tv Power Lunch CNBC December 20, 2016 1:00pm-3:01pm EST
but looked at dillard's, it is a name i owned, a name i like, i like the geographic exposure it has, a little bit resistant to some of the weather concerns. i think it performs well in an environment of 2017 with more money in people's pockets. >> that was fun. that does it for us on "the halftime report." "power lunch" starts now. >> we'll see you in a bit. welcome to "power lunch." i'm brian sullivan. here are your three big headlines right now. first, with with two hours to go in trading, will the dow hit the 20,000 mark today? we were as close as 13 points away earlier. let's see if the market provides any kind of a late day push. second, we're counting or continuing to follow the developing story overseas following terror attacks in germany and turkey. we're live in berlin ahead. >> and third, we're keeping a very close eye on fedex. why? the company reporting earnings after the bell. we bring you the three things to watch when they report. "power lunch" begins right now.
and welcome to "power lunch." i'm michelle caruso-cabrera. the dow hitting yet another record high today. as brian mentioned, we came within 13 points of the thus far elusive 20,000 mark. we're oh, so close. but our market reporters are close by. bob pisani on the floor of the new york stock exchange. bob, give us a rundown of what has gotten us this far so far. >> the important thing is to understand why we had the big move from the middle of 18,000 for the dow, before the election to 20,000 today. so let's take a look. why the moves? two things that are really important. number one, the seasonal factors, the last two weeks of the year, very powerful historically, dow is up an average of 1.6%, just in the last two weeks. number two, most importantly, the big momentum that we have been getting from the election, the idea that we're going to get tax cuts, going to get less
regulations, going to get a stimulus program, earnings are going to expand. as a result of these two factors, no stock for sale hasn't been for five or six weeks. we get the markets moving sideways, but there is no big sell-off. the market just rotates and essentially we go sideways. there is no sell-off, but also no big buying rush. look at the etf here, volume is average today, and the reason this is happening is the mark set focused on this rotation, making a lot of money by going in and out of sectors. what do i mean? look at today what is happening. finances were big in november. they fell back in last week or so, suddenly they're back again. goldman and travelers are strong. industrials had also fallen back. they're doing a little bit better. boeing and ge, apple and some of the tech stocks have been in and out. today, apple is on the upside. these are powerful moves that move the market forward. why can't we get over 20,000? what we need is a little help from those consumer names that lagged in november. could we get some help from procter & gamble, coke and
merck? we'll see. we're not quite there yet. >> to bertha coombs at the nasdaq. >> we're talking about the dow going towards 28,000. small caps have really outperformed large caps, up 21% year to date with the russell 2000 today. still outperforming. it is up 16% just since the election. but, today, it is the first nasdaq stock added to the dow. that's notching a historic high. it is microsoft. the stock off of its highs of the session, outpaced the overall dow gains from 10,000 to 20,000. much of those gains coming over the last couple of years with the tech giant shift in the cloud. contrast that with apple, which saw monster gains ahead of the addition to the dow, 21 months ago. it is the stock in the apple ecosphere that have actually driven the overall market today. and invidia at a fresh all time high. goldman sachs putting the graphic chipmaker on its
conviction list. after 200% run-up for the year. 550% since 2009. and the mother of all chip fir s s these days is broadcom. avgo went public in august of 2009. that is up more than a thousand percent. also at a fresh historic high today. brian? >> pretty cool stats there. thank you very much. here is another big number for you. according to trim tabs investment research, nearly $100 billion has poured into etfs since trump won the election. for comparison sake, for all of last year, only 61 billion went into etfs, for the whole year. joining us now, john stolzfus and luciano with wisdom tree. welcome to both of you. >> thank you, brian. >> so, listen, i understand that many of you guys, professionals,
say dow 20,000 means nothing. it is no different than 19999. it is just a number. however, that type of inflow data does suggest that it matters, john, to somebody because they're interested again. does it not? >> it most certainly does. it draws attention to the market. to those people who have been on the sidelines for a long time. suddenly, they look at it and go, i didn't believe 17,000. i didn't believe 18,000. >> on channel 16 in green bay and the cover of the usa today. >> it wasn't that long ago that we broke 17. i recall i was on the -- well, cnbc on the new york stock exchange floor and we were talking about 17. >> it sounds like you're suggesting if the retail investor were to get in now and we think a lot of people will for that reason, they see it on the cover of the newspaper, they still read them or see it on the evening newscast, is there still time? >> we have to think so. just a few things. if we think of the s&p 500, it is only up about 40 some percent
from october 9th, 2007, the last cyclical peak. and similarly the dow is not that much up from going back to the last cyclical peak. most of the -- you know, up, up, 200%, three times the value of it, all of that is from being terrifically oversold on march 9th. >> that's a good point. we always like to go back to the low of 2009. actually, using your data is probably a better tell as to what the overall long-term performance is. what do you think? >> there is always time to get in, always time to invest for the next ten years. the industry took in more than 200 billion last year. the reason you're seeing so much money coming from the election, most of it is going into u.s. equity. and people are starting to get excited again about what faster growth in the u.s. could mean, lower tax rates, how that impacts corporate profits, and people are saying, you know, the valuations are high today if you're looking at a trailing
basis. but how fast you can grow going forward. our best guidance would be take a look at what price you're paying to own asset classes. you mentioned small caps have had a great run. they're expensive now. and probably the best way to own them in our view at wisdom tree is to own all the companies that are profitable because they get the benefit of the tax cut. but earnings weighted. then you lower the pe ratio on the whole portfolio. we say buy the market but at a reasonable price. >> also, you like something called the japan hedged equity etf. >> i love it, brian. i love it. >> okay. okay. >> i don't like it. i love it. >> we're going to fight now. no, here's the problem. i look at japan, and i'm bullish japan a few years go, but look at the market, the market in japan can have wild swings. up big, down big. five recessions in the past 15, 20 years. why is this not a very risky investment for the majority of our viewers? >> it is a volatile play.
if you look at what equity markets are most sensitive, number one is japan. japan is a winner in a trump world. why? >> higher rates here tend to mean higher returns in japan? >> stronger dollar, weaker yen. as that yen weakens since the election that's good for japanese stocks. they rallied. only trading at 16 times earnings. the reason you got to hedge out the currency if the stocks are going up and the currency is losing value, you're not getting any money. we would say if you're looking for the next year, japan is probably one of the best international markets to be looking at. particularly if you think rates are headed higher and the dollar is headed higher. >> i see you nodding your head. you agree. >> japan offers opportunity. right now, hedging the current sy makes a lot of sense. you need to watch it, because usually the dollar strengthens, anticipating a fed hike cycle. as the hike cycle proceeds, the dollar begins to weaken. we saw that last year, hedging was not a great idea. but as i recall, i think it was in 2013, 2014, hedging really
works. >> want to do it now in. >> yeah, got to keep your eyes on it. >> got to be watching if you have any international exposure. >> thank you, guys. >> we're also following the latest developments in that deadly truck attack at the christmas market in berlin. cnbc's jeff cutmore is live in the german capital with more. >> it has been a terrible 24 hours, hasn't it, for europe? we had terror related attacks in turkey, switzerland, and, of course, here in berlin, where the death toll remains at 12, 48 injured. angela merkel, the german chancellor, was here a couple of hours ago, laying flowers at the site of this terrorist attack and that is what the authorities are now clearly calling it. a polish registered truck, driven into a crowd at a christmas market. but, you know there are lots of
questions, michelle, being raised at this hour within the last few minutes, the federal prosecutor's office say they have released a suspect, a 23-year-old pakistani man, who has been in custody for most of the day. but who denied being the driver of this vehicle. so at this point, it would seem the authorities have no one in custody, which is why the terror alert remains very high here because they believe that the driver of the lori has a gun. the man who was found in the cab dead who is believed to have been the original driver of this polish vehicle, was shot to death. so now we understand that there is a high alert in berlin as they focus on where this gentleman, in individual may be. the suspect is at large. look, michelle, you know how these things go. you were in paris last year when you were reporting on the terror attacks there. the markets very responsive to
what happened. a lot of nervousness, but you can clearly see from the price action today that markets are increasingly becoming desensitized by these terror events. we had a walk around here. this is pretty close to berlin's fifth avenue, if you like, and it is quiet. so we will have to see whether there is any impact on retail sales. so this evening, i leave you from berlin, where the brandenburg gate, this key place in the hearts of berliners is now currently draped in the colors of the german flag. i'll send it back to you, michelle, from berlin. >> thank you very much, geoff, for that report. >> back to business now. we have a news alert in biotech. now to meg tirrell. >> 19 u.s. senators sent a letter to president-elect donald trump asking him to work with congress to bring down drug prices. they laid out five different measures they hope he'll focus on, the chief of which is allowing the secretary of the department of health and human services to negotiate on drug prices, something that medicare
is currently banned from doing. that has been investor's greatest fear and having a democratic government, whether it would be something that donald trump would elect to do is unknown right now. they also ask that he work to increase transparency in drug pricing and stop abusive pricing, not just those 5,000% price increases from martin shkreli, but repetitive 10% to 20% increases every year. so 19 u.s. senators led by sherrod brown and al franken writing this letter. >> thank you for that. when we return, we name names on the one stock that may hold a key to dow hitting 20,000 this year. speaking of, we are just about 25 points from crossing that historic 20,000 mark. leading your charge, goldman sachs, as it has for the past month, verizon and jpmorgan. will the market get a post lunch push.
