tv Power Lunch CNBC March 13, 2017 1:00pm-3:01pm EDT
>> visa, great businesslike mastercard. no credit risks. if rates move up -- >> you own both. >> what about 3m. anybody own it? >> we've been selling it. when you look at industrials. >> not a good move. >> yes. >> industrial companies are all reflecting -- >> "power lunch" starts now. >> it sure does. i'm michelle caruso-cabrera. here's what we're watching at this hour. the deal of the day. look at mobile, intel smachg up mobile eye for $15. many believe this is the big in the m and a boom in the autonomous car space. we're awaiting new details about wall street's top cop bharara. white house about to hold a
press briefing. millions of people from virginia to maine are gearing up for a historic end of winter blizzard. look at this thing. some areas of the northeast could see snow accumulations of four inches per hour. we have the latest from the monster storm as "power lunch" starts right now. >> hi, everybody. i'm brian sullivan. stocks are stuck like your car might be. intale big reason. intel shares down 2% on that mobile eye buy out. oil continueding its slide. crude falling below $48 a barrel earlier today. one thing that is higher is gold and guess what? gold is rising for the first time in ten session. i'm melissa lee. here's what else is happening. the atlanta fed naming rafael
bostick as their new ceo. >> scotland is breaking away from the eu. >> lincoln sales in china have tripled in the past year. welcome everyone i'm tyler mathison. we have another jam packed program on tap four and we kick it off with the deal of the day. intel buying mobileeye. the shares shooting up by 30%. we have both sides of this big story covered. phil lebeau looks what it means for the future of self-driving cars but let's start with john fort. >> three points i want to bring you from this conversation dealing with this acquisition and what it means for the road ahead for intel.
he was talking about m and a in general. he said that perhaps in the past intel hadn't done so well in m and a but under him they've done quite well, pointing to altera said that's ahead of schedule. he talked about it a computer vision and how it's necessary to get us to the next age of executing. >> if you look at our strategy, the computer vision, whether it's a drone or a robot or a car, it's going to become an important set of data. so you saw an acquisition, for example in novidia which is targeted more towards those low end devices. and mobilized targeted towards high end devices. >> this is a $15 billion skigs. altera was $17 billion. he's been doing big ones. finally he contrasted this move with qualcomm's move saying this is intel operating in a strong
suit concentrating on executing not just the car at large. back to you. >> to phil lebeau for what this means for the future for self-driving vehicles. >> intel ceo may say this is not just about autonomous drive vehicles but make no mistake this is going to send ripples throughout the auto industry. consider this. nearly every single automaker is working on autonomous drive technology. they all have cement autonomous drive technology now. they are developing full autonomous technologies. let's show you where we are now and where the industry shaded. right now limited hands-free driving. somebody says i have an autonomous drive car they are full of it. the extended hands-free driving should be here by 2020. might be here by 2019. further out when do we have vehicles that can completely drive us and we won't have to touch the steering wheel. at the earliest 2025, maybe not until 2030. one of the stocks to watch is
delphi. delphi has been doing a lot of work when it comes to autonomous drive technology or drive assist technology. many elm look at delphi and say if there's another company that's right for a merger or acquisition, delphi would be that company. that's one reason why the shares are up. take a look at shares of nvidia. mobileeye and nvidia is what people focus on. guys, it's going to have a lot of people talking about for the automakers themselves what's their next step? go with mobileeye or nvidia. likely a combination of a number of tech firms involved. so as the intel-mobileeye idea just the start? let's bring in our analyst. when you take a look at a deal like this what does that do the automakers who are on the quest
for an autonomous vehicle. does it make them choose suppliers in any way. does it facilitate the development of this technology? >> i look at this as a trojan horse for non-auto companies to get into the auto space. two years ago we were talking about technology companies trying to build their own car. we're not talking about this any more. what this exelm ply fies there's more value in the automotive manufacturing process first and technology companies need to get into that process if they want to monetize that. the second point is auto suppliers broadly traded much lower multiples than their traditional technical companies. you look for high potential return on investment capital opportunities and leveraging to that data monetization opportunity, auto suppliers are out there for a taking. system santiago bought out harmon with the same kind of
thought process. third, we'll shift over time, i think from a driver experience focus to sort of a more passenger experience. so thinking about the suppliers that have leverage to things that are going to become more important when steering is taken away from you and braking feel and so forth. perhaps seating comfort. >> what will be next >> for the time being battle for real estate is in the dashboard. into entertainment is very important. i think over the longer run, leer has some great technologies coming. we'll be in this next five to ten year phase where vehicles get safer and safer. >> those companies are not the next m and a targets. are we looking at a potential wave of m and a as automakers
look to acquire the technology themselves? >> i don't know that automakers will be looking to acquire it themselves as much as companies that are not in the automotive process today looking to get into that process. these are trojan horses. the reason this is important, if i'm ford or volkswagen i would be hesitant to open it. it will bring along a tech proficiency with samsung and intel. >> do you want to buy technology or do you want toby a distributorship >> that's the big question. >> that's why we have you here. >> you answered it. >> i think if you put gm on here what they would say is they are not 100% sure.
