tv Power Lunch CNBC December 5, 2016 1:00pm-3:01pm EST
our view on oil is 50s. even if you look on a geopolitical side, tensions in the middle east continue to increase. a lot of these countries have been basically running deficits eating into their reserves. i think oil pressure remains to the upside and energy space continues to benefit. >> i have to cut you off because we have to go. >> thank you. >> our bad. that does it for us. "power" starts now. >> a new week, and another new milestone for your money. stocks shaking off a shakeup. italy with a dow hitting another record, more on the latest move higher coming up. plus, why one of the greatest restaurant owners in the world decided to close his legendary eatery. shake shack founder danny meyer is here. and things get a little punchy down under in the craziest video you will see all day. a man takes on a kangaroo. this is a real fight. we'll tell you why and show you the outcome of this epic battle as "power lunch" always putting in work starts right now. ♪
>> that is one crazy piece of video. i'm melissa lee. the record run continues today. the dow hitting a new all-time high. the s&p 500 close and the nasdaq is having its best with one-day gain in nearly a month. tech stocks are rallying and so are financials. small caps do well with the russell 2,000 with the best day since november 11th. >> i'm tyler mathisen. here is what else is happening. north carolina governor pat mccrory conceding his re-election effort to democrat roy cooper. the ism nonmanufacturing index moving for the 82nd straight month. it's not as -- it is now at its highest level since october of last year. and national steak and poultry is recalling nearly 2 million pounds of ready-to-eat chicken probabilities because of possible bacterial contamination. marcus is here, the profit is in
the house, he will be with us throughout the show, the whole show, with so much to talk about. >> so much. >> a lot of things from politics to the markets and much more. >> yep. >> but first, to the trump rally and records being broken again on wall street. close to 40 stocks on the s&p 500 hitting new highs. and tech finally showing signs of life alongside a rally in financials. same for the ibb. that index is higher. to dominic chu to take us inside the numbers. dom? >> let's set things up again with how things have done in the market ever since the election. just about a month or so ago, if you look at the sector leadership, we'll put it up there again. it's worth noting. the financials, the banks, some of the biggest drivers of the rally so far, energy not far behind. you can see there and we know the oil prices have ticked higher a lot over the past couple weeks here and industrials, consumer staples and utilities lags the most. some of the stocks helping to power things, again so far, record highs. darden restaurants we've been
talking about the consumer trade. are people feeling better and spending more money to eat out at restaurants. the banks, jpmorgan chase, big bank side of things, u.s. bank corp the super regional banks that perhaps benefit more with the steepening yield curve as the interest rates take a step in normalizing. fedex on the transportation side. also, military defense contractors like general dynamics on this trump trade as well. now i want to focus one aspect of this report here on an important part of the market we talk about often. i get a lot of comments on twitter about it, the dow transportation index. we are seeing highs here again today, we're still a couple percentage points away from record highs in that dow transportation average, however, there are some traders down here, art cashin included who i spoke to earlier today, talking about the idea if we see continued strength in the transportation stocks we could get that conformation. record high in the dow industrials, getting back to record high in the transportation stocks and all of a sudden it could be a signal for bullish times ahead.
transportation stocks certainly, guys, ones to watch. back over to you. >> thanks very much, dom. talk more about this historic run with us is mark, chief investment strategist with janney, montgomery scott and margie, with wells fargo asset management. margie, start with you, do you think this bull market can continue to run and if so, how much higher for how long? >> i think it definitely will continue. i think there are a lot of positives looking out for lower tax rates and more friendly business environment. and we have slow, steady progress in getting more people employed, albeit not a wage we like. i think it says to me that the market could go a long way even if we have interest rates a little higher. i don't think it will have an affect at all on a higher stock market, better for profits. >> mark, similar thought from you, do you think we can continue to go higher from here or do you think that so much positive news is being baked into stock prices that the
market is a little vulnerable? >> a little of both, tyler. the fact is, you know, you mentioned earlier the ism services report once again posting a positive print. we've seen this accumulating evidence that the economy is eliciting signs of strengthening, came about coincident to the election outcome. while a lot of the rally has been attributed to donald trump the economic underpinnings are supportive for corporate profit growth in a climate for that earnings picture to brighten in 2017 and equities are lurching ahead in advance of that. if we continue go straight up without a pause the market does become vulnerable. as margie said we have higher interest rates and stronger dollar and that's the tightening on the economy and could work productively to the good news er collating in the economy at the moment. >> we also, mark, have a market that is 18.5 times forward earnings, 24.2 times trailing earnings. very high valuation historically.
how much, if at all, does that worry you? >> it is a worry. it is the one thing that in the absence thereof you would be quite bullish about. the fact is the market is full predicated on at least historical measures of trailing and/or forward earnings multiples. as a consequence i think higher prices have to come on the back of better corporate earnings. we've printed a positive quarter here after five consecutive quarters of earnings contractions and i think that pace is likely to continue or maybe be built on in 2017, but that's really where the wildcard is. is it going to be built on faster earnings growth and therefore supportive of share prices because i don't think we see substantially higher equity prices purely on multiple expansion. >> if you think about where the market is moving, right, we want to understand where is all this cash sitting and how are these companies going to invest that. in order to get record growth or have year over year growth or quarter over quarter growth they have to make acquisitions or cut in the business or cut sgna.
where do you see the growth coming from? >> well, mark, i mean obviously exports are a part of our economy, but they're only 13% of our gdp. so the rest of it is mostly within our own borders. so actually that's why we've tactically leaned towards small and mid sized domestic facing companies over multinationals. i think the multinationals could struggle under the prospects of the stronger dollar and not accelerating economic activity outside the u.s., particularly as it relates to the emerging markets universe and therefore it's going to be a tale of two cities. i think the larger multi nationals may have a harder time manifesting the brighter corporate earnings picture. i think it actually falls to the benefit of the small and mid sized companies that should stand to benefit from not only better economic growth here in the united states, but corporate tax reform that will be much more beneficial to domestic facing companies that are paying the effective tax rates of 30, 35%. >> is that really the ignitor? is it the corporate tax change that's coming in your mind or
potentially coming? >> i think that's a part of. it most definitely, marcus. the fact is it's not necessarily going to be that tremendous to the benefit of the multinationals whose effective corporate tax rate is already 23%, not the stated 35%. it's going to be the small and mid sized paying 30 and 35 and some cases 40%. i think that fall right to the bottom line and that should be the boom for not only sturdy small and mid-size enterprise activity but housing or hiring conditions should remain firm. >> margie the last word, if you lad one sector in which i could make money over the next 12 months, what would it be? >> i think the share related energy names are going to be a good play. all they really need is oil between 40 and $60 and they'll do very well. >> all right, margie thanks very much. mark, we appreciate it very much. news alert from trump tower in new york, former vice president al gore emerging just moments ago from a meeting with president-elect donald trump.