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welcome back. we're just 28 points away from dow 20,000. keep in mind, though, when the dow last closed above 10,000, back in 2009, it was kind of seen as an important first step on the road back from the financial crisis. now, as we stand on the cusp of 20,000, seven years late, we're looking at how industries have changed since then. perhaps none has transformed more than the retail sector. courtney reagan is here with
more on how retail has really, really changed in just several years. >> really changed. since the dow closed above 10,000, that was on october 14th, 2009, retailers work tremendously on what shoppers see and the inner workings. this has fueled the top retail stock to spend more than 1400%. you also have to be camera ready now that a selfie could be snapped at any minute and shared on social media. that's propelling ulta beauty. amazon changed the paradigm and continues to move that target. if you bought amazon on october 14th, 2009, when the dow was sitting at 10,000, you made 692% on that investment. the ath also leisure craze propelled three of the top ten
stock rise. foot locker at number three, up 537%. lululemon, 429%. and that's weathering that see through pants problem in the harsh words hurled by its founder about some women's bodies. remember those? under armour shares, class a, up 242% since that october mark. and while it is not athleisure per se, cabela's shares have swelled 349% in that same time period. another thing that hasn't gone out of style, bargain seeking and treasure hunting. ross stores come in up at number four, up almost 500%. dollar tree shares have gained more than 400%. >> i think back to amazon, back at dow 10,000 and how everybody thought it was really ex-pens e ex-pennsylvanex-pensiv ex-pensive. >> think how expensive it is now. >> how it transformed nearly every other business out there within the sector. >> and you can't say internet. it is like beauty, amazon.
that hard to put anybody else in that boat. >> i think it is fair to call amazon a freak. it is a stock that has in 20 years, michelle, has never -- valuation has never mattered. profitability has never mattered. all the warren buffett, real financial metrics have never, ever mattered. >> imagine being a retailer trying to compete against that. >> my favorite point you made, though, how selfies cause more people to put on makeup. all the time. >> have to be ready all the time. you just never know. ulta shares up more than 1400%. that's incredible. >> you have your makeup on all the time. >> i don't take it off anymore. i just walk around like this. >> so you always look your best. >> always look my best on the subway, i just looked spectacular. >> looking sharp all the time. >> thank you, courtney. we're going to bring in matt boss with jpmorgan. good to have you here. you heard courtney's report. what is the best stock to buy right now as we think about
going from 20,000 to 30,000? >> a lot of the themes of the past but rapidly changing for the future. so to me the consumer is being drawn to convenience and value. so the convenience is online. the convenience is amazon f you're not online and not amazon, you need to offer value. that's in the brick and mortar side, you need differentiation, you need private label, something that is only you, and you need this value. so what is winning out there is the off price sector. we're seeing tjx and burlington in the off price sector. what is also winning is the growth pie underlying segments. i think there is continued growth in health and wellness, so we think foot locker continues. that's the diversified way to play this athletic sector. finally, at the low end, it is the dollar stores. so i think this concept means a lot to this value, low end consumer. dollar tree sets up about as well as anything in consumer into 2017. >> how confident are you making
forecasts generally? courtney did an excellent piece earlier on what tax changes may come. we don't know what the import taxes may -- we have no idea what is going to happen in the next six months. when you frame all of your investment recommendations, how much of that is, well, we're not really sure what is going to happen with taxes, but this is our best guess? >> a fantastic question. so right now the best that i think you can do is parse out the individual components per segment and per company. so what you need to know is what the percent of foreign sourcing for each one of these companies. what percent of private label does the department stores have today and what percent of their business is done in the u.s. so your worst position are going to be the highest percentage foreign source and the highest percentage of private label. that's going to hurt the specialty retailers. that's going to hurt the department stores. one of your best positions would be if you have pricing power, and you're passing through our people's goods, so a foot locker, for example, reselling
nike, reselling under armour, the off pricers, tj max, reselling other people's brands, they would be your best position but they have to deal with the potential for rising prices. one thing we put out this morning is the potential for an exemption among grocery and food that not a lot of people are talking about, but i know some of the large value retailers are lobbying for this right now. that be with a game changer for the dollar stores, if that were to go into effect. >> something to watch for. thanks, matt. >> thanks for having me. up next, we have shopping in china, a not so bold call on the hottest stock on the nasdaq 100 and a huge price target on sales force.
n . in honor of dow 20,000, time for street talk. michelle, kick it off, please. >> invidia is the first stock. goldman added invidia to the conviction buy list saying it has a 27% upside from here. 105 bubs. this is after insiddia -- invidia is up year to date. analyst is confident in the trajectory of the data. and the growth of the gaming population and product. it will drive revenue in addition to vr.
>> the stock has been unbeatable this year. i know jim talked about this stock many times. and this is going to be one of those years for a name that nobody saw coming. second stock, sales force.com, drexel hamilton starting coverage, buy rating and a $100 target. analyst says the move more into cloud based offerings in the early stages and is a big opportunity for growth over the next decade. they add sales force is the best equity vehicle for investors to play the cloud. the stock should be a core tech holding. the $100 targ set 40% upside, 95 bucks a share. the stock a little ways to go. >> that would be a big move, though. >> third stock, jd.com. coverage at a buy with a $33 price target. company says there is a substantial addressable e-commerce opportunity in china with the growth there twice as fast as the overall industry. trying to shed noncore businesses, finance and also trying to improve expenses.
2548 right now. >> was $38 15 months ago. finally smaller cap name of the day is extraction oil and gas. xog. research firm saying xogs offer high quality assets, balance sheet strength and their word, bountiful upside. i love it. bountiful. like the valuation. they know the company can break even or even make money between 30 and 40 a barrel. $26 target on the stock, which is 30% upside of xog. >> dow just a few points away from 20,000, so don't move. got to see it when it happens. we'll be right back. look how close we are. s my head. this is where i trade and manage my portfolio.