they are spreading their bets. they are investing in lift and maven on the volume side. ford boughte artificial intelligence not that just long ago. no one knows which aspect of the data is important. you'll see a lot of companies trying to get involved in any way, shape or form they can. by 2025 it will be a totally different landscape with respect to vehicles coming off the line and how we think about vehicle ownership probably in the developed markets. >> i want to play a southern bite of a conversation i had with mobileeye ceo two weeks ago at the ipo event in vancouver. i'm a skeptic on autonomous vehicles. he's not. >> autonomous vehicle is a wave that's so big that nobody can stop it any more. it's created because there's
strategic engagements of the regulators to reduce car accidents combined with strong acceptance from the automakers. >> so let me pose this sort of nub of my skepticism to you and get your reaction. that's this. i wonder whether the technology can move faster than regulators and insurers will. >> well regulators and insurers have not been sitting still. we were party to a few sort of insurance related events as long ago as three or four years ago where they were talking about tad vent of autonomous vehicles. you may have heard on the tesla call, tesla is mining a lot of customer data. will they use that data to provide their own inhouse private label insurance. on the insurance side i think it's being very much discussed. on the regulatory side, data has to prove this out. where i see, perhaps tyler
you're right but also mobileeye is right. if you think about these geofence markets, ann arbor, michigan and college campuses you can easily cut those off or close those off to driver vehicles and generate data to prove to the regulators this technology is worthwhile and is worth getting behind. i think you're going to see that bleed into, you know, the u.s. over time. that's going to be i think a partial answer to your question. >> i may be right or i may be wrong but the one guy who is right is the ceo of mobileeye. jamie mentioned the company adian. remember when the ceo was on he makes seats. if you're not going to drive any more the seat gets more important. remember the ceo he was so funny. seat design is so exciting right now. it's new age of the same design. we got to get him on again. >> no butts about ths about tha.
>> the firing of bharra. when it comes up at today's press briefing we'll bring it to you live. we go to southern district of manhattan. that's where he used to work. did he clean out his desk today? >> reporter: de. he arrived about 30 minutes ago. we're told that his visit is expected to be brief just saying good-bye to colleagues and the like. when you hear the name bharara there's one thing that comes to mind and that's insider trading. some of his most high-profile cases, like the one who had the longest sentence of any insider trading case. sca capital, that was fined $1.2 billion the largest penalty ever for an insider trading case.
bharar a's track record on insider trade cigarette unprecedented. 89 cases resulted in convictions. seven cases are still pending. one of the big questions on wall street is what happens to the pending cases. in the interim, the deputy under bharara has become the u.s. attorney but the longer term plan is more of a question mark. >> as a general manager those cases will continue to go forward. but with a relative number of high-profile cases you have to deal with the fact that bharara hachbsds on prosecutor, he was a attorney who got involved in the cases and got involved in the decision-making and so it has an impact. >> that was randall jackson a former assistant attorney for are the southern district of new york. he worked with bharara for six
years. he said regardless who takes over the office they will focus on white collar crimes. >> thank you very much. we are just guesting started here. still ahead more on that. it's a monster blizzard. it's taking aim on a huge part of the east coast all the way from virginia to maine. we'll give the latest on that storm's path. must see pictures of a house encased in ice. unrelated to the storm. every home in america will look like that two days from now. >> how can you protect your company from becoming r president trump's next tweet target. we'll explain.
