Skip to main content

tv   Power Lunch  CNBC  January 5, 2017 1:00pm-3:01pm EST

1:00 pm
that's all for us. thank you for watching. "power lunch" begins now. >> i'm melissa lee live, it is a sea of red in retail after the first read on holiday sales sorely disappoint. retail analysts warned you about this, and we are live straight ahead. >> i'm michelle caruso-cabrera. the dow now low 80 points, and nasdaq and s&p lower, too. we'll go inside the numbers coming up. i'm tyler mathisen. wall street watching washington today, that building
1:01 pm
particularly as congress holds intel briefings and hearings to signer threats to america, obamacare front and center too. live report soon. >> i'm brian sullivan here in florida at the global energy conference with a huge show focused on oil and energy for you. the ceos of patterson uti, they have a good view where we are going, a huge canadian company in oil sands, talking pipelines, and the energy analyst with his favorite stock pick in oil and gas. it is a huge two hours." power lunch" starts right now. brian sullivan so smart. orlando in january. welcome to "power lunch," dow in the rearview mirror at least for today. bob is on the floor, bob, okay,
1:02 pm
retail is bad, but yobeyond tha? >> oil and bond yields. look at oil, the inventory numbers, they are late. product builds, gasoline, for example, a bit of an issue the you see oil dropped there hurting the market overall. you got less demand from the refineries, built less for the product, the oils in the refiners, exxon and chevron, for example, those two alone, 15 points on tdow, and marathon turned around. other is yields. you know, remember, michelle, we topped out 2.6% one month on the ten year, 2 .6% in mid-december and going straight down. that's heads and shoulders right there, technical analysis, not to get dorky, but 2.3% today. >> hurting banks. >> pressuring banks. this is the bank etf. the banks, one month you're looking at, the banks top out a little before mid-december, and they have had trouble moving
1:03 pm
sideways since. look at the big banks today, ones that matter, goldman on the dow and jp morgan, put them together right there, there's another 24 points, all four, that's 40 points on the downside. >> long end of the curve, and janet yellen too aggressive, hurt the economy, despite all that stuff? >> look at it more simply. just like the stock market, some argue, is overbought since the trump rally, others argue the bond market is oversold since then, and we are seeing some competent moves on both sides. >> okay. happy new year, bob. >> i try to keep it simple. >> tyler? >> michelle, thank you very much. what a die in retail, and not a good way. the retailers have been slammed. there you see a couple of them. almost all the big losers in the s&p are in the retail sector with the exception of the banks bob mentioned, but the losses here are significant. macy's, kohl's crushed after reporting disappointing holiday
1:04 pm
sales numbers. courteney reagan is live in new york with more. >> reporter: they feel like they are on the naughty list at the end of the holiday seasons. both saw the sales fall 2% for november and december leading them to cut the full year earnings forecast and may may si's thinks is continues through the year: with the strong thanksgiving week, december would have been stronger, but the momentum did not materialize for the holiday period. online sales grew double digits, but a sale online costs more for my retailer to execute. add in the discounts, and margins are pressured. kohl's says the gross margins are lower than planned because more sales came at deeper discounts. when there are challenges, macy's takes action. they are closing 68 stores of
1:05 pm
the 100 stores announced in august, costing them $575 million in sales in 2017, but save it $550 million in expenses going forward each year. macy's is cutting more than 10,000 jobs, about 7% of the work force, but don't get depressed about the consumer. this are many economic data points that show us the consumer is willing to spend. they are just doing it in different places. adobe came out with the latest holiday sales number, online sales growing billions, up 11% last year. who got the bulk of that? no surprise, it's amazon. at least according to slice intelligence that scans receipts in e-mails of over 4 million customers, and amazon got 38% of the online sales. back to you in the studio. >> thank you very much. well, you know you're living up
1:06 pm
to the name when you get a tweet like this from jim cramer, the great matthew boss at jpmorgan called every inch of the retail story. he is your go-to guy making/saving big money for clients. so says cramer. >> let's hear from the man who nailed the call, jpmorgan's matt boss, no pressure, matt. >> thanks for having me. >> investors looking at the downdrafts on the stocks and seeing a buying opportunity, lowering the price in both of them. the lower price target, kohl's more upside from here? you're saying kohl's could have 12% upside to the price target versus macy's which is flat to the lower price together. >> i think what you're seeing here is a changing of the guard. everything's changing in traditional retail. i think the traditional retailers are losing traffic at an accelerating pace, and it's going to amazon and online, and we would not be stepping in on the department stores.
1:07 pm
we downgraded nordstrom to sell after visiting there. it's brick and motor versus online that's challenging. rising costs of doing business. in 80% of store volume, 80% of sales volume is still coming from brick and mortar stores. >> don't buy either with 12% upside on kohl's? >> you know, actually, we dug into the model, you know, right before this, and one interesting statistic on both macy's and kohl's, the dollars are back at 2008 levels. i mean, that's a staggering statistic. >> crisis levels. >> back to recession levels, and m macy's cut in restructuring, the largest cut made since the financial crisis. they take action, but the sales volume perspective, there's -- it's tough out this for the competitive dynamic. >> we know what macy's plans are with respect to store closings and layoffs, but what do expect
1:08 pm
from the other stores? massive numbers of retail locations shutting down? >> i think macy's is the type of the iceberg. they are getting ahead of the game. you know, it's a forward-looking management team. i think they are making the right moves. you will see more of it. you know, kohl's tested closing roughly 20 stores in the last year to see the reaction and what kind of sales recapture they have. in their game plan, they would convert larger stores to smaller stores. j.c.penney has real estate tied up in the collateral loans, so they have to, you know, a little bit of a wait and see story, but overall, to me, you have a good degree of consolidation that's still on the margin to come. >> brian? >> brian sullivan in florida. congratulations on the calls and shoutout from jim cramer. what we talked about and what i wrote about is home and car
1:09 pm
sales. any analysis on how a surge in housing and auto sales might be takiing away from retail, and thus, a slow down in those, the macy's of the world picks back up? >> two dynamics. there's a shift in spending that's been taking place. you know, whether it's towards home and improvement, autos, or towards electronics like the iphone, no question that the consumer wallet is being pulled in a number of different directions, and i think it's a zero-sum game. it's not an expanding wallet. that's part of the issue. that said, the bigger dynamic regardless what happens with housing and autos, the bigger dynamic is the share shift happening in a micro level. those dollars are still being spent. people are still buying apparel. they are just buying it online and amazon, and when the dollars are being shifted, from brick and mortar to online, legacy retailers lose. 1% moving from brick and mortar to online, they are not capturing the full 1% of the
1:10 pm
dollars. that's the challenge they are all facing right now. >> so, matt, what's interesting in today's session, look at the tentacles of the retail selloff, and you immediately go to the mall reads. they are actually bearing decently in today's session, massive store closures, and are there enough strong retailers in your view to absorb the supply coming on to the market? >> so the reason -- obviously, i don't cover reads, but they are disverse mying tendencies. i don't have a strong view on what grocery stores, what restaurants, and what this means -- >> but -- >> another tree to five years from now -- >> they are not going to step in and cover extra stores from macy's, but something outside, nonretailers? >> well, you are seeing online retailers, seeing others open stores. you are seeing examples of online only trying to create it. every single one of the department stores if they could start today, i don't think macy's has 600 stores or kohl's
1:11 pm
have the store base you have. on the flip side, some of the online only retailers are realizing that having stores and mine share on the ground is also very important, so there's some exposure that can be offset, but not all, and i think that's why you see the reit look at restaurant, leisure, and grocery. >> matt, thank you for your time. >> thanks for having me. melissa, thank you very much. here at the global energy conference, and it looks like retail now goes through an oil and gas did the last two years. oil and gas price collapsed, and the firms there struggled mightily, perhaps none as much as your next guest company, chez peak energy, it's come back nicely. we are joined now exclusively by the man who many say have the hardest job in energy management. the first national televised interview, doug, thank you for
1:12 pm
joining us. >> great to be here. >> you came into a tough to the, a divest story. sell anything that is not nailed down. are you done with the divestiture story? do you start growing again. >> well, it's a question of the balance sheet, the operational growth, stronger than we have been in the 25 year history. it's important to know when 2013, we began focusing on value. we saw good stock price appreciation during that time, and downturn that hit two years ago in commodity prices impacted us significantly because of our significant leverage. we embarked on an aggressive plan to reduce leverage, recognized 10 billion in reduction in leverage over a three-year period. significant improvements in the past year as well. while we focused on operating improve ms and all aspects of the business to be profitable, first time producing company. >> are you done with that? do you need to sell anything
1:13 pm
else, or do you need to rework anymore contracts? >> so where we are right now, we see that we want to continue to improve the strength of the company. it's not a well-known fact. we are the no. 1 independent producer in the united states. the strength of the portfolio gives us tremendous optionalty. we have 11.3 billion barrels of net recoverable resources across our asset base. to your question, it's going to be difficult for us to drill and complete all those wells as fast as what we'd like. we don't have the capital funding or cash flow to do it. we are going to continue to look at sales over the next two to three years, there's another $2 billion in debt reduction with an asset sale component. >> when you look at the company, for a company of your size, as big as you are, you are geographically dispersed. there's pennsylvania, texas, utica, oklahoma. you can't maintain that kind of an odd footprint as a $6 billion company.