>> the bulk of the time was with president-elect donald trump. i found it an extremely interesting conversation. and to be continued. and i'm just going to leave it at that. thank you. >> and that's what mr. gore had to say to the cameras. all this happening moments ago in new york city at trump tower. >> before you get to the next story i wonder what that was about with gore. we look at al gore and think environment. let's not forget al gore is on the board of apple and there's been some talk that maybe donald trump will try to do what -- with apple what he did with carrier. and get some iphone manufacturing -- >> back here interesting point. >> in the united states. i have no idea. but he is on the board of apple. >> reportedly apple has considered bringing manufacturing maybe as a preemptive measure to avoid getting the government actually intervene to force it to do anything, it's actually looking into it themselves. >> then the governor of washington better be involved. that's what happened in indiana,
right? >> yeah. fair enough. >> subsidized by the state. >> yeah. >> 600 bucks a worker, though, per year. >> government -- the governor of washington better be involved. >> washington or california? >> california. apologize. >> either. get the governor of washington -- >> we will call donald trump the governor of washington, but i mean d.c. >> what happened with carrier right, it's great, but the state is definitely involved. >> the state. >> and you can't forget that. the federal government can't sort of do all of this. >> it could be any governor really. they could bring manufacturing back to any state in the union, not necessarily california. >> but i thought you knew something, marcus. >> no. >> my mind in the wrong place, but yeah. >> all right. well today's rally coming despite huge news out of italy. italians deciding to toss their government out. that would be by the way, their 63rd government in the past 70 years. italian banks falling on the move down as much as 7% who have been wiped out over the past 12 months. euro posting a big reversal after hitting the lowest level
since march of last year and now eyes turn to next year's elections with france and germany. let's chat with cnbc contributor tara palmieri. does the italian referendum on the constitutional measure that prime minister decided he would step down because it did not pass, does that tell us anything about what's going to happen in france and/or germany next year? >> what you're seeing are populace rises across europe, just like in the united states, and from my observations as a reporter in europe for the past two years, is that the trump win made europeans more comfortable with the idea of voting against the establishment. you even saw in austria where the far right leader lost by just 100,000 votes. he said he admired trump. you hear that from france, she said she admired trump. the brexit vote led by nigel faraj who called himself a
friend of trump. essentially the vote in italy was a vote against the establishment that was led by a rightfive-star movement which counts trump as a leader. you will see more anti-eu and anti-establishment votes in the next few years. >> i'm glats glaad you brought up the parallels. the market reaction similar as well. a lot of things plunge but for a short amount of time. the euro at a 2 1/2 week high against the dollar. i'm curious, is this evidence of the belief there is a draghi put in the market no matter what happens, the ecb will come in to the rescue? >> right. and you also see that there's more optimism now because the vote was essentially against the anti-austere policies in the eu. the voters want an injection of capitals into the banks and government bailouts. they want it see the debt limits
raised in their country. there's some excitement in terms of like mobilizing the economy. renzi didn't do much for the economy in italy. he was not a strong leader anyway in that respect. maybe there's more hope that with a new leader, we might see the italian banks recapitalize and refinance and maybe the es u will be less stingy when it comes to helping the sournts part of europe. >> we appreciate your insight. thank you. >> thanks, brian. >> the countdown to christmas is on with 19 days to go. reretailers getting a boost. plus, a big upgrade for nike, the same day, under armour lands a major deal. lace up your sneakers. "power lunch" is back in two minutes. matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every
inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. kevin johnson is going to be comprehensively all-in the chief executive officer of starbucks coffee company. >> i have to be authentic and
lead in my way. i can't try to be howard. i'm not howard. >> we're under construction shanghai and new york. we're building a new growth platform at starbucks. business leaders in america, need to recognize that the rules of engagement have changed and of engagement have changed and we need to do everything we can 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. ♪ it's the most wonderful time of the ♪ >> with crowded sidewalks and stores and heavy bags and spending too much money. it is wonderful. >> or with good earnings. >> or good earnings, marcus. >> 19 shopping days until christmas. retail stocks have been in the shopping bag of some investors. the average is up about 10% since election day. however, one name that is not enjoying any retail recovery is sears holdings. that stock down over 40% this year. over 70% in the past three years. once iconic brand has clearly
lost its way. a couple guests on it as well. marcus, you're a chicago guy. chicago-based company, iconic american brand. there are some sears stores we've seen on-line and you can find them in the real world that are half empty. what's your take on sears? saveable? >> it's a bit disappointing. i grew up on sears like a lot of people did and a lot of iconic brands that existed inside of it. when go into a sears store today anchoring a mall there's nothing in it. the inventory is sparse, the staff is sparse. it's a concern. and i've heard things about transitioning to a new way of selling. >> does bad beget bad in retail. >> it does for the staff. >> you walk
>> holdings not saying the company is a great company but thinks there is value in the stock and don, i'm going to start with you. we've been banging up on sears for the last minute or so. you're not here to defend their retail model but why do you think that the stock does have potential upside? >> if you look at how dominant sears historically have been, they've collected assets, over 160 million square feet of real estate whiz is enormous, own kenmore, craftsman and die hard and sears home services and worth a tremendous amount more than the share price, albeit
that's being reduced by operating losses at the retailer. >> in terms of the brands they're looking at strategic alternatives and sounds like they're looking at jvs as opposed to a spin out. to realize the value of these brands don't we need some -- somebody needs to buy a stake to give us a valuation or spun out to the market? >> i think what they would do ideally because the sears physical footprint has shrunk and the sales of these brands have been diminished what they need to restore and allow the brand to do well, it would be a partnership with another retailer to allow the brand to get a new life. >> sold in other places? >> yeah. >> sold in other places. >> sold in other places. i think the best outcome for the brand is someone else to pick up and sell them. >> what do they do with the real estate? sell it? >> i think that the answer is yes, but in order for it to be worth a considerable amount of money they need time. >> that was always the strategy, tyler. always the strategy. a balance sheet play saw the tangible at set of the retail
and the intangible asset of the brand. i would love to hear mark's perspective. >> sears holding is like the mythical headless horseman wandering in the night looking for its lost never to be found head. >> how do you real feel? >> well this company started to go into decline in actually 2000 when alan lacey became ceo. a financial guy who had no idea how to run a retail wise you worked there. >> i worked there. >> this isn't just sour grapes? >> well, it's old sour grapes. because i left sears canada in 2004. so it's been a very long time. >> okay. >> lampert took over in 2005. he might have viewed his idea of running a retail business as viable then. within a year or two, he began to strip the assets of the enterprise. you can't run a retai business, let alone any business, based on that kind of an operating strategy. can you imagine what boeing,
apple, ge, ibm would look like if their ceos -- >> i'm going to jump in. let me be blunt. we've heard the criticism of eddie lampert, the chairman of sears holdings, do you believe as some have suggested, that lampe lampert, a rich hedge fund manager. >> largest shareholder. >> has decided to use sears as effectively a personal piggy bank? >> i would say he's been using sears as an atm machine, personal atm machine, virtually from the day he took over. >> i'm not a big fan of what eddie has done at sears but i don't think that's the case. i think he had a real estate strategy when he initially went in and his idea was to strip out the poor performing assets and be left with something. there was a period in time where he was involved in the merchandising and working with some of the merchants on some of the brand. that doesn't sound like a guy who is just looking to make it his personal piggy bank and knowing eddie like i do and i don't like his strategy here, he doesn't really need the balance sheet of sears to pay his bills.