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here is your cnbc news update. turkish police tighten security around the russian embassy in ankara, one day after the assassination of the russian ambassador. five members of the attacker's family have been detained, along with his roommate in ankara. the body of the russian ambassador was taken to ankara's airport, where a memorial service was held in his honor. and his widow was in the front row. canadian researchers found kids who resumed activity within a week of having a concussion were less likely to have symptoms after 28 days than those who rested. however, experts caution activities that put patients at risk for a collision or fall should, of course, be avoided until there is a full recovery. and the bitter cold did not stop a long line of shoppers looking to buy a nintendo nes classic addition game console at a houston best buy. some started lining up monday afternoon to buy the throwback
consoles. it sells for 60 bucks. some of them, though, are selling for much, much more on sites like ebay. go figure. that's the cnbc news update this hour. brian, back to you. >> if you ever played techno bowl and had bo jackson, you would understand. >> i have not done either of those things so i never will. >> i may be in that line this weekend. >> okay. 20 points, that's as far away as we are from 20,000 on the dow. we're at 19,980. we have been kind of holding, guys at this level for a couple of hours now. eric, jim and carl talking about it in the 10:00 hour. >> it is like a ceiling. >> like a tease. if you want to find somebody to blame, we got to blame somebody, blame merck. only dow stock down. get your act together. some merck buyers.
>> on to the bond market, rick santelli tracking the action where it is just as important, even as we're still so excited about dow 20,000. >> we are excited. for a second, i thought sully would blame me. if you look at intraday of tens, you have no idea something so aggressive is going on. yeah, we're at lofty yields, but the range has been tiny. and it is just not today. if you look at one week chart, it really jumps at you with automatic scaling, how little we have moved. maybe the key is, even though we're not moving, we're hugging what is the top of a very long historic range. we haven't been at these yields on a close is basis since september of 2014. but where the action is at is in the foreign exchange. if you look at may 1st start to the euro versus the dollar, no surprise. dollar strong, euro is weak. today we have bank of japan. look at start to dollar yen. the dollar is strong, the yen is weak. but here is one very few look at, and we're talk ing two export driven countries, or
groups of countries, look at the euro versus the yen. and this is obviously in favor of the euro on this chart, and maybe it is a chart we should pay a little bit more attention to, all these currency moves make multinationals quake and exporters ride awake. melissa lee, back to you. >> thank you, rick. the dow is closing in on 20,000. it is now on pace for its best quarterly percentage gain since the fourth quarter of 2013. joining us is michael aronne. good to have you with us. i'm going to pick up exactly where rick left off and that is a stronger dollar. we're seeing the 14 year highs. is that a concern for you as we approach the regard highs on the dow and higher levels on the s&p? >> i absolutely think that the strength in the dollar is a concern for markets and one that right now is being underappreciated. as rick highlights, about 40% of the s&p 500 earnings come from outside the u.s. and the strength in the dollar
will put downward pressure on the earnings. remember, the so-called earnings recession just ended in the third quarter. however, it started after the strength in the dollar at the end of 2014 and early 2015 when the fed promised to raise rates at a more aggressive pace. >> are we in a sort of golden vacuum of information, where we got the fed meeting behind us. we don't have earnings season starting. we don't have donald trump officially taking office until next month. about a month or so. what do we do in this next sort of month? >> i think you enjoy the rally for the next month. i do think that the market will breakthrough that 20,000 level. >> you mindlessly ride it higher? >> no. i think you -- i think that the market is likely to rally into the inauguration. and then i think the honeymoon period, or this month long period you're describing, there is a couple of risks out there. first, and foremost, we'll move on, we'll find out more about the size, the shape, and the
timing of the fiscal policy, infrastructure spending, tax reform and where the friction lies. how will this be bipartisan or partisan, will the fiscal conservatives and the republican party push back. and i think we'll learn a lot then. the other thing as we have been chatting about is that at that time we'll be getting fourth quarter earnings. and i think the market is pricing in growth in those earnings now that the earnings recession has ended. and will they support these higher stock prices. that i'm not so sure. so i do think that the market's run a bit too far, too fast, however, to your question, i do think that it has the potential to rally in through about the inauguration at this point. >> tech support is crucial, right? because if you're talking about strength in the dollar, which hurts the multinationals, if they get a low enough corporate tax rate, that could help offset that. that's why we're so focused on that. it is going to deliver directly to the e in the pe. >> i think that's exactly what is driving stock prices higher, particularly in the smaller cap
stocks that have done really, really well this year and post election. i think that they have a higher effective tax rate relative to large cap stocks. and i think that every kind of point reduction in the corporate tax rate falls to their bottom line. i think that's what the market is pricing in. not only higher growth, but higher earnings and as a result, folks are saying valuations are not that stretched at these levels. >> i'll ask you a stupid question, one that i think all the viewers are wondering now, if it is so clear, we talked to market participants that the honeymoon period will be over once we get earnings season in and once we get the inauguration behind us. then people are going to start looking at when wilt you see the concrete steps laid out that are basically fueling the rally we have seen so far? if it is consensus that the markets will then hit a period of volatility and pressure at that point, you sell beforehand, don't you? >> perhaps. you could book profits, this is a seasonally strong time for the
year. remember, now, what could be buoying stocks is if there is anticipation that tax rates will go down next year, why not hold on to these gains through the end of this year, and evaluate the situation in january. >> all right. michael, i'll leave it there. thank you for joining us. >> past few months have been wild ones for the private prison industry. take core civic. that's the company known as corrections corp. of america. shares got crushed after the justice department said in august it would phase out the use of private prisons on a federal level. since donald trump was elected, core civic shares surged back nearly 70%. let's bring in david hininger, the president and ceo. welcome. before we go into company specific stuff. i want to ask you about the industry in general. your industry has come under a lot of fire. people say the u.s. government has no business being in the private prison business. and that you profit off mass incarceration. how do you respond to that's critics? >> i'm extremely proud of what
we do with our federal, state and local partners. we do three things. core civic safety, own and operate jails, prisons in the united states. re-entry facilities and then also core civic properties, real etate only solutions. safety has gotten so much attention in the last few months. i'm extremely proud of what we do. let me tell you a few things. >> let me ask, okay, fair enough, i want to jump in, people say you guys benefit. if there is more people in jail. and that is not a way that any company should -- >> you don't want to incentivize that kind of -- >> contracts and limits that say you need 90% occupancy. >> that's baloney. we have 30,000 inmates today going into facilities doing programs. education, vocational trade. last year we got 2,000 individuals earned their ged. and research shows that if people go to education or vocational programs or 43% less likely to come back to facilities or criminal justice
system, we're providing great service, we're making sure individuals want to release, they can support themselves and their family and not come back to the criminal justice system. >> the stock is acting like the situation will be different under a trump administration. is it? >> there are several things that we can look forward to as a company into next year. immigration. if there is a need for innovative and customs solutions we have done for the federal government, we can provide a lot of value there. second thing is, there is about -- >> if there is increased screening or -- what about immigration that will happen this year that will benefit your company? >> if there is a need for more -- capacity on the border. or if there is a unique population we have to help serve with ice. the second thing is, there is 300,000 beds in the operation today in the united states that are in facilities 50 to 100 years old. there is some facilities in the country that are open during the civil war. and i think this whole conversation about infrastructure and the need to
replace old antiquated facility, there is more value added there. the third thing is that a lot of discussion with the trump administration about criminal justice reform and trying to put more programs towards re-entry, or core civic communities where we provide re-entry facilities, now 25 of those. >> you to believe a trump administration is going to be friendlier to the idea of private sector involvement in prisons as opposed to what we just saw happening under the obama administration. >> i believe that's the case. i believe that's the case. i think in is a push, like i sid, towards re-entry, push to replace old antiquated facilities, the theme, and this upcoming administration, i think we provide a lot -- >> let me ask you directly. do you think the doj will reverse the decision? >> the whole media interest on the doj memo in august was a big
misunderstanding. we saw the bureau of prisons decline over the last three year and we serve as a relief valve f there is increased need, we'll be there to help, but we have seen ourselves as a tool in a toolbox. >> your stock is up 19% since the election, over the past month or so. are you seeing situations be so much better under trump administration that you're looking to expand or -- i'm trying to gauge what level of occupancy, i'm not sure if that's the right term, in your current prisons, you need to build more facilities, you see things turning to the better under trump administration. >> context behind this. half our business with the state governments, the other half the federal government. the federal bureau of prisons, all the attention in the last few months, that's 7% of our business. if there is additional need there, we're there to serve. we have a great track record. if there is additional need with ice, we can provide a solution there too. i go back to a lot of old
antiquated facilities that are very unsafe to operate. we have a lot of real estate expertise. >> you own those facilities? you rent them. help rehab. how does that work? >> great question. so a couple of examples. we signed an extension on a lease in california. facility that we own 2400 beds, and california city, california, state of california operates it. they don't have to spend the capital, probably a 5 to 7 year project. we use our balance sheet and lease it back to the state. oklahoma, we signed a lease 2400 bed facility, they were able to close 15 old very small facilities consolidate, get more efficiency and safe for the facility for staff and inmates. so we just used our balance sheet and provide solutions and the up side is it is a newer, modern facility, safer to operate and more efficiency. >> in these contracts, are you
mandating a level of occupancy, a minimum? >> we have some agreements and that's a protection for us and the partner. >> you understand the optics of that, though. >> absolutely. >> there san incentive to incarcerate people to make contracts. >> i agree with that. i disagree with that. the reason they're coming to us is something they can't do themselves and the program and services we do in our facility is rehabilitating individuals so they're not likely to come back in our facilities. this is an important point. we have about seven-year run where our contract renewal rate is 94, 95%. if we're not doing a good job, not helping them get a ged or high school diploma, they don't renew the contracts. >> a pleasure. we appreciate you taking some tough questions. thank you. happy holidays. >> thank you very much. glad to be here. crunch time for fedex, a shipper trying to stay ahead of the holiday gift giving deluge.
