
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welcome to the second hour of "power lunch." i'm michelle caruso-cabrera with brian and tyler.
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two record-breaking winning streaks are in danger now. the dow has been up for the past seven sessions. the russell 2000 small cap index up for eight, but both are lower now. dollar index, though, keeps on going, hitting the highest level in 13 years. that rally unabated. >> here what's moving now, advanced microdevices soring 10% on pace for its fourth straight day of gains. square going the other way, you see advanced micro up 11%. square down 2%. jack dorsey planning to sell up to 7% of his shares in the mobile payments company. and lululemon under pressure. credit suisse downgrading the yoga wear retail, increasing discounts among other factors for that. now let's talk about health care. the fury over drug prices may be off the headlines due to the election. but the issue nowhere near to being resolved. high drug prices are still a problem. listen to how patients paid twice in the current system.
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>> generic products, the -- it works very differently in the system than brand products. the system incentivizes higher prices on the brand. and if you don't play in the system, if you don't -- in the system that is broken today, your products aren't going to get to patients because of the lives covered by all of middle men you just talked about. so, yes, my point is patients are paying twice, full retail price at the counter and higher premiums. >> the blame game of why they're so high continues. let's keep trying to get answers and bring in dr. robbie welch, partner at mtn and meg tirrell joining us as well. looking at your notes you use terms like frictional cost. it can get complicated. for the layman that is not a drug market professional, why are drug prices so high in america? >> the system is incredibly complex, opaque, messy, and it
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is broken. the three factors which are driving the issues that we have within the system are, number one, we don't have value-based pricing. number two, we have a lack of tra transparency in the system. >> what. >> what does value-based pricing mean? >> let's turn it around. the pricing system we have in the u.s. is totally different of every other pricing system. manufacturers can set their price at whatever they want. essentially they set their price at whatever the system will bear. the other way of looking at drug pricing is, hey, let's have a look at how much benefit i get out of this drug, and cost, price the drug accordingly. >> if i follow that rational, a life saving drug should be extremely expensive. >> indeed. a life saving drug should be expensive. but there is other drugs which change the quality of life, the
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quality of life, for a long period of time. those can also be highly priced. drugs, often diseases, can be highly priced. >> how do we get here? >> we got -- the system has evolved. remember, u.s. drug pricing system. >> no one in this country heard of a pbm, 10 or 15 years ago. did they exist? >> they started to evolve around 15 years ago. they evolved because of a simple concept of prices were set by the manufacturers at whatever level. there has to be a check within the system which allows a correction for high price drugs. that's where pbms came in and one of the key components of what pbms do is try to reduce cost to be more aligned with the benefit. that's a good point of the system. >> one thing you put out in your note today, 88 pages, this is what it takes to start to understand the drug industry, you point out frictional costs and talk about how a pharmacy benefits manager is incentivized
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to keep driving the prices up. can you explain that dynamic? >> they try to do that by rebates which you heard a lot about. that's a good thing. the issue is the pbms keep a significant portion of those reba rebates. that has two problems. the fictional cost. number two, it puts conflict of interest into the system. >> the rebate goes to whom, to the pbm? >> some goes to the pbm, some passed through to the consumer. >> doesn't the pbm -- they want to get a higher rebate. don't they have incentive to have the drug company raise the price? >> absolutely. they have incentive to drive higher prices and higher rebates. >> the mylan ceo was saying -- >> so the pbms would argue they are able to pit drugs against each other. hepatitis c, competition there, they were able to ring giant
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rebates out of gilead who hasn't raised the list price of their drugs since introducing them. your proposition says they don't. do you advocate get rid of the pbms all together? >> if you have a system where someone can set the price of where they want, there has to be a check within it. the pbms keep a significant portion. $15 out of every $100 of the list price drug goes into players within the system, middle men in the system, and not to the manufacturer. >> delta is short for change, right? >> exactly. >> there could be a change to the system, one thing you think could improve things, what would it be? >> i would say has to be two things at the same time. number one, the value assessment of a drug, the cost benefit has
