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tv   Power Lunch  CNBC  January 17, 2017 1:00pm-3:01pm EST

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some final trades. >> currency better, commodity better. >> disney. >> vol. buy futures for those who can. >> buy more weatherford. that's it. >> well prepared here. >> and i like the retailers. i think that affordability is not going to be around. big benefit. >> we'll see you soon. thanks for watching. "power" starts now. >> i'm brian sullivan. here is your power menu today. four years, cnbc has been taken you insight mind of one donald trump. ahead of his inauguration, we dug through our archives to bring you the president-elect in his own words. also ahead, the real view from switzerland and the makers of swiss miss, among a ton of other products, conagra ceo is here. giant cover-up in d.c. going on ahead of the inauguration but, trust us, it is not what you think. we'll explain as "power lunch" begins right now.
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welcome to "power lunch." i'm melissa lee. nasdaq had only finished in the red one time this year. and for all three major indexes, we're less than a percent away from record highs. financials under pressure today. names like jp morgan, morgan stanley, bank of america trading lower by about 3%. ty? >> melissa, thank you very much. i'm tyler mathisen. here is what else is happening at this hour, u.s. flight cancellations hitting an all-time low in november. air travel consumer reports says carriers canceled just .29%
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domestic flight notice month of november. blackrock agreeing to pay $30,000 to settle s.e.c. charges over whistle blower protection violations. >> and another major winter storm taking aim on parts of the pacific northwest. areas from portland, oregon, to spokane, washington, could see heavy snow, sleet and ice. michelle? >> thanks, tyler. welcome to "power lunch," everyone. i'm michelle carus of the o-cab. our team of reporters is covering it for you. john harwood live in d.c. let's kick things off with courtney reagan, major news from america's biggest private employer, walmart. moments ago the president-elect tweeted thank you to general motors and walmart for starting the big jobs push back into the u.s. courtney, tell us more about walmart. what have they announced today?
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>> reporter: so much going on in the world of retail today, michelle. from the expo floor at the annual convention but also, of course, what's going on with walmart, the world's largest retailer. it's adding 10,000 jobs here in the u.s. over this fiscal year. now, walmart has added about that number in previous years, just to put it all into perspective. the jobs will mainly be at the 59 new stores that it had previously planned to open. some of them will be an e-commerce services, but, of course, the timing is very key with the inauguration of president-elect donald trump coming on friday. walmart is the u.s.'s largest private employer with more than 1.5 million jobs. so, 10,000 is just a small fraction. walmart also says there's 59 new stores will support about 24,000 construction jobs. if you're wondering what the impact will be on the company financially, this is part of walmart's previously announced $6.8 billion capital
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expenditures planned, spent over the fiscal year beginning february 1st. >> courtney, wasn't it just last week that walmart announced a cutting of a couple hundred jobs? they also cut jobs last year. thousands of them. didn't they? >> reporter: that's right. so what often happens with a retailer as large as walmart is that they're going to cut in some places and add in others. that's what happens with both employees as well as the store. so, last week we heard that walmart would be cutting those human resources jobs and the next day, workday announced walmart had just signed a new contract with them, hughes oousing its human resources software. we understand how that happened. walmart did cancel out or close stores from last year but said they were going to add new stores and part of those are the 59 we're talking about, where those new jobs will be added. >> got it. courtney, thank you. courtney reagan. big news from german, pharma giant bayer.
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meg tirrell is working that story for us. meg? >> expected to close by the end of this year, the merger between bayer and monsanto. after meeting with both krechlt os, the trump transition team says they're committed to jobs in the u.s. and keeping their workforce here along with the headquarters in st. louis. the trump team saying none of this had been in the works previously. analysts saying, though, not so fast. the deal was announced in december, combine agriculture business will have its global seeds in traits and hq in st. louis, r & d spending globally which appears similar to what the companies confirm today that they pledged over six years, at least globally. bailiffer and monsanto saying in a joint statement they had a productive meeting with president-elect trump. >> thank you very much, meg. we also got a big announcement from general motors. let's get to cnbc's john harwood
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with more. once again, the real question is, how much of this was already in the works? >> reporter: well, i think pretty much all of it, tyler. and that's the common thread of all these announcements. gm saying they're going to add or retain 1,400 jobs, billion dollars in investments in the united states. and general motors is learning, just as other companies are, that one way to stay on the good side of the president-elect and not get hit by a tweet that could cause your stock to go down and be proactive about announcing things at this time. united auto workers, by the way, put out a statement saying this announcement today flowed from their recent collective bargaining agreement with general motors. but donald trump, of course, is taking credit for those jobs. in fact, he did, in addition to the thank you tweet he sent a series of tweets saying he's bringing back into the u.s. even before the inauguration,
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massively reducing the cost of aircraft with his discussions with lockheed and boeing and as a result of that the american people are seeing what he called big stuff before his inauguration. donald trump's attempt to get off some of the controversies of the last few days and build momentum toward that friday inauguration, a strong economy and progress on jobs is key to his message and key to what he has promised to voters and he's trying to make sure that that's how they see it right now. >> we're seeing all kinds of a market impact, john. donald trump weighed in on the gop's proposed border tacks. the president-elect thinks it's too complicated. the dollar is falling, retailers are rallying, oil companies are worried about refining and having to import. and now on donald trump's side also is new york fed president bill dudley who weighed in on this over at the national retail federation. >> i personally think that the border tax adjustment proposal at the house is pretty -- it's a pretty dramatic change and i think that it probably would lead to a lot of changes in the
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value of the dollar, the price of imported goods in the u.s. and i'm not sure that, you know, that would all happen very smoothly. i also think there could be lots of unintended consequences. >> richlt ft within the gop. there are strong supporters and haters on both. >> reporter: that's right. the border adjustment tax is much more popular in the house than it is in the senate. it's obviously more popular in the house than it is in either the new york fed or the new trump white house. he has proposed a 35% punitive tax on companies that shift jobs overseas and try to sell back into the united states. i think republicans in the house consider that too crude a weapon. they're looking for a more elegant solution regarding systemic reform. and it's also the case that that border adjustment tax would raise $1 trillion, helping you to lower that corporate rate and
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getting it down, as the house does, to 20%. a long way to go before all this discussion and tweets and exchanges back and forth get translated into actual legislation. that's going to be one of the ones we watch early in this new administration. >> for sure. thanks, john. >> you know, guys, let me jump in for a second here. we love to talk about jobs and i love these companies coming out and doing this. stock buy back you are under no legal obligation to buy back one share of stock. do we have any indication of whether these companies will be held to what they say? we're going to add 3,000 jobs in america? >> i think a lot of these jobs already -- >> they were already announced by these companies, already planned for. there's no reason to think that they're going to double black on their own plans which were not prompted by the president-elect. >> i'm not trying to be cynical about it. you get my point. you know those 3,000 jobs -- >> they might not do it. >> things have changed. >> sure. >> i know you, tyler -- >> i'll be out there, making the phone calls. >> through go. later border tax moving
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certain stocks. >> after president-elect donald trump said the u.s. dollar is too strong and the proposed border tax is too complicated. looking at the broader s&p, top ten stocks are either energy or retail. let's folk news on retail. spdr retail is up more than 1.50% today. winners include walmart, best buy, michael kors and gap. luxury retailer which owns tommy hich hilfiger brands, on stock for its best day in more than nine months. back to you. >> susan lee, thank you. what started off as a big trump rally is looking like a slowdown a bit. all three major averages in the red today, all still hovering near record highs. katie nixon of northern trust