quick check on the dow. 30 points away from dow 20,000. we're ten points off the session highs today. the biggest winner now, nike ahead of earnings, posting strong gains, goldman sachs, a leader on this march 20 k as well as caterpillar. as if they didn't have enough on their plate with a record peak holiday shipping season, fedex is also set to report second quarter earnings after the bell and morgan brennan is here with a look at what we should be watching for. >> that's exactly the place we should start in terms of, look, in terms of watching. this peak holiday shipping season. when fedex reports fiscal q results later today, analysts
expect earnings to have grown 12% to $2.90 per share on revenue $14.9 billion. the biggest factor in focus is e commerce and surging package volumes have continued to pressure ground segment margins as the company expands its network in part to handle more oversized packages like furniture, kayaks, trampolines. other items to watch, improving profitability and express and the freight business and update on the tnt express integration commentary on trade, which fred smith recently met with president-elect donald trump to discuss and since fedex is considered a bellwether for broader economic growth, fresh gdp forecast. now the 5:00 p.m. call, also likely to include an update on that holiday peak season as the final days of delivery unfold. and ahead of that, and in response to the winter storm related service advisory that was posted on its website, fedex saying, operations and service are performing well, thanks in large part to an extensive
preplanning work while forecasts for the remainder of the week are fair across the u.s. winter weather systems can develop and affect service. i'll tell you right now, i've actually got a shipment myself, which is how i know about this advisory, that's in flux. if you look at the stock, it is one of the best performers in the transports, up 33% this year. >> way better than a year ago when we were talking about full on crisis, right? stuff didn't arrive in time for christmas for a lot of people. >> exactly. we have seen this -- this has been an issue with fedex. so far you look at some of the service numbers from third party analysts and it has been very strong coming into this final stretch. so it really comes down to the next couple of days. we'll see what they have to say. >> can i say something i think is deserved and probably never been said in the history of national television. great job by the post office. i mean that. the men and women of the post office, they were delivering packages on a sunday, on a sunday, and don't they -- they deliver, i think you said, the majority of packages. post office gets -- >> for amazon.
>> post office gets just, you know, crushed constantly in the media. so nice job to the post office. >> it is, you know, that's a good -- >> now i can retire. >> that's a good point. a lot of folks -- if you look at the snafus we saw deliveriwise in part with amazon packages in 2013 with u.p.s. and fedex, that was a big gain for the postal service. that's why they ship two-thirds of amazon packages, able to use that to their benefit in terms of getting more business. >> thanks, morgan. >> thank you. >> we are less than 30 -- less than 20 points away. now less than 30 points away from dow 20,000. will the market hit the vaunted mark in the next, say, i don't know, 90 minutes? find out by watching "power lunch."
every night this holiday season, dom chu searches the market. when he finds a stock, one that traders don't love anymore, he brings it here. we join him now as we journey into the land of misfit stocks. dom? >> i love this time of year because of the land of misfit stocks, we always go hunting around for which ones haven't been participating in some of the market rallies or haven't been participating in some of the market declines. the ones that stand out.
so look at this. because two sectors in the s&p 500, consumer discretionary, and industrials have hit record highs this holiday season. we're going to focus on the retail side of things because it is the season, 'tis the season for it. look at these stocks. with consumer discretionary at record highs, these discretionary stocks have not participated in the rally. trip adviser, down 44% year to date. h&r block, yes, they're considered discretionary, down 30%. under armour on the athletic apparel side down 28%. and l brands down 27. not all. four of the other ones that people know about. haines brands, signet jewelers, delphi down 21%. so some of these misfit stocks will be huge things to watch. it is the season for them. remember, for many of these stocks, sometimes traders look for turn around stories and what not. but, again, with names like
under armour and nike being the underperformers this year, it will be curious if these guys become misfit stocks for longer than they are right now. >> thank you. as this market eyes the dow 20,000 level and fresh new year, what are some industry disrupters you should have in your portfolio to help ride the market higher? let's bring in ian winer, at wed bush securities. what is an industry disrupter in your view at this point? >> i think that's just a company that can basically take a wrecking ball to any industry that it goes into and has a clear first mover advantage, has the kind of scale that they can go into, specific industry, and dominate it and eventually push other people out of business. and so i know two of the names that we were going to talk about were lululemon, as one of those, and amazon.com. >> let's start with amazon. we talked about it a little bit. it had a tremendous run since
dow 10,000. that would have been a great stock to have. and people have always been fighting the valuations and what they don't see as enough profitability to justify the moves. and yet here we are again and here is a stock you like despite trading at 177 times trailing earnings. convince me. >> if you look at earnings growth, it is pretty much a hockey stick as you go out a couple of years and still looking at about 75% year over year earnings growth. and it seems to me that the leverage they have is in their cloud business, and, you know, at any point, it seems like we're at that tipping point, where they're going to be able to get a lot more share and finally tone down the spending a little bit, where you're going to be in a position where they get massive leverage and you still got top line growing 20 to 25% and i would be hard pressed to find another company that has as many good things going and and has the ability to put as many out of business. >> a disrupter. let's see if it can keep doing that. you would think so.