1:14 pm
where would you look to sell? >> i disagree with that. i think the foot print we've provides tremendous flexibility, optionalty, gives diversity in product, oil and gas in the u.s., giving access to different markets that we can direct capital to for better returns for the investors. so i look at it as a strength, the power and strength inside our company is inside the portfolio of assets and talented employees. >> profitable at $3 net gas and $50 oil? >> absolutely are. we take great confidence in that primarily because of the capital improvements achieve, reductions in our cash costs, how we recognized 50% reduction in our operating costs and gna cost, 50% in capital efficiency, making more money today, brian, on a dollar invested than ever have. >> more sales possible? >> more sales are possible. >> a pleasure, thank you very much forever joining us. >> great to be here. >> thank you. just starting here on "power
1:15 pm
lunch," and next, another cnbc exclusive interview with the san francisco fed president john williams. his thoughts on the economy, the stock market, and the president-elect straight ahead. plus, buckle up, all you amazon investors. alexa is taking the wheel. sort of. we'll explain. "power lunch" will be right back.
1:16 pm
1:17 pm
1:18 pm
the president-elect donald trump on twitter, saying toyota will build a new plant in mexico to bill cars for u.s., no way. build the plant in u.s. or pay big border tax. certainly like the tweet directed to general motors this week. for more, let's get straight to phil lebeau. >> this is clear. combined this with the gm tweet earlier from the president-elect. it's auto production in mexico for vehicles ultimately sold in the united states, and he's making it very clear he's going to put pressure on auto makers at a minimum not to add production to mexico, but for that production that's already there, and as we reported, more than 3 million vehicles that are built in mexico were sold in the united states last year. it's very clear. he's warning that there will be a border tax coming. now, how that will look, what it'll be, how it impacts the part suppliers as well as the auto makers remains to be seen,
1:19 pm
by it's clear. this is all now about nafta auto production and how that impacts auto makes and parts suppliers. interesting to see how this plays out in the years to come. >> a full assault on nafta or back door attack. either way, that's why plants were located in mexico. >> right. >> because of free trade. >> absolutely. it's lower cost, and from there, we've talked about this before it's not the primary republican, but mexico has more free trade agreements with countries around the world than any other country. so as a result, if you build in mexico, you can ship to brazil. you cannot do that from the united states. if you build a vehicle in the u.s. and ship it to europe, there's a 10% tax. there's no 10% tax to build in mexico and ship to europe. you're right about the primary market being the u.s. and canada. that's the primary market for vehicles built in mexico, but there are other reasons that are at play.
1:20 pm
>> phil, michelle here at the nyse. it's not just donald trump calling for a border tax. when you read the gop plan, the better way, and they talk about tax reform and all this, the corporate tax reform is very explicit in what they want to do. if you export from the united states, your corporate tax rate falls to zero, and any -- >> good point. >> anything you import, you pay 15-20% depending on what the ultimate number is. this is coming to every single industry if the gop gets its way, and if this is what donald trump is talking about, that we don't have clarity on that at this point. >> which then brings up the question, michelle, if you're an auto maker, import all the vehicles into the united states because there's demand there, and you're suddenly facing a tax, how do you replace demand? you can't build a plant overnight in the u.s. some of the production we can replace here in the united states. some moves to excess capacity
1:21 pm
available in canada, but you're not going to be able to replace that overnight, and, also, you face the question, do i want to build in plant in the united states where the costs are higher. for some vehicles, it makes a lot of sense. suvs, trucks, pickups, people pay higher costs there. they are not paying a higher cost on a small compact vehicle. they're just not. that's the question the auto industry will face. >> phil, the timing of the tweet is interesting because we look at tweets thinking, what prompted this tweet? actually, the president of toyota -- mr. toyota, cited saying, you know, new year's gathering today, earlier today, interested in maintaining a good relationship with the president-elect and willing to work with the incoming president after mr. trump criticized general motors specifically. this tweet, though, phil, is different from the gm tweet in that it's naming a car specifically, the second best selling car in the united states behind the honda accord.
1:22 pm
i mean, in is not the chevy cruz, but a car that many, many americans have and would pay more for with a border tax. >> you bet. you bet. you're right about that, melissa. no doubt naming what i think is the fifth or sixth most popular vehicle in terms of sales here in the united states, i have to check out where that came from, but it's a top ten vehicle in terms of overall sales and you talked about toyota, at an industry gathering today, asked about whether his company is considering any changes to the production plans in mexico. they said we'll consider our option as we see what policies the incoming president adopts. we produce cars in mexico from markets including north america, europe, all the stuff we heard from others before, and they are beginning to look at what they might have to do, so a somewhat pragmatic comment in tokyo. look, they know what's coming. they know that the
1:23 pm
president-elect and republicans are pushing for a border tax. >> yes. fascinating story. showing shares of the toyota motor, the shares in new york not as strong as you could imagine as in japan. phil, thank you for the story, interesting detroit auto show next week." power lunch will be right back with more on this.
1:24 pm
ur, usonoumontislye h. t hethorex e isf kerapa
1:25 pm
1:26 pm
welcome back to "power lunch," i'm steve leisman in chicago with app exclusive interview with john williams. thanks for joining us. >> great to be here. >> we just got a tweet from the president-elect criticizing a foreign company for building a plant in the u.s. -- in mexico, threatens a border tax, and you can explain to me how an economist like yourself, a fed official, how do you react? one eyebrow up, two eyebrows? how do you process that? >> the way i react to is just focusing on my job. >> sure. >> the job is to keep the economy growing at full strength, full employment, innation at 2% and focus on what monetary policy can and can't do and take the rest as outside my purview. >> but you have to process it. one of the concerns of the federal reserve are trade
1:27 pm
barriers. how much concern are they and what effects will they have on the economy? >> all the issues, fiscal policies, things we study carefully and analyze and look specifically about what it means for job growth and inflation and mean for monetary policy? we do a lot of analysis around the issues, how big effects and timiing would be and analysis around that. again, from my perspective, we don't know what's going to happen, and as we learn more and change our forecast, we'll see. >> the trade barriers a potential negative? >> well, clearly, if a number of countries have trade barriers, that would have a negative impact on growth and raise inflation, too. so i mean, there's a rot lot of fak tovs from various policy action, and, again, from my perspecti perspective, analyze them and what it means for the economy. >> minutes of the meeting showed half the participants raised the outlook because of the the expectations of fiscal policy. you one of them?