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to move to the manufacturers primarily and number two, this is perhaps a bigger change, we got to see rx benefit. >> that's prescription benefit. >> exactly. choice and transparency to the consumer put into place. a consumer doesn't have choice about his benefit level right now. >> other countries don't have this problem issue because -- >> they don't have the middle men. and -- >> single payer. >> single payer and the cost benefit assessment is done at the time of pricing, rather than through this hugely complicated mechanism. and we're talking about price. got to think about access as well. we're having the same problems as other countries, and patients don't have access to the right product because of this. >> thank you for joining us. >> thank you. >> thank you for joining us, meg. >> my pleasure. >> thank you to everybody for joining us. >> okay. facebook's ad numbers not adding up. julia boorstin is looking at the latest headache for facebook. >> facebook revealing that it
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overstated three metrics to brands. in doesn't impact facebook's revenue, because ad pricing metrics are not changed, but the mismeasurements are significant. the measure of how many people were exposed to brand posts over a month will be as much as 55% lower. to reassure advertisers, facebook is making changes. increasing third party verification, working with likes of nielsen and com score and a measurement counsel with markers and agencies. saying they have made a strong commitment to transparency, but we want to make sure facebook moves toward accreditation. anthony decliemente says he doesn't expect this to affect revenue saying it has been balanced, but they said this issue may create near term trust issues. michael cassen agreed this won't hurt revenue and while
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advertiser are unhappy, they are reacting positively to facebook's efforts. >> let's bring in mike jackson. what do you make of this? this sounds -- if i'm an advertiser, i would be furious. >> well, you know, there are a couple of things going on. one, facebook is a very effective medium for advertisers, specifically those brands that are trying to make the shift from being a mass market broadcast television advertiser to a social engagement brand. the brand is convinced it works, buttransparency and clarity is important. the one thing that facebook has done over the last five, seven years with the new leadership team is they have engaged brands
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directly. and a lot of the products that they have created are literally in collaboration with, again, major brands like amex. you have a dialogue going on there. they're happy with the results. but, again, you look at pricing, in this whole digital space, the lack of clarity and integrity around what i'm paying for versus the results that i'm achieving, it is a gray area, it is fuzzy. and google and facebook really need to step up and lead in this kind of digital advertising space. >> julia -- >> i think there are a couple of -- it seems like there are a couple of issues here. facebook has been accused of being a walled garden, transparency is of utmost importance to advertisers and ceos and the ad agencies. it seems like this is -- facebook's biggest effort yet to take down the walls around the gordon and engage with the third parties in terms of measurement.
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it seems like the question moving forward is if facebook is working well enough and if the moves toward transparency are significant enough to overcome advertisers' annoyance about the mi mismeasurement issues. >> you're correct. because the word you used is annoyance. this is becoming a point of frustration for the partnership. and, again, i do believe that facebook can combine the whole negotiation notion of protecting data, very private, very rich and confident information they have on the platform. i think there is a way to protect the integrity of that and give their advertising partners the confidence that as this shift continues to move forward, they're happy with the engagement model and the returns and there is clarity and confidence as it relates to the numbers. >> michael, facebook's valuation
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is more than exxon or johnson & johnson because people think they're going to take over the world. we learned a lot of the news on facebook is fake. we're learning a lot of ads on facebook may not work or viewed to the point that a lot of people thought they had been. >> i don't think the value proposition has been diminished. but facebook is the global medium for sharing and engaging with consumers, with news, with brands, and it is only going to get bigger as we move forward. they went to that trough where they weren't growing and now as you said, their stock is exploding. and they're dealing with what i call significant growing pains with the platform. the fake news issue is something they have to wrestle to the ground. there is all sorts of ways, technical ways for them to do that. they need to provide that filter of integrity, and, again, when
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it comes to the folks paying the bills, i'm telling you, all an advertiser is looking for is clarity and confidence. if i advertise on facebook and i'm american compreexpress or w, i'm seeing significant results. >> okay. we'll see. thank you, we appreciate it. >> thanks, everyone. there are many questions about donald j. trump's proposed policies and how it might affect the economy. let's focus on two sectors that go together. not peanut butter and chocolate. railroads and coal. >> we're in the chicago metro area. this is the rail capital of the country. a quarter of all free trains coming here. i'm going to send it over to contessa brewer, live in ohio, in the heart of coal country.