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management. let's kick it off with the financials, steve. that's a headline that the pullback, sharp one that we're seeing in financials despite blowout numbers from morgan stanley and the likes of a comerica. what's behind this at this point? you liked financials. are you concerned about this pullback? >> no. they've had a real move, melissa, in the last six weeks, as you know. it's very natural for stocks to have a little bit of a pause. that's where we are right now generally with a market. little bit of a pause, 2%, 3% pullback. the next stage will be seeing if the president-elect and then the president can actually impliemet a lot of policy changes he's talking about. i think there's a lot of skepticism amongst the analytical community about that. we think he will surprise on the upside there. as he does, i think we'll have another leg up in all these stocks, particularly financials, which are in the crosshairs of all that's good about the trump agenda. >> sure. right to that point, katie, i'm
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wondering what you think. already the president-elect has questioned the border adjustability tax. that may highlight some cracks or rifts that are starting to develop between him and his party and perhaps the ability for him to get the agenda done that he is seeking to get done. as steve mentioned that's at the heart of the reason financials have rallied, the idea that there will be corporate tax reform, deregulation and you need party unity to accomplish those things, don't you? >> at the same time, melissa -- i do agree with you. we are going to see a lot of uncertainty around the timing and the magnitude of some of the policy adjustments under the trump administration. but at the same time, i think financials are responding quite nicely to the curve and the premise that we're going to have higher rates this year. we still stand by that premise. aside from the policy initiatives, there is still support for financial stocks under a higher rate regime, really, which is a function of better growth. >> steve, what do you do with any company that is deeply
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affected by move notice dollar? because you can see what's happening today with the dollar falling on these comments from donald trump, who is very willing to work to talk down the dollar. that's a pretty new position for us to be in for the president to do that. how do you take that into account? >> well, one, we think the dollar is going significantly higher. you know, we've got better economic growth ahead here, particularly on a novel basis, more inflation than the rest of the world and structure reforms, bringing money into the u.s. that's all going to push the dollar higher. so, one is, i would advise against trying to trade the day-to-days. there will be tweets and things but generally we've got the dollar gone in 90 on the euro, 130 on the yen. in a strong dollar environment, you know, we think you have to play it that way in terms of how you invest in the market. >> katie, listen, maybe a border tax, maybe not. maybe repeal of obamacare, maybe not. maybe a stronger dollar. maybe not. all these things can leave people confused.
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when they're confused people tend to freeze up and do nothing. what should we be doing with our money right now, given all this conflicting headlines? >> right. i think the risky trade is being out of the market. fundamentals are very important to risk assets here. we have a combination of improving macro factors. you've had improved inflation expectations. now you have improved micro factors. you have improved corporate earnings outlook, small businesses, large businesses. we think earnings growth in 2017 is going to be in the 8% to 9% range. much, much higher than it's been after five quarters of an earnings recession. the fundamentals are here. and the trump policies could act as an accelerant. they certainly will act as a volatility contributor, at least in the first couple of months of the trump administration. we urge investors to lift through this volatility and stay invested. >> steve, final questions. what if i have significant
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holdings of international etfs in a rising dollar world? what should i expect? >> i would hang on there. that's where the real value is in the market right now. we're still underweight international going into the first half of the year, tyler. you get to the back half of the year, we think the reflation in the u.s. starts to spread out into the rest of the world. weaker currencies in europe and japan. that helps. that's where the real value is in the markets. i think the back half of the year, you'll see the international markets really start to play catch-up with the u.s. >> steve, katie, thanks. appreciate it. >> thank you. >> have a good week. >> thank you. >> in less than three days, donald trump will begin his presidential term. that could usher in a new normal for america's ceos. how are they preparing? we'll ask one of the most iconic food brands straight ahead.
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arguably none of them are lacking in importance. what we're really focused on at conagra is any policy change that will encourage investment in the business and help drive growth. we are in the midst of a significant corporate turn around. we've made great progress on our cost structure. name of the game for us right now is driving growth and innovation. we've got our eye on any potential policy changes that could foster that. >> you go in the board room, sit around and say, guys, what have we heard from the president? what are our contacts in d.c. telling us? what do we need to do? what are issues one and two for conagra? >> get our cost structure in order and then grow. as you pointed out a few minutes ago, there's a lot of maybe this, maybe that going on. we can't spend our energy getting distracted by speculation. we've got to stay focused on executing our agenda. that is really about growth and
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it's about innovation. you talked a lot in the show today about job growth. we're really a domestic company. as we're going to drive our share of job growth in america, it's going to be on the heels of improved sales performance and that is going to be the result of improved innovation and growth and brand building at conagra. >> you said the word innovation so many times, mr. connelly, a lot of people think innovation is in silicon valley only. it comes from tech companies. slim jim, hunts, reddi whip, where do you make innovation within the food industry? >> innovation is as important in our business as it is in anybody's business. let's face it. we have 50 plus iconic legacy brands. and brands evolve over time f they're not contemporized and kept relevant, they can become stale. >> what does it mean, does a slim jim change in size, in what's in it?
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>> let me give you an example. >> yes. >> sure. i'll give you an example. we've got a great business, pam, cooking spray that many of you have used. some of our consumers today do not want to partake with an aerosol spray. we're in the process of launching an aerosol-free pam. reddi-whip, all natural, made from cream. many of our consumers did not want any dairy that was sourced with growth hormones in it. so we've removed any rbst from our products. these are adding modern food attributes, taking away some of the negatives that consumers don't want and making sure that our brands stay thriving with our consumer base. >> i am a fan of reddi-whip like you have no idea. >> two important questions, sean, is there a reddi-whip shortage? >> there was a tragic explosion in a nitrous oxide plant. absence only makes the heart grow fonder. reddi-whip is on its way back.
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may find it hard to get the next few weeks but we'll be back in full force on reddi-whip. >> michelle is beside herself. >> relieved. >> relieved. as part of your cost cutting, you have cut jobs. a lot of companies announcing they're adding jobs. i assume you don't fear getting caught in the twitter hairs of president trump because you're cutting jobs because you're trying to govern your costs. >> it's an excellent question. the key is a lot of companies in our space got out over their skis in terms of being too bloated on cost structure. we look at our cost as a percentage of sales, rate base. it's about 10% of sales where it should be in the industry. historically, it had gravitated higher than that. in other words we were too fat. we right sized the business. now we've got to grow the top line. as we grow the top line, we'll need more employees to help continue to drive the business and we'll be able to grow our employment ranks from there. it starts making sure you're not
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out over your skis and have a competitive cost structure. >> continued good luck to you. >> thank you. >> sean connolly. >> i take it, squirlt t it direy on a spoon. >> i thought you were going to say mouth. >> why are you putting the spoon between that and -- don't need the middleman. >> why dirty up a spoon. still ahead, donald trump in his own words. stuff he said on cnbc. 15 years worth of stuff, about hints of how he is going to lead the country. digging into the cnbc archives. you'll see how his hair has evolved, coming up. first of all, take a look at this. it's a giant tail. not a giant tail risk. maybe it is. it belongs to an alligator. wait till you see the rest of it. you won't believe it. back in two minutes. ngs! puzzles! me love puzzles. well..puzzles are a great memorization too- dinosaurs! yess!!!! puppies! ooh! i love puppies!