1:28 pm
>> it's hard to know what fiscal policy will be, but the way i view viewed it was relative to a few months ago, and in terms of policy, i built that into my own. >> distribution of this, is a better chance that it's more growth, and more fiscal stimulus, a modest effect on growth over the next couple years. i don't know what it looks like, but i think on that, probably more fiscal -- >> the ranges around which we need growth? i mean, there's numbers thrown out that growth accelerates 3%, 4%, 5%, but the natural growth rate is below 2%? zb right. my view in terms of the demographic productivity trend we saw is growth is like 1.5%. now, some policies could change that if we find ways to invest in people and technology. more broadly in infrastructure. i think we can shift that
1:29 pm
upwards. right now, my view is a lot of the fiscal stimulus people have been talking about would have a relatively modest effect. >> sheing shift upwards, looking for a half point, extra point? what kind of numbers can an economy do of this size? add two points of growth? >> i think if we look back at history, and the periods with rapid productivity growth giving us an extra two points of growth, that's periods of ground breaking changes and technology and how the economy work. that could happen in the future. i don't have a crystal ball about that, but you're talking about transformative change to the economy. >> the average fed officials looking for three rate hikes next year. are you an average fed official? >> i don't know if i'm average, but i will say that i think that that's -- you know, the central tendency of the views of the colleagues are three rate hikes. that's a reasonable view given unemployment is 4.6%, economy's growing at 2%. that's a reasonable assumption. >> three seems to be in the
1:30 pm
ballpark? >> absolutely. >> john, because of the fact we have a president-elect tweeting, we have to cut it short, but i appreciate your time today. we're going to go now to back to melissa. >> thank you so much, stoeve. world leaders converging for the consumer lelectronics show, and sony's ceo is one of them live with john ford, john? >> thanks, yes, here with the ceo of sony. great to have you -- >> thank you for having me. >> i want to start off talking about tvs, which are always a big deal here. >> yep. >> you announced a new olde tv, crystal display. what's new in tv consumers can expect to have an impact the way we look at tv? >> at sony, excited to talk about the series we just announced, and it's, obviously, 4k, but i think the buzz word for the industry, certainly for
1:31 pm
sony is hdr, high dynamic range, 100 times more dynamic range than compared to a normal tv broadcast of today, so once, again, sony certainly, but the industry's pushing forward to bring more and more exciting visual entertainment content to customers around the world. >> lenses, a big deal in lenses and smart phones, you know, whether it's samsung or apple, people use your technology in the phones. >> sensors. >> that as well. >> yep, yep. >> so what should we expect that's brand new in 2017 that's going to push the capabilities forward because most people are taking pictures with these. >> well, i think, you know, we always push the envelope in the image sensor business, and that certainly means providing more of a compelling time, but at the same time, making sure we put in the latest and greatest sensors in the digital cameras so they are differentiated from the photo experience you get on the smart phone, which, by the way, is good, but we can do better with the digital cameras.
1:32 pm
>> president-elect donald trump has been tweeting lately at companies both domestic and based overseas. >> yep. >> one today on toyota. does that change in leadership in the u.s. change the way you do business in the u.s.? >> well, i think, you know, we have really yet to see what kind of potential policies will be impleme implemented, what changes come about, and we'll deal with it, you know, as they come, whether they are positive or neutral. it's the same thing as brexit. we really don't know what the impact will be, so, you know, we don't want to get too ahead of ourselves. >> talk about hacking. you guys have had experience with it. for you guys, it's in therearvi. lots of conversations now about the impact of >> yep. >> what changes have you made at sony, are you back on e-mail? are you still sending faxes? how is that changing the
1:33 pm
landscape for you on how you operate strategically? >> we looked at the entire i.t. landscape we have, especially at sony pictures, and made some changes and brought it state-of-the-art, and brought in additional management level people in terms of general, ande reviewed the process that we implemented, literally, you know, a month to month basis to ensure it is state of the art, and you see in the back mirror, but one never knows. we are staying on our toes as far as security goes. >> jumps out quick. the ceo of sony, thank you for joining us. >> thank you, thank you. >> back to you guys. >> all right, thank you, john. still ahead, want to know when donald trump tweets about stocks you own? there's an app for that. timely, isn't it? back to brian in orlando at the golden sachs global energy conference, brian? >> all right, melissa, thank you. yes, donald trump going after toyota for maybe importing cars from mexico, but what if you
1:34 pm
import a couple billion of gal lols of oil from canada, or is the president-elect easier on a canadi canadian-america pipeline. we'll get answers right after this. you're watching power lunch, a huge don't go anywhere. we're back, next. hep l can ctilo
1:35 pm
1:36 pm
beuswsws l br.odbr2 prn. viviag e at the marine mammal center, the environment is everything. we want to do our very best for each and every animal, and we want to operate a sustainable facility. and pg&e has been a partner helping us to achieve that. we've helped the marine mammal center go solar, install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment.
1:37 pm
together, we're building a better california. welcome back to "power lunch," here's your cnbc news update this hour. a car bomb struck near a courthouse in western turkish city followed by a shootout between three of the assailants and police. a police officer and a courthouse employee were killed along with two of the gunmen. ten people wounded. heavy gunfire continuing in the recently captured eastern direct of mosul. iraqi forces retook 70% of the district from mill tamts and expect to reach the river dividing the city in the coming days. the western half of the city, though, under full isis control. follow and smog blanket
1:38 pm
china. schools suspending activities, and china is not third year of the war on pollution aimed at reversing damage after years of uncheck economic growth. and the national institute of allergy and infectious diseases releasing new guidelines on when parents introduce foods containing peanuts to the children with high allergy risks saying peanut butter given at four to six months of age if done with a doctor in the physician's office. that is the news update this hour. now back to brian. hi, brian. >> hey, not a terrible place to be, sue. thank you very much. appreciate that. we are joined by the ceo of one of canada's largest oil producers. brian, thank you very much for joining us. listen, we're going to talk about the price of oil and pipelines and everything, but i want to ask you about our president-elect because 15% of u.s. oil comes from canada, right? a lot of imports into the united states, a couple million barrels
1:39 pm
per day. so far, the president-elect went after the auto industry. do you feel there's any risk to the president-elect going after imported oil? >> well, i think that the -- there's a great deal of uncertainty at the moment created around this whole regulatory process, what kind of tax changes there will be. i got asked about it a few times today here at the conference. i think that we'll get more clarity over the next two, three months as we understand what the broader impacts are. it's a very complex question. >> let me ask in another way. what do you do the completing tweets, you know, like, we need american jobs, stop importing oil, you know, even from canada. what would you do as ceo? how would you handle that. >> that would be a situation where it's important for canada to get tight water and the morgan pipeline, and the government, as you are aware approved expansion online three.
1:40 pm
the other thing the president-elect's talking about is whether he should reactivate the keystone xl pipeline to create 15,000 jobs in the u.s., so i think it's a pretty complex topic here, and, hopefully, in the fullness of the next couple months, we'll get a good understanding of what to accomplish and how do we deal with it. >> one is the company in your town, probably in your building, as a matter of fact, the ceo, we talked to him about it. do you think the new administration is more pipeline friendly? do you believe the keystone xl, benefitting your company would help? >> i would put money on that one today. i think that the president-elect understands and thinks about that relationship. the importance you appointmented out in the u.s. marketplace, and the keystone pipeline has been about bringing more canadian crude down to the u.s. gulf
1:41 pm
coast. word's largest refining complex. >> saving you a few bucks a barrel. how much would a pipeline save any canadian company costs over say railing it? the oil's moving either way. how much money would it save? >>pipeline tends to be -- depends on the time, $3-$5 a barrel, better in terms of the transportation costs. one of the big differences of the volume, and 75,000 a day on the keystone pipeline for capacity. >> if we get this done, you save that money, is it fair to say that that would make it more likely that capital projects, new construction in oil and gas, which a lot of it's stopped up north because it's expensive in canada in certain parts, will continue? is $50 the right cost of capital to make future investments? >> my view is that we will be able to have a robust business model in the wti range. there's been significant improvement in costs since we last talked, you know, for example, our sustaining capital down 50% per barrel, and our
1:42 pm
unit operating costs down 30%, and our volumes up 26% from this time last year and the oil sands, and so there's a lot of things that have changed, and, you know, we're really taking and taking a look at what have we been able to accomplish over two years, how do we have a stronger company in this environment going forward? >> we do appreciate your views on all kinds of things, including the trump tweets. sounds like canada's safe for now. >> we're friends. we're friends. >> right. thank you very much. looks like canada's off the hook for now, but you never know. you never know. >> you don't. thaps, brian. speaking of the president, another tweet from the president-elect sending another stock tumbling, this time toyota. reaction coming up from former secretary and arizona governor, bill richardson, who wrote a version of the book "art of the deal," and it's called "sweet talking a shark," and what he thinks about donald trump's tactics here. we'll be right back.