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>> donald trump won over voters in mass with his promises to revive this industry. the question is, can he? i'll tell you about the specific expectations the coal industry has for president elect trump right after this on cnbc. ♪ ♪ is it a force of nature? or a sales event? the season of audi sales event is here. audi will cover your first month's lease payment on select models during the season of audi sales event. (bing)
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today, we have morgan brennan riding the rails outside
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of chicago and contessa brewer on the banks of the river in coal country in ohio. we start with morgan brennan. >> hey, brian. we're at csx's bedford park facility, 22 trains loaded with 1300 containers moving through here daily, 26 miles of track. this is a huge facility, privately funded by csx and highlights the fact that the freight railroads maintain their own infrastructure. their own network. they're on track to spend $26 billion this year alone. that being said, even so, if the incoming trump administration does roll out an infrastructure plan, freight railroads could benefit in three key ways. first, we have better connections. for example, here in the chicago area you got all the major freight railroads meet, they do so alongside passenger and commuter rails. and can cause a lot of congestion. if you see private public partnerships that create more flyover bridges, that could minimize the hours that some trains wait at intersections and boost service.
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second, you got more freight demand, as building materials and other commodities have to get transported for all the projects around the country. third, the prospect of more business friendly regulatory environment. that's something that csx says could unleash new opportunities. >> for us, one of the key things is that we are allowed to build -- we need to build and we see a lot of extra tape, so to speak, to go through. it can sometimes take up to five years to build certain projects. >> so in speaks to a number of projects, everything from double tracking existing roots to raising the clearance on bridges, particularly in urban areas to more hot button contentious projects proposed, namely on energy. crude by rail and coal terminals proposed on both the east and west coast. but, of course, this potential -- this promise of infrastructure spending, still a lot of question marks, a lot of details that need to be sussed out. in the meantime, we have seen a
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number of the stocks including csx trading at highs on part of the prospect of more infrastructure spending. guys? >> over to contessa, right? >> that's right. what does coal country want to see from president trump? contessa brewer in ohio. >> the trains are running here too, equally important right alongside the trucks that are bringing in the coal that helps power the nation. this is an area where the people who worked in this coal industry helped power donald trump to his victory. they liked his promise to end the so-called war on coal. >> i'm praying that he may be able to deliver to the good people. i expect him to kill the paris climate accord immediately. >> murray also wants president trump to appoint a supreme court justice who will abolish obama's clean energy plan, but that's not going to address all of coal's challenges. >> in my mind we have seen a
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perfect storm of three factors that have come together. basically at the same time. that have put tremendous downward pressure on coal demand. three factors, environmental regulatory climate, natural gas boom that lowered the cost of natural gas, and also weak international demand. >> murray says that trump could help coal compete on a level playing field by opening up 20 ports to export liquefied natural gas. by doing that, he says they would lower the supply available of natural gas in this country and help coal compete for customers, the power plants that makes coal cheaper and in comparison to liquefied natural gas and hoping that will happen very soon. >> thank you very much. another day closer to the inauguration of president trump and more questions now surround his transition team and administration. john harwood joins us now. what is the latest? >> a lot of comings and goings at trump tower in new york.
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there have been fewer concrete developments coming out than there have been reports of turmoil within the transition. most notably the resignation from the transition team of mike rogers, former chairman of the house intelligence committee, his former colleagues on capitol hill are looking at this with some concern, but hoping that the trump team will turn it around. here is john thune, the third ranking senate republican. >> you got a lot of people trying to do a lot in a very short period of time, positions to fill. it really is like taking water from a fire hose. i think that this transition is certainly no exception to that. i think it will be -- they'll find their way. >> now, we thought there might be some announcements today because eric trump, when going into trump tower this morning, donald trump's son, said he thought it was likely there would be. but kellyanne conway, the campaign manage, just recently talked to reporters and said she did not expect any announcements today. >> still a lot of confusion at
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this point. okay, john. we'll watch it go on here. thanks. the dow 7 session winning streak is in jeopardy today. is the trump rally over? "power lunch" will be right back.
