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tv   Power Lunch  CNBC  December 7, 2016 1:00pm-3:01pm EST

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that does it for us on "the halftime report." notice the market is ripping, we send it over to you guys. welcome to "power lunch," i'm melissa lee with tyler mathisen and brian sullivan. new all time highs. biotech taking a beating on some drug pricing comments from the president-elect. more on that ahead. we begin with time magazine naming mr. trump person of the year. he's the man of the moment, dominating the news cycle.
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the president-elect spoke exclusively with nbc's matt lauer after being named person of the year. here is what he said about the state of business and the state of our nation. >> when you say divided states of america, i didn't divide them. they're divided now. a lot of division. and we're going to put it back together. i believe in free trade. but i don't believe in stupid trade, stupid trade is when companies move out of our country and fire their workers and come back in. my trade policies are going to be terrific. by the way, we're lowering taxes in this country. we're getting rid of 90%, maybe 85% of the regulations, which are stifling business. >> from supporters to detractors, the biggest heavy hitters in corporate america weighing in on the president-elect. right here on cnbc. and here is how they plan to deal with the so-called new guard. >> given the chance, and this is america, and we need to unite and blend it and this inauguration will be an attempt to show his personality, and
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that seemless blending of all of the diverse points of view. >> i don't think any of us are against regulations. we're for smart regulations. i think that is number one issue. >> i like the fact that we're talking about job creation. and keeping jobs here. will it change our behavior? yeah, we'll think about it. but with that we need some policy reform like tax reform. >> i don't think anybody wants to be shamed, but as a leader of the public company, what you want to do is what is right for the long-term benefit of all of your stake holders, employees, shareholders, the communities. >> companies want to do the right thing. the positioning of this relationship between government and business, i think, it is a business misguided, about time for things to get right with that. >> it is kind of a grand experiment. every day we see things, we have never seen before. certainly they're interesting. i'm skeptical. but at the same time, i say, you know what, this -- this has been a vote for change. >> and let's hear now from another ceo has to operate in this new political environment.
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and he oversees perhaps the most surprising stock of the year. with us now on set, u.s. deals mario longy, shares of 80% since the election and nearly doubled just the past 90 days. welcome. how are you operating in this new world? if you see it as a new world. >> we see the world getting to a more fair norm. when you look at trade, you look at what has happened to our country here with the massive amount of dumping. there was a period of time last year when we saw, you know, foreign material taking over more than 40% market share. and we have been putting in place mechanisms and realigning the definition of injury, which i have to commence secretary pritzker for working with us in that process. i think what we have right now are the proper -- to assess injury. >> it is interesting, because donald trump is probably getting a lot of credit for the market rally. you're a huge part of that.
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but yet your stock was up before. the government imposed tariffs on cheap chinese imports in the fall, that had nothing to do with donald trump. now the commerce department's investigating vietnam, all this has happened pre-trump. in some cases, i know tariffs are considered a bad word, do tariffs work sometimes? >> i think, first of all, it is important to clarify people use the word protectionism in an appropriate manner. all that we have been looking for is fairness and that everybody operates under the same rule of law. rule of law has been in an essential part of how societies came together and evolved appropriately. and i think that's all we have been asking for. under that environment, we can compete with anybody. >> why -- i'm assuming here that you think that the laws have not been administered fairly from our side to our rivals and competitors. why do you think that is? why hasn't it happened?
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>> to a degree, i think there was a misunderstanding what true intent of the law in the definition of injury within the trade law was. we did a research -- we saw that several countries and several companies were operating in the appropriate manner. we went back and we're able to identify that back in 1978, when the definition of injury was introduced into the trade law, it has a provision that already says that if you cannot identify behavior that can lead to injury, you're entitled to the protection of the law. so the word protectionism really is sometimes misinterpreted. we're making sure the law is applied equally to everyone. >> essentially you're saying that you think prior administrations have not understood the law. >> that's correct. >> all of this is in place. to brian's point, your stock went from $7 about a year ago to about $21 the day of the election. a much bigger increase prior to
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the election than compared to from election day to now. when you hear, though, the trump administration or what will be the trump administration's early indications on policy, such as preventing jobs from going overseas, particularly in the auto industry, which is where you supply a lot of your steel, how does that change or how does that require you to realign your business if at all, if all of a sudden some of the jobs or some factories in the auto parts sectors aren't going to be in mexico. they'll be in the united states. how does it change what you do? >> i think what you will see is an acceleration of the investments that we are going to make. we already are structured to do some things, when you see in the near future, improvement to the tax laws, improvements to regulation, those two things by themselves may be a significant driver to what we're going to do. and you add to that, you just heard secretaries elect ross and the secretary of the treasury,
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they're validating that sustainably we can grow at least 3.5%, and in that environment, we're going to be able to do significantly. >> just to be clear, when you say reinvestments, you're thinking united states, in the united states, as opposed it other countries, paubecause of t is coming. you're planning that right now? >> absolutely. >> how much of that will be human beings versus robots? >> that's the core of what we have been doing. >> let me ask in a different way. does automation kill jobs? >> i don't think it does, if you can grow. you can improve by putting a measure in place, if you grow, you certainly move jobs around in different forms. the problem -- >> give us a real world example. many of us, including myself, do believe that automation does steal jobs. tell me why we're wrong. >> when we deal with megadata today, it does the job much faster in a much broader manner. analytics become core need in
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this new environment. you need people to interpret it. you need people to design the next phase of growth. so that's kind of how you can adjust. >> where is this reinvestment you're talking about? is this completely separate from preplanned investments or reinvestments in things like new blast furnaces. your blast furnaces are among the oldest in the industry and probably need to be replaced. are these reinvestments that you're talking about in light of a trump administration, is this different? are these different reinvestments from what was already planned? >> it is not different. it is going to be accelerated. >> accelerated. >> okay. >> so let me ask you about regulation, which is something you think has burdened your industry vis-a-vis foreign competitors. what single or group of regulations would you like to see repealed? and would that mean that you would not be complying with existing environmental standards? in other words, is the repeal you seek at the expense of more environmental -- >> no, what i believe is
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regulation has a role to play and it is important. but it has to be done smartly. i mean, when you get into some situations where we're being asked to control some substances in water that are far lower than what nature naturally offers, that's irrational. so i think there are some things that really don't need to be there. and there was a point in time in the past couple of years that i was having to hire more lawyers to try to interpret these new regulations than i was hiring engineers. that doesn't make any sense. >> final question. there has been a lot of optimism in the stock market around your equity. not just you guys. the entire market. in the last 30 days, mario, have you noticed a jump in optimism among your customers? have customers called you and said, let's get ready to ramp it up. the market, i fear, may be getting ahead of itself. >> i have not felt an environment of positive optimism where forces are converging to
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provide for a better environment in quite a while. and this is pretty widespread. customer suppliers, you know, throughout the communities -- >> only in the united states. are you seeing the same optimism in europe, it is different. >> it is the united states. united states is a special place. >> are your employees more optimistic? >> absolutely. and i'm more than happy to bring back the employees that we were forced to lay off during the depression. >> how many jobs is that? >> it could be close to 10,000. >> 10,000 jobs. has mr. trump called you? have you talked to the new incoming administration in any capacity? >> not yet. we have talked before and when we have plenty of input that has been given throughout the campaign to refer to the things that really will be making a difference. >> i want to be clear before we let you go, you're here on international television. maybe a lot of your employees or former employees are watching. you're ready to rehire back some employees that had to be laid off? >> absolutely. >> up to 10,000 of them, in the
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united states. >> in the united states. >> we like to hear that, especially going into the holidays. >> that's good. >> i'm sure they do too. mario longy, thank you very much. >> thank you very much. >> appreciate that. news alert with seema mody. >> i want to draw your attention to shares of aleer, which have just resumed trading after being halted for a couple of hours. alere responding to abbott's lawsuit and intention to terminate its acquisition of the drug company. alere saying the lawsuit is entirely without merit. abbott knows the issues it raised provides it with any grounds to avoid closing the merger. alere has complied with the contractual obligations but we're looking at shares of alere down better than 9.5% on the day. a story we'll continue to watch. >> all right, seema mody, thank you. one thing is clear, under president-elect trump it is not business as usual. even house speaker paul ryan said as much. so how do businesses adjust to this new normal? we're taking a page out of the art of the deal and look at how
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ceos can close a deal with the most unconventional president in modern times. that is next. generosity is its own form of power.