>> welcome back. shares of gartner is up 2%. shares of truck maker navistar higher after carl icahn increased his stake in the company. and hsbc hired an outsider for its chairman for first time in its 152 history. it named mark tucker to the post. one of tucker's first dutys is to lead the search for a new ceo. stocks struggling to stay in the green. nasdaq only major average with gains right now as you see there up about eight points. counting down the fed decision
on wednesday. what's the next move for people like you? mark hamilton is from oppenheimer funds. gentlemen welcome. mark, let me begin by asking i note you are moving out of high yield. >> yes. >> securities. like a lot of people apparently. big flows out of high yellield funds. why now. >> a couple of things. basically it came down to the following. one valuations got tight. not a lot of room for error at this point. when we look at a longer term view what we're seeing is there's been some build up in corporate leverage, the fed is about to begin tightening. those are precursors to potential trouble in the financial markets. there's really very little room. >> basically if people are chasing yield in a low yield environment watch out. >> yep. >> all right.
craig, your thoughts? >> well, i think the normalization of rates will be bumpier than people expect. the last tightening schedule of june of '04 were much lower than they are today and you had the emerging world ready to take off. neither one of those two conditions are present today. the tax reform would have and about lift to earnings that looks like that's pushed until the fiscal year 2018 reconciliation. you won get the benefit of that. i agree with what was said. >> how about stocks? like them? >> we're still a little bit long stocks but not as much as we were and have generally been looking to cut risk in the portfolios. >> why? >> similar story. on the positive side growth remains fairly strong here. we're seeing that and a better sill j cyclical aspect. there's tension in the fed. the market is not priced for
volatility. >> if you're pushing out your expectation for tax reform does that mean you want to also lighten up on your exposure for equities or did you never price that in to begin with. >> i was skeptical of that given the other things on deck. but there are some areas. i like europe. it's trading 15 times forward earnings so less expensive to me. technologically it's looking good. the ftse 100 breaking out of a 15 year base. some of the political risk, these populists while they are not sneaking up on people this cycle. they may under perform expectations. i do find things i like. europe is an example. i do think u.s. -- >> did you think that it was going to happen this year and going to happen later than you expect should you then down shift your expectation for equities that point? >> i didn't think it would happen this year. that's why we're modestly
undering weight in certain areas. being patient. let the political events unfold and use that as an opportunity to add to positions. >> if you think high yield is tight as you say and risk of dropping, is that good for equities because people sell credit, buy stocks or bad for equities because this is a precursor to what might happen >> it's a challenging environment for equities. cost of credit goes up. >> negative on u.s. stock market? >> not negative. no. we still got a very strong growth environment globally the best growth environment we've had in a couple of years. but the asset class that looked most mispriced or most expensive was high yields. >> we'll leave it. thank you mark and craig. appreciate it. >> thank you. millions of people in the path of a historic winter blizzard. how big and how bad will it get? we'll have the very latest next.
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welcome back. millions of people from virginia to maine are gearing up for a historic winter blizzard. let's get the latest from the weather channel's nick walker. >> 100 million people could see one inch of snow or more and a lot of folks millions will see a lot more than that. biz warnings from new york city down the jersey coastline through long island up through connecticut blizzard watches all the way to boston.