>> he intended to act as their chief merchant from day one from which he had no experience and under which he was completely unsuccessful. >> yeah. >> it's one thing to insinuate yourself as an expert and another thing to be able to perform. >> yeah. >> this is a company that has been failing financially for 11 years. >> is there any reason for there to be a sears? there is any reason? i mean if i want appliances, i can go to home depot or -- >> jc penney or like pc richards. if i want the hardware go to home depot. gardening supplies. >> the brand are strong. >> clothes probably not going to sears. >> amazon for all of that by the way. >> brand are strong. >> but that's a different question from asking whether there's a reason for sears. >> shouldn't exist anymore. >> their sales have gone from $41 billion in 2012 to $24 billion estimated this year. they've lost, what, 16, $17
billion in sales in five years. how do you recover from that? >> i think -- >> or do you have to? >> i think that given the hand that they have now they are a legacy retailer. start looking at the 80s and 90s, best buy and lowe's and home deport and amazon, what they're trying to do is over half of their stores are still profitable. look at the beginning of the years, accelerating store closings has become profitable. >> they've had several hands dealt to them over the years and then they've been slow to react. just in the past few weeks or so the executive vice president and the president have both resigned ahead of earnings. ahead of the holiday season. that's suspicious as an investor or market observer. >> tremendous turnover at the top and heard marcus talk earlier. hard to attract and add talent when a at a shrinking enterprise and not able to operate as you see fit. >> you say many of the stores remain profitable. i would argue with that and
suggest that if there are stores in the sears portfolio that do remain profitable it's because they don't have any staff. they don't have any inventory. >> or the real estate is legacy real estate at valuations that enable them to essentially be paying no rent, no occupancy costs. >> they spun off and showed over 75% of the stores were still positive. >> at the end of the day they are losing an enormous amount of money. they show no positive cash flow. the only thing that's propping them up are the asset sales and -- >> yeah. >> and the loans that lampert keeps making. >> we have to go but one final thought what would you do with it? >> let me just jump in here. sears is probably hived off well over 100,000 jobs. since lampert took over. there are over 100,000 -- >> what would you do with it now. >> maybe 200,000 who are yet to lose their jobs. >> okay. >> in this era of job creation, job preservation we've been in
for the election cycle i would point out that one of their long-standing board members steve mun chin has been designated secretary of the treasury. and i would have to say, i would hold him complicit with eddie lampert in the catastrophe going on in chicago. >> thank you very much. don, thank you for making the bull case for sears and we'll all be talking about the ones. thank you very much. >> it's a fistfight from down under that may make you wonder. a man punches a kangaroo to save his dog. what happens next. stick around to find out. ♪
take a look at shares of under armour on news the company will become the uniform provider for major league baseball starting in 2020. the ten-year deal a big deal for under armor and another blow potentially for nike here. what do you think of this? >> maybe. >> did nike have the -- >> they have other deals with other sports. >> did they have -- >> different -- >> i don't think they. >> starts with an "m," somebody else had that. >> under armour is known, when they supply college uniforms, for really let's call it fashion forward stuff. >> let's just say that kevin plank is one hell of a ceo and i don't think he did a bad deal. >> from under armour to nike the stock down 17% this year making it the worst performer on the dow. the next guest says it's still the unquote quote captain of the
industry. joining us on the news line, hsbc's earwan ramburg. >> thanks for having me. >> you cite some of the biggest drags the bears would site on the nike case, fx, overhang still affects them. you say you have great visibility in the mid to high single digits reporting sales growth and limited margin compression, high for this year, into next year. why do you have such high visibility when the bears think these are issues they can't necessarily quantify? >> i think you're looking at a pretty great underlying sector. it's the captain of industry. i think the pushback on the call you will have market share losses, you just mentioned under armour, we've seen a few subsectors taking share, but, you know, you can have nike, year in and year out, slightly losing share to a few alternative players but the reality is there's good growth
in the underlying sector. and so if you look at nike about a year and a half ago it was a consensus by absolutely everyone liked it, if you look at it now it's fashionable to have a pretty negative view on the stock. the reality hasn't changed that much. you're still looking at mid to high single digits. it's still quite a bit of a compounder. yes, the u.s. has been a bit disappointing, yes currency has been a bit of a drag, but the reality is you still have pretty good growth. >> what's the tipping point in terms of market share loss which you would get less constructive on nike? at what point is losing market share to the under armour and adidas not okay anymore? >> if it starts to shake the positioning of the company in the u.s. which remains its core market, but i think it's fair to have -- look at the fact that alternative market share gainers, you know, can have a very good year and then the following year can be a bit difficult. look at this year, adidas had a fa nall nall year -- phenomenal
year in soek. next year will be tougher for adidas. >> seems like a number of brands have figured out how to piece and parse their way through nike. lululemon has taken a chunk of their athleisure wear. under armour starting to get into athleisure wear and sneakers and others sports. adidas doing well in soccer. how does nike hold off all the individuals poking a at their compartments to keep their business afloat in your mind. >> well i think they're ahead in digital. i think they're ahead in connecting with consumers. and, you know, we're mentioning soccer today where this year adidas was coming back, but look at a 15-year view, nike was pretty much nowhere 15 years ago and is now co-head of that sector. so, you know, again, i think market share losses might be a bit short term. they might be losing out on this baseball deal, you know, is baseball very important for the long term on a global view, not necessarily. they might be losing out to
under armour and basketball this year. can they come back next year in basketball, that might be the case. i think yeah, they have the scale, i think they have the quality of management and i think they have the intensity and this idea there were somewhat half asleep at the wheel is completely false in my view. it's just bad -- >> how do nike and adidas compare outside of the u.s.? >> well, i would say they're pretty much neck and neck in china and then you have a few core strengths. if you look at nike in europe, it's a lot stronger in the uk. adidas will be a lot stronger in russia, for example. and then it's going to be category by category. i would say in basketball, nike is dominant throughout adidas doesn't really register much. if you look at lifestyle and soccer these are the two strengths of i dedas and played out well this year. >> we're leaving it there. thanks for your time. >> it was ma guestic. >> ma guestic. >> had the mlb.
>> ma guestic had mlb. it may be a costly contract. >> let's -- here's another angle interesting to watch. majestic makes everything in the united states. under armour makes almost everything outside of the united states. i wonder now, they've got this uniform contract, will under armour manufacture baseball uniforms outside of the united states where they're made? they could manufacture them here and what would the president elect have to say about that. >> or buy majestic. >> or that. still ahead, we're going to check in on the appetite of the consumer with shake shack's founder danny meyer and the five most instagramed places in the world in 2016. "power lunch" will be right back. ♪ ♪ for decades,
investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20.
install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california. hi, everybody. i'm sue herera. your cnbc news update for this hour. libyan forces say they have driven isis out of the port city of sirte. declaring full control of the one-time libyan stronghold.
all remaining extremist fighters surrendering after forces backed by u.s. air strikes advanced into that area. russian president vladimir putin in an interview on russian tv says donald trump's business accomplishments show him to be a smart man. putin says he is confident trump will make responsible decisions when he takes office. p amazon has revealed long awaited details about its physical grocery store concept called amazon go. customers will use the app to enter and then shop. anything picked up is automatically add the to your virtual cart. once you're done shopping walk out of the store. host and comedian jimmy kimmel will host 209s 17 oscars ceremony according to hollywood trade publications "variety" and "the hollywood reporter." but the academy has not immediately confirmed or denied the report. we'll keep you posted. the news update at this hour. back to you guys. >> thank you very much. let's report on another visitor to trump tower, peter thiel, the
silicon valley venture capitalist and investor. one of the early trump supporters going to visit the president-elect. >> just commenting on friday when trump named the members of the strategic forum that there was no representation from silicon valley. >> from silicon valley per se. >> and tech ceos like ibm but not from silicon valley. just because there's been a dearth of silicon valley ceos who supported him with the exception of mr. thiel. >> wonder the heat on peter thiel, and the gawker stuff, has cooled off just a bit. peter thiel hasn't spoken to really anybody since that. we will keep trying on that. a check on your markets and your money because things are pretty good. we're only up 48 points. not some great market day but it's enough that it is yet another record. so you can say today, the dow hit another record high. by the way f you're wondering, the top performer out of all s&p 500 stocks is range resources.
the oil and gas company, rrs, humana and aetna bringing up the rear. my favorite story of the day. take a look at this video. a man running toward a kangaroo because the kangaroo had his dog. i didn't know they had a thing for dogs. but whatever. the first strange thing about this video the dog is being held in a headlock by the kangaroo and then the man decides to literally stand up and punch the kangaroo in the face. the kangaroo kind of dancing around. the dog got away unharmed. the man is supposedly a zookeeper out hunting. he had pretty good form too. he led with his right. >> he was ready. >> look at the kangaroo stood there stunned. he said you hit me, man. the kangaroo is like you hit me. >> is that your accent if. >> i don't have an australian accent. >> we added the sound effect. >> i didn't realize that -- >> i wanted the kangaroo to punch him back. >> for me, the most interesting part, one punch it's over. >> the most interesting part of
the story, why was the kangaroo going after the dog? >> you mean what did the dog do to the kangaroo? >> on the radio it's a big dog, like a 75 pound dog. like what -- -- >> what fascinates you these days. >> what did the -- are they known for like kidnapping dogs? >> okay. >> should have punched him in the pouch. >> good times. >> look at the dog. >> the restaurant sector -- >> one more time. >> should have been taken. >> who was just served an upgrade and the founder of shake shack, danny meyer will stop by, exclusive interview, next. but first, rick santelli with today's bond report. hi, rick. >> hi, tyler. indeed, interest rates have come off today, but the ir they're still on the lofty side. one week of 10s and we're over 240 when the day started and hovering at 2.38 up changed. high yield close last thursday at 2.44 become to july. one year of bunds, we are
basically at the loftiest levels or close to it since the end of january, 37 technically was in early december but we're not far off the beat. you want to pay attention to the 40 area. if you look at a september of 2014 start to italian bonds, and i picked 10s, the reason i picked that point is so you can see the tops are coming higher but we've been higher. they're well under 2% and high for the cycle is 2.13 in november. finally, dollar index was down close to a penny, it's down 7/8 of a cent. one day euro versus the dollar a bounce from huge support right above 105 occurred with the renzi vote. most of it was priced in. the poor shorts in the euro didn't get it and now it's turned up strong. hey, "power lunch" will return. after 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.