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you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. -- business guy, a transactional negotiating guy that is becoming president. we shouldn't be surprised anymore he's going to say surprising things for an incoming president. he's an unconventional person. he was an unconventional
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candidate, becoming an unconventional president. >> speaker ryan seeming to capture the essence of what the president-elect wrote in his book, the art of the deal. trump writes, quote, i never get too attached to one deal or one approach, i keep a lot of balls in the air, because most deals fall out. no matter how promising they seem at first. so that in mind, how should business deal with a president who is arguably the first real businessman in the white house since herbert hoover? let's bring in harvard law professor hal scott, expert on ceos and negotiation tactics. i'm sure some would take issue with my, you know, sort of laying it out there about business people because other presidents, george bush ii, he owned the texas rangers, but i think people got my point. donald trump's coming in from a business perspective. how is that going to change the game even further with his dealings with business and government? >> well, you know, in some sense business should be more comfortable with the business guy than a lawyer. you know, they deal with
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business every day, and now they have a president who is one of theirs. so i think although washington may view this as unconventional, they should be used to this kind of person in the business world. >> how does twitter change this dynamic, professor scott. there is a note out regarding the boeing tweet yesterday and he said that the president-elect was using twitter as a bully pulpit. that's quite a different sort of negotiation tactic. >> well, i mean, what's wrong with the president complaining about $5 billion for an airplane? i think that's what we would like presidents to do. and he, you know, there is no contract with boeing. he's not breaking anybody's contract. he's basically saying to boeing, you know, we would like your plane -- we want you to make money. we want you to make a lot of money. that's a business guy. but he's saying i think your price is too high. so i think the important part of that message to me was that he
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recognize boeing has to make a lot of money. i don't think that's something obama would have said. >> to you think that businesses or ceos are unsettled or on their back foot over the idea that the president speaks rather aggressively and pointedly about individual businesses? or is this what ceos do all the time? >> well, you know, if you put this in the context of states in the united states, every governor is constantly calling business that is in their state trying to, you know, persuade them not to leave and calling businesses outside the state, trying to get them to come. so these ceos should be used to that. what is perhaps different, probably is very different, is that the president of the united states is doing it. well, why shouldn't he? he's supposed to be doing something that is good for his country. and having business stay in the united states is good for the
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united states. >> what do you think, hal, we heard so much ahead of the election that donald trump is the least qualified man ever to run for office. if you look at it, you could say he's the most qualified in some respects. he ran a business for 40 or 50 years, yet he had some bankruptcy issues, but you probably learn more from failure than you do for success. why have certain parts of this country been so reluctant to embrace somebody with a firm business background, whatever you think of the man himself, as our ceo. >> well, you know, it has been -- you mention herbert hoover, by the way, i'm sure donald trump will do much better than herbert hoover. >> nobody could do worse, probably. >> that's right. but i think we're just not used to it. we haven't had a business guy. there becomes a culture that gets established for how a president behaves. he's a politician, right. well, now we have somebody who is not a politician. and it is really a breath of fresh air as far as i'm
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concerned. so i think it is getting used to something. but i think hopefully after we get used to it, we'll like it a lot. >> what is the best way for businesses to respond to a president-elect tweet or request to renegotiate something? not only is he negotiating as a business person, but he's negotiating as the president of the united states. and in our interview that jim cramer did with the ceo of united technologies, he sort of mentioned, you know, we're looking at the situation, we get 10% of our revenues from government contracts. are businesses inherently at a disadvantage? >> well, you know, i can answer that in a number of levels. first of all, i don't -- if he has a contract with a company or the government has a contract, i think it would not be right for the president to threaten to breach that contract. he would be acting contrary it law. and, by the way, i don't think the president has done that. if he goes to a company and says, look, can't we come to a better agreement on something?
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how should the ceo look upon it? well, at a very basic level, the ceo has to say what is best for our shareholders? okay. now, is it really good for your shareholders that the president of the united states thinks you're betraying america by moving jobs outside of the united states? it is not really in the interest of your shareholders. your company is going to suffer a reputational risk. now, that's because the president is saying it is the wrong thing for you to do in terms of your responsibility to our country to do this. i don't think that's a wrong thing for the president to say, and, by the way, you know, when ceos look at the interest of their companies, they really should look also at the interests of our country. they're in our country. and they should be caring about our country and the best ceos i know, by the way, do that. >> all right, professor scott, pleasure to have you on. hal scott.
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>> thank you. time magazine naming donald trump person of the year. but up next, stocks are near session lows, naming the stocks of the year. five stocks posting bigley returns in 2016. got the names ahead. and speaking of bigley returns, stocks at a record, all over the rally when "power lunch" returns.
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the dow up triple digits soaring to fresh all time highs. s&p 500 hitting new highs. the records keep running on, bob pisani at the new york stock exchange. >> let's call this one a slow meltup. the volume is not heavy, but the overall market is lifting with a little emphasis on the out of favor groups like real estate and telecom. let's look here. new highs, intraday highs from the dow industrials, s&p, russell 2000. we're very, very close on the midcaps. sector check, you'll notice here, telecom, real estate, consumer discretionary, technology, what do they have in common? they were laggards in the month of november. laggard groups are now moving up rather noticeably here. so remember all those big moves that we had in november in terms of the financials and industrials, other sectors starting to move. 300 new highs down here at the new york stock exchange, haven't seen that in a while. groups, american express,
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cummins, norfolk southern, best buy, retailers, financials, you got big industrials, very broad swaths of stocks hitting new highs right now. the market is getting more even. remember what happened in november? we had financials and industrials moving up dramatically. staples, staples right now basically flat on the day. this was a couple of hours ago. we're seeing beaten up groups like staples and utilities doing a little bit better overall, a little flatter market, overall market is lifting. just broad stocks starting to move forward. what is the overall tone of the market? a little change. november, by the trump sector winners, by your financials and materials, now there is a new theme, potential generic growth in the economy and that's lifting all boats now. 300 new highs now. haven't seen that in quite a while. >> thank you. time magazine naming donald trump person of the year. so, of course, us being cnbc, we thought what should be the stock
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or stocks of the year? here are some real contenders for it. invidia, on the list, if not the winner. the little sort of scrappy chipmaker that could, beating intel, much of it up 183% this year. free port mcmoran righting the return. newmont mining riding the gold wave. we had the ceo on this fine show yesterday. thoughts on stock or stocks of the year? >> i think it should be a financial. >> goldman sachs. >> goldman sachs or bank of america, financial, only because it was the election that really ignited it. i think that is the story of the year that really the stock market came alive after the election, whether you liked the politics or not, that's the market we have. >> how about u.s. steel? did pretty well. >> yeah. >> not bad. >> it was a $185 stock in 2008. but many stocks were $185 in
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2008. >> how much? two years of -- what was the goldman up this year? >> up 30% in 30 days. >> that's a story of this year's market, right there, in one chart, i think. >> it is much of the dow's total return over the last 30 days as well. not taking anything away from the broader rally, but goldman has been the donkey that pulled a lot of the market mule or market cart. i guess donkeys can't pull other mules, unless it is a super donkey. >> it could be a super donkey. the returns are super. >> all righty. donald trump says he'll bring down drug prices. should that sector be worried about it? the story is straight ahead.