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inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. welcome back to "power lunch." i'm susan li. qualcomm to face anti-trust over licensing. fined in south korea over similar violations. back to you. >> thank you very much, susan. this is not a scene, folks, from "jurassic park." it's a real giant alligator going for a casual afternoon -- look at the size of that guy. >> holy smoke. >> in a wildlife preserve in lakeland outside of tampa.
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this video yesterday on her walk through the preserve, ladies and gentlemen. look at the tail on that thing. >> they must assume that alligator is very, very full because those people are awfully close. >> apparently the locals know of this alligator very much. they've seen it around. they call it the hunchback. >> look at him. wow! >> oh, my gosh. >> you ever see one of those upclose you'll know what the dinosaurs looked like. >> that's a lot of belts. lot of shoes. >> cowboy boot. >> when this beautiful giant beast expires naturally and peacefully, of course. >> that's what -- >> everybody knew that's what you meant. >> tale of two pretties. >> no crocodile tears here for that joke. days away from the inauguration, many glimpses of trump's management style.
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>> hi, everyone. welcome back to "power lunch." i'm sue herrera. the widow of the orlando nightclub gunman has been charged with helping her husband in the months leading up to the massacre. arrested monday morning, due in federal court in oakland later today. the man suspected of fatally shooting five and wounding six others at a florida airport is also expected in federal court today. esteban santiago left the broward county jail in cuffs and a jumpsuit. according to results from a new nbc/wall street journal poll, obamacare has never been more popular. 50% say they have little or no confidence that republican proposals to replace it will make things better. and a recall to tell you about. okra is being recalled because it could contain glass
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fragments. it includes select packages of the 12-ounce breaded okra with the best use bid date of november 3rd, 2018 from pictsweet farms. one minor injury has been reported so far. that's it for the update. back to you guys. >> thank you, sue. inauguration of donald trump as the 45th president of the united states, looking back to his messages to american businesses over the years, we're using clips of many introduce he has given to cnbc well before he became a presidential contender. we're focusing on donald trump, the ceo, president and his message on management. >> you have to keep good people around you. never trust them too much because all of a sudden things will start to happen that you're not going to like. you understand what i mean. you have to keep great people around you. have you to motivate them.
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you always have to be on top of them and you have to be smarter than they are. i hear so many times i want my people to be smarter than i am. that's a lot of crap. you want to be smarter than your people if possible. a lot of people with great ideas but they can't implement them. they're losers. they're not going to make it. you really have to be able to implemen implement. >> let's bring in cnbc contributor larry kudlow whachlt do you think? you've known donald trump for a long time. we used to have him on tuesday because the apprentice was on tuesday night. talk to me about his management style that you've been able to witness firsthand. >> not really. interviews are different than, you know, management. i think what you've got here is a tough guy who is performance driven, profit driven. interesting, in some of these quotes. he said, you know what? being defeated, being defeated, losing could be a blessing. you don't want to do it too often but it forces you to
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reassess and forces you to come back. i kind of like that a lot. i can't really judge him. he as a very successful guy. obviously, it works. >> uh-huh. let's get more advice from donald trump now on management. listen to this, larry. >> in the early '90s, the real estate markets, everything was crashing. many friends went bankrupt. i never went bankrupt but i went to work and learned i can handle pressure. when you learn that you can handle pressure you're going to be successful. going through bad times can be a blessing. you don't want to do it too often but going through bad times can be a blessing in disguise. i don't like to say mistake or like to admit i make mistakes, you want to know the truth. i consider everything a learning experience and you can never let the mistake be bigger than the company. i've had friends that bet the whole ranch on one deal. you can't ever bet the whole ranch. >> i don't like to admit mistakes. >> yes. >> we've witnessed that,
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actually, on the campaign trail. it leads us all to say he's so thin skinned. >> he's a counterattacker, a counterattacker. you're not going to hear him say i'm sorry or -- maybe you might not hear -- a nonapology, or nonacknowledgement acknowledgement. it's not his style to go around saying i was wrong. i was wrong. it's not going to be his style in the white house either. i can assure you of that. on the other hand, on this clip, you know, he mentioned sometimes you've got to lose in order to do better. i think that's great. i like that a lot. i don't know if we had the clip yet or maybe it's in front of us, but he sort of says surround yourself with great people but not too great, all right? i love that. did we do that clip or not? i was a little disheveled. in any case, get great people but not too great. you should be smarter or i should be smarter than all these other people and they have to be run on a short leash, tight
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leash. don't just run wild. >> one more on his management philosophy. one more time. >> it's a little bit in the wor world, what have you done for me lately? everybody kisses your ass when you're hot. if you're not hot, they don't even call. so, it's always good to stay hot. >> there are a lot of bad people out there. and you really have to go -- you have a problem, if you have a problem with someone, you have to go after them. and it's not necessarily to teach that person a lesson. it's to teach all of the people that are watching a lesson. that you don't take crap. and if you take crap, you're just not going to do well. you can't take a lot of nonsense from people. you have to go after them. i've always believed it. >> you can't take crap. >> that's right. >> writing that down. >> this is not breaking news from mr. trump. i get that. he's developed through twitter. one thing that interests me,
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having worked in the white house years ago, i noticed it's a real -- trump's operation, president's operation is really horizontal. if my read something correct and so forth, and it's not over yet, there are many assistants to the president. full assistants. that's a big job. by the way, it means not only do you go to meetings but come in and out of the oval office when you want to. i hate to put a number on it. i think i counted nine or ten. a lot of them surprised me in past white houses, deputy assistants but not full assistants. so he is setting up a very horizontal operation. now that may be characteristic of trump, inc., but it's unusual in the white house. >> and why is that significant, do you think? >> well, he's going to hear from all sides but it's going to take a lot of time. it may be you've got people coming in and out of the oval office. assistant to the president that's a very big job. and even in the press operation
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miech . my friend, sean spicer. press secretary appointed to the president. never heard of that before. good for sean but i'll say it's unusual. that's what you seem to be seeing, he has counselors, regulatory czars. i don't know. it may take longer to make decisions. maybe not. >> tyler has a question for you. >> larry, i'm curious, from what you know from your own experience or what you're hearing. a lot of the president's appointments are not people with much, if any, political experience, which a lot of people see as a strength. i was reading over the weekend accounts of prior transitions and those first days in the white house. and the recurring theme is, one, how chaotic it is. nobody knows where stuff is. they don't even know where the ladies' room is and, number two, how overwhelming it is. how can you be ready for what awaits on friday, saturday? >> it's very difficult. great point. it's extremely difficult.
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by the way, tyler, even if you had all hands, it would be the same problem. >> sure. >> you don't know exactly what's going to confront you. from what i gather, speaking of people, inaugural afternoon is going to repeat, get rid of a lot of the obama regulations. a whole laundry list of regulations. going to span a lot of different areas, immigration, energy, health care, et cetera. he may make a judicial appointment. i don't know. he's going to be busy first afternoon. but it's always tricky, tyler. it's always tricky. it take ace while to get into the groove. it really does. >> can we bring up the border tax? >> sure. >> provision in the house gop plan to tax imports but not export. >> subsidize exports. >> you were on with representative nunez. you said you don't like this at all. turns out president-elect seems to agree with you. >> i know. >> told "the wall street journal" it's too complicated. i knew you would like that. >> i do.