lululemon, though, i'm not convinced. i feel like athleisure is peaking and what else have they got going? >> i don't know. out here in los angeles, i think i'm the only person who don't own yoga pants. >> well, get on it. >> i'm hoping for christmas, we'll see what happens. but in general, if you look at lululemon, they're another company that finally, finally is going to stop spending money like crazy and the sgna is going to get better. they have tailwinds overseas. a lot of these other athletic companies are struggling. here is one where you have sucklsuck l secular trend. and it seems like a good company to own and should go higher. >> ian bringing us ideas for next year. good to have you here. >> all right, thank you. nike set to report results after the bell. we'll break down why the sneaker giant has been the worst performing dow stock this year and what it will take to spark a turn around. plus, don't forget about the
welcome to the second hour of "power lunch." we're standing by for dow 20,000. we could get there with the 2:00 p.m. lift that we have seen lately. so keep watching. plus, mourning in germany. angela merkel visiting the site of yesterday's attack as a new bomb threat closed cologne's main train station. turned out to be a hoax, though. nike reports earnings after the bell. will the dow's worst performer this year be the one to take us over the top? >> i'm brian sullivan. the dow getting within 13 points of 20,000. earlier today, now sitting in a range below that, a range you've been in for the last couple of hours. broad group of stocks leading us higher today, trying to lift and pull us to 20,000. goldman, cat pill, home depot, you knight
united health. invidia is the best stock on that index this year. it is up more than 200% and now you got another analyst commentary on the stock. on the other hand, trip adviser down 40% this year, rebounding a little bit today. it is the best performer, still a tough couple of months for trip adviser. let's bring in art cashin. and bob pisani. art, i don't want to throw any water on 20,000. but the laws of math require me to remind our audience that the move from 10,000 to 15,000 is 50%. for those 5 ,000 points. the move from 15 to 20 is only 33% for the same 5,000 points. as we get bigger, the numbers mean a little less or does it still matter? >> it is more from a historical perspective that it matters. it is a diminishing percentage move. but let us not forget that --
let us hope this is not like dow 10,000 where we first got across that line in 1999. and lingered there for seven years, recrossing that number 67 times before we made the final and conclusive breakout. >> i think what is important here, i agree, a smaller number. but what i would like to see for 2017 is more participation in the stock market. that's why i think dow 20,000 can help focus on. i think only 52% own stock. 82% of all stock is owned by the top ten percent of households. wouldn't it be nice if that expanded in the next year or so because the economy expanded. and, yes, dow 20,000, that's why i'm interested in it, maybe people will focus on it more and get more interested in the stock. >> a lot more etfs, bob, which you're always telling us about. i would think that's one of the mechanisms by which a lot more
individual investors would get involved. it made it so much easier. >> you're absolutely right. since the election, trim tabz indicates that nearly $100 billion has gone into equity etfs. well over 3. billion of trading at that rate. >> and, remember, in 19 -- we were talking about the last time the dow was around the 10,000, moving over, 2009, the etf business was $100 billion business. it is $2.5 trillion business. now we talk about routine basis. it has changed the way people invest. the world is very different since the last time the dow was -- since the dow was at 10,000. a big deal. >> another big difference, art, is that -- the role of hedge funds. the number of hedge funds and participants, the number of dollars in hedge funds and also the degree of computerized trading today versus back when the dow was at 10,000. >> it is enormous. what happened was when the
dotcom bubble collapsed, all those smart guys went out and borrowed money from their family and friends. and we went from something like 700 hedge funds to 8,000 hedge funds. that number has been going down. because they're finding out the game is difficult. and believe it or not, one thing that is making it difficult is the kind of passive investing you see in etfs. it is harder for them to analyze the individual stocks because people are just buying sectors and not saying, well, it looks like the u.s. steel is better than some other -- or one of the other things. so it is making a market tougher and tougher to analyze. >> maybe 2017 will be the year for active management. >> we'll see. >> bob and art, get ready. art, put your happy face on, man. >> yes, sir. >> always happy. >> next guest didn't think the dow would hit 20,000 for at least another two years. let's bring in seth masters,
chief investment officer. i hope you're not right at that point. we're only 30 points away here. you think it will be this year, very soon? >> we're pretty darn close right now. it could well be. when we first published our research on this, way back in 2012, the dow is at 12,000 and change. and it was a very provocative idea that we could think about hitting dow 20,000 and anything like a ten-year span. people were very pessimistic back then and the point of publishing that piece was to highlight that we thought there was a huge opportunity to be in equities, period. today we're seeing we're pretty close to that level and it is a different kind of environment now, frankly. we're probably going to see lower returns going forward than we have experienced in the past. a bit more volatility. that will still be enough to take us above dow 20,000. >> where to from here? it sounds like -- if you wrote that piece, when you did, saying there was a tremendous opportunity, you sound like
you're hesitating about what the next 10,000 points are going to be like. >> i think the next 10,000 points are going to be choppy. i think we will see dow 20,000 multiple times, sometimes on the way up and sometimes on the way down. and that's not so surprising. it did happen around dow 10,000 and other levels too. and not just at round numbers. the way that usually equities evolve. they don't go up in a straight line. >> what would hold it back? what slows it down or makes it gyrate around that level? >> the long-term driver of stocks, of course, is the earnings of companies. and i think, you know, we're pretty optimistic that over the next five years, and longer, you're going to see earnings grow at a moderate pace. because the economy is going to grow at a moderate pace. the problem is, that earnings stream will be uncertain. as we have seen this year, just think back to january and february, when the market was down because everybody was convinced that china was going to implode and lower oil prices were a huge problem.
since then, seems like everybody has become much more optimistic, but, of course the structural issues that cropped up in the early part of the year are not banished forever. and when the next seeds of doubt arise, they'll be probably another dip in the market. the key is to be opportunistic and to seize those moments and that's what we try to do. >> very quickly, after january 20th, do the earnings prospects for the companies that you talked about materially increase, does it matter? >> i think it matters a lot. the reason that stocks go up is because earnings go up. and we are optimist make companies in the u.s. in particular are generally pretty well positioned, especially in those sectors that do have the potential to benefit from an environment with potentially more investment, potentially lower corporate taxes, and potentially also some deregulation ahead. i think that's one of the reasons that, for example, financial stocks have done well recently, as well as energy
stocks. >> seth, thanks for joining us on this day. >> thank you. >> seth masters, ab bernstein cio. the dow marches to 20,000, 20 of the 30 stocks are higher this year. nooky nike is a stand jount. could this be a buying opportunity for investors. with us is sara eisen who covers the stock. you'll be on the conference call. what is the key issue? >> a competition problem. always a competitive industry. you've seen adidas have a resurgence, especially in the u.s. that has threatened nike's dominance in north america. it is a big deal. there is a lot of talk that athleisure had peaked out. it is going high fashion, and adidas has really nailed this trend. you've seen them partner with kanye west in the easy line. you've seen them release the
retro stan smith. that's working. it is not so much for nike, not so much for under armour, both stocks down double digits. one thing i would point out is that nike was the best performing dow stock of 2015, up more than 30%, from first to worst. part of that, a big part of that is the slowdown in north america and that's where you're going to see the competition heating up. i'll be watching the north american futures orders, and the north american sales numbers. >> and, of course, market share loss is a huge concern. also recent reports of a lot of discounting, so maybe pressure on margins, what is of concern to you? you have a perform rating on the stock. >> dominant market share in north america is both a positive and a negative for nike, because, of course, this year is the first time we are seeing that market share erode. there is a trend that is happening in athletic that is all about lifestyle. and adidas as a brand continues to have a pretty impressive momentum here in the united
states. so for nike, as a performance company, foremost, we do question whether they can do both lifestyle and performance simultaneously. you mentioned the discounting, yes, according to our checks, there is still a lot of inventory in the channel and that could bode poorly for us for the margins. >> is that a nike problem? is nike missing the mark on the kinds of merchandise it is selling now or overall industry problem where there is a glut of inventory across the board? >> it is a little bit of both. we have been noticing the product pipeline at nike look a bit stale. nike had to take pricing down on a couple of basketball shoes this past summer, which is unprecedented for this brand. so that's something that we're watching. and, of course, any newness on the horizon would be something that would help. >> on the conference call, itwh is the number one issue you're listening for?