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hi, everybody. i'm sue herera. here is your cnbc news update for this hour. a plane belonging to pakistan's national carrier crashed today killing all 48 people on board. the small twin engine propeller aircraft was flying to islamabad when it crashed in the village about 45 miles northwest of the city. opening statements are under way in the federal trial of
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dylann roof, charged with killing nine african-american parishioners at a charleston church. the judge gave the jury instructions before prosecutors began laying out their case against roof. having a positive attitude could help you live longer. harvard university researchers tracked the health of 70,000 women and those who were considered to be the most optimistic had a 30% lower risk of early death than the least optimistic women. and sprint is giving pokemon go users some reasons to come into their stores. beginning on monday, more than 10,000 sprint stores will turn into pokey stops and gyms. players will be able to collect in game items to help advance their game and perhaps more importantly recharge their phones. that is the news update this hour. ty, back to you. >> you're optimistic, right? >> very optimistic. >> you will live long. >> i hope. and prosper. >> donald trump narrowing his short list to head up the fda.
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let's get to another optimistic person. cnbc's meg tirrell with the new details. >> we are hearing that that short list potentially is narrowing and may include a peter teal associate, jim o'neil. sources tell cnbc has been put forth by peter teal, under consideration for potentially leading the fda, sources also tell us that teal put forward o'neill's name not just for fda, but for a number of potential positions under the health and human services department. we reached out to team's team on this, they gave us a statement, essentially saying that he has extensive experience in government and in silicon valley. he's a strong candidate for any of several key positions. now, o'neill is currently a managing director at teal's mithril capital management. he doesn't have a medical background, which would make him an unconventional candidate here. another name floated is scott
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gottlieb, with the american enterprise institute. he is a doctor and has worked under fda and cms in the past. so folks will be trying to parse out which of these guys or maybe somebody else under consideration who will be leading the fda under a trump presidency. >> stay there. we want to bring you in on this other story as well. donald trump vowing to bring down drug prices. he says he does not like what happened with drug prices. health care and biotech taking a hit on the comments. biotech down more than 3%. joining us is les frontleiter. interesting because the sector everall, health care and biotech rallied shortly after the election. on this one comment to time magazine, giving up pretty much all of the election day gains, there was an interesting note earlier today, i want to get your take on this, saying essentially doing anything on drug prices may be very difficult, tom price, the nominee for hhs secretary would not go for government, a regulation of pricing. and also republican congress
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won't approve that either. what is your take on whether or not this could mechanically happen? >> i think it is mechanically very difficult for the government to control prices. especially this particular group of government folks who are market oriented. there are some ways they can incentivize the market to move a little faster in terms of developing new drugs and competition. but i would say direct negotiation is not likely to happen. and -- but we know that drug prices have been and continue to be a very strong rhetorical talking point for politicians and also really a pain point for a lot of people in america. so at a minimum, the rhetoric is bound to continue whether or not anything actually happens is another story. >> so you're acknowledging it is difficult to be an investor. you can say, yeah, it is probably not going to happen, but you get a tweet, a comment, and, bam, those gains are gone.
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>> yeah, well, you know, it is never not been difficult to be an investor. but yeah, it is something we deal with. you have to put that into your valuation model. if trump comes out with another tweet, you know, is it more attractive, down 3%, 10%. so it really -- we deal with this -- we always dealt with regulatory issues. this is just the latest of many. and, of course, who is going to runt fda, who is going to run cms, who is going to run hhs. those are all issues up in the air. i think at least at the moment, health care, unlike a rot lot oe rest of the market, is in a holding pattern. >> i'm curious to hear your thoughts on the idea that -- during the course of the campaign, did say -- expressed some support for the idea that medicare should negotiate drug prices. that note we saw saying trump likes to negotiate everything, he's never going to turn down the opportunity to potentially
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negotiate, maybe that won't happen. it is thought this would never get through republican congress. but if the president-elect adopts this position, do you think republicans could change their thoughts on that? >> sure. but that's really -- i would say from what we know right now, it is a little bit out there. most republicans have said they don't want to. i think actually there are a lot of democrats who say they don't want to as well. mechanical mechanically, to start negotiating directly now would be an amazingly large challenge. and they're going to scrap -- if the republicans repeal obamacare, which they say they want to, there are some pilot programs part b that will go away where some of the value based issues are being brought up. on one hand, doing one thing. on the other, doing something else. i guess we're just sort of in a wait and see until we -- until the staff is announced and then
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we hear what they intend to do. >> drug companys liked obamacare, generally, didn't they? >> i would say almost all of health care liked obamacare. the idea of being more people insured. >> will they like it if it is repealed? >> i think they're going to -- it depends what comes afterwards. >> that's my point. >> i would say repeal and not replace i think is most risky for the hospital sector. but certainly the insurance companies have lost a lot of money on the exchanges. it sort of depends what comes next. and unfortunately even the people who claim to have crystal balls haven't said what going to happen in the next couple of months. >> nobody really knows. >> yeah. >> all right, les, thank you. our thanks to our own meg tirrell. >> all right. governors start to trump each other just to lure business away from other states. the battle for business is just heating up. that is next. by the way, the dow industrial
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average is now up 200 points as new record highs are made seemingly every single day. if you're wondering, american express, home depot and nike are the key players. the report from rick santelli. >> thanks, sully. 24 hour chart of 10s, we lost about five basis points today. could be the lowest close tins a week ago tuesday. a little over a week. let's look at some basic year to date charts. and know that tomorrow is the ecb meeting. rates are down here. look what is going on the big picture. we're basically coming off rather extreme high yields since july of 15. bunds never made it as high, but right at the top of the range. let's look at what is going on between the italian and sovereign bund. you see it was close to 200 basis points and widened post referendum before the ecb, hard to tell why it is coming back in. finally, the currency, all about the currency. this is from march of 2015.
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virtually where the euro dollar is trading on the low side. it bounced lately. what is all this mean for tomorrow's meeting? nobody is quite sure. quantitative easing continues to march of next year. will mario draghi talk about it? these are all huge issues. we're all connected at the hip on central bank policy. now, "power lunch" returns after a short break. will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at
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find out how american express cards and services 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. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird. welcome back to "power lunch." stocks hitting session highs this hour. triple digit gain for the dow up 200 points, more than hitting a new high. and the s&p 500 and dow transports also sitting at new highs. look at american express, home depot, nike, leading the dow higher. western digital, micron, also leading the s&p 500. welcome back.