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>> and he wants a weak dollar. >> that, i don't. >> you are king dollar. >> king dollar man. always will be. whether this is just relative to the chinese juyuan or not, i dot know. i think that could apply everywhere. i'm not happy with that. i'm thrilled he came out against the border tax assessment. too complicated, no one is going to understand this. we'll wind up getting a terrible deal and -- terrible is putting it mildly. i don't even know why we want to stop imports and subsidize exports except maybe in certain cases like mexico renigged. th that i get. no one will understand it. i'm so happy mr. trump came out. the whole thing needs to be rethought. is that going to hold up tax reform? >> that's the key issue, right? >> big question. >> that should be an easy win
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for the republicans, corporate tax reform. if it gets very complicated and they have an internal civil war about whether or not to do this with imports and exports, do you lose that easy win? >> you lose a quick win. what i hear, obamacare first, which mr. trump wants, business tax reform, overall tax reform coming later. >> way later, in the 2018 budget process. >> you won't know the rates, grandfathering or a lot of things. you won't even know the specifics of how much of this goes through. which means, michelle, troubling to me. means people will postpone economic activity. and all the good things and incentives to rejuvenate the economy, which we're all talking about, i think, business tax reform is absolutely a terrific idea, if i do say so myself. >> the dollar fell because of this comment. retailers are rallying, oil companies are rallying because they import so much for refining. the dollar -- overall market seems to have slumped a little
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here. >> yeah. >> i'm wondering if this is the reason why, the delay in corporate tax reform. >> that's part of the story. there's confusion about a lot of these issues. you're not as close to final file on tax reform. you're just not as close as a lot of people thought. it's there. there's a good trump plan and there's a good ryan/brady plan. senate i'm not so sure. but you're not that close to it. 2017 could be more disappointing in terms of the economy. people will wait until 2018. these are bridgeable differences. >> yes. >> but one thing i will say, this business about the border tax adjustments supposed to raise $1 trillion. that is just nonsense. i hate to say this, but it's voodoo economics. >> what larry is referring to is that you score a plan, all the tax policy foundation, how much it's going to raise, how much it's going to lose, and is it deficit controlled or does it raise the deficit. >> i love the tax foundation. they have incentives and behavioral changes but we don't know. but what troubles me is --
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>> why can't the corporate tax rate just go to zero? >> i'm with you, abolish it. >> it doesn't raise that much money in the scope of things. >> walk hand in hand down the yellow brick road on that one. i'm the tin man. you can be dorothy. but, look, it's a lousy reason to make tax policy, in this case stopping imports, subsidizing exports, on the basis of what i'm going to call phony scorecard revenue issue. that is not the way to make policy. the way to make policy, is it good for growth? does it create new incentives? will it help people, companies large and small, minimum income wage earners, biggest beneficiary of the corporate tax. that's the way you make policy. i don't want the wicked witch of the north to be there, pulling controls. that's actually not right. it was the guy -- >> but we get it. >> saying imports are bad and
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exports are good. i think that's a lousy economic model. but, unfortunately, it does have its followers. >> in his administration, yep. thanks, larry. >> we'll see. thank you. appreciate it. >> larry kudlow, cnbc contributor. brian? >> michelle and larry, thank you very much. on deck, if a company beats earnings expectations and the stock falls, is that a screaming signal to buy it? it's happening to a big name today. first, to mr. rick santelli at the cme for the bond report. rick? >> hi, brian. if you look at an intra- day of tens, that says pretty much everything. once again we knock on the door, 2.30 penetration. it was rejected. minus five basis points as we sit. foreign exchange, you heard the last conversation.
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lot of movement. look at one week chart of the dollar, definitely hugging on the low side on that chart. open it up to election day, you could see the pattern. and you could also see the same chart in tens. looks about the same. but if you had more volatility in the dollar index and if the dollar is leading, it looks like this turn around is definitely captured the attention of fixed income traders. enjoy your phone! you too. all right, be cool. you got the amazing new iphone 7 on the house by switching to at&t... what??.... aand you got unlimited data because you have directv??
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good to have you with us in studio today. size up what worked, what didn't. >> pretty much everything worked at the company. that's why they did actually a little bit better than their very recent end of november guidance for the quarter and for the year. >> so what is the market not getting? >> you know, united is a funny stock. every time they report a really good quarter about double-digit revenue and many double-digit earnings, growth across all its businesses but doesn't guide up or they don't beat by 20%, the stock goes down, like clockwork. you can make a lot of money off of it. >> the conversation you had during the break. are you allowed to do that? >> absolutely. >> it was very interesting. >> i asked sheryl, sort of one of my hypotheses. 10 or 15 years down the road who will i buy my insurance from? my supposition is that the big hospital companies, university of pittsburgh medical system, medstar in d.c., whoever it is. >> northwell health here in this
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area. >> yeah, that they are going to become effectively my insurer, or the insurance companies, like umh, are going to buy hospitals and providers and i'm going to buy an integrated system of care. >> so, let me start with i agree that we are moving towards a much more integrated model, because that's the only way you can have sensible, effective, efficient care that actually helps you to get better at a reasonable cost. >> yeah. >> but i can tell you that united is highly unlikely, can i say never likely, to buy a hospital company in the united states because they are very busy trying to empty the hospital of unnecessary patients or heads in the beds. >> so we don't want them to own it? >> we don't want them to own it. >> compound fracture of his femur and four hours later he's walking out the door in crutches. >> that's not a bad thing. you don't want to get an infection. it could be a good thing. if hospitals want to survive they need to figure out how to be part of this new health care
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equation by taking risks, managing patients better or being more cost effective rather than running hospitals just to fill heads and beds. >> screwing up the possibility of obamacare with regard to umhs and all other tax plans because do they fight? are they conflictual? >> i think they're complementary in the sense that they're looking at tax reform as the saving grace for all the uncertainty around what they're going to lose potentially in a replacement plan for obamacare. the way i look at this is the best case scenario is the status quo. you know how many people are insured, how many people are subsidized and you know how bad your uncompensated care is going to be if you're a hospital. what's going on in the background is that companies, health care policy, reimbursement dynamics are forcing patients out of the hospital. we've had this very significant decline in discharges, in patient days and slowdown in e.r. admission growth. and all of that, i think, is
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being directed by a not so invisible hand of entities like united, like optim, moving toward care that is trying to move us out and healthier at a lower cost. if hospitals want to survive this, the couple things you're going to have to happen. one, it would be nice to get help of cash flow to invest in the business and grow it a different way, which tax policy would certainly help. so, yes, that's a help. beyond that, they need to get away of this old model of filling beds to providing health care to the formal patient. >> you're very negative on hospitals but for insurers like umh, it is the biggest medicare advantage company, correct? >> yes. >> what's the best case scenario and worst case scenario? the ceo was careful to say we haven't met with donald trump or the transition team. we don't really know what's going to happen. we'll see. >> i will remind last time we
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talked about health care, they had a big target on their back. the whole point for a united and politics around medicare advantage is that with the star scores there have been significant incentives for managed care plans to become much, much more effective at treating whole medicare patients. this is where the real innovation is happening. if people in congress are wise, they'll see what the private sector is doing because they're realizing all their hopes and dreams with respect to what a rell one, effective, visionary company and industry can sometimes do if given the opportunity to make health care work better and medicare advantage is the poster child for good things happening. e still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today
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time for street talk. upgrading noble energies. the deal to buy calculateton williams in november will give noble resource inventory capable of over 40% irr. seaport had originally downgraded them on the back of
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this news but now providing a decades worth of high-quality drilling. >> clayton shoulders must be the happiest people. li li l lyons gate entertainment. customers do value starz very highly. bernstein says it makes it a better stock than it was. lions gate, the company behind "la la land" and the up coming" john wick." 600 people get killed, apparently. >> i didn't know there was a number one. >> third stock here, stifel downgrade. from 40 to 62.