notice the timeline here as we get into the evening hours. washington, d.c., philadelphia during the overnight hours, new york city will see that snowfall and into boston by the time we get into tomorrow morning. snow falling throughout the day could be blowing with wind gusts to 55 miles per hour. four inches an hour possible in some of these areas. white out conditions. power outages are going to abound here. all totalled up we'll see many areas get two feet or more of snowfall. new york city area probably looking at eight to 12 inches that between 1:00 a.m. and 6:00 p.m. along with strong winds. now we upped our totals. even as we speak. a foot to foot-and-a-half of snowfall. again expect to see power outages and stay off the roads. back to you. >> nick, thank you very much. guys, did you know if we get more than a foot of snow first time new york got a foot of snow in march since 1960. old school. if america issues a 50 or even 100 year bond would you buy
it, america? is it a great idea or a terrible one? we'll drill down on this coming up. plus protect your business from so-called trump risk. you can for a fee, of course. courtesy of two former trump campaign aides. we'll tell you all about it as "power lunch" rolls on. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every
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let's go live to the white house press briefing room where sean spicer just got a question about preet bharara. >> this is common practice of most administrations. >> i understand this happened at the doj and request was from the doj but there seems tube white house connection vis-a-vis the connection the president had asked him to stay on and then the president apparently called him a couple of days before he was allegedly fired. can you tell us -- did the president change his mind. >> the president was calling him to thank him for his service. this is a standard, as i said, a standard action that takes place in most administrations. attorney general reno sent out
an id cold letter in 1993. bush administration sent out a similar one. this is a very common practice for all political appointees not just in the department of justice but throughout government when there's a turnover in administration. >> yesterday john mccain said president should either provide information about the allegation he put on twitter about his phones being tapped at trump tower. today is the deadline. what is the president going to do? >> let's be clear. the department of justice was asked to put, to send information down to congress. it wasn't the white house that was asked to do that. just so we're clear as far as what the request was. hold on. i think if you look at the president's tweet he said very clearly quote wiretapping in quotes. there's been substantial discussion in several reports. on march 3rd there was talk
about reports of wiretapping and other out lets of other aspects of surveillance that occurred. the president was very clear in his tweet it was wiretapping. that that spans a whole host of surveillance types of options. the house and senate, intelligence committees will now look into that provide a report back. but i think that there's been numerous reports from a variety of outlets over the last couple of months that seem to indicate that there's been different types of surveillance that occurred during the 2016 election. >> so what you're saying is the president doesn't have an obligation to provide -- >> i'm not saying that at all. what i'm saying the request that was made from the house was to the department of justice. i think that's an appropriate question to ask them. what i'm telling you from a white house perspective there's no question that there have been an abundance of reports regarding surveillance and other type of activities that occurred during the 2016 election.
>> and the president's only evidence are these reports. >> no that leads you to believe that. i'm saying to you that what we made clear on that sunday was that the house and senate intelligence kmaets have the means and process and access to look at the entirety of the evidence that's being presented to them and make a determination that they can report back to us. >> sean, following up on major's question, does the president feel he has an obligation once the investigation is over to release some sort of statement in response to whatever the findings are? that's my first question. i have second one for you. >> let's get there first. to start to presume what the outcome will be before the house and senate look at all of the evidence, and information, and reports that are prernted would be a bit presumptuous. let's slow down a little, let them look at everythinger and make some determinations. >> has president trump donated his paycheck from the month of
february like he promised to do during the campaign. >> the president's intention right now is to donate his salary at the end of the year and he has kindly asked that you all help determine where that goes. the way that we can avoid scrutiny is to threat press corps determine where it should go. in all seriousness his view is he made a pledge to the american people. he wants to donate it to charity and he would love your help to determine where it should go. >> the correspondents association. >> great way to do it. >> thanks a lot, sean. i want to follow up with you on questions regarding michael flynn who is no longer in the administration. there's a five year lobbying ban that's been imposed on all trump administration employees. does that also apply to michael flynn? would he not be permitted to lobby for five years because of the agreement that he signed when he became a national security adviser? >> that's correct.