>> this is a global company. this is a company that gets more than 60% of its sales outside the u.s. so while that key north america market is very important, and has been a major driver of the slowdown, we want to hear commentary on china. that would be the profit engine for nike. we have seen double digit growth there, a cash flow machine. and we want to hear whether there is a slowdown, a, because of the chinese currency, now back at an eight-year low against the dollar, that cuts into the sales in china, and what is going to happen in a trump administration for a company that sources nearly all of its product in asia. there is talk of import taxes. and, of course, any talk of trade wars, this is a company that is in the cross hairs, of , course. it sells around the world and sources around the world. it is speculative. it has investors worried. >> future commentary, or commentary about the political environment and the future. we're going to get a good read on what the dollar impact might be for a company like nike.
is that a concern for you? >> yes. that's definitely a part of the issues. nike may have to take pricing up, of course we have seen the opposite as of late. so that's something that we're watching. overall, i agree with sarah that the global footprint of nike is -- could be a benefit and a concern under the current administration. and china is something we're watching very intently. that's 30% of nike's profitability. and operating margins in china came down this past quarter for the first time, really in some time. >> anna, thank you. and sarah. >> thanks for having me. >> market flash with dom chu. >> nike lines, just adding to the discussion there, 4% to 5% move in the stock. maybe fireworks to today. at least we're watching some other stocks as well, best performing industry group within the broader s&p.
medals and mining, and powered by shares of free port mcmoran. shares have more than doubled, 11% above. yesterday credit ratings agency moody's changed the company's outlook to positive from a prior negative and cited things like success around asset sales, reduction in capex and cost. a stock to watch. back over to you. yogurt, steel, and something named fred. that's all coming up in the good, the bad and the ugly. not someone. something. the dow now 34 points away from 20,000. softened up a bit. we're going to focus on the economy. is it strong enough, not today, not tomorrow, next week, next month, next year, to keep stocks going higher? steve liesman, larry kudlow, showdown at 12:15.
welcome back. i'm phil lebeau with breaking news regarding volkswagen. agreeing to a settlement regarding 3.0 liter diesel engine vehicles here in the united states. about 80,000 of them. the company has agreed that it will be offering compensation for those owners of those vehicles. remember, these are vehicles separate from the 480,000 2.0 liter settlement we saw a couple of months ago. we don't have a final price tag as far as how much the settlement will cost the company. it is expected to add, the
estimate is they would add another billion dollars to the growing tab that volkswagen has faced regarding the diesel emission scandal here in the united states. back to you. >> all right, thank you very much, phil lebeau. time for the good, the bad and the ugly. we hit the good here. shares of fred's are up sharply. gain of 87%. buying 865 rite-aid stores. on to the bad, in the staples sector, general mills down 3%. the company reporting profits that fell short of estimates, revenue weaker than expected due to weaker sales of brands like yoplait and progresso. an ugly day for worthington. the metal manufacturers profits fell short of estimates. the dow is closing in on 20,000, less than a month after breaking through 19,000. what is behind this rally? let's bring in steve liesman and larry kudlow. i am so pleased to have you here
today. your resume, so esteemed. junior economist, the new york fed, first job, chief economist and you have tremendous experience. >> and cnbc contributor. >> that's the icing on the cake. >> and you're very -- grateful for that, i was also chief economist at omb. >> right. under reagan, yes. so why are we here today? why has donald trump's victory seemed to push the dow so far so fast? >> look, i think part of this is economic growth expectations. very progrowth policies, as i put it, the war against business is over. that's the way i look at it. the war against capital is over. and i think people are very encouraged and really it is a whole different mood in the country that is developing. confidence mood, business can confidence, consumer confidence, people like the way the transition has gone basically. i'm not saying everything is perfect. never is. but i think there is a new sense of optimism developing, whether
that pans out or not, i don't know. i'm saying right now, i sense new optimism, and as the happy warrior, just what i love. >> i heard you tell me during the break, there is things that impress you about this rally. what are they? >> big promises in the break. >> they're not that big. the market climbing the wall of worry. don't often talk about the market climbing with substantial weight weighing it down. those two weights are the yield on the two-year and the ten-year, and the value of the currency. these are two things that in other markets we have talked about weighing down stocks, what is happening is stocks have climbed tee dee spite these problems out there. it has been ignoring what has been happening in the fixed income market and it is has been ignoring what is happening in the currency market. i think those are two substantial points that speak to a strength to this rally, that maybe a little bit under mark. >> the rise in bond rates, okay, about 60, 70 points, almost all from the real component of the
ten-year. that's a growth expectation. that's a higher real return on capital. that anticipates fewer regulations, lower tax rates. it is not inflation. it has been 79% real. also, another point, maybe a little in the weeds, corporate bonds, we talk about corporate bonds, up 38 basis points. only about half of what treasuries have gone up. here is the thing. bwa, the spread against treasuries has narrowed substantially. the spread of high yield corporates, falling more, that's a very good signal. >> that means that people think those companies are less likely to default and why their interest rates get closer to a better interest rate. >> we're moving away from recession threats. >> very smart, those guys, doing the valuations on credit risk. i think it is worth pointing out a couple of areas where the
market may be ahead of itself. larry or melissa would know this better, this idea that maybe the market is already discounting some percentage of what trump promised. when it comes to banking stocks, health care, when it comes to a lot of the areas of growth, i don't know that larry's four, five, six, stop me when i get to double digits growth numbers are going to really happen. it is well to remember, from an economics point of view, to get a single percentage point extra is a very, very, very, very big deal. >> but to get a percentage boost to s&p, eps, it is a 1% drop in the corporate tax rate. and that, and i think you'll chime in on this, that has not been factored into the valuations in this market, almost at all. is anybody raising the s&p 500 eps forecast by 10 -- >> excellent point. they get mitigated by the higher
dollar. >> actually, can i say, the higher dollar thing, i think most of the adjustment is adjusted. i don't see this as spiking up and up and up. it is a footrace, right now, between profits and interest rates. i think that's the best way to look at the next six months or so. besides the legislation, and the tax cuts and so forth and -- it is a footrace. and don't forget, in this footrace, if you take a step back and look at the whole dow 20,000, go to jeremy siegel, stocks for the long run, okay, right where we are today, since the peak of august 2000, okay, that's roughly 16 years, we only had increases of half a percent per year. jeremy siegel's long-term work shows 6% or 7% real. we have room to go up. it is not going to be without corrections. i get that. corrections are going to come and go. but the market is not hopelessly overvalued by the metrics.
>> to underline what melissa was talking about, i don't want to go into the gop tax plan, but to say this very simple statement, if paul ryan were to get his way, on the way he wants to reform the corporate tax rate, the way i read it, what you export, your tax rate goes to zero. right? exporters, anything that leaves the country will be taxed at zero corporate tax rate. >> if our trading partners do not put up retaliatory tariffs. >> the easy way out of this, the easy way out of this -- >> switching to the same system that evebody else in europe uses, right? >> at 15%, 20% corporate tax rate has huge incentives. that's melmelissa's point on profit. always try to tear down barriers. don't raise them. tear down the other side.
let's take mexico and nafta for a moment. mexico took its vat tax from 5 to 16%. they said they wouldn't on american imports. can they go back. let's re-adjust the art of the deal here, got a guy who knows about deals in the white house. >> let's make good on your promise 20 years ago and get those vat taxes on imports back to where we thought they were going to go or better yet eliminate them. mexico can grow. >> thank you, larry. >> mr. kudlow, tear down this trade wall. >> thanks, larry. >> thank you for having me. coming up what do small businesses think of a possible repeal of obamacare. and dow 20,000 watch. , chevy wa. who played the wife? beverly d'angelo! juliette lewis costarred as the daughter. oh, i think it was um... chris columbus was the director... it's called claymation...
narwhals really exist... actually 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.