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could be tough for retail with a highly competitive environment, pressuring traffic sales. doesn't think it's going to get any better in the near term. >> nordstrom down, but 8% better than macy's. ouch. boyd gaming, morgan stanley upgrade them to overweight. boost the target from 23 to 17, 15% upside. regional gaming trends improving and coming to a positive inflection for a few reasons, personal income and consumer confidence are up. also, get this, higher rate will give retirees a little more pocket money to spend at the casino. that's right. >> retirees, gamble. >> positive on boyd gaming. that is "street talk." "power lunch" is back in two.
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welcome to the second hour of "power lunch." i'm melissa lee along with michelle, tyler and brian. we're all here two hours until
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the closing bell rings. falling financials, morgan stanley down more than 3%, the sector was the worst performer today. goldman sachs or citi, what will they report tomorrow? donald trump now, but is facebook mark zuckerberg planning a presidential run in the future? and d.c.'s cover-up. a story you've got to hear. let's check out the market movers at this hour, british american tobacco agreeing to pay in control of reynolds american. the deal a 25% premium to reynolds' share price the day before the 18th, initial proposal back in october. american 3% higher right now. walmart higher more than 2%, retail giant announcing it will create 10,000 u.s. jobs this year at 59 new store locations. brian? >> the week was not busy enough
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with the inauguration and world economic forum. also remember it's a big week for bank earnings. morgan stanley out today had a huge quarter. stock is not being rewarded today. goldman and citi group report tomorrow. morgan stanley not only had a big quarter but the biggest fourth quarter since all the way back at the financial crisis. why isn't the stock being bought today? >> take a step back and look how well it's done. up 25% post election. there's been a really strong move here. today, you know, i don't think you take away from the investors we've spoken with have been very pleased. i think today mover a function of the comments about the dollar and interest rates are off a little bit. i think that's all it is, a little bit of profit taking off that. a great quarter. reaffirmed the outlook and expectations. people should feel really good. >> it's still worth our viewers' money? if they don't own it, they
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should be buying it? >> i think so. take the longer view here, significant significantly the stock has done well. look at the next year. >> let's look ahead. few stocks hotter than goldman sachs. they come out tomorrow. you cover them as well. what are one or two key numbers that goldman investors need to be watching? >> like morgan stanley, income trading is a key metric that people focused on. pretty good results. goldman will have to put up a good quarter to meet expectations. and then ultimately, anything that makes people feel better about the outlook for the roe. after the stocks move here you have to be able to justify getting that roe into the low to mid teens level. that's what we're looking for, anything that will give us more comfort that we're moving into that direction. >> i assume you're not putting anything into a model, per se, because of deregulation? something that i
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unquantifiable. tax reform. selling blocks right now, how does that change your view on whether or not that's likely to happen? >> sure. all financials are starting to bake in some probability that we're to get some level of tax reform, some level of deregulation. but, i think you're right. we don't know exactly what that will look like. it's hard to price that all in. one input we do know is that interest rates are significantly higher, generally a positive for financials. that's real. we'll see if that holds. but thus far, you know, what benefits from that, the moves have been deserved and so on regulation and tax reform, the market is baking in some probability. i don't think it's fully expected we'll get everything that we want. so if, in fact, you do, that would probably actually argue for another leg up and vice versa, if people are disappointed then we've got to move to price in some of that benefit.
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>> if we seek sort of cracks in congress in terms of what they can accomplish, then you do expect the leg lower from here in financials? >> yeah. it depends. everything we've heard thus far would suggest a real change is occurring. so that's important. lot of investors that we speak with have not been invested in financials in eight years. if there's some level of change and some level of tax reform and lighter regulation, those are incrementally positive. clearly the zevl in the details. if you get something that's really disappointing, i think we priced in some benefit. but i think what we've seen now, the probability is we're going to get something, magnitude is kind of the big question mark. >> thank you. >> thank you so much. from the world economic forum in davos, biggest names in business and politics weighing in on key issues. they're sounding downright optimistic.
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>> if you think what we've all been saying in the united states the last two years, we're growing 2%. yes, there's cause for optimism. we'll see what happens. you actually have to do something. >> you want rates to rise for the right reason. i believe that the pie gets brt bigger when trade is free. >> it can't be that the economy gets better and everybody is happy. something has to reinforce it. >> what is the theme that would cause 2% or 3% to become better? we have all consistently said fix this regulatory environment and get tax reform. >> raises are rising in america. if you had it because of a wrong reason, inflation, things like that, that would be very concerning. i think we're a long way way from that. >> sales force is the fastest growing enterprise company of all time. and we're still growing at that rate. for us to exactly predict where we're going to be in, let's say, three or four years, we don't know. >> i feel quite good.
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you can see that we have transitioned to being acogny active solution. >> our dream is to, in short order, double the company once again. it's exciting. you can see we have an incredible quarter last quarter. the numbers just blew us away. >> when people talk about the transition, i think of it as what are you becoming? we have become, our strategic comparative through the third quarter. >> the more we take friction out of trade, the more those people can hire. >> that is the stimulus, catalyst for higher growth. president-elect trump comes in. what's he talking about? tax reform and regulatory reform. >> yeah, if they really got meaningful tax reform, if companies could actually repa repatriate their cash, appealing to both democrats and republicans, that's a hell of a jump-start. people saying i don't want to miss this. i have to invest. >> we call that in the biz stock
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montage. lot of talking up their own industries, which, of course, is going to be expected. anything we can take away from that? besides that david cody loves the patriots? >> bottom line, corporate tax reform and less regulation. >> that's it. >> and why the markets moved, president-elect trump named on november 8th. >> when did cnbc go on the air? >> 26 years ago. >> first ceo that went on cnbc, bill griffith, said we needless regulation. and with a southern accent just like that. >> right now in the market, we're talking about the trump slump. we see the battle over corporate tax reform and obamacare, et cetera, et cetera. mario gabelli said we're going to go, become a country that welcomes capital impales it. a lot of arguments about how corporate tax reform will be done, what will happen with
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regulations but the attitude is completely different now than compared to the last eight years. you're going to have faith in this market you have to believe we'll get through all these hiccups we're talking about. >> in terms of the market it's barely a slump, barely the beginning of a slump. and still at 11 and change. ensure your portfolio and you stay long. and there we have it here today. >> with all due respect to everybody here and everything i've heard trump slump a few times and thinking the dow is up 10%. not including dividends. in 90 days. i love slumps like that. >> that's a good slump to be in. >> it can't go up every day you want to tell people. it can't be christmas every day. >> that's the reality, people. >> not a bad slump. >> hypothesis, i love it. pushing america first policies and the leader of communist china sounds like a
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global free trader. seema mody joins us with what seems like a world turned upside down. that's a line from hamilton. >> it is, tyler. subtle irony in all of this. trump's tough policies on trade, people were surprised by chinese president xi reassuring a somewhat upbeat tone as the most powerful communist leader emphasized in davos the importance of globalization. xi did not mention trump by name, his speech widely seen as a direct response to the president-elect's anti-trade rhetoric. the chinese leader made the case of why countries should remain committed to trade and say no to protectionism, adding that no one wins in a trade war. this is particularly interesting from xi. scores at the low end of the world bank's measures of openness to trade. trump has called china a currency manipulator, in his speech, the chinese leader, president xi, explicitly said china will not devalue the yuan.