1:43 pm
1:44 pm
whatbats tearto ur momwhuelkthof picrea ter rg sta ysiss bl ericanre lp t job, yoicann ev comes nfi outv ys, whiny nicole iw evth inherepa y a a♪
1:45 pm
welcome back to "power lunch," shares of toyota tumble after donald trump sent out a tweet within the half hour. toyota motors said we'll build a new plant in baja, mexico to build cars for u.s. no way. build the plant in u.s. or pay big border tax. let's get reaction from the former new mexico governor, bill richardson, energy secretary and u.s. ambassador to the u.n. under president clinton and wrote a book "how to sweet talk a shark," it is all about negotiations and negotiating with tough guys. governor, lovely to have you on from beautiful santa fe. thank you for joining us. >> thank you, thank you, michelle. >> what do you think of the tactics to pressure companies to change their ways?
1:46 pm
>> well, first of all, he's violating presidential transition history. at the same time, there's only one president, and he's getting involved in foreign, domestic policy when he should wait until being president, but apart from that, i think it's dangerous to, by tweet, threaten american companies, making policy this way, and dealing with stocks. i don't like what he's doing. i will say one thing that i like and that's the fact that he is emphasizing bringing, keeping jobs in the u.s., but do it through policy, not threats like a border tax or other threats that implied, like, no way. this should be done by a secretary of commerce, by his treasury secretary. one of the cabinet secretaries going to do? is all policy coming from tweets in the white house? this 15 problem. >> so back on monday, he tweet
1:47 pm
the north korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching part of the u.s. it won't happen. china took out massive amounts of money and wealth from the u.s. and totally one-sided trade, but won't help with north korea, nice. you've been to north korea and negotiated with them. is there anything to taking an even tougher, more public stance against north korea and the nuclear cables, can that work? >> well, i think the president-elect is right in looking at options that and other approaches. this has been a very difficult foreign policy problem for the united states, and, by the way, i wish he'd mention the american that's been detained there, but i think to do it publicly before he's president, before he has advise from his intelligence and secretary of state, is
1:48 pm
dangerous. it's not good policy, but at the same time, i think what he's laid out are legitimate options, but i don't like the public way he's done it, especially when there's one president at a time. president obama's president until january 20th. let's not send confusing messages right now. >> u.n. ambassador in the past, i want to get reaction to the united states abstention on the resolution a week or so ago condemning israel for the settlement policy number one, and, number two, what consequences are there if any if the new incoming administration comes in what it intends to do and move the u.s. embassy to jerusal jerusalem? >> well, i didn't agree with the obama administration abstention. i would have vetoed it because i think the u.s.-israel relationship is a cornerstone of our foreign policy. i know israel's been very difficult, and benjamin
1:49 pm
netanyahu has gotten very partisan, pro-republican. he should stay out of american politics. i believe in the two-state solution, but i don't think you take the arab-israeli issue to the u.n. the u.n. is hostile to israel. i would have voted differently, but at the same time, i can understand the frustrations in this whole middle east peace process. on the jersusalem issue, i'm concerned about that. it's important to have the strong relationship. moving the embassy is purely symbolic. be very cautious about that, but i certainly would want to make a significant improvement in the u.s.-israeli relationship, which right now is daughtering, it's in trouble. >> he's promised he'll try to do that for sure. thank you for joining us from new mexico. governor bill richardson. melissa? >> thanks. let's get to don for the market
1:50 pm
flash. >> you mentioned tweets in the prior segment here. this is a donald trump report here. there's a report out of bloomberg, headlines coming out now that trump is said to have told a confidant he opposes a proposed deal between at&t and time warner stock. time warner stock is off by 1.3% right now. it was done by close to 4% at its lows of the session in reaction to the bloomberg headline, bloomberg ran headlines saying trump is frustrated with comcast and nbc universal, and, of course, that's the parent company of this network, cnbc, but at&t shares ticked lower as well, not like time warner, but, still, tyler, more reaction from the market to some possible headlines involving donald trump in the stance on certain companies out there. back over to you. >> thank you very much, dom. more reaction to president-elect's tweets on toyota, the ceo of audi north america will join us live. ey a nes
1:51 pm
nsst..at'soft burotoicicicks.rgll acc an
1:52 pm
has a it.ic himhe anma l a newtswa g on a perfect car, then smash it into a tree. your insurance company raises your rates. maybe you should've done more research on them. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claims centers are available to assist you 24/7.
1:53 pm
call for a free quote today. liberty stands with you™. liberty mutual insurance. welcome back to "power lunch," and president-elect slammed toyota in a tweet a half hour ago saying toyota will build a new plant in mexico to
1:54 pm
build cars for the u.s. no way. build cars in the u.s. or pay big border tax. let's get reactions. phil lebeau is with the audi north america president. >> joining us from the consumer electronics show in vegas. we'll talk about that and artificial intelligence in cars in a bit, scot, but your reaction to yet another tweet from the president-elect, essentially, targeting auto production in mexico. you're now billing the q5 down in mexico, obviously, some of those come to the united states. how worried are you there's a border tax? >> look, phil, i can really only deal with what's in front of me right now and can't get into the world of speculation. i think there's a couple things. i mean, first, look, we're a global international company, and we certainly support the dismantling of trade barriers, free trade, movement of products is what we support. the other thing, of course, as you pointed out, we've made this decision five years ago, and that factory will not just be sending cars to america, but it sends cars throughout the world.
1:55 pm
off to europe. off to saudi arabia. off to africa. off to latin america. it's a global plant. making cars for the globe. beyond that, really, not in a position to speculate on the ram fi kagss of that. >> but do you believe that not only audi, but all have to prepare for the fact its clear donald trump is going to be pushing for a type of a tariff on mexican-made autos? >> look, again, phil, we will deal with the environment that comes our way when the president comes into power on january 20th and all the decisions that get made with the commerce secretary and all those, but, again, we dealt with the world as it was and the world as it was under nafta den decisions made five years ago, that was the place to put the plant, but, of course, we've been around for 100 years and dealt with ramifications of all sorts of things that happen throughout the globe, so, certainly, we'll manage and deal accordingly and fairly. >> scott, talk about why you're in las vegas, you just announced
1:56 pm
and demonstrated this partnership, and you're talking about artificial intelligence coming into the vehicle. what is if we're going to be seeing in three, four years from you guys? >> you know, phil, to me, it's simple. you know, all auto motive manufacturers are trying to get to a desired state of fully autonomous vehicle, if you want to get there safer and sooner, you need artificial intelligence. the way we are now, we're really just using a series of algorithms, but, clearly, driving a car is just too complicated to solve with algorithms. you're going to need artificial intelligence. so, really, it's going to get us to that state safer and sooner, but it'll be in our cars in 2020, but i think the cool thing is we have a demonstration that is taking place in the
1:57 pm
conference. >> thank you for joining us. and, melissa, there you heard, it's not the first time we talk about this, when it comes to the tweets from president-elect donald trump, all the auto makers now have to sort of take a new approach in terms of saying, okay, we're going to have to deal with something at some appointment. we don't know what it is, but something's coming. >> they do. thanks, phil. up next, back to the markets with the dow once again slipping away from 20,000. we are down 73 points. power lunch will be right back.
1:58 pm
1:59 pm
2:00 pm
good afternoon, everybody. this is the second hour of "power lunch", and welcome with melissa, i'm tyler mathisen. michelle at new york stock exchange, and brian in orlando, florida. two hours until closing bell. here's what we are watching for you right now. two steps forward. one step back. dow 20,000, proving to be a very elusive hurdle for the bulls. retail wreck, macy's closing stores, stock down a big 15%.