welcome back to "power lunch." bullish call in the restaurant sector today. upgrading mcdonald's from a buy to neutral. the price target on mcdonald's a bump to 139 from 126. the first adds november should end up as one of the best same-store sales months for the quick serve burger sector. mcdonald's shares up 7% this month, 1.25% today. it's been a strong month for other restaurants, darden up 18%, trading all-time high today. pa near ya, shake shake and chipotle seeing strong gains here. let's talk about this restaurant resurgence with the man who founded shake shack for a "power lunch" exclusive is danny meyer, restauranteur and ceo of union square hospitality group. great to have you back. >> it's great to be here. >> we should mention your restaurant group has 11 restaurants mostly new york city including union square cafe set to reopen in a new location this week. danny, you know since the election there seems to be a real change in atmosphere for the financial markets and if you
take a look at shake shack stocks, for instance, the stock down about 18% year to date through the election and then has been up about 10% since the election. you've reported strong earnings. i'm wondering if that sort of change in enthusiasm and the opt pic missile that seems to have come in the financial markets is the same case for the rest of the restaurants that you have in your group? >> let's just name that restaurants are places that people come to be with people and people didn't feel great with all the uncertainty. kind of just the same thing as you saw in the financial markets. and i think that during all the months of presidential debates and primary debates and, you know, all the just uncertainty that people faced. that impacted people's interests in going out to eat and it's like whether or not you were happy with the results of the elections, you now know what it is. i think that people are coming back in droves even if they're
coming back to debate, there's nothing like sitting around a table with some good food with friends and that seems to really be bringing people out and we couldn't be happier. >> this is marcus. as you think about your entire portfolio, you know, we know what's happening in quick serve and fast casual but you have some higher price points. are you seeing any change in traffic in those as well and that's what i'm focused on, what's happening to that 18 to $30 entre priced restaurant? >> well, this year, marcus, has been sort of a sketchy year, beginning all the way back in january. and i think the thing that the fine dining full service industry has been facing besides the uncertainty that i was just talking about earlier, is a really, really big headwind when it comes to labor. the cost of labor has exceeded anything we've ever seen before and so i think what restaurants are trying to figure out is, how do i properly price that labor
into the menu price. and what we've done with our restaurants that are in the full service field is to eliminate tipping. and counterintuitively that's made our menu prices seem to be more expensive but then by the time you sign your check and no line to give a tip, you end up saying, that was actually a great value and i might add a hell of a lot more convenient after having a bottle of wine and then trying to figure out the math and split it between all the other people at my table. >> yeah. how has your hiring changed? is the kind of teammate or server that wants to work at your restaurants, has that changed at all? have people left and other people come in? >> it hasn't because what we did whenever we would convert one of our preexisting restaurants, we made it very, very clear to our staff that for the first three months, while we're working out the new math relative to what it used to be, when you were receiving tips, we're going to
guarantee you that you're going to at least break even to where you were. so we didn't have the kind of attrition that some might have feared we would have. we invited our staff members to help us do the math so that they could thrive. the biggest uptick has been in the kitchen. it's really, really hard to have spent several years of your life and all kinds of money getting a culinary education and coming to a big city like new york city and being paid less in some cases than a fast food worker. so by eliminating tipping, we've actually been able to increase the amount that we're able to pay cooks as well and that's been fantastic. >> overall in terms of expenses, danny, have expenses exceeded the growth of your revenue? i'm asking you this because out of shake shack's last quarter revenues were up 40% and expenses up 43%. i'm wondering if that's the trend you're seeing across your restaurants? >> well, once again, to the degree that expenses are up, it
is primarily driven by labor. and i would say yeah. this has been a tough year. good news for us, however, has been that i can't even imagine if this year had not been a year in which commodity prices had actually gone down. so it's been kind of a wash from that respect and we're really excited about next year because we think we're getting everything in line right now. >> tyler -- >> the cafe opens later this week, we will open the restaurant with no tipping, and that economy is going to help us move forward while others are struggling with minimum wage. >> an investor thinks about looking at the entire food space, right. the qsr and fast casual and fine dining and lots of different opportunities. i think what danny is pointing out about labor is going to be something that's going to continue to be a problem. we are not seeing as much headwinds in the commodity side but as a an investor if you had to invest in food, "quick serve,
fast quacasual, seem safer thane darden sit down restaurants. >> i think there's -- yeah. just want to say real quickly if i can, whenever we use the word labor i want to make sure people understand what that is, is people. and the restaurants whether quick serve, casual, full service, that will do the best, always have, are the ones whose people are happiest to come to work and happiest to serve their customers. it will translate to a better experience. >> great to have you with us. best of luck on the reopening of union square cafe. >> that's a point you've made too, marcus, say serve the customer but serve the employee if the employee is happy the customer will be served better. >> i worry about the fine dining category he was talking about. as minimum wages continue to go up and exempt, nonexempt statuses continue to be challenged and tips and no tips, it's going to be a tough labor pool for a while. >> is that one of the reasons
we're seeing -- again, we're in the new york area so we're sort of the odd balls of america, i get that, but we all travel a fair amount, is that the reason we're seeing the $40 plus entre becoming more common? i've just anecdotally noticed menu prices, even fast casual restaurants have gone up. >> i would bet that in cities like new york or chicago or l.a. where business travelers exist, i think those restaurants in those big cities know they can get away with it. if you take that same restaurant and go into the suburbs, you're not going to see that same thing. you probably see a 30% difference in price. >> real estate cost as well. >> still ahead, the most instagramed places of 2016. see if you can guess the location. the answer is next. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests
especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. instagram leasing the list of the five most instagramed photoed locations of the year. number five the eiffel tower and the most instagramed place outside of the u.s. this year. number four, new york's times square. central park also in new york at number three. number two, is more of a group of locations, rather than just
one, both in california and florida, universal studios taking the runner-up, the sort of harry potter world of wizarding castle. and the number one most instagramed place of the year, is disney. as if the mickey and minnie mouse picture -- >> i thought it was going to be some place having to deal with the kardashians. that's what i thought. >> you're not on instagram are you? >> i am, actually. >> you are? >> did you post something about the car dash shans? >> no. >> okay. >> no no. >> all right. biotech moving. ibb off session highs but one of its best days in nearly a month. big moves off a biotech conference. the ash conference under way in san diego. meg terrell is there and joins us now with pretty big movers, in fact, in either direction, meg. >> hey, mel, a lot of instagraming going on here in san diego at the hematology conference. sentiment in biotech has been positive since the election. a lot of which is due to
people's expectations that trump may have a tax holiday which could bring back more cash to use for m&a which always boostz biotech. also, of course, heading through the house already passing through the house is an act known as the 21st century cures act seen as favorable to pharma, controversial on some measures. as you mentioned clinical trial results driving the industry. we are here at the conference in san diego. also a world lung cancer conference in vienna. some stocks moving big here out of the conference include stocks in immuno therapy like kite as well as bluebird, both up today on data coming out at the conference. on the flip side we are seeing stocks including global blooder that puttics which works in sickle cell and agios down a lot out of the conference. analysts saying no real data driving the moves. we are talking with agios's ceo in "closing bell." tune in for that and we will discuss it. back to you. >> thank you very much. still ahead the president elect firing off a series of tweets to
tweak china. a smart move or something that will cause big problems. we will ask former u.s. ambassador to china jon huntsman, second hour of "power" is straight ahead. so what else is new? how's your mother? umm..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.