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the battle over jobs not just happening between the u.s. and other nations. it is also happening between u.s. states. scott cohn joining us live with that story. scott? >> is that what they call it. we have been talking about states battling states for year in our america's top state for business series, but this may be the first time that that battle is actually sanctioned by the white house. donald trump last week in indiana saying that while his administration plans to make it difficult for companies to move jobs off shore, he's perfectly fine with companies moving from state to state. well, that has experts and the economic development community all abuzz. >> for states, i think it puts them a little bit more in a central position. they're now going to be seen as part of the overall national effort here to grow our economy. and to make it more competitive. >> so will that effort hinge on subsidies like the deal that saved a few hundred jobs in
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indiana? if that's the case, those subsidies get a lot of criticism out there as so-called corporate welfare, but these states cumulatively have been the biggest, most generous with their subsidies, new york at the top, $25.2 billion, a lot of that in discounted or free electricity. louisiana, 16.8 billion. michigan, 14.1 billion. washington state, home of boeing, 13.8 billion. and new jersey at 8.9 billion. indiana is an -- in sixth place. what we found in recent years with top states is that companies are looking for places with the best workforce. and that's how states are leveraging their cost disadvantage against foreign countries by saying, look, we have the skilled workers here. in our 2016 top states for business study, the top workforces were colorado, massachusetts, virginia, north dakota, and arizona. we'll be starting to crunch numbers for our 2017 top states for business story series very
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soon. and you can bet that this is going to change the dynamics just as the change in the dynamics in every state capital across the country. >> look forward to that. scott cohn in mountain view for us today. time for street talk, analyst recommendations of the stock s you need to know about. we the price target higher to 31 from 27. juniper is transitioning to what he calls a volatile service provider market and has a strong product portfolio, gaining share and switching and we'll see stable revenue growth in 2017 and 18. also cloud revenue, this is interesting, growing as a percent of total revenue at 24% up from 19% just in 2015. >> stocks up 17% in 90 days. not bad. stock number with, mercado libre. goldman sachs upgrading to a buy from a neutral. they call this a rare window to get into a secular growth story. the recent stock price dropped due to foreign exchange volatilities. company based in america, does business in latin america.
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they say this is a nice valuation. and note mercado has better monetization now in argentina and mexico. their target price at goldman on mlei up to 100, about 25% upside. >> that's like ebay of latin america. third stock here, michael stores, downgrade to market perform. it held up in the face of deteriorating industry fundamentals and possibly the end of a seven year cycle of expanding. private equity investors own 51% of the company. the board could go in and increase buybacks. >> fake christmas tree, they have a nice selection. >> you can make a fake christmas tree. >> you can make everything from michaels. next up, nexeo, woodlands, texas, houston based plastics distributor. $10 target, saying the company is starting to catch up to its
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peers, shifting to higher margins specialty chemical businesses. they note a fragmented market worldwide that is ripe for market share growth. their target applies 34% total upside. so nexeo, small cap call of the day. next up, tyler mathisen. >> thank you very much. if we can take a shot of the heat map over there, i want to show you how dominant equities are today. that means that 4 1/2 out of 5 stocks in the s&p 500, more than 400 of them, are up today. s&p 500 at new highs. energy, industrials, financials, the leading sectors there as we look at another day of green. coming up, the powerhouse, we're going to take you inside kim and kanye's pricey new york city crash pad. plus, the hottest new housing amenity, the secret service, high end buyers look at it as an
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welcome back to "power lunch." stocks at session highs now. one mover is square. shares coming off session highs, but still off more than 3%. apple and square have announced a new partnership that will integrate square's payment technology with the apple wallet. customers will be able to use money stored on square's virtual card to make payments using apple pay. that stock now up more -- about 4% on the day. >> all right, thank you very much, seema mody. time for the powerhouse, weekly series that gives an inside look at homes of celebrities, sports figures and ceo. we're taking you into the penthouse that kim kardashian and kanye west stayed in when they spent time in new york city recently. this new york city penthouse is on the market for over 22 million. and recently two of the most famous celebrities on the planet call this place home.
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kim kardashian west and kanye west and their family faced a crush of media each time they returned to this 7,000 square not triplex. >> to make them feel comfortable, we had to convert the office into a glam room for kim. we were able to offer them the entertaining space, the amenities that they would be used to in their own home. >> florida or to ceiling window. the lower level contains four of the five bedrooms including the master suite and a home gym. the outdoor living area is a rare find in the middle of the concrete jungle. complete with a private swimming pool, sun deck, and grass covered terrace. >> so the bottom terrace was designed just for children. you can play soccer on there,ive with whiffle ball, whatever you want. >> the amount of inquiries and action that we received after
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they left from serious buyers was amazing. >> so how much did kim and kanye spend to stay here for a whole month? not a penny. air bnb picked up the entire tab as part of the home rental company's marketing strategy. >> thank you, guys, so much for this complementary stay here in new york. >> i'd like a stay like that. robert frank joins us. we want to point out we're in the midst of a rally and we're watching the dow transports hit its intraday record high. the highest level in about two years. >> kardashian rally. this was -- >> transports specifically. >> this was the most unusual use of luxury real estate for marketing i've ever seen. they're not marketing the apartment. what air bnb did was to pay the apartment owner of this $22 million penthouse a monthly rent, somewhere north of six figures, north of $200,000, to
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allow them to stay there for a month, just for the marketing value of having kim at the end there on instagram say, thank you, air bnb, for letting me stay here. it was just for that marketing value. and, again, a very interesting creative use of an apartment for marketing. so they let them stay there for free, paid for it by air bnb. >> you can't actually book that. >> no. you can't. and just to -- >> you can? >> cannot. you cannot book it through -- they would never allow a $22 million penthouse, none of the people in the building would allow it. that's what's unusual. the apartment is not even for rent. >> they'll rent to kim and kanye. >> for a sum. >> did they ever stay there? >> they were living there for a month during fashion week and his concerts in new york in september. that was their home. and she had her glam room there
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and the kids -- >> i don't like that place with young children with the balconies like that. my boy, my 2-year-old, he's a little bit of an idiot, he would be walking along the edge of the rail. >> no, no, no, that would be trouble for little kids, i think. >> great apartment. 700 square feet interior. >> robert, i know you're going to stick around for the next -- we'll turn now to the hottest thing in new york city real estate now. that would be -- you heard about door men, these are serious door men. secret service guys. tara palmieri is with us. you report that some real estate agents are touting secret service protection now as an amenity at trump tower. tell us about it. >> right. they're calling it the hot new amenity. they actually in the flyer they sent out, they said fifth avenue buyers interested in secret service, it is the safest building in manhattan. so clearly people are figuring out how to profit off of the trump brand. which is as much as trump tries
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his best for his business assets, people will try to profit off of it. business associates, marketers, et cetera. so trump doesn't make that much money from the sale of a building. condo unit in his building. because they're mostly privately owned. he would only get a processing fee. but the point is, he's drawn a lot of attention and these realtors are figuring out a way to possibly lure clients who -- >> melissa was pointing out it is probably safe because you can't get in and out of it. >> imagine when the president is coming and going and there is a lockdown on the building and you can't go up the elevate, come down the elevator. >> this is -- this terrible for wealthy buyers. there are 30 units for sale in that building. prices are falling. there is a big reason. there are many buildings in new york city, most have very good security, plenty of security. this level of security is disruptive to you and your guests. nobody wants to be in this building now. these guys are trying to turn
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lemons into lemonade and god bless them, they're real estate agents, but it isn't going to work. nobody wants to be in this building. >> could there be lawsuits against -- >> that is a very good question. that's a -- i hadn't thought of that, but i bet it is possible if somebody can't sell their apartment and they're blaming that, yes. >> in america, we sue over everything. not just a random thing. tara, how do you feel about rpp? do you know what that is? >> can you explain that for me? >> rich people problems? is this tugging at the heart strings? is this an after school special? >> i'm not entirely sure. but i was just going to make the point earlier that foreign buyers are really interested in living in trump tower where as a lot of people who are already living there want to get out. a lost the real estate has gone down in the building. six units decreased in value since trump was elected. but i was going to say that,
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this is an issue now where you're also seeing a lot of foreign dignities thinking they have to stay, the trump international tower when they're in d.c. as well as a way to curry favor with donald trump. >> i bet it is going to be harder to get through a foreign buyer with a lot of cash buying an apartment in trump tower. >> with all the suitcases. >> in terms of the transaction getting approved, you're a foreign buyer with a lot of cash, i expect it will be harder to get that through. >> it is hard to put a mink through a metal detector. that's hard, melissa. >> right. well, actually -- >> tara, my dear, we have to go. we love the story. we'll see you a lot. you're based in d.c. now. >> my hometown right now. >> right. >> we're all over this big rally now. dow is up 250 points, buy another mink for your trump tower apartment. the dow transports at another record high. "power lunch" always rolling in the fine stuff is back after this. and i know a thing or two about trading. so i trade with e*trade, where true traders trade
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>> just to warn me. >> little touch there. >> that's right. >> all righty. two hours until the closing bell and what a rally we have. look at the dow, folks. up 1.5% or 272 points. another all time high. the s&p 500 also hitting all time highs. the dow transports, they are surging record highs here. this is the first intraday record high for the transports, folks, in two years. telecom, consume er zegs r e er. >> if you look at the list and it is small, get to the movers in a minute. if you look at the losers in the s&p 500, almost all of them are biotec biotechs. if you cdid not have those comments, it is conceivable nearly all 500 s&p 500 names would be higher. wendy's surging 4%.