12 different cities, profiling nearly 40 startups. largely companies are in wait and see mode when it comes to donald trump's presidency and the action he may or may not take on obamacare. in columbus, ohio, joe deloss is offering coverage. the company employs more than 50 that is largely impacted by incarceration. >> about a third of our workforce is full time. for our entire team, we provide an alternative insurance product that reduces the rate of some medical costs based on prenegotiated rates. >> in detroit, eric of detroit denim hopes to offer insurance in the future but doesn't have to comply with the employer mandate. >> we do not offer any sort of health benefits. but that is a goal of ours that as we grow, that's one of the primary things we want to offer our staff here.
and so if anything, it is really put it more at the forefront of when we can do it and how we can do it, but, you know, it is important to us to be able to offer benefits, regardless of what else is out there. >> despite uncertainty ahead, both companies are moving forward with their expansion plans in 2017. back over to you. >> kate, thank you very much. well, we are all anxiously awaiting what you might have heard about dow 20,000. what happens once we get there? mike santoli is looking at the curse of the round numbers. mike? >> so you're not saying if we get there, a pretty decent bet we'll touch the 20,000 mark. if you look back at past, the dow jones industrial average dates back to the 19th century, when it has reached the widely watched numbers like 100, 1,000, 10,000, it had a hard time putting the milestones into the rear view mirror. if youook he, it first reached the 100 level in 1906.
it was still kind of grappling with it into the mid1920s before it escaped. also plunged below in the great depression. with 1,000, from 1996, really to 1992, 1,000 is something like a ceiling on the market, bum pd against it, didn't put any real distance itself and that mark. 10,000 we talk about, 1999, first crossed that threshold. one of 15% the next year or so. but did decline twice below it in two bear markets. i'm not sure 20,000 qualifies as one of the round numbers, it is not a multiple of ten, since 10,000, but just some context for psychological or whatever reasons that it has been an issue in the past with the dow cracking through the numbers. >> all right, mike, thank you. mike santoli.
let's talk more about the round number curse with us is jeff hersh, editor in chief of the stock traders almanac. is there such a curse, do you think? do you think the round numbers provide a ceiling? >> i think michael hit on it with the base ten levels being very difficult to clear, 20,000, doesn't seem as difficult to us right now. >> nothing to worry about until 100? >> i think we have some things to worry about other than that. profit taking, but i think the most important part is the strength is -- we have seen that. we have a rally after a new party gets into power. we have some progrowth policies coming in, potential government functional ty brings my old forecast into play from 2010 i put out there. >> what is that number? >> 38,000 . >> dow 38,000. >> i want to make sure our audience. >> by 2025.
>> maybe makes it more believable than it was back in may 2010 when the dow was around -- >> by 2025? >> that's what the title of the back was. >> to brian's earlier point, easier and easier, every thousand points is a much smaller percentage. basic math there? >> yes. >> still 38,000, exciting. >> that includes a new secular boom, new technology, touching everybody in the world, the government functioning properly together, getting some things done. over the next several years, the late '80s, late '90s. >> in term of the difference between 10,000 to -- what got us to 10,000, what are the key differences in your view. what sort of sets this up differently? >> i think it is a -- two separate booms, two separate
sections, the boom, the information revolution that pushed us above 10,000. here, i wish i could tell you what it is going to be. could be robotics, biotech with the health care thing being -- may take longer. could be energy technology. the beginning of a new era of technological growth that touches everybody on the planet. >> does it have to be technological? could it be political? >> it is a combination of the two. we're getting the political. that's coming into play here. get some functional ty in congress and with the executive branch coming up in the next several years. but it is a combination of getting us out of the military engagements on the ground and the middle and near east, the government functioning properly, getting healthy inflation coming in and some new culturally enabling paradigm shifting technology. >> dow 38,000 probably sounds bonkers to our audience. but new that i think about it, the market doubles on average. gain 9% including dividends on
average. that is actually not far out of the historical norm. not to take anything away from the boldness of the forecast. >> thank you. appreciate that. >> it was based upon a long-term cycle. >> thanks, jeff. >> not to take anything away from it. i took everything away from it. >> good job, brian. >> you're welcome. we're talking pills and pilots. hopefully not in the same place. in the march to 20,000. >> say it again, michelle. >> stick around. "power lunch" will be right back. this year at t-mobile, the holidays are on us! switch your family of four to t-mobile, get unlimited everything, and we'll give you $800. that's right! $800 to spend anywhere you want. plus, all season long, get awesome deals on smartphones, tablets, and accessories.
i'm sue herera. belgian authorities detained one person and seized weapons and computer materials in a raid this could be linked to terrorism. the person detained is known to police and is due to face a judge later today. an aid convoy carrying humanitarian supplies crossed the border from turkey into syria. it was organized by turkey's humanitarian relief foundation. the brandenburg gate in
berlin lit up in the colors of the german flag, in honor of the marketplace victims killed in monday's truck attack. it was first illuminated in the black and red and gold of the german flag before changing to red and white, which are the colors of the city of berlin. a double win for notre dame basketball player matt farrell. following his team's 77-62 victory over colgate, he was stunned to see his brother, an army lieutenant who is stationed in afghanistan walking on to the court. bo was supposed to come home in february, but made it in time for the holidays to see his brother play. i'm going to try not to cry. so i'm going give it back to you, brian. >> if i'm crying. >> that's okay. >> very special moment. just in time for the holidays. >> thank you for his service and long delayed return home.
nothing is as certain as death and taxes. there will be some changes to one of those thins this year. 2017 tax year will include some likely major policy adjustments. so what is it that you need to have at the top of your mind as you file taxes in the new year? let's bring in dave, ceo of jackson hewitt, the nationwide tax preparation firm. welcome. >> great to be here. >> after donald trump gets elected, every stock in the world went higher except for your competitor, h&r block baurk because people feared there wouldn't be a need it use you, because -- >> what if taxes become something like this? is that a reality? >> i think simplification is in the cards. i don't think whether it is for block or us, we do tax returns for hard working americans. they need their earned income credit. there is a lot of other things that are, you know, will prevent it from being a postcard but a lot simpler. >> that's right here.
subtract the earned income credit. do they need you? >> they can get it themselves. they can file online now with turk turbo tax. >> before we get to tax strategies, that will be helpful to do in the next week or so we have left, do yo fear what changes may happen or do you think like most things congress does, there will be a lot of talk and not a lot of action? >> i think this time around there will be a lot of change. you've got president and congress that are all of the same party. most of the tax changes they're talking about can be done through a reconciliation process, don't need more than majority in each of the houses. all the work we have done at jackson hewitt says it will be the number one or number two thing in the agenda in first 100 days. we expect a lot of change. most of it is good. >> are you paying attention to what they're talking about for corporate taxes and changing --
not taxing profits but cash flow? it sounds bizarre to me. >> it does sound bizarre. we're more fobboused focused onl tax returns. taxing off the top line we haven't done in the united states. >> just trying to understand your business and the impact on your business. what percentage, ballpark estimate, of your customers come in and fairly straightforward tax return that they file in the end. not a lot of complicated things. what is the deterioration of if something like this gets passed, people say we don't need to pay all that much. will your prices come down or -- >> for us, look, we do -- the number two player, about six, like six out of ten people want to come to a professional. not that different than the stock market. even if things are simple, they want to talk about all the changes. all the changes we're talking about todayimpact most of the customers. average fee is $200.