the second hour of "pour". i'm tyler mathisen. more tough talk from president elect trump. marcus is still here with us. >> why do you say it like that. >> still here. >> tyler. >> you won't leave sfo you can say he has camped out on the "power lunch." nobody would say that. >> no one would go there. >> i'm brian sullivan. >> some of the stocks making big moves today. pitch your tent under the financials, moving higher. goldman sachs leading the way. hsbc initiating coverage on goldman with a buy rating. better late than never i guess. disney, one analyst speculating whether or not it could actually get rid of spinoff, sell-off, whatever, espn. more on that in a moment, though. by the way your two worst performers, health insurers, aetna and humana, lower as the anti-trust trial over their merger begins.
now let's get to dominic chu with the the nyse for more on another record high for your money. dom? >> we are at record highs except we've given back about half of the gains we've seen near the peaks for the dow. up about 45 points right now. if you take a look at some of the biggest point contributors to what's happening right now, i'll show you right now what's happening with disney. at post 8 gts, the walt disney company up about 1.25%. one of the biggist point contributors trading today. want to maengs here what you mentioned earlier on, goldman sachs. at post five, citadel over here, see here, again, up by about almost 2%. one of the biggest gainers there as well. as you talk about what's happening with the dow those are the stocks doing a lot of heavy lifting. if you take a look over the course of the election, just about a month or so since the election happened, there are about four stocks that have contributed more than half of the gains to the dow so far. about 1200 some points during that time span.
those names are the names that we often talk about. names like goldman sachs, also united health group, caterpillar and jpmorgan chase. if you take all of those guys together, they factored in more than 600 some points of the gain overall. if you're looking for where the outperformance has been and where the dow outperformances come from, those stocks specifically are the ones driving most of those gains. and if you want to read more about what's happening with those stocks and why the dow is doing as well as it has so far go to cnbc.com right now because on tradingnation.cnbc.com. you'll find that same story about which stocks are powering the dow. back to you. >> thank you, dominic chu. another big addition to the trump team announced. dr. ben carson nominated to be the secretary of housing and urban development. john harwood live at trump tower with the latest. examinaticomings and goings to jon. >> no question. the investor peter thiel walked in a few minutes ago and that was after former vice president al gore, a democrat, walked out,
said he had an interesting conversation with the president-elect over climate change, which is his big issue. we've only had one appointment to the cabinet today. that is ben carson, dr. ben carson, retired neurosurgeon, who had been speculated about for this post for a while. he's a celebrity in republican circles. contentious primary against donald trump. he's attracted controversy. democrats not surprisingly have come out against him but so has susan collins from maine. so you could have a scrap to confirm dr. carson at hud. now, president-elect trump created controversy into the weekend. he took a call from the president of taiwan, which was a breach of traditional protocol with china, which does not recognize taiwan as an independent country. now initially, the trump transition indicated that was a call that was initiated by the taiwanese president as opposed
to being planned and mike pence on the sunday show yesterday, said it was simply a courtesy. >> i would just say to our counterparts in china that this was -- this was a moment of courtesy. the president-elect talked to the president two weeks ago in the same manner not a discussion about policy. >> now, donald trump, however, took a tougher tone indicating he may have been trying to send a brushback pitch to the chinese in a couple tweets overnight. the president-elect indicated we don't have to -- china has not asked our permission for actions that hurt u.s. exporters like tariffs, import tariffs in china or the devaluation in the past of their currency or their military claim that they've staked in the south china sea. that was a different message than mike pence was sending over the weekend. you had donald trump with a strong warning not just for china but also for u.s.
companies, that would take jobs overseas. now he struck that deal with carrier last week and got some criticism that they simply prevented carrier from taking all of those jobs out of the country by giving them tax breaks. donald trump said in these tweets that the companies that take jobs overseas will face a 35% tariff, getting back to that message of consequences if jobs go overseas. guys? >> john, thank you very much. john harwood reporting from outside trump tower. more than a week away from the next fed meeting where on this very program you'll find out whether the fed will raise interest rates or not. but markets, which very much expect an increase have turned to wondering what happens to fed policy next year. with a new president. and new policies. from the white house. steve liesman looking at the latest fed speak. mr. leaseman. >> thank you. two fed officials saying today that changes in policy from the new president could mean changes in policies at the federal
reserve. fed president phil dudley said he's been monitoring the market reaction to the expected new policies from president-elect donald trump and he will alter his outlook when it becomes clear what's going to happen. the general gist of what's expected he said arguing for more fed tightening over time. >> if fiscal policy were to turn more expansive and lend support to economic activity, then probably the federal reserve would probably remove accommodation a little bit more quickly over time. >> dudley said he supported fiscal policies that would improve the nation's productivity and st. louis fed president bullard suggesting regulation, infrastructure spending and tax reform could all help productivity growth and alter the outlook for fed rates. the other areas being talked about trade deals and immigration reform take longer to have an effect. fed officials have been pretty consistent on this and await the policies from the president elect before they change the outlook. if the market is right about where things are headed it will
mean more tight ing from the fed. marcus f i might, i have the pleasure, i never done this before, but listening to the profit, in the car on the way home and i'm a guy who loves his music, and other than listening to cnbc -- i'm in a rock and roll band. i have to have my rock and roll music i happened to listen to "the profit" and you're talking to the dress maker. here's my question to you. it was a fascinating show. i couldn't turn it off. what happens to that dress maker if donald trump slaps a 35% tariff on imports? you were talking about imported fabric. what if that happens. also, that counter balances with a massive tax cut. how does that work out on the bottom line of the pnl of the dress maker. >> the fabric is imported but manufactured in new jersey. the actual final garment is manufactured here. so i would -- i guess i would argue why would i pay a tax on the fabric, the raw goods. >> because they -- let's assume talking about this border
adjustment that would raise the costs of imports by as much as 35% before it's manufactured here in new jersey? >> yeah. i mean i -- i just don't see how that's possible. the price of everything would go up tomorrow morning. everything at target, everything at walmart, everything at a lot of stores would go up tomorrow morning. literally tomorrow. i don't know how that happens. >> so you think it can't happen? >> i don't think 35% happens. i think there is a benefit to trying to create more jobs here in this country but i like the free enterprise of allowing free market to be what it is. that's from my perspective. >> how did the dress maker turn out? >> great. she's a good lady but that's a real thing because she makes them here and they're more expensive to make them here. >> can i ask the bottom line question out of all of that fed speak. the bottom line is the risk is to the upside and steeper than we expect for rates. >> for fed rates. they don't want to get too far behind but dudley pointed out we don't know when, we don't know
how much and we don't know the actual substance of it. it's very hard to make policy. what i will be watching very carefully at the meeting next week we'll get the new forecasts from the federal reserve, have any of them got sort of glommed on to the direction of the markets here forecasting more growth and higher rates or are they going to be like dudley and say i can't change yet because i don't know what i'm changing to. >> thanks, steve. shares of soda stream bubbling up rising 127% so far this year. popping nearly 50% in the last month alone. we'll talk to the company's ceo next and a couple more bad soda puns. but first our exclusive interview with newmont mining ceo. "power lunch" wil be right back.