i have to check and figure out when he signed or if he sign the form. but yes all administration officials who come in are required to sign that ethics pledge banning them for lobbying for five years and lifetime ban on lobbying on behalf of any foreign government. >> what are the repercussions if an employee of this administration lobbies within five years, where is the teeth? what's the penalty? what's the punishment that's imposed on that particular trump administration employee? >> i would have to get back to you. i don't know whether that's a department of justice aspect or not. but i will get back to you. yeah. >> i was wondering did the president ask bharara to stay on during the transition or not? >> i was not privy to that conversation. again, i'm not sure how it's relevant at the end of the day. the department of justice asked all remaining 46 that at this time that they asked for all of them to submit their letters of resignation based on the same
kind of precedent that was set during both the clinton and then the bush administrations in terms of the timeline. jessica. >> about the reports about the president visiting key largo. can you talk about that visit and what he wanted to accomplish. secondly, with respect to that visit, we still don't have a confirmed ambassador or secretary of state for east asia affairs. how does that affect are you planning and ability to properly brief the president and make sure he has a strong position. >> planning is ongoing for a visit between president trump and president xi at a date to be determined. we're not ready to confirm that. we'll have more details. it's the purpose of this meeting of that kind of a meeting to help diffuse tensions over north korea and the recent deployment of that military battery to south korea. any meeting between president and the united states and
people's republic of china would necessarily cover a broad range of topics of mutual concern. secretary tillerson is traveling to the region now. as we go forward we'll have additional details on the timing and the location of that. >> the implication of you talking about tillerson's visit. >> he's in the region. i'm sure that in i had visit to japan, south korea and then china preparations will come up as well as areas of mutual concern. >> there's been a rash of threats on jewish community centers. there were similar attacks taking place in orlando, florida, new jersey and oklahoma. this is not unlike the anti-semitism that the president
announced. will he denounce these attacks. >> sure. i think one of the points that we've made in previous statements on this the is that this is not the way that we as americans solve our differences. we don't attack each other. we don't engaging this kind of behavior. i think we have a first amendment that allows us to express ourselves and that's the appropriate way but doing it where you're threatening violence or destruction or vandalism is inappropriate in all of its forms. >> [ inaudible ] >> i don't believe there's any connection. that would be a stretch to say the least. >> thanks for taking my question. i want to ask about north korea. you mentioned north korea. can you tell us a little bit about the review of north korea right now and what direction do you think the administration is going in terms of trying to manage north korea. >> as i mentioned secretary tillerson is headed to the region. he'll meet with his counterparts
in south korea and japan and ultimately beijing. that's a major subject. as i mentioned when we ultimately meet with president xi and others, that will be a discussion, something he's talked about prior to tremendous signation of the last south korean president, was something as part are of an ongoing discussion. there's an internal review we continue to have. but then there's obviously a geopolitical conversation we're having with partners in the region as we look to contain north korea's military threat. yeah. >> thank you, sean. >> we'll keep monitoring this sean spicer white house press secretary in the briefing room at the white house. as expected he did field several questions about former u.s. attorney for the southern district of new york, preet bharara. didn't get to the crux of the issue which is the disconnect between attorney general bharara being told apparently that he was going to be able to stay on. we watched live on cnbc his arrival at trump tower, his
departure and it was a nice meeting and his expectation he would stay and last friday he would not be staying, he would be gone along with the other former u.s. attorneys in the country at this point. he was also asked about the situation with the wiretapping. no clarity there. wouldn't confirm the reports that there will be a meeting with president of china x xi jinping. protecting your business from trump risk you can for a fee, courtesy of two trump aides. john harwood has that report. president trump said he would drain the swamp in washington but what we've seen some people close to donald trump during the campaign decided to cash in by making money, advising corporations on how to deal with the trump administration and the trump white house. the two in question today are corey le juan do you ski former campaign manager and barry bennett started out as ben
carson's manager but later became an adviser and surrogate for donald trump on television. they established a business that involves advising clients on how to mitt investigate the risk that donald trump will go after you. they listed some advice that in an interview with the "new york times" that spoke to how companies can avoid staying out of trouble. the first one is invite donald trump down to your factory or business, let him cut a ribbon and announce the hiring of a couple of hundred new people. this san effort to help donald trump's pr campaign toil miscellaneous straight the idea that the american economy is coming back since he's taken over as president. a second potential strategy is if donald trump does come after you, give him a win. an example there was lockheed martin, the firm that got in trouble for donald trump going after them for the cost of the f-35 jet. donald trump then had a meeting
and claimed that he had shaved $600 billion off of the cost. in fact he didn't but the company did not point that out publicly and finally, he said if he were advising mexico they are not a client but certainly these two gentlemen would like have mexico as a client, make it took like you're paying for wall even if you're not. all these are ways to manage donald trump who we've seen highly unpredictable character who can go off at any time and there's money to be made to avoid being a target. >> they are charging for that advice? >> they are. >> there's hope for my post-tv career now. i'll start a firm. be nice to the media and invite me over for drinks. >> you've gotten to the heart of the heart of the washington consulting business. all right, john, thank you very much.