2:01 pm
kohl's plunging 20% on weak sales guidance. the next chapter in the retail story ahead. plus, toyota shares urn pressure as president-elect trump tweets saying toyota said we'll build a new plant in baja, mexico to build corolla cars for the u.s. no way. build plant in u.s. or pay big border tax. feels like a cards you pull on the monopoly board. toyota stock taking a dip now. brian? >> i like that, it's community chest, do not pass go, toyota, go back to -- there we go. welcome back. we are going to actually do something that's hard to do. we're going to look into the future of oil. how are we going to do that? in a few minutes, we'll speak with the man running the company whose products are the first thing oil and gas products would hire when they anticipate higher prices. that at patterson-uti, one of the leading drilling companies out there. they are on the front lines and
2:02 pm
see what kind of demand they see, could give us a good window where prices are headed. >> looking forward to. that how are we trading in the markets? 20,000 on pause now, dow struggling, was down triple digits, now 71 points, travellers, the biggest drags on the index right now. what's working? health care, realize, consumer staples all holding up here, and gold also hitting the highest level in a month. the main etf that tracks gold is higher as well by 1.5%. the royal gold stock up 2.9%. a lot of the miners gaining as well. dollar weakness here a big part of the move higher, michelle? >> yeah. talk more about the markets now, bringing in our cash and floors director, and bob, chief market strategist with boston private wealth. all right. i was sitting this earlier and heard a trader say, oh, geez, we got to get a feed of donald
2:03 pm
trump's twitter feed because he's impacting stocks so much. right? i mean, have you seen a president-elect have dramatic impacts like this? >> no, not like this, and multiple times a day, more importantly. so -- >> people said to me, when i said, why can't they just have it it on the phone, an alert, you are not allowed to have phones on the floor, right? >> communications here are highly restricted. they are worried that things would leak out, the scc doesn't want side by side trading of options and stocks, so you have to through a lengthy process to have your phone okayed to pick up certain things. many people down here don't have what's called an approved phone. you get things secondhand. >> you can't have a ding go off on the phone when he tweets. what do you think of the president-elect and what he's doing here with toyota, with general motors, et cetera? >> two aspects of that. first of all, from the people who elected him, i think he's
2:04 pm
doing exactly what the people who elected him expected him to do. he's trying to keep business and jobs in the united states. he's doing it in a way that is a little bit new, certainly, we've never seen it before, heard it before from a president, but at the same time, you know, from the stock market's perspective, i think if you're a long term investor, you don't react to the news. we talked about it just the other day. you don't react. if you take a look at what lockheed martin, and toyota is doing now, if you sold initially on the news, you're a loser. if you wait, you use the tweets as a buying opportunity, but not to be scared from the market. >> what's spooking the market today, art? all retail or something else? >> retail set a weak tone, but two things. number one, the dollar has move down, and with it, the yield on the ten-year has moved down sharply. that in turn has spooked the
2:05 pm
financials. people hoped for higher interest rates in that they could make more money. that's going down. so the financials are weak. that's maybe 40% of the problem. the other came when the oil inventories came out, and the products were enormous overbuild. >> yes. >> oil went negative. that's when we were down about 128 points on the dow, and oil has crawled back into positive territo territory, and we removed one-third of the problem. >> it's funny. the market doesn't doesn't like the dollar too high, pulls back, and when yields move up, everybody is nervous. >> things go up. go down. everybody is nervous. >> you know, i read an interesting article on cnbc the other day talking about how, you know, the major corporations are prepared for a rising dollar, i wouldn't let that completely freak me out. i know that people get nervous about it, but i really wouldn't let it scare me out of the market. >> gentlemen, thank you so much. >> thank you. >> robert, art cashin.
2:06 pm
thank you. >> more reaction to president-elect's trumps tweet about toyota, pressuring them to build in the u.s. for the u.s. market or face a big border tax. not the first time he's threatened an auto maker about that. gm was in the tweet hairs earlier this week too. gm shares down about 2%. ford down 3% right now. joining us on the news line is james albertine. welcome, good to have you with us. all the tweets must be causing consternation in the headquarters of the major auto maker build in mexico. how much has it changed the conversation about where these companies build in the future? >> caller: yeah. thanks, good afternoon. thanks for having me. look, i think there's still as
2:07 pm
we talk to investors, many believe low likelihood of a border tax or some sort of import-related tax on autos to the degree, you know, tweets would imply. and that makes me certainly ner vou vous thinking about how the auto stocks, ford, gm, and others working since the election. you know, whether, you know, i think a lot of this is posturing on the president-elect's part, but make no mistake, this is something the oem takes seriously, and investors are underestimating the potential as we understand it. >> i'm sure a lot of americans, including people who either voted for mr. trump or didn't are cheering the idea that he's out there defending american manufacturing in the way he is, and using the power of the bully pulpit, but i wonder why you think that a border tax of the sort referenced in mr. trump's tweet and talked about in the republican house plan for tax reform, why is that not as
2:08 pm
likely or less onerous than some of the implications? what leads you to believe that. >> caller: well, you know, we've done some work in this regard and worked with some of the tax experts from the brookings institution and so forth to discuss this. there is a school of thought that believes, you know, the senate has something to say if and when this happens. the house, and that the senate view on this is a lot more sort of bipartisan and could dilute some of the, you know, the sharper impacts, you know, that could have trump impacts he intends, and, separately, you know, there's such a big ramification for all of retail. talk about autos for the moment. think about how this flows through, not only on the new vehicle side seeing incentives grow north of twenty% year after year, but bringing your car back for service, that's an imported part for service, dealers are a huge employer of u.s. -- of americans, and so i think there's a lot of, you know, sort
2:09 pm
of more intertwined here than, perhaps, we give credit, and that, the nature of that leads investors to think it's less likely, perhaps, to happen. liks understand the impact if i'm an investor and want to know what the bear case scenario is in this situation. how many cars sold in the united states, for instance, are manufactured in the united states? how much of the after market parts business, how many parts are made in the u.s. sold in the u.s.? >> caller: yeah, so let me see if i can do the best i can here. apologize for the background noise. at the electronics show. i don't have it in front of me, but i can tell you we sold about 17.5 million vehicles in the u.s. last year. 1.9 million of them were produced in mexico. the biggest pricers of in mexico in order are gm, nissan, fiat-chrysler, ford, and voex
2:10 pm
weigh volkswagen. it's a big swath of cars sold in the u.s., so the implications are equally significant. we are talking mexico, but there's a lot produced in canada that i think might be getting overlooked in all this, so we depend a lot on the neighbors to the north and south. parts perspective is not in front of me, but you imagine it's significant as the motor parts have to be serviced. >> you're basically saying that 11% of cars sold in the united states are made in mexico, were not counting cars in canada, so north of 11% hit by border tax. 11% of cars sold in the united states would be sold probably at a higher price if this border tax goes through? that's the impact? >> caller: exactly. to qualify it. to use estimate, and we worked with experts in this regard, not something manufacturers make necessarily available to everyone, so we're trying to do
2:11 pm
the best we can to guess, and that's as close as we come so far. >> wouldn't a border tax apply in this instance to cars made in germany or in japan or korea and imimporta imported. assume it would. >> caller: i would completely agree. i think this is, you know, think about luxury manufacturers, you know, you can look at percentages made in germany, a lot of suvs made, mercedes in alabama and so forth, but luxury a big percentage of import. surprise they have as much impact in canada and mexico. people underestimate that. as well as, japan, some transplanting, but a lot of the parts come from japan. >> james, thank you for the time. prepare for doing more television in 2017. i know this is going to be continuing. thank, james. >> caller: appreciate it, thank you. let's get to dom for a market flash. >> shares of shopify spike on the heels of a report saying they are going to announce a partnership with amazon.com.