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lowe's up 3%. the home improvement chain reaffirming guidance for the year. mastercard on the rise, up 2%. credit card giant hiking its quarterly dividend by 16%. new $4 billion share buyback program. southwest airlines also higher. say the passenger traffic rose 7% from one year ago. to bob pisani on the floor of the new york stock exchange for more. this is a broadening of participation. >> right. it is a slow meltup. the tone of the market is changing. let's get to the simple facts here. we're at new highs, historic highs in the major averages, s&p, the russell 2000, very importantly. transports may not quite be there, but very close. midcaps also. essentially at new highs here. the tone is changing. that's what i want to emphasize. remember the trump rally in december, buy banks, buy industrials, buy materials
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overall. the tone is changing a little bit. the december market theme is by generic growth. the overall market. take a lock ok at the market leadership today. it is telecom, real estate. this is the sectors that were lagging in november. so, mellasia is correct, the market is broadening out. industrials and other groups are still up, but these are now leadership groups here. so let me just show you, the new high list still largely banks and industrials. so you got your paccar, cummins, norfolk southern. this has been a story for a while, so your big money center banks, regional banks, you even got amex and other groups, financials like some of the insurance names, also 52 week highs. it is getting broader. we're seeing consumer discretionary stocks. your kohl's and best buy. marriott wasn't at a new high until recently. host hotels. sectors starting to peak out.
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it is broadening a little bit, even some other groups, some of the other kinds of industrials that are doing a little bit better. so let's just say right now, the market tone is broadening out. let's talk more here. art cashin, we were saying the market is broadening out. a strong time of the year. you get midday meltup, suddenly we're at 300 points. >> and you have a couple of different technical things you had a compressed range for most of the morning. around noon, a buy program came in. took the dow up on the lead. they started to follow the dow. and then most recently when the transports took off, there was hope for a record in the transports, which we now have gotten. that's going to give you a dow buy signal. all these things have combined to give you a low volume levitation. >> i was talking to nick gunn.
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asking me at 11:30, we're starting to lift. why are we starting to lift. the only thing i saw is modest buy programs and yet the market just sort of broadened out from there. you can get that with markets at new highs, and when you're in the seasonally strong period of the year, modest buy program, everything lifts. >> don't underwrite that strong period of the year. this is a good part santa claus rally as well. technicals and hope to get up here, we finally got one. and that's what this lift is all about. >> i'm curious, it is melissa, i'm curious, we're all seeing a nice bid to the bond market and markets hitting high, intraday. also a session high. how do you explain that, this need for safety still? >> there is a lot of anxiety. tomorrow, the ecb will make some very important decisions. so i think you see people kind of hedge themselves, get that kind of protection in case there is a negative surprise.
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i don't think there will be one. i think draghi will bend over backwards after the italian referendum to supply what the market needs. >> and so the bottom line here is the market is broadening out. we have been debating this for the last several days. we have stopped see something of the other big leaders like banks and industrials go up in these other sectors now start moving in. the question is how much further can we go on the idea of somewhat better growth in 2017 in. >> i think -- i don't know you'll go in the manner of this. but when we had pretty good novembers, you borrow a little of the december rally, but don't take much away. usually come in with another 1% to 2% rally. santa claus won't have to go in a milk carton. >> thank you for coming over. appreciate it. >> thank you very much, bob. in our last hour, we spoke with the ceo of u.s. steel, mario longy. the stock is up 80% since the election. he's meeting with vice president
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mike pence on friday. and he's hopeful an increase in demand will let his company bring back jobs. >> i have not felt an environment of positive optimism where forces are converging to provide for a better environment in quite a while. i would be more than happy to bring back the employees that we were forced to lay off during the depression. >> how many jobs is that? >> it could be close to 10,000. >> now, we should be clear that hiring would be contingent on future economic growth. but certainly he said he was open to bringing back all of those workers that had been laid off recently. >> it is not just a -- he mentioned reduction corporate tax rates that could make the u.s. more competitive to have the jobs here. accelerated reinvestment, not that the investment will be bigger, it sounded like, but that it is going to be accelerated to this year. >> yeah, i tweeted out he plans to hire, so corrected the tweet,
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he would like to hire them. this is good news. the fact he's on air, now he's on the record, saying i would like to do this, and it is entirely possible, great news for a company that had a lot of layoffs over the past decade. >> absolutely. another stock on the move here at&t ceos and telecom giant and time warner appearing before lawmakers to defend the proposed merger. eamon javers is live with the latest. >> this hearing today was relatively gentle treatment for the two ceos of at&t and time warner. couple of moments of tension, though, one of those when senator richard blumenthal of connecticut asked both ceos to attest they wouldn't weaken their news. i asked randall stevenson about that after the hearing and here's that he told me. >> purpose in a news agency is to provide objective coverage of the news, period. why would that change?
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regardless of who is president or who owns cnn. objective news coverage is the objective. >> mark cuban of the dallas mavericks on hand, he made the argument that even though this is an $85 billion proposed deal all in, these guys are still the underdogs when they're compared to google and facebook and the other entities in silicon valley that they'll have to compete with. here is what mark cuban told me also just after the hearing. >> regardless of the size, just in terms of content, opportunity, disruption, these guys are at a disadvantage. i don't see this as being a negative consumers, i think it is going to be a big positive. >> overall, even though there were a couple of those tense moments, you have to say nothing here that could potentially derail this deal. i talked to amy klobuchar on this subcommittee, she said the whole purpose of this is not to get in the way of the deal, but to get senators on the record and get some questions answered and they did do that today. >> thank you very much. a closer look now at at&t.