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the trump rally stalling a bit today. is president elect trump a bullish for stocks? let's bring in kate warren and lowell ura at bmo global asset management. welcome to both of you. kate, are you optimistic? do you think the stock market will be higher one year from now than it is today? >> yes, i am optimistic and i think stocks will move higher but bumpy along the way. >> main driver will be? >> the main driver will be higher expected growth because what we're seeing is a focus on stimulus policies, things that will help economic growth and those help stocks.
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>> you agree? >> we would largely agree. i think there a lot of things going on, not just stimulus, but also favorable tax environment, you've got -- you've got trade agreements that i think perhaps are potentially viewed as a greater risk than potentially they might actually turn out to be. and so we think some of the concerns that people are facing are perhaps overplayed. >> because you think that the -- that those trade agreements will remain more in tact than not? >> yeah. i think that the new administration is going to be very, very careful in using executive powers to put at bay some of the rhetoric put forth during the election. so we know that china will play tit for tat with the u.s. administration and that's going to scare the administration when orders go from boeing to airbus. >> here is the thing. the inauguration isn't until
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january 20th. we don't know a lot until then. how much more of a vallrally cau get before you know what they're going to do? >> i think you're correct. we don't know the policies, all we have are expectations based on the fact that most of the commentary has been progrowth rather than anti-trade or anything else. so do i think the rally continues? yes. but i think at the same time you are going to see other policies that make investors a little more concerned. i wouldn't say it is all just focused on the progrowth. >> the rug could get pulled in -- on certain sectors, stocks based on when we learn more about what the new administration might or might not do. where would you place your sector bets? >> i would say on the combination of those that benefit from stronger economic growth because i think regardless of the other things that happen, we'll see a pi
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pipic pickup -- >> like? >> consumer sectors. >> make some money. what do they buy? >> they buy u.s. stocks, they stay awith aay from european st. one thing this election has done is force us to lose our focus on what is going on in europe. and the next several months, you have very significant events going on in europe, starting with the italian election next month, the dutch election, the french election, and the big election at the end of the year is what is going to happen in germany. you have a wholesale change in europe and particularly the eurozone. so we're losing focus on overseas events that may very well impact u.s. investors. our long-term view is, yes, stay bullish but look to add on weakness because of what is going on outside the u.s. >> lowell, thank you, kate, thank you. appreciate it. "power lunch" will be right back.
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i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. hi, everybody. i'm sue herera. here is your cnbc news update at this hour. bill de blasio met with president elect trump at trump tower a bit earlier today.
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the mayor said he raised new yorkers concerns about trump's campaign rhetoric. >> i thought it was very important, particularly as the president elect begins his transition for him to hear the voices of the people. and to get some perspective from outside the transition bubble to understand what is being said in the streets and subways of our city. >> meantime, kentucky senator mitch mcconnell will remain the senate's top republican in a unanimous vote. senate republicans re elected him to senate majority leader. no senator publicly mounted a challenge. >> the flight cap that american aviator charles lindbergh lost while doing a loop in a flight above paris in 1927 went up for auction in that city today. auctioneers say it could be worth up tole $85,000.