2:12 pm
now, for those who don't know shopifq, it's a canadian e-commerce company. the stock is having an impressive day, almost the most positive day on the nasdaq, 100. best day since mid-november for amazon, trading above average volume. a spike there. another mover is time inc. spiking on reports it's been contacted by meredith corp. about a potential interest in a merger there and board members meet later on this week to consider options. also heavy volume there as well. a couple movers for the radar. back to you. >> thank you, dom chu. a rough day for macy's and kohl's. where's the winners in the retail wreckage? some say it relies in tech. let's get live to the consumer electronics show in vegas. thanks a lot for joining us, oliver. >> thank you, melissa. happy new year. >> happy new year to you. you think of shows past and semiconductors and a.i., all
2:13 pm
that, but there's nontech companies there, under armour's ceo is there. what are you looking for there? >> real future is technology, and there's a lot of problem in the brick and mortar stores, so wearable technology, integration of mobile shopping experiences is really important. we're really looking at a lot of the innovation that's happening, whether it be new ways to shop and entertainment as well as the wearable tech, so the macy's story, there is a new year's resolution at macy's, store closures. comps weaker than expected, down too, stock took it on the chin. i say this business remains a business in transition, and retail really getting rumbled. why is that happening? a lot because of online. a lot because of technology, rise of amazon, market share losses from players from offprice, but future of retail is technology. >> oliver, you gave a long list
2:14 pm
of reasons to be bearish about retail, and then you add to that the notion of this border tax which president-elect tweeted about directed at the u.s. auto manufacturers and toyota, but still could impact retail. how do you fit that into how you look at the coverage yeen verse and affecting margins? >> the border adjustment tax is a very risky aspect for retail. we're really worried about earnings per share could be cut 50% or lower. >> 50%? >> very negative, or more. just because the 20% tax on good imported and cost to sell goods to imported goods is significant. unfortunately, retailers are going to be unlikely to be able to pass through all the cost increases to consumers. it's a tough veermt. retailers who are most at risk are those that import the most goods from abroad and china, and that's a big part of my universe. retailers that use benders --
2:15 pm
>> the supporters of the tax, it's michelle at the nyse. supporters argue a strong dollar. ultimately, retailers will be able to buy a lot more stuff from overseas. that would be the offset. don't believe it or too hard to calcula calculate? >> i think it's possible. it's a lot -- in addition there are some benefits in terms of the overall corporate tax coming lower than it is for exports, so there's real gives and takes, but the frame work is scary because the cost to goods sold is denominated in the u.s. dollar, so there will have to be a lot of negotiations, whether that be benders or negotiations with the factories directly. it's a hazy time. companies and retailers are going to have to issue guidance, and the context of a holiday season in the addition of not understanding the factors of how they manifest and goods get sold. >> oliver, do you think there's any chance that the trump administration gets involved in
2:16 pm
retail outside of what michelle just brought up on top of the tax? i'll tell you why. we talk about saving a thousand jobs here and there. millions of retail workers in america who are starting to see a couple hundred thousand or million jobs lost because of amazon. do you think this is an administration getting actively involved in sort of -- i don't want to say "protecting," but helping brick and mortar? we can't have empty stores and million unemployed people. >> yeah. i think it's going to be very interesting because retail is such a hugely important factor in our economy, and there's so many middle to low income consumers that shop at walmart, so we really don't want to have major price increases in terms of that living experience and that being a risk factor, in addition, wages is a topic and rising wages have been a good thing for the economy. it's really sensitive to, a, the wages, b, unemployment, and, c,
2:17 pm
helping retailers control cost. you brought up another topic, which is, yes, stores are a problem. across the board, it's problematic in terms of foot traffic to stores and the rise of online. so i think keeping the retail industry healthy, keeping workers healthy and happy and keeping consumer spending going, these are key themes which will be important as we think about the economy at large and as the decisions get made. >> oliver, leaving it there, oliver chen appreciate the time. thank you. here's what's coming up on "power lunch", hulu stepping up the game in the streaming wars. china's big currency move, and hilarious outtakes from a car dealership ad, brian, what you got? >> we'll look into the future. how? you do that by going down the money chain talking to the ceo of the company that's one of the first dollars spent. patterson-uti, the biggest land drillers out there. are they seeing a resur jens?
2:18 pm
we'll find out later on. offering one or two single favorite oil and gas picks just for you on "power lunch" live from florida right after this short break. ac d ofes t ht, inatt ac
2:19 pm
2:20 pm
welcome back to power lunch, at the energy conference in florida, joined by a man who is literally on the front lines of the oil and gas business, andy, the president and ceo of patterson-uti, not a household
2:21 pm
name, folks, but an important company because when you see drilling rigs to put new wells into the ground, it's on one of this guy's rigs. thank you for joining us. >> thanks, good to be here, brian. >> you surprised people months ago because you did a deal for a company called 77 energy. again, not a household name, former offshoot of chespeake, but why pay that money when not even all of your drilling rigs are utilized? >> you know, we're really excited about this potential merger with 77 energy. we announced the plan to merge on december 13th, we hope to close by the end of march. that's the target right now. 77 energy has a lot of great people, a lot of high quality assets, and it marries well with the same assets that we have at patterson-uti energy. >> not all your rigs are util e utilized. why buy more? >> it's not today, but that's the cycle. it was an interesting opportunity for us. we first got to look at 77
2:22 pm
energy back in 2013 when it was still part of chespeake. we know the company well and people over there and this came a point in the cycle where we could go back and talk to them at the recent emerging from chapter 11 to combine the company. >> is this a sign of long term optimism? is the worst behind us? >> we see today the initial stages of recovery. look at what the drilling rig count is in the u.s., up over 60% since the bottom in late april. there's opiumism out there with wti trading over $50 a barrel, what we see is that the rig count will continue to go up. >> i'm going to give the viewers a secret. hate to take away from friday, but a little hint. i look at your daily numbers. >> okay. >> you got your rig summary, you update that every day. >> by basis. >> 40, 5, and now 77. some analysts suggested, hey, great news, but do you have the people to work the rigs? are there enough workers left in
2:23 pm
the industry if we continue to see rig counts go up? >> it's the one part of the equation we're going to see tight p up. we've been in good shape so far at patterson-ufi, hired back over 600 people, and that's just been great after a near and a half of a tough cycle for us. look at the people that we've gotten back, back in september-oseptember september-october, 90% were returning employees, now it's 80%. it tightens up. we know how to handle it. we have a national footprint, and in 2014 when we were busy, over half the people we hired back into the company were transitioning military, and you know as well as i do, we have a lot of great men and women in the military looking for positions in the private sector at some point. >> big companies that hire, they beat you guys for price cuts, price cuts, price cuts. seen the enof the price cuts? bad for them but good for you. >> no details of the pricing, but there was an industry report coming out this week that talked about the fact that drilling day
2:24 pm
rates have gone up for the first time in two years so, we're moving in that direction. >> quickly, 15 buys, but 16 holds or sells on your stock. talk to the community. why should they have more optimism about your stock? >> you know, we have a great story to tell. you know, we're in the high spect drilling, the completion business, and look at the merger with 77 energy we work on today, then we are well-poised and positioned as an investment in the north american play. looking at energy and considering everything going on in the markets the last week or so, it's worth looking at energy again. >> andy, you said that once or twice in the past i guess. pleasure to have you on cnbc. thank you very much. >> thanks a lot. a short break, but more on trump tweets and goldman sach's energy equity analyst along with favorite stocks in his first tv interview. coming up on "power lunch." stick around. ti to re outi rtiretires rerement
2:25 pm
* m in aa outi rtiretires rerement esinvestadveveatd inn st anr anpetekn fls nupe co thd?atulmb r th tlor jhe,d i ong thand ex sfiowsus wi
2:26 pm
elyou wih.vokade e, ocesofurits udhyatmau toeedizz faghead, swor deainororinp not tvomha snd ontain
2:27 pm
d mecas u ta in®suinsulilow bl swor dea'sor tngs nd. tvomha snd ontain wer urod wit voage lovingr mber® t t uinsulilow bl swor dea'sor tngs nd. tvomha snd ontain wer urod wit voage lovingr mber® welcome back to "power lunch," and first to the good, ceb, up a whopping 21%. it's a business research firm based in arlington, virginia. they are buying the company for $2.8. the bad here, travelers down by
2:28 pm
1.6%. downgraded to an underweight saying the valuation has gone ahead of itself trading to other insurers. it is ugly day for consolation, down 6.5%. earnings and revenue topping estimates, but concern about how the trump presidency affects the mexican portion of the company's business, specifically mexican beer. the talk about the border tax makes jim cramer's guest timely. rob sands, ceo of constellation brands joins jim on "mad money" tonight. don't miss that. we're just getting word, toyota responded to trump's tweet. we got all the details when "power lunch" returns.