average client well over $3,000 refund. it is good value at the end of the day. we think change is good. >> give us advice for the last week. >> the last week, best thing to do, we know that rates are supposed to come down. accelerate your charitable deductions. take 2017, pay it now. if you're a student, prepay your tuition. those are the easiest things that most of us can do now to lower our bill, sell -- if you have losses from your bonds, from what happened in the last couple of weeks, sell those now. next year, rates will be lower. defer any gains until next year if you can. >> the market is up. i presume many of our audience will have capital gains. this you book them now? >> book your gains -- >> sell your losers. >> hold your winners. lots are -- deductions are greater this year. want to pay less tax next year. >> good strategy. we appreciate that. your insight into taxes. thank you very much for joining
. 48 points, until dow 20,000. had here is an interesting stat, since the election, the dow is up 23 out of 29 days. so it has been slow and steady march higher. >> it appears the russians could be to blame for everything. maybe computer bots manipulating online advertising numbers. according to a new eamon javers has more. >> that's right. new report out from white ops, based in new york, being treated as very credible by people inside the digital video advertising industry. what they say they found is a massive russia-based botnet
hacking into the heart and soul of the digital video advertising system. the way this works, generates about 3 to $5 million a day for whoever the hackers are and prevents major media companies from receiving all that income that would be directed to them and their middle men. what they say is this major botnet is operating by setting up fake bots that are sending signals into the advertising exchange. that's an online system, that matches advertising buyers with sellers of advertising space. posing as fake sellers, sending that into the system, as a result, advertisers are paying for as many as 300 million nonhuman views every single day. they say as part of this scam, the hackers falsified documents and gained access to 571,904 real ip addresses. an industry trade group held a conference call this morning, with about 130 different executives on that call in order to respond to this.
there is some question here about just how much fraud is at heart of digital video advertising. a lot of people are going to now need to react to this report and we're talking to as many of those folks as we can today. >> thank you. we're still keeping a watch on the dow. we're at 45 points away from the 20,000 mark. "power lunch" will be right back.
welcome back here. as the dow tries, pushes, scrapes, claws its way toward that 20,000 mark. let's take a look at some of the airline stocks phillip lebeau has more on that story. >> this was the place to be when you first started investing, if you first started investing back in october of 2009. take a look at the returns you're seeing from delta, american, southwest since then. up at least 400% in the case of united, up more than 900%. three reasons why these stocks have been off to the races since then. first of all, consolidation. basically, the then largest airlines, they've consolidated over the last seven or eight years down to the five largest airlines. at the same time, these guys were just coming out of bankruptcies. and result, they had lower costs. at the same time, there was
another thing happening back in 2009 into 2012. gulf coast jet fuel. it started dropping lower and it's remained lower and as a result, their lower costs have been filtered down to the bottom line. and fooibl, ancillary fees have boosted airline revenues. they have particularly grown stronger over the last couple of years. and finally, guys, i want to show you the stock to take a look at in terms of the airline stocks over the last seven or eight years. alaska air, up more than 1,200%, if you went back to when the dow was at 10,000 back in october of 2009. what a return, what a chart there. >> yeah, phil, thank you. a lot has changed prosecute last time the dow passed 2,000 back in 2009. it's actually a drug stock that's holding us back, merck. >> that's right. that's right. so, a lot has changed in that time, of course, this was before
obamacare. if you look at the contribution of the three pharmaceutical companies to the dow. pfizer, johnson & johnson and merck, you can see they're just about on-pace, but underperforming just slightly. that really reflects the tension we've seen in the drug industry for the last seven years. at the end of 2009, that's when pfizer and merck were both wrapping up these gigantic acquisitions. pfizer sold wyatt for $68 million, merck sherg pillow for $41 million. they're also preparing themselves for the implementation of obamacare at the gik of 2010. that generally has been seen as a positive thing for the pharmaceutical industry, adding more coveraged patients for them to give their drugs too. we've also seen over that time an acceleration in new drug approvals. the fda using several mechanisms to speed drugs to the market. the last two years are seen historic highs, although it has slowed down a little bit this year. and the thing that's really keeping it from soaring like we've seen some other stocks do is increasing pressure on drug prices. even just today seeing 19 senators, mainly democrats, two independents, asking donald
trump to work with them to bring drug prices back down. to end on a slightly less negative note, take a look at the biotechings itf, that has more than tripled in the last seven years since we hit 10,000. although it peaked in summer of 2015, a pretty good run for biotech. >> it's interesting, because when i heard the news about the letter, i thought there should be a sharp reaction in biotechs and there really wasn't. but maybe that's because it was offset in the buys in celgene we're seeing today. >> that's possible, and it's possible that people are starting to get immune to these kind of letters and attention. and when it's spread across the industry and not targeted at one kind of stock, you don't see the same kind of hit >> and the names you cited were democrats, i noticed. i don't know if there were more on there. they're just going to have less power in this next administration. >> that's right, there were 17 the democrats and two independents. bernie sanders and elizabeth warren were among familiar names we've heard talking about drug pricing. what's interesting, though, is that donald trump in the past has talked about medicare negotiating on drug prices. it's a question of whether he'll
adopt that and whether a republican congress will also support it. >> i love stupid stats. so i'll give you -- there's one ibb stock that has doubled this year. array biopharma. i think you deserve a trip to boulder to interview that company and see why array biopharma is up 105% this year. >> i'll have to learn to ski. >> thanks, meg. earlier, we gave you a look at the good, the bad, and the ugly of the broader market. as we head out, a look at the good, the bad, the ugly and the dow. the good, nike, the shoe dog of the dow this year. the bad, with cisco. the ugly, merck. not too ugly, but to melissa's point, it's the biggest dow decliner, so we're blaming the lack of 20,000 today entirely on merck. call meg terrell at 201. we're back right after this.
check, please. >> as we do our check, please, we await dow 20,000. look, the best stocks quarter to date in the dow, goldman sachs, number one, up 50%. i don't think there is any sector where there is more hope in a shift in the viewpoint of washington than the financials and what could happen as a result of the change in an administration. >> yeah, for sure. >> we've also got a couple of ex-one current goldman, one ex-goldman guys now in very high positions. gary cohen and steve mnuchin. >> i said that goldman should be
the poster child of the soft market vehicle. you said, who would you choose? and i said, goldman sachs, because it really exemplifies the gains that -- >> you would not select nvidia, you would select goldman? >> although, nvidia is a fantastic story, that's also up -- >> but less affected by the volcker rule. >> exactly, exactly. and a steeper yield curve. >> mine are not that smart. the average dow stock is up 12.8% this year. the dow is not up that much. there's nine names up more than 15%. if it wasn't for nike, the average dow stock would be up a lot, a lot more. but the average dow name is up 12.8% in 2016. you're welcome. >> do you think dow 20,000 matters? >> i think it gets people interested. the retail investor interested in the stock market. >> i think, literally, watching channel 4 in dubuque, iowa, and they'll be like, dow 20,000. i think it does matter, because you're going to hear it more. >> i think symbolically, it's
important. technicians will say, it doesn't matter that much, but symbolically, it does. >> for really deep wonky wall street people, it means zero. nobody looks at the dow anyway. but for america, and i love america, it does matter. >> all right. >> thank you for watch iing "por lunch," america. >> "closing bell" starts right now. >> hello and welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. we came within 13 points of dow 20,000 this morning. and of course, now, we're, what 52 points away. but anything can happen in this last hour of trading, of course. and we're going to follow every move, bring you the money managers to debate what's worth buying, maybe more importantly, what they may be selling at these levels right now. >> hedge fund giant ray dalio says the trump administration could be, quote, reigniting animal