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shares up today by more than almost 3%, up 17% this year. does the rally have more room to go? we have a classic bull/bear debate now. jennifer fitchy and craig move et and julia boorstin. congress doesn't approve or not approve a merger. the doj, possibly the fcc could play a role as to whether or not this goes through. the subcommittees oversee the doj. it is important. from that standpoint, do you think it was a convincing case that it is not a matter of competing against the likes of a comcast, but really redrawing the lines of competition to include the googles of the world. >> well, yes and no. look, the -- antitrust issues that this raises are all vertical. and i think it got a relatively gentle treatment. our view now is that the deal
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is probably more likely than not to get approved. and that the vertical issues, while real, are probably not going to be show stoppers, particularly if the jurisdiction for the merger review is only in the doj and not in the fcc. i think that was actually perhaps most important in the most interesting part of the hearings today was whether or not the fcc would have any jurisdiction. >> julia, i know you're listening to the hearings closely on the in-house feed. i'm curious what your reaction was. i thought that was provocative argument that could redefine the landscape of mergers in the future. >> number of people ask me, why is mark cuban testifying? what is his point? he repeated over and over again, various different ways, the idea that it is going to be very hard for time warner or at&t or any of their similar companies to compete with the likes of facebook or snapchat or google or all of these companies that are taking more of our time. he was changing the way he redefined the business landscape, saying that facebook, snapchat, youtube, they're
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competing with what time warner has to offer. if you want to have any chance of competing with them, they have to allow time warner -- >> he's looking at television. >> differently. >> in a very different way. >> yes. and the way -- he's looking at entertainment, the way we spend our time. >> all the companies need the wi-fi and internet. >> there is also this question of at&t is saying that perhaps it will allow you to stream content like directv now without that counting against your data cap. i think that issue is going to be a very controversial one for this and for also the way they treat time warner content. >> jennifer, i'm curious, when we think about possible consolidation in the sector and i guess now the definition of the sector broadens just a bit. we're looking at this optimism that is surrounding the like of sprint and t-mobile, should we think more broadly, it may not just be a sprint t-mobile possible tie-up, it could be a
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google, sprint or comcast t-mobile. all sorts of combinations now based on the definition that could arise. >> that's right. i think what the trump presidency even before you saw convergence kick in, so the typical silos had become very morphed. you mentioned sprint and t-mobile. i would agree. that's what the market seems to be thinking. but if net neutrality or title 2 is reversed under a trump administration and the fcc that comes with it, i think it is a game changer. things that weren't at all seen possible before the election now very much are possible and different partners -- tech companies have to consider wireless as part of their strategy. >> i think it is interesting that yesterday randall stevenson said he thinks a trump presidency will be great for his business because he expects trump to roll back all the net neutrality rules and other regulations that have made it harder for them to make more money. so i think that's another area
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to watch. it very much ties in the potential of this deal. >> and jennifer, i think you brought up an excellent point, we're going to have a collision course at some point, are we not? i understand julia's point, they're competing on the content side, time warner owned by at&t, which then requires -- they're the ones providing the cell phone signal with verizon and sprint to operate the facebooks and you tutubes of the world. they're going to come into massive accident. >> content is king, but only if it has mobile. if you think of who has mobile, there is really four national players and spectrum is very much a finite asset. we favor those carriers that have spectrum and most of it and the biggest, baddest pipe in my view is sprint. >> to explain your thesis on at&t, and specifically address the idea that this company, if this deal goes through is going to be digesting an awful lot of acquisition in an awful hurry.
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>> that's right. not just a lot of act w acquisi but a lot of debt. if you look at at&t's balance sheet, you have to include the operating leases and off balance sheet that, like pension obligations and post retirement health care benefits, add all of that in and at&t is going to be close to $300 billion of debt at the end of this transaction. very highly levered. and while i get all of the arm waving about some cool stuff that might happen, let's look at the reality, which is their wireless business is a shrinking business. their wire line business is a this rifrni shrink business. those prices aren't enough to offset the cost of rising programming costs, so the economic value is actually declining. and the economic value of the subscribers that they'll get with their new directv now service is very likely close to
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zero. so you're looking at a business with very high operating leverage, very high financial leverage and negative growth. i love the conceptual stories about convergence and that sort of thing, but the reality is this is a business that is unfortunately very growth challenged. >> got it. thanks, guys, appreciate it. jennifer, craig and julia. now to seema mody. we're tracking all parts of the market rally. and one part of the market rising steadily since the trump -- since donald trump won the presidency is the home builders. industry group is showing gains amid the overall market rally. xhb up more than 2%. shares of pultegroup, lenner, dr horton and toll brothers up 3% higher. more new record highs to tell you about. right now, the dow is up about 261 points. and in the month since the election, the dow has gained more than a thousand points of
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loot. how can you keep making money in this rally? that's next on "power lunch." ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?
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welcome back to "power
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lunch." a newsletter concerning spacex. it is now delaying its next launch until early january. it was originally scheduled to do its launch about december 16th. but as you know, they did have an explosion in september and they say they're still working through the details of that. september 1st incident. and they want to make sure that they have everything in order. now, iridium, the company that will put its satellite on that next spacex rocket says that it fully supports the decision to delay the launch until early january. so, ty, you're up to date. a little delay. big rally on wall street that we're following, the dow soaring 270 points now, 272. new all time highs. the s&p 500 also at new highs. the transport, new highs for the first time in two years. amex, home depot, nike,
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suffering this year, leading the dow today, while western digital, micron tech lead the s&p 500. how much higher can we keep going? our next guest says u.s. stocks could see another 6% to 8% upside. let's bring in peter anderson, chief investment officer with fiduciary trust. 6% to 8% from here by when? >> well, i'm actually modeling that. that's for next year. >> okay. >> before we took into account the trump election. so forward looking expectations as we call them, prior to november 8th, we were modeling around 6% to 8% return in u.s. equities with a 15% volatility. now, we have not made any adjustments yet, simply because we're not certain any of these policies are going to materialize. so you understand, tyler, you have to wait until some of this stuff actually plays out before we actually have data to
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analyze, right? >> but it sounds like what you're telling me, if i'm interpreting it correctly, is that we already have borrowed from next year's returns. >> we could have, yes. and one of the things that i think we need to realize, though, is that this year isn't over yet and, you know, the euphoria we're feeling now, experiencing now, i'm not necessarily thinking that this market is getting its oxygen from trump. i think that this last quarter was tremendous in terms of, you know, u.s. economy and consumer reporting, strong, equity quarterly earnings were superior. so a lot of the stage has been set for a rally anyway. and then i think certain people are piling on the projections about president-elect trump and how that might help a lot of the asset classs or certain sectors
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and we're not that enthusiastic at this point yet. >> pete epeter, i not called it trump rally. but i think there are other things at work here. how much of this is directly attributable to donald trump's election? >> well, it depends on what you're looking at. when you're just seeing the headlines that say buy infrastructure type stocks, then a lot of that rally is dedicated to the kind of lead-in. if you start looking at individual stocks, for instance, you can actually back in to why some of these stocks are performing so well. and then on top of that, you can say some of these companies are well positioned that if any of trump's policies do come true, they have the additional tailwind to push them into further higher valuations. >> and key corp. is one of them. not only does it fall into the favored financial space, but you
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also say it has exposure to infrastructure finance. in what way? >> let's just review that. the reason why we like it is, of course, just the basic net interest margin argument. key corp. will probably benefit from rising rates. secondly, it is acquired first niagara, so it is going to expand its footprint. already we have some catalysts there for an interesting story. now, if infrastructure does increase, they're known for commercial lending, perhaps they'll actually participate in the upside of lending to finance that kind of construction that so many people are anticipating at this point. >> so if you had -- let's$50,00 want to put it to work for the next 12 months. how would you advise me to do that and i include in that the idea that i should dollar cost average in to whatever i'm doing. >> well, first off, there is a
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lot -- we're going to suspend a lot of other constraints about that. what your risk profile is, et cetera. i think what you're really asking me is where are my positive? so u.s. equities, very, very positive. especially i like the idea of dollar cost averaging because as trump does install his cabinet, and does assume authority, we'll get more data as to which policies might come true and incrementally you can start adding selectively in the sectors. but information is king here. until we get a sense of, i mean, all of us are very excited about the speculation as to where the funding is going to come from and what attention he's going to pay to, but once we get more information on that, you have more ability to correct your positioning and your asset allocation. and by june of next year we'll have a pretty good sense. >> we're going to have a lot more tradable points one way or
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the other over the next 12 months. thanks. to john harwood with breaking news. >> tyler, cnbc has confirmed that scott pruett, the attorney general of oklahoma, a fierce critic of the environmental protection agency, has been selected by donald trump as his choice to head that agency. now, scott pruitt is someone who worked with other attorneys general to argue that the epa was extending its constitutional or exceeding its constitutional authority to regulate emissions. he is very close to the oil and gas industry, which is very big in oklahoma, including people like harold hamm who co-chaired his campaign and is a close ally of donald trump. so scott pruitt, fierce critic of the epa, to head that agency and this is very similar to previous picks, betsy devos, conservative to head the education department.