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back to you, ty. check out what happened earlier this morning to trump place in manhattan. crews removed the trump name from the building. no longer trump place, i guess. renamed for their street addresses, 140, 160 and 180 riverside boulevard. on the west side of manhattan, very prominent buildings. residents of those buildings had been demanding a name change. sam zell, whose company operates the building, says the name change was in the works for a while. >> in the process of zealing with this for over a year. our goal was we have no interest in having any political position on anything. once mr. trump made the decision that he was going to enter the political scene, we looked at it and said, you know, we don't -- we just want to be neutral. we don't want to have an opinion. and this was part of an agreement we had with him, the
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agreement has expired and we're basically renaming the buildings according to the street. >> on a separate but related topic, three nba teams deciding not to take in trump branded hotels in new york city and chicago where they previously had stayed in the city. >> specifically, reports that the tenants demanded this change. said, no, this has been in the works for a long time, justify the minu -- just the minute he became political, we didn't want it on there. >> moved ahead. >> let's stick with real estate, diana olick is joined by a man who is big in miami when it comes to real estate. diana? >> that's an understatement. we're at sls brick, a brand know condo and hotel tower, luxury all the way, that is the first
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actual collaboration between hospitality mogul sam nazarian and king. this is a new brand for you. many properties in development here in miami and more internationally. given the global volatility in economies, brexit, softening on the luxury end, you still think this is a good bet? >> yeah, i think miami is a sweetheart of the world. we have seen the slowdown on demand on south american buyers but still coming. forced us to go to new markets, to turkey, italy, china, and we find that the word miami is still magic, still getting good number of buyers. we hedged against a downturn by acquiring very large deposits. we leverage is not taken part now, like it did in 2009. so our buyers have 50% nonreturnable deposits. so we fell very strongly about
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the market. and we feel very strongly about miami. and the long-term, i don't think there is a city like miami with a future so rose why i. >> we first met, it was during the housing boom, you were building thousands of units and said the sky is the limit. you spoke again during the crash and said, well, maybe we made a few mistakes. we have seen prices go down. we have seen sales go down in miami. and supply is growing exponentially. you have, what, 15 buildings going up here. are you concerned that some of your investors, even if they put 50% down, might walk away? >> well, i'm always concerned. that's my business. i wake up every morning thinking negatively. but i think we're very strong right now. put it this way, we just started closings in this project, which is a project that is a luxury project, that sold very well, we're 100% sold. and less than two weeks we closed 100 units. and not one buyer, or the other
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400 that are still waiting to close, i have expressed any desire not to close. so we find that people know that miami is still a very good value. miami is still selling condos. and the same project in new york, for example, in hudson yards is $3500 a square foot. so international buyers still think of miami as a very good buy. we have grown tremendously. >> but we have to talk about the elephant in the room more. on the pool deck, our presidential elect, fellow developer donald trump, you have called him a friend, you have been very close with him for years, but you did not support him in his run for the president sy. tell us why not. >> i'm a democrat. i believe global warming is an issue. i believe totally different about immigration than he does. i believe in free trade. i believe nafta has been good for the country. i believe that, you know, in social welfare, i believe in public health.
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and those are some of the things that he doesn't believe in. so we can be friends, like i told him, but i couldn't support him because i supported the ideas, you know, the politics of hillary clinton. and now he is president. so we have to come together. we have to unify this country. that's the most important thing. and i immediately wrote to donald, to president trump now, president elect trump, saying that it was a time for unity and anything that i could do to help him that i would help him. he is our president and we have to gather, you know, around the troops around him. >> to you think miami is such an international city that his presidency, his administration, immigration, with construction workers, that you need so badly here is going to have any effect in. >> i think that donald is a business man. i think we have done four or five buildings with, you know, president elect trump. he understands because we made
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presentations together to foreign buyers the importance of foreign investments in the growth of cities like miami and new york. so i think he will take all that, and consideration, and not do anything that in any way will harm, you know, the growth, because the whole campaign has been about jobs and growth. and disturbing that would be counter to what he proposed and he understands world trade, he understands business. so i think that he will be good in that way. my only concern is foreign buyers feeling because of the rhetoric of the campaign that there could be change in visas or change in immigration, and they would be less, you know, less protected here. and i assure them that i think president trump will do nothing to let those people with money, that want to invest in the united states, to come to the united states. >> diana, a lot of these markets appear to agree with you.
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can i ask one question before you let him go? big rally on the stock market, stalled today, but what about the very sharp rise in interest rates, albeit off low levels? is he worried about that? >> our anchor is asking about the sharp rise we have seen in interest rates, obviously we have seen a run on the stock market, sell-off in the bond market. what do you think of the rising interest rates and how that will affect development? >> i think we're due for a rise in interest rates. we have asked for an increase for a long time. the interest rate, you know, changes we're seeing, i think, will turn into perhaps more good changes, growth of 1%, 1.5% over the next few years. i don't think that impacts real estate. we have been at almost fictitiously low interest rate environment. i think banks will welcome an increase in interest rates and i do not think it will have a
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negative impact. >> most buyers aren't using mortgages. >> most buyers are not using mortgages. we have a mortgage program with international buyers in which 50%, 50% haven't given us will lend them to them at attractive rates and majority are not taking it. these are cash buyers. these are investors with a lot of money. >> okay. george perez, thanks so much. back to you. >> thank you, diana. back to the markets, bank stocks were running but now the worst day in nearly two months. is the post election run done? trading nation team will tackle that. and get this, more than a month before christmas, the season's hottest toy is already sold out everywhere. what it is, and why parents everywhere will be scrambling like mad and shelling out to keep their kids from crying all night. "power lunch" will be right back. hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right?