you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. joining us for a "power lunch" exclusive gary goldberg ceo of new month mining. good to see you. >> good to see you. >> citigroup analyst downgraded your stock which for a large part of the year was the best performing stock in the s&p 500. citi thinks most of that run is done, downgraded you to newt. yo neutral. >> we've set the business up to thrive through all cycles in the gold business and seeing a downturn over the last month since the election and we're set up to handle the changes that are out in front of us. >> tie for the audience and investor the relationship between your stock price and the price of gold. we understand they go up and down roughly together. do you have any idea how closely
correlated they are? >> at the end of the day, every $100 move in the price of gold is about $350 million to our after tax recash flow. it's about 70%. >> can you repeat that again for our audience. that's interesting. >> $350 million for every dollar change in the -- every $100 change in the price of gold. >> gold goes up or down $100 an ounce, 350 million is added or subtracted. when we spoke in january or february of this year i don't think anybody predicted the kind of run gold had and your stock would have. gold has, obviously, come back down to earth a bit. is a thousand bucks an ounce still where your budget roughly is? >> we target actually a little bit below 1,000 an ounce. i think it's important not just in terms of the cash costs but the long-term can capital costs. the other thing we've been doing is investing in new mines. we've brought two new mines on
in the last two month. one in surnam and one in nevada. we've been investing in the future. >> as an international corporation you're based in denver but mines all over the world and operations all over the world. do you have an opinion on the president-elect's comments about trade, potential tariffs, relationships with other countries? >> i think we'll sit back and see what forms as he picks his cabinet, what policies he decides to put in place. at the end of the day we kind of are a taker when it comes to what he does and we'll watch what he does. >> do you strategize about it and say okay, what may be likely and let's -- >> not so much what he may bring but the whole global situation brings. we operate in a lot of different places in the world. australia, peru, ghana, so we take a look at what's happening throughout the world. >> yeah. some difficult places to do business. i mean some expensive places do business. you might be the most capital intensive of all industries
because of what it takes to get the gold out of the ground and largely to the end user. is there more to come in terms of capital spending efficiencies? are you able to take more costs out of the business? >> we've taken quite a bit of costs out, 22% since 2012. it's a capital intensive business and we're there for the long term. when you go into a country or location, you've got to be around and hoping to be around for 20, 30 years. and not just looking at what the impact is on the day, but you're looking at how you leave things in terms of rec cla makes and closure. >> i have to ask you they want to know, where is the price of gold going? >> i'm really confident in the medium to long term that gold is going to be good. there hasn't been the investment in exploration and in new projects so we see the supply of gold going down by 2020. >> going down? >> yeah. >> supply going down. >> in the next four years. >> there hasn't been the investment. likewise we see in the medium and long term, the middle class in both china and india growing.
demand for gold, gold and jewelry, gold is a form, a hold of wealth going up. >> gary goldberg, ceo of newmont mining, a pleasure. good to see you. >> good to see you. >> melissa? >> should disney sell espn. its struggles are a reason why disney's stock are down. would disney be better off alone. we'll answer that question next on "power lunch."
downgrade,. a news alert out of italy. julia? >> hi there. we've got a stay of execution it seems for the italian prime minister matteo renzi. a few moments ago he left the presidential palace. he handed in his resignation to the president, but the president actually rejected it. this is unexpected. the president apparently telling him he wanted prime minister renzi to remain in power until the country budget for 2017 has been passed by parliament. now the belief that they can get this done by friday, but it does mean that rather than announcing an interim prime minister over the next 24 to 48 hours, it seems that prime minister renzi is going to stay in place now at least until friday to get this
budget done. obviously, everything we've talked about here in terms of renzi then stepping down, once this budget is in place, still holds and the country will then look for a new prime minister. but i think as far as asset rbc releasing a note saying the company could be better off without it. the analyst says a move would unlock shareholder value and give the company the flexibility to make an acquisition that would help the company grow faster. disney shares down 12% in the past year and concerns about espn are big reason why. which would lead to the question of why do that right now when there's concerns about the valuation of espn, why say go to spin it out some. >> if you get rid of it it's part of their television operations which include abc, right, and i assume other networks. >> big money maker. >> it has been a big money maker. what would you do? >> i would want to understand what the assets are selling because abc sports and espn have been linked closely together. sharing programming. i don't know. >> i guess the idea is you would
turn disney into a studio. >> right. >> and the hotel properties. >> what prevents you from doing that anyway? why does espn have to go to do that? >> it doesn't. but you have a purer play if you get rid of the distribution part. >> the drag on the stock has been the concerns about espn. >> about i guess i think i'm the only one who has trouble believing those stories. >> i'm with you. >> you are. >> because -- >> the amount of cord cuttings. >> i don't buy it. i will tell you why. if espn is losing all the subskribers so is everybody else. >> at a faster rate. >> you can't snip out espn. you're cutting the cable or cutting your tier on your cable package or not. i don't know. everyone is picking -- i don't have a relationship with espn. ket tore -- competitor in some ways. but if espn is bleeding like that, everybody is bleeding like that. and i just don't believe it. >> well, you don't dvr things on
espn, right. >> no. >> you watch it live. >> live or don't watch it. >> absolutely. >> all right. thanks. >> sure. >> i will be watching tonight the monday night football game. >> espn. >> yeah. >> that's going to be a great one. the jets and the colts. >> always good as 49ers and bears. >> used car used to be to sort of mine a lemon sold by a slick salesman but now they are called preowned and more and more people are buying these previously owned cars. aren't they, marcus. and they bring you -- we'll bring you the closing trades for oil and more when "power lunch" returns. when you travel, you want your needs to be understood no matter where you go. you want an experience that feels highly personalized. with watson on the ibm cloud, travel companies like wayblazer can apply cognitive analytics to social data to understand what a destination is really like. and who exactly, it will appeal to. today watson is helping businesses create experiences
that revolve around you. because that's what the ibm cloud is built for. that revolve around you. the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence. ♪ ♪ see ya next year. this season, start a new tradition. experience the power of infiniti now,
hi, everyone. i'm sue herera. your cnbc news update at this hour. north carolina governor pat mccrory conceding the election to democratic challenger roy cooper this afternoon. this in a videotaped statement released on youtube. >> despite continued questions that should be answered regarding the voting process, i personally believe that the majority of our citizens have spoken and we now should do everything we can to support the 75th governor of north carolina, roy cooper. >> workers with heavy equipment
picking up 97 bmws from the tracks today. just a day after a train carrying the cars derailed in fairfield county, south carolina. two locomotives, ten train cars and the bmws were all damaged. there it goes. no injuries luckily were reported. japan's latest hyper luxury train unveiled today. japan east railway company showing off its plush 17 sleeper suites. ob be servation cars enclosed in glass offer views of the passing landscape and so far ticket demand is outpacing supply. you're up to date. that's the news update. back to you. >> thank you, sue her rear ya. 90 minutes from the closing bell. stocks are higher. we have the big gain here on the nasdaq higher by 0.8%. the dow by the way is at an all-time high, hit an all-time high earlier. the oil market closing for date. to jackie deangelis at the nymex. >> good afternoon to you, melissa. crude oil not seeming to close
over $52 a barrel intraday did cross the pivotal resistance point. what's it interesting, though, look over the last month or so, crude oil prices are up about 20%. that is a massive move and it's not all just off of the opec news. it's also off of this exciting about the trump presidency and what he will do for energy policy. the belief right now is donald trump will be very proactive and swift in taking action to move the ball forward. i want to take a look at some of the stocks and some of the other plays you can manage in this space. first off would be the etfs. take a look at the xle and oih. they're up over 10% and 20% respectively in the last month alone. these are a good way for retail investors to have a low fee exposure base to the different energy names. if you want to go specifically and drill down into the different subsectors, big oil names, like exxon, hess and chevron, these are all higher as well. you've got the servicers your
halliburtons, schlumberger, outperforming and the refiners will benefit from more product to turn into gasoline. valero, phillips 66 are riding the wave. don't forget about the pipeline stocks. the dakota access pipeline which you have discussed, that permit, was denied by the obama administration. coincidentally, it was the day before the protesters were asked to vacate that camp site ahead of the winter. at the same time remember, that the trump administration is actually saying through a spokesman of the transition team that it supports construction of the pipeline and they will review and make a decision as soon as they are in the white house. back to you. >> well we will see. the story goes on. jackie, thank you very much. automakers expect to sell more than 17 million new cars in the united states this year. that's new cars. but 2.5 times as many people buy used cars. phil lebeau is looking at the demand for used vehicles. phil? >> and it's growing, tyler. take a look at this.