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china will likely take an opportunity to look outward trying to fill the void that protectionist policies potentially bring to the u.s. that's why a lot of people were saying it was a golden opportunity for xi to elevate china's economic profile and address the world saying, hey, we're open for business as some parts of the world look a bit more inward. melissa? >> seema, you weren't there and neither was i, but i wonder if the audience -- did they laugh? capital control increase on a daily basis, state-owned enterprises subsidized by politically connected banks, regularly steal intellectual property. to think that xi jinping will be the bastian of open markets runs contrary to everything we've seen. >> almost a message that china tries to evoke to the rest of the world. the question is, we'll actually see what china and the leadership does in the coming
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months in response to what trump does while he is in the white house. that, of course, will be key. as you point out, there's many times attacks on many u.s. goods imported into china. many ways where there is just a speech and action, of course, will speak much louder. >> thanks, seema. coming up on "power lunch," mark zuckerberg testifying in court today. plus would he some day run for president? and a huge cover-up controversy swirling around d.c. huge.
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mark zuckerberg appearing in court today. $2 billion in damages. julia boorstin joins us now with more of this. >> mark zucker burg took the stand around 9:00 am central, occulus ceo who previously worked at zinamax and collaborated on games. zuckerberg was pressed about whether he knew about carmax allegedly stealing and deleted
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evidence that tied the technology to zinamax. he said he had no knowledge of that. zinamax attorney raised questions about whether facebook allowed adequate time of due diligence and pressed zuckerberg about an e-mail exchange of oculus misrepresenting certain things. zuckerberg saying concerns were how fast products would be completed not about intellectual property. facebook paid $3 billion for oculus in addition to the $2 billion price tag widely reported facebook paid an additional $700 million to retain employees and another $300 million for hitting key milestones. >> glad he didn't wear a hoodie to court, julia. good move. >> was wearing a suit. >> kicking off a year-long road trip around the country, zuckerberg wants to meet people from all walks of life.
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some believe it's all part of his plan to run for president of the united states. more from vanity fair's nick bolton. i was relieved when i saw your article. remember when he said he was going to go to every single state, all 50, in the wake of the election. part of that you could say, okay, he didn't get the election he wants. when he announced that i thought wow, that sure sounds like a listening tour, doesn't it? that wreaks of someone who wants to run for president. >> he has been to 20. he has 30 left. my big question for him is how many of those states are swing states? i would imagine quite a few are probably in the rust belt. and it's just really fascinating, you know. mark is a very, very interesting individual. he is one of the smartest people, i think, i've met in silicon valley. i've met all the ceos of these big companies and what i find truly interesting is that he has created facebook, quarter of the
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planet connected and that's not enough for him. he wants something bigger. the question is, is it going to be the presidency? >> let me ask you this, has anybody heard from him directly that he wants to be president or is this a lot of people in silicon valley talking? >> no one has heard, you know, that i've spoke to at least that says he's definitely running for president in 2024 or 2020. a lot of people i did speak to who are close to him, not through work but in social settings and also some through work, is that, you know, the quote that i heard over and over, which is quite funny, which i didn't understand at first is, quote, unquote, mark zuckerberg wants to be emperor. that could be that he wants to connect everyone on the planet, that he wants to be president. i don't know i think that he does have larger, grander goals. one person said to me that has known mark personally for several years that, you know, he wants to be -- he doesn't just want to be this guy who started this company and ran facebook. he wants to be remembered as an edison or washington, something
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like that and maybe the presidency is that. what i think is fascinating is what's the bigger goal? is it that he changes the world with policy? what is the larger thing for him? that's not completely clear. >> to that point, nick, becoming president may actually be a step down. >> that's what i -- >> compared to the influence he has right now. huge influence over the big swath of the population. why do you need the headaches of being president? >> i completely agree. so few people on planet earth that becoming president of the united states is a step down for you. for zuckerberg, that could be one thing. scrutiny that comes along with that. for many years, zuckerberg and facebook got a lot of bad press because of privacy issues, just a multitude of different things. and they haven't really been dealing with that lately. they kind of fixed those issues. you know, running for office would bring a lot of those
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things back and could affect the company. >> i wonder, nick -- >> in negative ways. >> i wonder if that could be a sticking point. can you consider the lashout of privacy advocates when you say i want to run for office. facebook knows more about you than you do. they know where you live. they know -- >> facebook knows more about you than any government agency on the planet does. >> exactly. so we're literally talking about a company that don't need a pollster. >> no. >> they could tell you 22.6% of people in this county swing democrat, republican, whatever it is. could you see a situation where people say, no, he should be disqualified because the company simply has too much data? it's an unfair advantage? >> that is exactly why i think he would win if he ran. i wrote a story when i was at "the new york times" several years ago about how facebook was using the facebook connect algorithm, determining what was going to be the next big thing
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before anybody knew what the next big thing was. that's how they figured out snapchat and instagram was going to be a big competitor. mark zuckerberg has been able to use that. i called that in the article his spidey sense. zuckerberg could run an algorithm on 1.8 billion people and millions and millions in the united states and say if i go to this county, this county and this county and run on these policies, i win. >> does he know how to tweet? this is a prerequisite. >> now it is. >> i don't know. we'll see. we'll see if twitter is still around in 2024. >> he'll have to buy it. is he socially adroit enough to pull it off? >> that is the one thing. mark is incredibly intelligent, strategic. he grew up playing risk in civilization. i'm not sure how true it is i once read a story he lost a chess game and went to his computer and wrote an algorithm
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to learn how to play chess better. the question is, is he charismatic enough? i don't have a lot of nice things to say about donald trump. one thing he does seem to have is charisma when he's in the room with people. i haven't necessarily seen that from mark zuckerberg but maybe he could learn how. >> nick, thank you very much. he may not the only tech billionaire who may run for office. peter thiel, it's reported, is considering running for governor. friends say they doubt he will because he is a private person. donald trump got only 30% of the vote in california. >> spent a lot of time with these guys from silicon valley. they're all a little socially awkward. >> the reason why he would build an algorithm -- >> thiel does not need that, by the way. i played him in chess one time and beat me in 90 seconds. now that says more about me than him, i assume. >> married to chess.
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>> junior grand master growing up. so, yeah, he has that thing. zuckerberg, you get my point on facebook. just to create the dialogue. they would never need a pollster. they know more about the mathisen family. whoever is on facebook has revealed so much about themselves you have an unfair advantage. you could target the six counties where you know people are questioning. >> finally get rid of the nsc too. >> drive by the nsa. they knew that already. win some, lose some. legal battles, the good, the bad and the ugly. plus a massive sink hole swallows a truck. we have video to prove it. "power lunch" will be right back.