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another year before enrolling. call a licensed healthmarkets' agent now. call now. call this number by the deadline... and let healthmarkets find the right medicare plan for you - without cost or obligation. call now. it is time for trading nation, traders do trade better together. let's trade the bank stocks sliding today after a big post election bounce. eddy elfenbyne and craig johnson are your guests. banks had a big run. stocks up 30%, 40% in a matter of a week or two. did they get overbought too
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fast, ready for another fall or rebound and move higher? >> i think we're at the end of this part of the post election move. like you said, this has been a tremendous rally for bank stocks. the sector just doesn't normally act like that. we had -- in four days, the s&p bank index went up 14%. and stocks like goldman sachs added $11 billion in market cap. this is for a candidate that they really -- the bank really didn't think much of. that was a change in sentiment. going forward, i don't think we can sort of count on the rally going forward, because all of the things that those are predicated on, a loosening of regulations, affecting dodd frank, talking about bringing back glass/steagall, that remains to be seen. we'll have to find out what the trump agenda is, how congress feels about this, how the democrats, if they want to put up a fight about that. so the short-term, the sentiment
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rally, that ended on monday. going forward, i think we're just in another aspect, another part of the cycle of where bank stocks look. >> a super complicated multipart question for you now. are bank stocks going higher or lower? >> short-term pulling back a little bit. longer term, still more room to go. this is a big change for the financial sector. we're shifting from a monetary based policy to a fiscal based policy. and at the same point in time, we're also starting to see the reflation trade coming back on. so while banks may have gotten ahead of themselves, look at the long-term chart we brought today. you made the classic bottling setup, broke out, typically you see this happen, look for the bank shares to back up, retest, come back to $21. but a measured objective for me, six months out, nine months out, closer to 25. i would be buying pullbacks. >> craig and eddie, thank you
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very much. for more trading nation, head to our website, tradingnation.cnbc.com. ibm ceo writing to donald trump asking him to help her create new collar jobs. we'll dig into that that means and if it can work. coming up. and now, the latest from tradingnatio tradingnation.cnbc.com and a word from our sponsor. >> overbought and oversold indicators are generally used differently depending if the stock is range bound or trendy. look to buy a range bound market when it falls into oversold territory and moves back above it. look to sell a range bound market when the oscillator rises into overbought territory and then drops below it. ways wins.
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. the ibm ceo sending a letter to president elect trump yesterday with new ideas on growing the economy. that includes the creation of what rometti calls the new collar jobs, jobs that are technical in nature but don't necessarily require a college degree or taught at vocational education. can new collar jobs go it a buzz term it a real thing. inside now, mike lee pole and paul shaw. mike, first to you, we have a
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lot of terms, this is a new one, new collar jobs. what do you make of the idea behind it? >> well, i read the letter and i commend her effort to initiate a new educational regime, but i felt it was pretty narrowly prey narrowly focused on computational and technical skills. at the institute for the future, as part of our workable future's initiative, we've been studying future work skills and found there is a vast array of new skills that are required, really understanding general systems, cultural skills, new social and collaborating skills, especially creative skills. all are going to be required as part of a continual education program. because even technical jobs or so-called new collar jobs are going to be subject to automation, and a coder today could be replaced by a machine of the future, so we really need to help our work force
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continually educate themselves to be agile and flexible in the face of the future. >> paul, what's your take on these so-called new collar jobs? >> i like the idea, i just don't know how we implement it. >> i wholeheartedly agree. i think this is one of the best hopes into creating the new, vibrant, middle class jobs. i might go one step further and call for a mandate that computer science should be as a second language in our public education systems. i just think there is a lot of opportunities ahead in these types of jobs. >> i'm old enough to remember "the graduate" where the watch word was plastics, and i think today that watch word is coding. so, paul, does everybody need to learn how to code? >> you know, i don't think that everyone has to. we don't need to have the next zuckerberg, but we see this