this data brought to us by the nada. national auto dealers association and talked to the folks at packs automotive about this. that end of theline there on the right, that's almost 41 million used vehicles, record used auto sales, what we're on track for here in the united states this year. you've seen steady growth going back to the reception back in 2009. what's driving this. the average used vehicle loan according to experon, data released today, is over $19,000 in the third quarter and the buyers with the top credit ratings, those with prime and super prime credit, those are growing fastest in terms of taking out loans. couple things are happening here. first of all, you have a wave of autos coming off lease. more and more vehicles have been leased by the automakers in recent years. and they've -- those are coming on two and three-year leases coming off, so there's greater demand there and used prices are growing a little slower than new prices in terms of transaction prices. when you look at a stock like the penske can auto group it's easy to understand why this
company made the decision last week that it's going to be buying a used only chain of dealerships in pennsylvania and new jersey. they're not the only ones who have done this. auto nation is developing a used only chain. we've seen other dealership groups do the same thing. there is growing momentum when it comes to used vehicles, guys, and that's what we're seeing with the latest data out there. >> this is marcus. i think what's interesting to note if you look at public autos sitting with cash on their balance sheet and a big infrastructure they are really starting to do that. as we know auto nation is getting back in the business. they were in it 14 years ago, 15 years ago. penske buying carsons out of pennsylvania that is a big move. but i think what it speaks to more than anything is that these big companies are recognizing that they need to separate themselves from the individual dealers because this is a way for them to really build a pipeline of same-store sales numbers. the new business isn't going to stay this strong forever. >> and that used market, marcus, as you know, the used market is
so split up. there are so many smaller dealership chains that these larger publically traded chains could start snapping some of these up and scale nationwide. there's a lot of potential there. >> the one thing that most people don't know is that the reason that these public autos can get into the stand alone used car business is because the financing sources that they have are the same on both sisds. an independent used car dealer isn't able to go to a big banking institution that does a lot of auto loans. the playing field really isn't level. >> and they're really pushing the marketing of those financing and interest rate packages. those are -- that's a big growth area for all of those chains. >> phil, we cannot let you go without talking about tariffs and donald trump and maybe some of the tweets and what he said on twitter, the u.s. is going to substantially reduce taxes and regulations on business, but any business that leaves our country for another country, fires its employees, builds a factory or
plant in another country and then thinks it will sell its products back into the united states, without retribution or consequence, is wrong. there will be a tax on our soon-to-be strong border of 35%. those companies you talk to a lot of labor union members. >> right. >> what do they think about that? >> they're surprisingly quiet in terms of coming out and saying hey, yeah, let's start slapping a tariff on these products coming in here. part of the issue is let's take the united auto workers. they negotiated the latest contract with the big three and while they would like to see more jobs and more plants in the united states, they made those agreements that allow ford to open a small vehicle production facility in mexico. now, remember, ford is not firing employees to do that. ford is going to be building and adding on to its current location in the detroit area and adding in an suv and a pick-up truck. so, you know, ford's response is we're not firing people to open up that plant. but it is interesting that we have not heard as much from the
unions as you would expect given the rhetoric and the very vocal tone from president-elect trump. >> there's a lot that, obviously, is going to be worked out over the next months and presumably the next four years, regarding tariffs and so forth but i wonder when he -- when the president-elect speaks as he did just there, is he talking only about companies that do this from this day forward? in other words, what about companies that have done it for years? we talked about nike a few minutes ago. what happens to those, if anything, or is it really a here the gate is coming down from this day forward if you do it, there will be a consequence. if you were already there it. >> i don't think you can go retroactive. >> i don't know how you do it. >> you're looking at dozens, hundreds of companies, that have set up shop in mexico because of the cost advantages there and also because the supply chains have moved there for certain industries like the automotive industry. i mean how do you go back and
say you set up a plant down there, seven years ago, now you're going to start payings us for that. that's really, really -- i can't -- >> aggressive. >> i would be surprised if they're able to do that. >> it certainly would seem as though he's saying if you go from this day forward and do it we will apply a consequence to you, but who knows. >> we'll see. >> any other thoughts, anyone? anyone else? >> i'm scared. >> no. >> you're scared? >> all right. >> why are you scared? >> just i don't want chaos. i feel like we start telling people we will tax things and move these things around and change the way free enterprise works and change the way things flow, i just -- there's a pace to everything and chaos isn't a good pace. people think it's fun today until the car shows up 35% higher. >> it does come down to cost. you said that earlier. i said that in our morning note this morning but that's what wages theoretically should also go up. >> wages should go up by themselves. that should be an independent issue.
minimum wage has to go up and people have to make more to live. it's a separate issue trying to tack on this issue as well. raise labor costs and the costs of goods, what's left. how do you make money? >> it's going to be harder. >> harder. you don't have to pay tax but there's no earnings so you don't have to worry about it. >> that's a grim outlook. >> up next, soda stream popping. the stock up more than 130%. can that rally continue and if so how? soda stream's ceo will answer those questions and many more coming up. .
shares of sodastream sparkling this year. the stock up more than 45% this month. it's been a busy few weeks for the soda maker which received complaints from necessarily and other bottled water companies over the company's shame or glory ad campaign which targets plastic bottle pollution. joining us for a first on cnbc interview is daniel birnbaum. great to have you with us. we'll get to that. i want to talk about the business and what you're seeing. i think that probably not many people know that germany is actually your largest market and since after the election there seems to be a belief that the u.s., the u.s. economy, will have great growth and in the
u.s. you're 1% penetration households germany you're 6%. how are you positioned for what the markets are telling us great growth in the u.s. and maybe stagnant growth in europe? >> sodastream has two benefits to consumers around the world. one the convenience you don't have slep sparkling water from the store which is the primary reason it's successful in germany and the other reason is health. people want to drink more water and when you have a sparkling water maker at home that takes tap water and transforms it in seconds into sparkling water you drink more water. that is proven. so we're selling a lot of soda makers or sparkling water makers. our growth is double digit since the beginning of the year. three quarters of double digit topline growth, triple digit bottom line growth and we're on fire. >> why is the american penetration one sixth of what it is in germany. >> we've been in germany about 20, 25 years and in the u.s. about five years ago. and we're launching here now. so we're still in that mode and
i expect there will be a long runway both in the state and also germany when we're only at 6% penetration. we should be at 60 or 70% household penetration and i believe we will be. >> i've been a retailer of your product and i carry it in one of my businesses and it's been great. it really caught on fire in the early years. it slowed down since. when i look at the 10-year and 5-year average of your stock while it's done great in the last year it's not where the 10-year average is higher years ago? >> we've been public since 2010. close to six years now. what happened in the states we started as a soda company and a different way to do cola. and a better way by the way. we tasted great. in fact, the same or better as you may recall here on cnbc did a taste test against coca-cola and we won. but two years ago we transformed our positioning to be a water company, a sparkling water company and focus on that. today we are the largest sparkling water brands in the world. we're twice the size of -- >> measured by what? measured by what? because that teams -- >> in volume.