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ben carson, staunch critic of public housing policies, it head the department of housing and urban development. >> john, thank you very much. the times, they are achanging. >> we're all over the record-breaking rally. the dow, s&p 500, russell 2000, small cap index all hitting new highs. transports having a record intraday high for the first time in two years, led by american airlines. those stocks up more than 3% a piece right now. "power lunch" is back in two.
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welcome back. for the first time in nor than two years, the dow transports hitting a fresh all time intraday high, gaining more than 2% in today's session. and analysts saying it is on the prospect of more fiscal spending. stocks propelling the index higher including maxine, american airlines and jetblue up around 3% to 2%. but keep in mind, components of the transports are currently up more than 1% as a whole. transports have gained 12% since the presidential election. >> seema mody, thank you. time for the good, the bad and the ugly in today's trade. we start off with the good. dave and busters soaring, higher by 18%.
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the company announcing a new coo. on to the bad, that would be vera bradley. down by more than 10%. the handbag retailer lowering its guidance after missing its own estimates. en it an ugly day for oxford industries, down by 11%. bad and ugly almost the same on an up day. one of the worst performers in the s&p 500 after reporting a disappointing third quarter. we're about 90 minutes away from the closing bell. as melissa and tyler noted for the last hour or so, we're on some kind of a record run. the dow jones industrial average hitting another record high. the transportation index hitting a record high as well. by the way, if you transport stuff, you probably need gas or oil. so why don't we get a check on the oil market with that lousy transition i made. you get the point. you're at the nymex. >> good afternoon, brian. crude oil was not on a role today, the way stocks have been so far in the session. i didn't think we would close under 50. in the last two minutes, this
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got ticking down. we hit new session lows and we did cross that line. so about a little more than a dollar loss on the day. we got a drawn inventories this morning but a build in gasoline, they canceled each other out. wasn't the department of energy numbers moving the market today. this is more profit taking on the back of the gains that we saw after the opec announcement. remember, this weekend the nonopec producers are going to meet and not a lot of confidence that they're necessarily going to comply with what the cartel wants and that's a big piece of how this deal rolls out when we get to the new year. now, the new range for halima kroft, 47 to 55. but probably the lower part of that. but the sell was pretty much significant in terms of setting the momentum and the new direction. the dollar backing off a little bit. dollar index over 100 now is still relatively high. it is actually probably continuing to pressure crude. back to you. >> thank you very much. to sue herera with your cnbc headlines at this hour.
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>> here's what's happening at this hour. the official death toll from the friday deadly warehouse fire in oakland will remain at 36. that word from emergency officials who say they have completed their recovery efforts at the scene. >> for right now we specifically officially are acknowledging the search for any additional victims has been concluded. unfortunately the number remains at 36 loss of lives. that is the final number. royal caribbean cruises says the cuban government has granted approval for the company to begin cruises to cuba. the company said it plans to announce the first floor to cuba eitineraries in the near future and speaking of travel, uber and sears are expanding their riders rewards program currently in new york and chicago to 23 more cities in the u.s. the program allows uber riders who link their account to sears to receive up to $2 in loyalty points for every trip. sears members with receive their
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first ride on uber for free, up to 15 bucks. that's the news update this hour. back to you. so did you have a thought? >> looks like he has a thought. >> looks like he has a thought -- >> that's how i look all the time. >> or stomach pain. >> they expand their relationship by taking many uber rides, i'm sure all of us had, i had no idea they had a partnership. they'reing something i didn't know about. >> we had that in a news update months ago. >> i could have gotten new garanimals. >> love uber. what is it like to be in one of the meetings with president-elect trump? we'll talk to a person who was there this morning and get his message for the trump team. as we head out, look at the nasdaq biggest winners in this rally. we mentioned them earlier. western digital, micron tech, and "power lunch" back in two. i laugh, i sneeze...
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welcome back to "power lunch." we have the nasdaq composite, nasdaq 100 higher today. it is a story of strength in tech. western digital at an all time
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high today. the storage productsmaker is raising its outlook in part because it renewed a licensing deal with samsung. that's giving a boost to a lot of the big cap names. you have chips higher, you have names like apple today that are moving higher, facebook, amazon, all those helping to lift the nasdaq composite. on the other side, you've got biotech as a big drag today. those comments by president-elect donald trump and his interview with time magazine, over his man of the year, person of the year award, saying he would like to bring down drug prices. a lot of the debate about exactly what he could do. nonetheless, this is the number one issue for a lot of folks and it is the number one issue in this sector. that head wind. >> all right, bertha coombs, thank you. let's dig deeper in the markets. jon najarian, bertha mentioned a
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lot of the big cap tech stocks h are higher but are underperforming their peers. >> as long as the other two sectors, one of them is challenged by exactly mr. trump's comments in that time magazine article. and that's health care. i'm broadly putting the farm p and drug companies in that basket. what we're looking at is if a market if we do have the fins and the health care stocks moving up, that it doesn't matter as much about tech. if we're losing some of the upward thrust from health care in particular those pharma names, they are big cap stocks. that's why it is the second largest sector of the s&p. we need that. but i think overall, tech stocks are going to go right back to work in 2017, if people are taking some profits this year, i can't blame them. >> jim, how much of this is
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computers? the transports hit a technical level. i hate to just describe it to, you know. but let call it what it is. >> the fact that the stock market is higher today is not surprising me, the fact that it accelerated was a function of this, an enormous order hitting the s&ps, 40,000 to 50,000 bought right when it was going through technical levels. >> and, jim, for our audience, put that 40,000 or 50,000 order in perspective for us please. that's gigantic. >> 5 billion to $6 billion. i should have done that the at beginning. $5 billion to $6 billion with a b of stock, a significant order. it accelerated the market higher. ill timed by the person buying it unless they wanted to push the price up, which is something the foreign notion to me. that's what happened. the question before, can this rally go on without the techs.