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across the companies, given the transportation company. we have a company that has created 10,000 truck drivers on this platform and it really created new opportunities because of the software data. when i was on board, they did not pay more than a billion dollars in salary to freelancers. they have 55 million freelancers in the country. what the stunning part is, that's only half the open job requests on the platform. if we had the skilled labor that he's talking b that's another billion dollars in salary that people can tap into today. i think there is not just the coding, it could be software maintenance, software modification integration, and software is everywhere looking around us. i think it's a really interesting opportunity we have. >> mike, how do you achieve these dreams and missions? is it government directive? is it companies training new
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employees when they bring them in? is it changing the education system? >> well, the first is to understand there were kind of two issues addressed in the letter. one is a tactical issues and an immediate need in jobs of a.i. cyber security. but what we focus on at institute of the future is really looking at stakeholder aspirations and equipping people to shape their futures. in a world of uncertainty, people have to have a really deep variety of skills. there would be as many design and management skills in the future as there will simply coding skills. in fact, the coding skills may be the most vulnerable. so the first step is, one, to develop a clear vision of what kind of work force do we want to equip? now, we may not be able to predict the jobs in the future, but we certainly understand the work force of the future is going to need creativity, social
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skills, systems thinking skills and only a finite number are going to need coding skills. so while i applaud ms. romadi's effort, i think we have to extend it into a continuous training program. so any worker that's right now the subject of a loss of a job has an opportunity for continual support to upgrade their skills. >> mike and paul, thanks so much for joining us. we really appreciate it. >> thank you. >> you bet. the hottest toy for the holidays is an egg that you have to hatch if you can find one. we'll explain when "power lunch" returns in two minutes.
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a little over a month to go until christmas. the hottest holiday toy is sold out almost everywhere. how is it possible? >> it's nine days until black friday, actually, so the holidays really haven't kicked off in time, but that toy is already sold out, so good luck finding one. >> it's hatching! >> a hatchimal. it's a creature in an egg that hatches and grows through three life stages, and it only actually hatches one time. it's 40 to $50. it's made by spin master. it was immediately a top five best-selling toy. hatchimal is one of the top toys on walmart, target and kmart's
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lists this year. the student response has been extraordinary, exceeding all expectations. they are planning for extra on the shelves this month, but they anticipate that, too, will sell out quickliy. while hatchimal says they don't encourage buying it on the black market, ebay has it for two times the retail price. hatchimals get hot because of the parents, not necessarily because of the children. then there's these videos on youtube of kids playing with toys, particularly toys that have an element of surprise. just watch other people playing toys and that's how some of these get started as hot toys. >> you can't stuff it back in the egg and rehatch it? >> one time. but then you have your hatchimal
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creature. >> it pokes its way out of the -- >> exactly. when you start the process -- >> there is a lot of these on ebay. they're going for 4 and $500. these are the same guys that buy generators before storms and then sell them back to you for $4,000. >> you tap the egg and watch the whole process. there is a mix between one or two different animals. target has their exclusive, and there's different ones you can get at different retailers so they're not all the same, and that helps demand. >> you'll be on this, i know, corky. >> i can't wait to get my hands on one of them. "check, please." >> tony romo so gracious in what was a very, very difficult moment for him.
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>> i should be tougher. i failed a viewer. >> tom has some follow-up questions why he thought he was legitimate. >> a little bit of breather in the dow. i say get ready for more volatility. it's been a smooth ride. too smooth in recent days. "closing bell" starts right now. hello, welcome to "the closing bell," everybody. i'm kelly evans from the new york stock exchange. president-elect trump's transition seem. we have the latest on who may be in and who may be out, and which cabinet positions could be named next. one controversial appointment making waves on wall street. trump's newly named chief strategist steve bannon is rolling eyes at the banks in a presentation he gave years ago. we have the details and the

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