>> so you're projecting out how many cartridges you're selling and what that would make in terms of leiters of water. >> 1.5 billion liters of water in the world, in 10 million homes, every day 4.5 million -- >> sparkling water the growth strategy or new product development we should be -- >> it's sparkling water. >> that's really the business. >> we don't have to use these disposable plastic bottles that are a hazard to the environment. >> do you think that's why the big water companies are targeting you? you put out a press release saying you received no fewer than six cease and desist orders? it's been viewed 35 million times on youtube apparently. is that the reason why? >> that's right. the bottled water industry has to be the biggest marketing and advertising i would say scam of all time. it's an industry that does not need to exist because the truth is, you can get the water without the bottle. you can. tap water is safe in the western world. here in america it's regulated
by the safe drinking water act. >> ask the people in flint, michigan, that though. >> worried about their local water. >> the other side of that story would be all the recalls that have happened to bottled water as we can talk about recalls. last year there were 15 recalls. here in the united states of bottled water. do you know about them? there was a recall by a nestle water brands outside of the u.s. about four months ago. we don't know about that. how about the 1990 recall of pierre that had benzene in it. >> if i buy your stock or invest in your business i'm investing in a sparkling water business or sparkling water business with flavors and licensing and product development and sodas? >> we are focused on sparkling water. water made exciting. if you want to add flavor to it that's your prerogative but we make sparkling water readily available, healthy using tap water without the hazard to the envifrmts. >> what prevents a competitor from going in the space? -- from getting in the space. >> we would love have a
competitor in the space. everyone who tried to enter has not been successful. >> how much ip intellectual property do you on the machine we're showing right now. >> we have quite a bit. we're willing to help competitors. we've done that in the past. >> you're selling the machines but really making the money on the other things you sell along the way. >> we make both on the device -- >> margins are the same. >> the margins are higher on the consumables but we have a pretty healthy 35% average gross margin on the device itself. we don't believe in loss making. by the way if you give away the machines people won't use them. so you need people to be vested in. >> it's like a printer. >> exactly. >> have you seen the ads? seen the ads? >> they're -- >> well, they're interesting because if you don't watch "game of thrones". >> you have no idea. >> it's basically the walk of shame. it's a famous scene in "game of thrones." this was tamer. how did you decide on this campaign? >> is this why coke is so or whatever i'm making coke up -- >> ness nestle driving this. >> because you're saying if you
buy bottled water, you are a bad human being? >> well, we're encouraging people to buy -- to use tap water. we're not necessarily saying you're bad if you buy bottled but use tap water. we're encouraging consumers. an actor you may recognize, i'm in that video cutting the cheese. >> you are the butcher. >> it's the cheese cutter, no the a butcher. >> i'm going to give you credit for one thing in addition to the great business you're becoming a disrupter and disrupters have one great attribute and make great acquisition targets and hopefully -- >> would you consider that? >> we're not looking for. it if someone calls we'll take the call. we're looking for our organic growthp we're almost half a billion dollars the revenue, double digit, we don't need to be acquired. >> great to see you. >> thank you for having me. >> nice job. >> ever since the s&p standard & poor's added real estate as the 11th sector, we squeezed it into our wall and had to do twisting,
thank you, s&p, it has been the worst performing group. why? can it rebound? lots of questions. trading nation team has answers coming up. 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 howmerican express cas and services can help prepare you for growth at open.com. >> thank you for having me. trading nation team has answers
hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.
exclusive ones on what went down behind closed doors between carrier, united technologies owned, and president-elect donald trump. our own jim cramer sat down with the ceo of united technologies, the parent company of carrier, listen. >> there was a cost as we thought about keeping the indiana plant open. at the same time, and i'll tell you this because you and i, we know each other, but i was born at night but not last night and 10% of our revenue comes from the u.s. government and a better regulatory environment, lower tax rate can eventually help utc over the long run. >> he also talked about immigration and free trade. >> jim, i think it's more nan just share owners. you have to think of the stakeholders that you have in a corporation, be it the communities, the employees, the shareholders and make a trade. at the same time the trade. at the same time i'll tell you the genie of gobblization is not going back in the bottle.
free trade is still essential to the growth of this country. two principles, immigration and free trade. that is what made america great over time because we had the ability to develop and innovate in the u.s. just like i sell otis elevators around the world. jim cramer with us on the cnbc nulz. do you think mr. hayes new how different they would be under a trump presidency than they would have been under a clinton presidency? >> yes, we did talk about that and thank you for asking. because i think one of the things that greg made very clear was that this phone call, this interaction would never have happened had hillary clinton been elected but now it's going to be something everybody gets used to, not just because it's good for the working person but also because there's a deal. donald trump has made a deal. you get repatriation, lower
tacks. periodically you're going to get a phone call. the phone call is going to say those jobs aren't going anywhere. >> i heard, read over the weekend, jim, that the topic that mr. hayes mentioned there was the idea or my word not his or yours the van rablt utx had if not raised explicit by was certainly hanging like a cloud in the room. >> i didn't press greg on that issue because that's central. did he say these government contracts, $6 billion at stake and he point-blank said absolutely not. he did not do that. but greg hayes was cognizant that was on the line. >> sure. >> i think that sometimes suasion doesn't require the blunt instrument, sledgehammer.
i think president trump -- president-elect trump certainly made greg a deal he couldn't refuse about taking away the idea that that $6 billion in defense contracts was going to go to someone else. >> right. without having him even say that. >> my question, was it implied? greg made it very clear. it didn't come up. what was good for america came up. >> jim, appreciate very much you jumping on this afternoon. later this afternoon the full interview with ceo greg hayes tonight on mad money, 6:00 p.m. sometimes cheap means a bargain, sometimes cheap is cheap for a reason. you guys track earnings. how about this. we've seen real estate investment structure come down. do the earnings prospect for
this group make it inexpensive with upside or cheap for a reason? >> they are cheap for a reason. they are not -- they are sort of in the bottom third of the range. they are not super cheap right now. what's about the rate, they are used as proxies for yield. we've seen the pricing go down just as we've seen interest rates go up. as soon as that -- it's been on an upswing since the second half of this year. you see the exact same direction of the reits. they have dividend yields that are about 1 1/2 times that of s&p 500, 3.7% dividend yields, so that's what people are really using them for on top of the fact their earnings don't look so great this year. there may be appreciation next year. as long as we're seeing interest rate rises, it's going to be tough for the valuations to expand. >> craig johnson, chart this for us. do you think it's cheap for a
reason or bargain? >> brian, there's no question this is classic bond proxy substitute. when you look at the five-year chart i brought in, you see a pretty clear channel that -- 175 is a really important level. maybe we get a little bit of a balance but i suspect that's going to break and you'll see a break toward 160s from my perspective. >> craig johnson and erin gibbs, we are bog to leave it there. looking at a very poor performance sector as rates have risen, guys. thank you very much. as a reminder, for more trading nation, go to internet, trading next.vbz.com. a very special check is coming up. now, the latest from trading nation.cnbc.com and a word from our sponsor. >> when a stock is trending down it's telling you it wants to go
[enge revving] ♪ ♪ 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 leaspayment on select models during the season of audi sales event. yeah, chevy was great in that. who played the wife? beverly d'angelo! juliette lewis costarred as the daughter. chris columbus was the director... it's called claymation... narwhals really exist... acally guys, it was the ghost of christmas past... never stick your tongue on a frozen flag pole... yukon cornelius... "die hard" is considered a christmas movie! that's the unlimited effect.
stream your entertainment with unlimited data when you switch to at&t and have directv. marcus has been with us for the entire show. marcus, you've got a new business partner and he's with you today. i hear you're not 100% in charge when he's around. >> he told me upstairs when i first met him today he was 50% in charge and i'm the other 50. >> you're the other 50.
>> this is my friend marc from north carolina. he came to me through the make-a-wish foundation. what did you tell everybody? why did you want to come here? >> i was inspired by you, and i want to give you my business idea. >> yeah. well, tell everybody your business idea. i think they will like it. >> i want to make a mind craft cafe so parents can drop kids off to play mind kracht. >> you're a mind craft master, marc, from what understand? >> yes. >> you would did he neat the creator? >> yes. >> i like his confidence. >> i like that confidence, it's wonderful. >> have you ever heard of league of legends. >> it's for older people. >> it's for older people. >> that's so like three years ago, tyler. mind craft is really where it's at. >> you're nine? >> i want to comment on how professionally you came dressed. presentation is everything.
he came with shiny shoes and his tie and he's ready to go sochl it's -- so it's nice to recognize this young man. >> we know marcus is your hero but we also know you love shark tank. between you and us and america, who is your favorite shark tank. >> o'leary. >> mr. wonderful? >> yes. >> thanks, brian. >> i also hear you like the artist adam sandler. >> yes. >> a lot of people would not think he's much of an artist. an actor maybe but not an artist. >> marcus and mark and we're together. >> adam sandler, kevin o'leary, that's great. i'm proud to be in that company. more importantly, marc is the hero. >> very nice to meet you. enjoy your day at cnbc. enjoy your day with marcus. thanks, everybody.
>> closing bell starts now. >> hi, everybody and welcome to closing bell, i'm kelly evans at stock exchange. >> welcome back. i'm thought you weren't coming back. >> i'm here, reporting for duty. >> i'm bill griffeth. dow lost steam. another record closing. we have one market bear who is turning bullish. what's behind his change of heart? we'll find out in just a moment there. >> trump talking tough on china. president-elect shaking up chinese diplomacy with a series of tweets and phone