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think about the banks, where banks were prior to financial crisis. and what percentage of the overall market they were. and how they have been beaten down, ground into the dust for eight straight years. think of the potential there. i think the point being there is other things that could lead this. banks, transports and industrials. >> i get that. but that is the -- the assumption that banks should be trading where they were prefinancial crisis. that everything is in place for them to be as profitable as they were before. and that is discounting the current regulatory regime that we have now. and changes in their business model that have taken place since '07. >> right. the dodd frank in particular and what may be rolled back from that. the strategically important investment. i think overall, what you're looking at here, is a sector that is going to be outperforming, primarily because interest rates are going to be moving so dramatically, the thick income, the jpmorgan -- was just phenomenal. you imagine what it is this
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quarter, basically since the election, going into the tail end of this year, and i expect the same sort of thing in the first quarter of next year. i think goldman, jpmorgan, citi, those are all going to do phenomenally well. >> melissa, i was not suggesting they should go back to where they were prior. i'm talking about going halfway back seems significant. and as far as the steepness of the yield curve and the how rates are going high, the last few days rates have not gone high and the banks performed pretty well. that leads me to believe there say couple of different ingredients in the rally. >> random nonmarket question. you are a restaurant owner, small business restaurant owner, do you notice an uptick in business? >> i think so. particularly -- when oil goes down, i notice a bigger uptick in business. when the stock market goes up, i think that there is an uptick in business. i'm sure of it when oil goes down. >> we're going to feast, anything under 499 she wants is
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on me. >> load up. problem is you won't want to go to any other restaurants after you've been to branson's. >> we'll test it out. thank you very much. more record highs for the stock market today. we're about 250 points on the dow. one sector flying high with the overall markets is airlines. so should you put some of your hard earned money to work in the airline stocks? we'll find out. ich allergy? eees. bees? eese. trees? eese. xerox helps hospitals use electronic health records so doctors provide more personalized care. cheese? cheese! xerox healthcare services... ...soon to be conduent. that's it. how was your commute? good. yours? good. xerox real time analytics make transit systems run more smoothly... and morning chitchat... less interesting. xerox transportation services... ...soon to be conduent.
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as a group, the airline stocks are hitting, get this, a 14-year high today. so two ways to look at it, a, incredibly overpriced, sell them if you own them, b, starting another run higher. let's find out. bringing in the trading nation team, max wolf, and rich ross. max, you heard my question. what is your answer? buy more or sell everything? >> thanks for having me. some good things for airlines now, but the airlines sector reminds us of why individual stock risk is high. there is headline risk here, and your portfolio decision could crash if you have just one name. we think there is some consolidation, a lot of consolidation on low energy
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prices. when you have economic strength, you have real sea legs or air legs as the case might be, but we think this is run pretty far. we start to be cautious about adding a whole lot of risk exposure here. these guys have been really good about not adding capacity, not so great if you're a client, flying in the air. but good if you're a company. we think they'll still have pricing power for a while, but, again, individual stock picking is late in the game for that at this point. >> okay. rich ross, when you look at the charts, i assume you look at the xal, how does it look to you? >> i'm going to go the other way. i'm a big buyer of the airlines, and a seller of laguardia. bring up the chart. i'll show you exactly why here. yes, you're up 17% post the election, 57% off the lows, but you're up just 1%, 2% over the past two years and i have bullish setup, vis-a-vis the bullish ascending try anal breakout and this breakout from
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a two year rounded base of support. you zoom out and look at the weekly chart you see in front of you, a 13 year layover in the group, you have significant upside from here. this is a group just taking off and i would not be afraid to be a buyer of the airlines here. >> 13-year layovers at laguardia are ones that felt that way. >> rich ross, both points are noted. i will sell you laguardia and raise you a newark any day my friend. appreciate that. for more trading nation, head to our website, by the way, the southwest airlines ceo will be on with jim tonight. "mad money," gary kelly, 6:00 p.m. "power lunch" is back in two. and now the latest from and a word from our sponsor. >> trading with the trend is key for many traders, so trend following indicators are important. the markets are trending down, many traders watch moving averages, which will generally
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have a downward slope. as long as the stock or index stays below the moving average, most trend traders believe the weakness in the mark set being confirpd.
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the trump transition team met this morning to discuss
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housing and the economy. after meeting with the president-elect, steven mnuchin and reince priebus today, he is hopeful trump can cut through the resolution. tim joins us now. >> thanks, tyler. >> good to have you with us. how do you see the housing market as struggling when new home sales were up 18% year or year in the most recent report and existing home sales were at a decade high and the share of first time home buyers is actually going up? >> certainly on a relative basis, everything looks to be certainly improving. the housing market, just like the economy, any time you see one of these huge dips we saw back in 2008, the housing market follows the pattern of typical economic recovery, which is about two years to bring back to the value that you were at that point in time. it's taken us about ten years to
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get back to where we were in the peak of the housing. >> let's go with mathis rule which is you'll always buy in the month at peak. continue. >> in that sense everything is improving in a relative basis. what you've seen people positively respond to, the housing market has recovered largely because of low interest rates and demographics. you have 2d00 million people in the country and they have a bias to living indoors. it's not much more radical than that. it certainly has not been because there's been any kind of stimulus for the mortgage industry or the real estate industry -- >> maybe we don't need it if housing is coming back and it's selling at decade highs. >> it just depends on what you're measuring. if you look at hoethe home intet rate, it's at a 50-year low.
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in rental properties, they're paying 30% more than they would for a purchase price. >> is the problem, though, what's going on in the mortgage industry or lending standards, or is the problem a tight inventory and therefore prices are higher? how much can the government step in and make it more realistic for somebody starting out to buy a home? >> it's layers, right? if you think about builders, they can't frd afford to buy a starter home. starter homes are $200,000 or below. you're seeing less of those than you did two years ago. and that's the cost and compliance issues of building a house. if that same lender and somehow you found a builder willing to do it and a buyer that had enough cash to get into that property, to ask a lender to vallone on that property, right now it's about $800,000. >> i want to get to fannie mae,
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but the meeting this morning, what was it like? >> the cast of characters was really -- >> you're sitting with the person of the year. >> it was something. you're going from mark burnett to billionaires, politicians. then you got the my pillow guy, mike lindell. >> the my pillow guy was there? >> yeah, it was really great. >> why? >> apparently he's a huge supporter, he's a big republican. i didn't know that. >> now i'm a very welcome advertiser. on a serious note, was one of those characters steve mnuchin. >> no. >> i did not. but did you have a chance to speak with him? >> i did not. i listened. >> there's been a lot of criticism around steve mnuchin. maybe you want to dodge this question but i'm asking it
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anyway. because of fannie mae and freddie mac, a lot of people critical of steve mnuchin's handling during the housing crisis, effectively procfiting n foreclosing families. why should we not be worried about steve mnuchin as lending secretary? >> for whatever the circumstances, they chose or weren't able to make those payments. the government was in a situation where they needed to find a buyer. that was during the housing crisis. he made a great deal. on some level you have to look at this and say, look, this is a guy who has looked out for the interest of his shareholder and himself and did pretty darn well in a precarious time, unprecedented time. i look at that as you got that guy who shareholders are now taxpayers. that could be real good when you're looking at working out the fannie mae and freddie mac
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situation. it's about the least american thing i've ever seen, having the situation where you have privately owned companies and the government comes in and nationalizes 80% of them but takes 100% of the profit. there is a huge opportunity there. >> the government will miss that money, though, if it goes away. "power lunch" is back in a little less than two.
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the trump rally rate is on.
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we see the dow higher by 1.38%, s&p by 1%. that index is higher by 2.25%. you can say what you want about trump, but the market is loving it. "closing bell" starts right now. hi. welcome to the "closing bell," everybody, i'm kelly evans here at the new york stock exchange. >> i'm bill griffeth. the dow rallying right now up 265 points. had been up 286 or 87, and it really has picked up steam in the last hour and a half or so, putting the dow on track for its 12th record closing high just since the election. >> and we've been watching this for one years now. the dow transports, they're leading the charge today


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