2:29 pm
2:30 pm
2:31 pm
we have a comment now from toyota regarding the tweet from president-elect donald trump regarding plans to build a plant in mexico and need for a border tax because the plant ships cars to the u.s. there's the tweet from the president-elect saying toyota mori toe said will build a new plant in mexico to build cars for u.s. no way. build the plant in u.s. or pay big border tax. well, toyota has a statement saying that the new plant
2:32 pm
planned for mexico will not cut u.s. employment and then goes on to say that toyota looks forward to collaborating with the trump administration to serve in the best interest of consumers and the automotive industry. what's interesting, guys, looking at this statement from toyota, it's similar to what we heard from ford when donald trump was first coming out saying, yao not going to build the plant in mexico. ford said it's not hurting employment in the u.s. having as many people employed in the u.s. as we were, you know, whether or not we build the plant in mexico, so toyota is sticking with the line of this is not hurting employment in the u.s., but donald trump's point is, i don't care whether it hurts employment initially. the idea of them importing cars to the u.s. is not good in terms of how he wants to conduct trade policy. guys, back to you. >> i don't moon ever to put words in mr. trump's mouth, but and who would, but the idea here is not that it reduces employment in the united states, but what he's looking for is for
2:33 pm
employment to be increased in the united states? >> correct. right. and so the argument -- >> expanding capacity there, you send cars here, why not expand capacity here and keep cars here? >> absolutely. that is -- i hear this all the time from people, especially trump supporters, missing the point, plants built in the united states. if you're a global auto makers, and they all are, they see things from the perspective of where do i export to around the world, and in their opinion, mexico gives them the best options, both in terms of latin america, europe, and eventually potentially as you pointed out, asia as well. >> as you said, it's not just nafta and a free trade agreement between us, mexico, and canada, but mexico's own free trade agreements with dozens of other countries around the world making it a very attractive place to manufacture because of of the low labor costs and to export from because of free
2:34 pm
trade agreements. >> and a couple things to kee. t they manufacture the corolla in a plant in mississippi right now. it's the third best selling vehicle in the united states. 360,000 sold last year. it's popular. we know that. >> sure. >> it's manufactured in the united states. how many of the 360,000 ultimately come from mexico when the plant opens up in 2019, 2020? no way to say at this point, but the argument you hear from the trump supporters is look, if you know you need the capacity as pointed out, add to the plant in mississippi, whether that's possible or another green field spot and build cars in that location. so it is interesting. another thing, tyler. we ran the numbers, toyota imported 170,000 vehicles sold in the u.s., tacoma pickup trucks, that's how many that came in imported from mexico and sold in the u.s. last year. >> yeah. you know, it's interesting,
2:35 pm
phil, the response is surgical in that it's responding to what was contactually in the tweet opposed to saying, hey, a big bulk, majority of the cars sold here in the united states are made here in the united states. we are providing americans with jobs as it stands now, and they are also, billing, as i understand it, a new administrative office in plano, texas. >> going to be huge. we've been down there, covered it, talking with james, who reare talking with monday morning at the detroit auto show, no doubt we'll ask him about that. toyota has been one of the companies that have worked really hard at trying to make it clear it views itself, yes, a japanese corporation, but views itself as a key and important corporate citizen of the united states. having said that in this case, it's what's happening south of the border that's in the scope of mr. trump's tweets these days. >> phil, thank you very much. as we talked offline, boy, that
2:36 pm
detroit auto show has spin this year. >> yeah. >> it's not had that in some years. thank you very much, phil. >> brian, down to you. >> yeah. all right, tyler, thank you very much. i wonder if volkswagen is next on the hit list. they manufacture cars in mexico already. wait for that. anyway, back at the goldman sachs energy conference in orlando, florida. joined by brian singer, equity manager of goldman sachs, his first ever television interview with power lunch. are you ready? >> i'm ready. >> are you sure? >> thank you very much for having us. we do appreciate it. >> earlier today, we interviewed chesepeake, and i brought up a big challenge. many people said you're geographically diverse, there's no way you can be successful long term. here's what he had to say. >> do i disagree with that. the foot print gives us
2:37 pm
geographic diversity in product, oil and gas across the u.s., give us access to different markets that ke can direct capital to for better returns for investors. i look at it as a strength. power and strength inside is in our portfolio of assets and employees. >> not a top pick, getting to those in a second, but disagree with analysts who say they are not successful. what's your view? >> it is about execution, particularly as we have seen, shale productivity and shale resource spaces considerably improver. it's down to who is able to execute. there's a number of companies that are diversified, they are pure play companies. as the world recognizes u.s. shale is low on the cost curve and works in environment and oil price environment like today, then we think it comes down to who executes. >> do you like the stock in general? >> they have made a number of positive changes to their balance sheets and asset base got better, and there are areas
2:38 pm
within the base that we like. it's not all about being in one place, but there is a burden to execute in 2017 and 2018, defined as meeting production numbers put out, and making sure they do not outspend too aggressively weakening the balance sheet. >> the stock this year right now, still worth viewers' money at $7.15 a share? >> there's more we like in eog resources in companies in different areas within the shale are resource favorite. eog 20% growth through 20 twenty per year. they have been the leader, not just in shale exploration, but also in terms of the technology side of things. we think eog can have free cash flow in 2018 and beyond, and in 2017, specifically, we think energy's going to have better capital efficiency because they are destocking inventory of wells drilled, and have rigs they contracted back in 2014
2:39 pm
when rigs and oil prices were higher. rolling off the contracts now. >> eog is the favorite? >> it is. it's on the conviction list. they are really one of the bell weather weathers. that stock continues to work. >> before you can go to your own conference, one more pick. range resources, tell the viewers why it's worth the money. >> sure. for natural gas, they stay above mid cycle -- >> where's that? >> $3. we think prices are about $3.40 first half of the year. not bad environment. for those exposed outside of appalachia. they are an appalachian company. primarily, but there's pipeline take away contracts where they are not selling in appalachia. >> it's misunderstood by the average investor out there? >> there is misunderstanding there, absolutely. they can stand greater capital efficiency and think their production guidance put out for 2018 of 20% is conservative, and
2:40 pm
we're above that. >> foreigners, feels like the first time going here, brian. thank you very much. likes eog, range resources. appreciate you having us here at the conference. thank you very much. >> thank you so much. after the break, not done yet, more on trump's tweets about toyota. get check please, final thoughts, and check on markets as well. don't go anywhere. peoptis ragin'y,n'isisplist go wact. cho ia gelp og withkom, only at ae.