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he's the green money you can spend now. what's up? oh you know, gonna pay some bills, maybe buy a new tennis racket. tennis racket for a squirrel? he's got a killer backhand. when it's time to get organized for retirement, it's time to get voya. welcome back. time now for "the good, the bad and the ugly." pharma giant forward. to the bad, arista on a setback
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to its legal battle against cisco could lead to a risk of them not being able to import their products for sale in the u.s. not a good deal. ugly day for progress software, down 13.5%. posted net loss from the latest quarter and guided below the street's expectations. tyler? huge truck swallowed by a massive sink hole in georgia. truck was just sitting there, minding its own business, when the pavement collapsed from beneath it. fuel from the truck was leaking. they had to stop that before they could drag the poor truck out of the hole. and from sink holes now to major portapotty controversy bubbling up in washington. we'll tell you about that. dow transports have had a nice run since the election. just read them, folks. >> sink hole. >> earnings starting to come out. and the closing trades on oil for the day are moments away.
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welcome back, everybody. i'm sue herrera. secretary of state john kerry speaking in davos, switzerland,
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says he does not believe the trump administration will quickly reverse some of the obama administration's diplomatic achievements. >> if the united states were to say we're not going to pursue this, i bet you our friends and allies who negotiated this with us will get together and that rusha china, germany, france and britain will say, you know what? this is a good deal and we're going to keep it. >> russian president, vladimir puten, says a report that alleged russia gathered compromising material on donald trump is a hoax. he accused the obama administration of trying to undermine trump by spreading fake allegations. ford revealing the 2018 mustang, sleeker design, improved performance, more technology and loses the v6 engine option. that's the news update this
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hour. back over to you guys. maybe there's one in brian's future, melissa. >> better just have the v8. they didn't take it down to a 4. >> they kept the v8. lost the v6 [ sound effect ] >> that's my impression of a v6. >> can i hear that again? >> nobody wants to hear that again. >> our favor to america. stocks are lower across the board. nasdaq sitting close to session lows. biotech stocks are the dragger there, index down 1.8% right now. oil market is closing for the day. let's get to jackie deangelis at the cnbc energy desk. >> crude prices getting a little bit of a bounce, finishing around 52.5 today. two big items worth noting. opec saying it could pull the plug on the opec deal in six months if market conditions improve. also, exxonmobil investing a little more than 5.5 billion to double its base in resources to
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6 billion barrels, the largest oil and gas acquisition since oil prices saw a steep decline in 2014. shares of xom trading a little higher. this is a big move showing that big oil is putting money on prices not declining again. you mentioned mobil energy almost $3 billion. certainly a trend to watch. brent crude jumping to week highs, suggesting no need to extend the opec cuts beyond june of this year. let's talk with the global head of commodities. is that how you read what he said? >> i was in abu dhabi. first essentially we're prepared to do more, producing below 10 million barrels. and then on extension basically said, look, we may not need to extend beyond june. the deal may have worked for
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them. >> is the deal working? >> they kept saying, look, we're only a couple of weeks into the deal. >> two weeks in. >> key countries like saudi arabia, stepping up saying we're below 10 million. kuwait say we're early in kting more than necessary. algeria. big question when they have the compliance meeting in vienna, what do iraqi numbers look like? taking the second largest hit. they did not want to be part of this deal. they wanted to be exempted and there are real concerns about iraqi compliance. >> what about donald trump saying he wants a weaker dollar? so instrumental to the price of oil, right? >> for donald trump the bigger issues were are there going to be attacks on imports coming into this country and what does trump mean by -- opec ministers
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taking a wait and see approach but suppressing confidence in rex tillerson and in james mattis as defense secretary. >> where do you see the price of oil resting? is it in the 50s? >> i think so. inventory levels remain loaded. you'll have to work off inventories. barring a major supply outage anyway weak state which you can never rule out, look at venezuela. we don't see using faster. >> the incoming president has said some things very favorable toward energy production, exportation. doesn't that put downward pressure on prices if it boosts supply? >> this is the discussion at the conference last week. he certainly will be more favorable to drilling in this country. but it's going to be price dependent on whether companies will drill. access is one thing.
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but the price and. >> people are literally eating out of garbage cans in venezuela. >> right. >> what what does the next couple of years look like for venezuela? how can they keep the infrastructure going when the loaf of bread is 500 u.s. dollars and you don't have a job? >> you can't get essential medicine. catastrophe of oil markets. venezuelan oil production is drilling down. they do not have relations with the imf. even if they did have a change in government it would take time to get aid to venezuela. >> you have a history in background working with or alongside or inside the intelligence community. >> worked at the cia as an analyst. >> worked at the cia. what are your thoughts about the intention between the
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intelligence services? >> it's reached a new low and the question is, can compromise, the new incoming cia director, can he restore good relations between the white house and cia? it will be imperative because the global threats are not going away. look at the issue of north korea, iran. we could be dealing with any number of security crisis in the first quarter of this administration. getting this relationship back on track will be imperative. >> helima, thank you. >> thank you. dow transports on a nice run, up about 10% since the election. do you care what's going to happen not what has happened. coming earnings, will they completely derail the rally? morgan brennan joins us. >> they will report results after the bell today, getting the rails rolling. 50 cents per share on $2.9 billion in revenue, estimates
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that represent positive growth on both the top and bottom lines. other transports reporting this week. united continental this afternoon as well, canadian pacific tomorrow. union pacific and likely jb hunt thursday morning. kansas city southern on friday morning. so, the rails have had a good run. shares of csx, northern and southern up on improving data and infrastructure spending and deregulation. kansas city southern has been the outlyer. autos are a big part of the growth story for that company. outlooks on prices and volumes in nearly two years they're growing, led by grain and coal, benefited from nat gas becoming more expensive. valuations are pushing toward the high ends here. investors are essentially baking in these potential trump policy expectations and potentially not
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really weighing the effects of a stronger dollar. we'll have to see what these companies say when they start reporting this week. >> absolutely. they start tomorrow. >> morgan, thank you. a quick check here on the markets. transports, in fact, hitting session lows. the markets also taking a bit of a leg lower here. dow is down triple digits. 93 points is the loss at this moment. this is a session low on the nasdaq, down three-quarters of a percent right now. bioteches are pressuring the nasdaq composite today. let's bring in the senior research analyst at avondale. >> as you all were saying, not what has happened, what's going to happen. the recent strength in the dollar is just very bad for exports, onshoring, domestic
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manufacturing and assemblies. i don't care how many ceos you tweet about. economics of the stronger dollar are a real headwind to domestic manufacturing and exports and that's what railroads move. >> we'll see that immediately in this past quarter's results, though? >> no, no, you don't. it's really what's going to happen six months from now. we put out a chart on a regular basis to show the correlation between the strength in the dollar and the decline in railroad volume. but we delay the dollar chart by six months because that's about how long it takes to bake in to the volumes, if you will. so, we're seeing the ongoing declining volumes coming in the next six months, what we're looking for, what's going to happen, not what has happened. and we're look at a segment, railroads in particular, that have lost pricing power. and it's really -- the jury is out as to whether or not they can regain that pricing power. we're looking at a company specifically, csx, essentially reporting flat earnings for the third year in a row. volume trends we see coming
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come, then they'll post a fourth and maybe even a fifth year of flat to slightly down earnings. is that a kind of company i want to pay 22 times earnings for? >> if i don't believe the consensus, that the dollar is going to get stronger, does that make the railroads a buy? >> no. the dollar has already gotten stronger. what trump does with tax cuts, what they do with deregulation, that's all bet. >> it's sort of interesting because you make the point for the recent quarter, the comps are kind of easy. housing, auto will be flat. >> comps are so low. >> it could be a time when it gets to be a tougher comparison on top of that drag we're going to see. >> exactly. headwind of the currency strengthening in the current timeframe but also comps that are a little more difficult. >> donald, great to speak with
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you. >> always my pleasure. >> we'll hear from the ceo of csx, michael ward, coming up. 4:00 pm closing bell eastern time. should be an interesting one. for stocks, some say the trump bump may have reversed but that's paved the way for gold. gold up 6% in a month. so should you be piling in to this commodity? stocks taking a bit of a leg lower. not a big drop for the dow. we are down 99 points right now. dow 20,000 just gets further away. kind of like the cavaliers/warriors game last night. financials also a drag. back with more "power lunch" after this. when it comes to healthcare, seconds can mean the difference between life and death. for partners in health, time is life. we have 18,000 people around the world. the microsoft cloud helps our entire staff stay connected and work together in real time to help those that need it.
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welcome back to "power lunch." i'm sue herrera. deutsche bank, justice department along with several federal partners announcing that deutsche bank has agreed to pay $7.2 billion for misleading investors in its sale of residential mortgage-backed securities. rmbs. the largest, apparently, settlement of rmbs involving
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federal and civil claims. it was announced a little bit earlier or actually late last year. deutsche bank has agreed to pay $7.2 billion for misleading investors in its residential mortgage backed securities. back to you guys. >> thank you, sue. deutsche bank involved in creating some of those securities. trading nation. your team, chad morganlander. we're going to talk gold. i know you always say you should have a little sprinkle of gold in everybody's portfolio, just to be safe. do you still have that view? is it worth it to hold gold? >> absolutely. we entirely believe that. we believe there could be a 4% to 5% total return on gold over the course of the next 12 months and further out on an annual basis. we believe it's a good hedge against the portfolio, similar to long-term treasuries.
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that's with our base case scenarios, modest increase with the u.s. dollar. if there is a tightening of financial conditions, we believe gold could rally easily. we are constructive on gold. >> as a fund manager, one more to you, chad, do you buy etfs or go buy boullion and store it in your basement? >> buy glt. get in and out any time during the day. that's how we invest in the yellow metal. >> i know cici, you're more on the option side. you look at volatility as well, what are you seeing about the future of gold? >> gold certainly has some increased volatility surrounding it. if we think about volatility, volatility, what the whole world thinks about, that's a good snapshot on how investors are panicky for the u.s. markets. what i would say we've seen, 2016, it was the go-to hedge.
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the biggest concern of 25% of all debt. investors wanted to hedge to a broader issue and gold was the go to. gold etf since the election n recent weeks we've obviously seen a shift where gold is starting to rise. we've seen investors start to buy options on products like the gld. positioning for more volatility and getting that upside exposure. we haven't really seen a return of that 7 billion of post election moving into etf. >> stacey, chad, thank you both. for more trading nation, go to our website, tradingnation.cnbc.com. shakespeare asked a rose by any other name would not smell as sweet. but what about a port-o-potty? one company in the flush of a cover-up. we're going to introduce to you
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don john, what's happening to d.c. which just stinks next on "power lunch." >> whether it's range bound or trend iing. an os later falls into over sold territory and moves back above it and look to sell a range-bound market when the oscillator rises into overbought territory and then drops below it.
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controversy is swirling around port-o-potties. don's johns may have found itself in the middle of a d.c. coverup. it seems that someone in the capital is taping over the company's logos and don's john's isn't exactly happy about it. we bring you now rob will course, chief operating officer of don's john's sanitation services. you have provided your portable
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commodes to prior inaugurations, about 9,000 -- about 7800 for the 2009 inauguration. did you encounter at that time anybody taping over the don's john's logo? >> no, we've never encountered this before. that was never a problem. >> apparently the architect of the capital has said that they are covering or removing the signage on the portable toilets to bring them into capital grounds restrictions on advertising. our staff determined that the signs -- gene's john's, a competitor, can be easily peeled off but don's johns signs cannot and are being covered with tape. how do you feel about this? >> the good news is we recently acquired gene's johns so they belong to us, too, so i hope they don't peel those off but, you know, i -- given that aoc's a customer, really not at liberty enough to say that we're not happy about having our logos taped over. we've never encountered this
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issue before. we're very proud as a company of our logo so this is not what we had hoped. >> i grew up in northern virginia and let me just put it this way, i've been familiar with you for a long, long time. i've been a customer, sir, that's all i'll say. i'll leave it right there. >> well, thank you. >> but this is -- just to be clear here, you have been at prior inaugurations and never had your logos covered but there was no president whose first name was don. >> that is correct. >> mr. sullivan had a question. >> i guess gene is number two in the market now. here's a question, rob. real question i've wondered for years. how do you guys plan? because you go to some events, this is serious. >> right. >> you go to some events, 50 people in line for every port-o-potty. you think, my god, they screwed this up. other events they're wide open. you can move in. what's the people to potty
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ratio? >> and does it change if there are more females in the crowd? >> these are real questions we have here, man. >> yeah. they're all good questions. it really depends on the event. if it's nfor a drinking event i would have to be a higher number of portal restrooms for the number of people because of all the drinking going on. for larger crowds it's more of a perhaps 100 to 1 ratio. if it's a large event like the inauguration. >> 100 to 1? >> it just depends on the type of event, how long in terms of how long it's going to last and what's actually going on. like i said, drinking and food events require more restrooms per -- the ratio is -- >> this is probably not a big drinking event per se. there are some of your customers including the redskins, the tiger woods foundation. i assume you supply the portable toilets for his golf event. how many portable toilets will you be supplying for the
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inauguration and demonstration that takes place the next day? >> overall we're supplying about 2500 units. about 2,000 for the inauguration itself and then about 500 or 600 going to the march the next day. >> all right. rob, thank you very much for clearing this up. >> all right. thank you. >> thanks a lot. check please is next. it's not just a car... it's your daily retreat. go ahead, spoil yourself. the es and es hybrid. this is the pursuit of perfection. i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't.
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(cannon sound)
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you check please. >> on a percentage basis the
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moves are fairly small. the nasdaq is the worst of the three major averages down by 3/4 of a percent. what's really worth it is moving into safety. take a look at what it's doing today. it's higher by 1%. a lot of the bonds are leaving the markets. the best performing sectors, utilities, consumer staples up by 1%. a big move in gold. it seems peaceful on the top level but we are seeing this churn within the markets. financials trading sharply lower. >> one of the bigger down days here so far. we always like to show you on "power lunch" at least one animal video a day. it could be pandas, it could be adorable things. look at this gator, a massive gator down in i believe it was lakeland, florida, not far from tampa. i believe he's known as humpback. he's well known. look at the tail on that thing. >> wow. >> wow. that is -- >> i don't know if there is a tampa. he may have eaten tampa and
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going on. look at that belly. >> big belly. >> very big. listen, that interview that we just did, it's a serious business. those guys work hard and they put it all out. trust me, they're the ones you need on that wall. >> that's right. >> when you need them, you need them. >> good job don's johns. >> and gene's. >> thanks for watching "power lunch." >> "closing bell" starts right now. wait a minute, that crocodile was real? >> we're having a heated debate. >> that's not a computer-generated animation thing? >> i wouldn't be that cool if it was crossing in front of me, that's for sure. >> wow. >> welcome to the "closing bell", everybody. after this long weekend i'm kelly evans at the new york stock exchange. >> happy tuesday for me as well, i'm bill griffeth. four big companies announcing to create jobs here in the u.s. we're wondering is this part of president-elect trump's plan to become, quote, the greatest job

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