2:41 pm
cho ia use t s mp t cin d ge..h cks neion, sure n th cou
2:42 pm
ll ynewhen gesents expxpn can y ora ed yoic y yfo i', tandt,e rtat5/nth. ♪ eon y yfo
2:43 pm
all right. welcome back to "power lunch." i'm michelle caruso-cabrera here at the new york stock exchange. donald trump firing another shot at any company that wants to move its operations to mexico. mexico peso down 15% against the u.s. dollar since election day this has been going on, so the chart we're showing you is the dollar increasing. toyota motors said we'll build a new plant in baja, mexico. no way, says, donald trump. there's the mexican peso. showing how the dollar strengthened dramatically against it. let's talk to mark chandler about what's going on with currencies. the dollar has gotten so much stronger since donald trump was the winner on election day. it's caused all kienz of chaos with currencies around the world. mexican pesos one example. today, the central bank stepped
2:44 pm
in to stem the bleeding. didn't work. why not? >> two reasons. one is this stream of tweets by the president-elect talking about how, essentially, discourages other businesses from investing in mexico. they need the capital inflows for the own economic development and current account deficit. secondly, it's not working because people don't have a lot of confidence that mexico spent over a billion dollars today. compare that to china. china's intervention is more effective, throwing everything at it. capital controls. squeeze on money markets. it's working in china, not working in mexico because of the threat of this change of policy. >> mexico believes in having currency float? it's a modern way to think. the chinese are still behind when it comes to the rest of the world with the way they deal with currency. they spent, you're saying mexico spent a billion dollars today. what do they do? go out into the market and buy dollars -- >> they really -- what they are
2:45 pm
doing is selling dollars, buying pesos to strengthen the peso, and to do that, sell some dollars, but sell treasury bonds to liquidify to sell. >> they found buyers in the bonds today. yields are down. >> yes. >> chinese, describe how dramatic the move is over the last two days for the chinese currency where the central bank stepped in. how big is the move? >> sure. doesn't p sousound like a big m however, it's the biggest move in china's, like, modern history. the biggest appreciation, two days, and what they are doing is squeezing, tightening controls, and the deposit rate in mexico hit 80% in china. 80%. actually, offshore market in hong kong. >> i wanted to borrow money, the borrowing rate is 80%, so expensive, you can't cover the shorts. >> exactly. >> this is reeking havoc. we don't talk about it in the united states. markets are rallying sharply
2:46 pm
since the election, but the currency markets and currencies in the countries are troubled as a result. do we cover it enough? the havoc that's been occurring over the world? >> for some countries, especially emerging market space, it's more problematic. countries like the eurozone, they are welcoming the weaker ewe row. the japanese are welcoming weakness in the yen. rising u.s. interest rates takes pressure over central banks engaged in unorthodox policy. winners and losers. emerging countries like south africa and mexico with current account deficits have to fund that while the u.s. is stocking in the u.s. capital, or there's political problems, like turkey, kept under pressure. the emerging markets is a difficult place with rising interest rates and rising dollar. >> pbuy the peso? no. get the overshoot. what i'm cautious of is last february, so long before we talked about a trump presidency,
2:47 pm
mexico not only intervened, but raised interest rates between meetings in february. there's a good chance mexico will back up the intervention with higher interest rates. >> marc, thank you so much. >> thank you. >> guys, back to you. >> the nasdaq is the only index in the green today. in part thanks to the bank stocks outperforming so far in 2017. markets as well as technologies specifically. matt miller is here and gina sanchez, so starting with you, this is the start of a trend for 2017 in terms of out performance? >> well, i think if you look at the individual stocks, they each actually have some positive on stock specific stories, and what's overhanging this, and i think what drove the stocks down or at least part of what drove stocks down at the end of the year was the fact that donald trump is on record, record being twit ter for being against net neutral neutrality, and in december, the senate failed to reconfirm a
2:48 pm
democratic commissioner, jessica, and so we're looking at a situation where net neutral di could could be on the chopping block. we have the chair of the fcc is pro-net neutrality, and donald trump's pick on his transition team david has no view on -- actually no record for being against net neutrality. that hangs in the balance. amazon, netflix, facebook would be severely impact if this went away. >> fear 2016, and 2017 people are not scared anymore? will it kick in and it's not the start of a trend on performance? >> well, i think that you're looking at a situation where everybody was really concerned that it was definitely on the chopping block, and then when you step back, i think that was a lot of fear baked into that, and when you step back, it is not necessarily a go, a given, so you still have a chair.
2:49 pm
>> right. >> the chair of the fcc is pronet neutralneutrality. could be overblown. >> okay. >> matt, what's the charts say? >> well, it's interesting. the -- we have a couple -- we have to break each stock down individually here, i think. facebook we have issues that they have. you know, they are moving more towards the mobile areas, so a lot harder to monetize that. the situation in -- i got three kids in high school and college, and they've got to walk away from facebook. they barely use it anymore at all. i start to worry about that one, but you look at a stock like amazon. first of all, you know, it's given some back at the end of the year, but it's holding in nicely around the 200 day moving average, which is positiving and the other thing, of course, is that, look what happened recently. we saw the situation where all the department stores, of course, and reporting, you know, horrible sales, deplorable sales around christmas time. you have, you know, the big explosion to the cloud, positive over the long term, and the last
2:50 pm
thing, of course, is jeff besos, who bets against him? >> technically amazon looks good? what's the picture for netflix and google, quickly? >> netflix is breaking out nicely. that's a very positive aspect for that name. >> okay. >> is breaking out very nicely. that's very positive. facebook on the other hand, that's beaten down. that's very close to a couple of lows here in the last couple of months. getting down to the double bottom low. we definitely have a disparity between some of these stocks. >> got it. matt and gina for more trading nation, head to our website. "power lunch" will be right back. and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> some traders believe they need to be smarter than the markets to make money. the challenge is that the trend is reality. it represents the collective actions of all market participants. when the broad market is moving
2:51 pm
higher or lower, so are most of the stocks in it. rather than bucking the trend, acknowledge the direction of the overall market and plan your trades accordingly.
2:52 pm
2:53 pm
welcome back to "power lunch." i'm joined by the ceo of hulu,
2:54 pm
mike hopkins. just this morning you unveiled more details of your streaming tv service. it will have live tv, dvr capabilities, on demand. less than $40. how do you make sure that you don't put your parent companies, the media giants, out of business? >> well, thanks for asking the question, julia. we're really excited about the service. we're going to be airing an array of live chams. we'll offer it for under $40. we're offering their channels in this package. i don't think they have anything to worry about. >> don't you think it will drive cord cutting so that all of their channels won't be paid for? >> all of their channels will be in our package. we think with services like ours you're going to see paid tv shift and stabilize and potentially grow in the future. >> do you think people will be cutting the cord from traditional cable and satellite tv bundles? >> the target we're going to focus on are people who have
2:55 pm
decided not to opt into paid tv so far. they'll be an attractive target and the people that have opted out. we don't think people will come in droves out of paid tv to our service. there are plenty of people to market to. >> directv launched something similar last month. are you concerned they have several month head start? >> they do. this is a long-term product that we're building. we're building for three to five years, not for 2017. >> we understand you're paying cbs more for their channels than cbs earns from the traditional paid tv distributors. how will you be able to make money? >> well, we're going to charge about $40. i think we're able to manage our costs in a variety of ways. there are other things people can buy from hulu. they can buy showtime, free products. >> when will this launch? >> the next few months. >> we look forward to having you back on then and checking it out
2:56 pm
ourselves. mike hopkins, thank you so much for joining us. we appreciate it. >> julia, thank you. the magic of television, a free state version of "check please" is next.
2:57 pm
2:58 pm
saying no way is that company going to build or expand a production plant to make
2:59 pm
corollas and bring them into the united states without paying a big border tax. this is the disrupter in chief. get ready, folks. it's going to be an interesting, interesting few months ahead, michelle. >> yeah, tyler. absolutely. he continues to shake things up in every way doing things that have never been done before and the tweets are a perfect example of that. and in some ways bring about big change in certain things and some countries it's wreaking havoc as we see with the mexican peso. >> related to all of this in terms of bringing back u.s. jobs, keeping u.s. jobs here, i'm watching stanley, black & decker and sears. the news is that sears is closing a bunch of stores. selling its craftsman tool brands to stanley black and decker for $900 million. stanley is part of this announcement saying it's committed to re-americanize the craftsman brand building the u.s. manufacturing plant. >> trump has changed the conversation, folks. changed the conversation.
3:00 pm
bri? >> mine is i wonder if amazon is going to face the ire of the president at all. remember, we have a couple of million people working in retail. we can save a thousand jobs here or there. if those retail jobs go away? i don't know. we'll see if amazon goes in the cross hairs. >> brian, michelle, we'll see you tomorrow. thank you for watching "power lunch." >> "closing bell" starts now. hi, everybody. welcome to the "closing bell", i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. well, it's toyota's turn, i guess. the japanese automaker the target of president-elect trump's tweets. we'll have details on what this trend means for the entire automotive section here. >> retail wreckage. the holidays didn't turn out for so many apparel makers. we first brought you the news on macy's and kohl's.

102 Views

info Stream Only

Uploaded by TV Archive on