treasury secretary steven mnuchin is open to issuing lands of 50 year or 100 year note. does that make sense. mike santoli has the details. >> probably more reasons not to do it or at least not to do it in more than an experimental way. if you think about just exactly why the treasury is always bore roger money, always issuing neets to cover that year's deficits. not like a homeowner that will turn out a 30 year loan and refinance and don't have to borrow again. they would raise annual interest expense if you did it in a major way. right now the u.s. government pays a blended rate on its debt of well under 2% because it's mostly skewed towards the short term. when this issue has been looked at in the past they've always come out against it because they prize the predictability of their auctions, the liquidity
that's in short term treasuries. it's the benchmark for global yields. it's the blood in the veins of the global financial system. they don't want to be seen timing the market and predicting higher rates by saying we'll issue 50 years. it's counter productive. it works as cross purposes what the fed is trying to do. so for those reasons and because it would never ever be a big part of the treasury issuance mix it's not a big thrust of this treasurer. >> hang on as we bring in rick santelli. what's your take on a 50 year bond. does it make sense with rates low as they are now to lock in financing to pay for example for some of the infrastructure potentially that might have a lifetime of 50 or 100 years or more. >> i think mike hit a lot of the key points. listen, first of all, it is a trade. okay. anybody who has had a floating rate mortgage or 30 year that acted like a five year until you got to the fifth year pup lock
in. we don't know what rates will do. to give you and example the spread between 30s and 10s over the last 20 years has been positive 25 to positive 140. it's a trade. the one thing i don't agree with mike on it might not be a liquidity issue. believe me. if you offer 50 and 100 year bonds investors who have long term liabilities would love to match it up with the long term paper. plenty of liquidity. real circumstances we have a fed meeting this week. that's where all the securities are hiding out. granted, the blended complex pl of these securities is shorter than 50 years. but longer maturities, some of those insurance companies and funds would be happier. i'm not a big debt guy. you will pay more right now. rate on a 40, 50 or 100 year bond will be more than the blended five year duration of
the current treasury portfolio. >> santelli or rick santelli, if we issued a 50 or 100 year bond what would the interest rate be, do you think? >> about 4.5. >> i was going to says maybe less because you look at other countries. if you go from 30 out to 50 that tends to be relatively flat. there would be demand. those insurance companies would buy them and put them twunl. they won trade them. by liquidity the treasury would have to consider -- definitely a market information. >> i see. so you're talk being about liquidity coming in the door. they are going to hold on to them like fed and ecb are. i agree. mike is right. if you look at a 40 year uk bond it spent much of its time below the yield of their 30 year. you never know about these things. a lot of it is supply and demand. >> do you think this could be a nail in the coffin of the aannuity business.
>> i suppose -- first of all there's not enough to go around and take on everybody's retirement needs like that. but funny. it does tell you where we are right now that everyone is saying right now sign me up for 50 years at 4.5%. who knows what the environment will be in ten years when you reinvest what you have right now. >> i'll be around in 50 years in a self-driving car. that's what i'll be doing. you say santelli i say santoli, let's call the whole things off. who is next in line with snap opening the door. ( ♪ ) upstate new york is a good place to pursue your dreams. at vicarious visions, i get to be creative, work with awesome people, and we get to make great games. ( ♪ ) what i like about the area, feels like everybody knows each other. and i can go to my local coffee shop
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>> reporter: south by southwest is teaming with start ups that would like to be the next snapchat. investors are telling us snap has opened the door for ipos. pinterest a unicorn considered the next in line for an ipo. they are here putting cameras front and center for the first time. but the pinterest lens which has via saul search and wide variety of other hot start ups as well. we caught up with the ceo of fan dual. >> it's fantastic for the tech industry. it just shows their strength. shows a broader strength in the tech industry. snap schat focus. when we talk to investors a lot of excitement in technology. so that's great. >> reporter: after south's huge ipo he's pushing does strike while the iron is hot.
>> the market seems like it's at all time highs. people are bullish on the jobs reports and everything else. i'm actually, we're encouraging every company that feels it's read zwroib a public company not to wait. >> there hasn't been one big break out like when twitter was in the spotlight but we're hearing a ton about virtual and augmented reality with many insiders saying this is the year those technologies go main street. brian, back over to you. thank you very much. on deck, more on the big preparations under way as millions brace for what's being called an epic late winter blizzard. must see images of a house that's completely covered in ice. on purpose. get this. one analyst says walmart is really cool. really? i'll tell you why and what he's the most bullish about coming up in street talk.
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chancellor angela merkel has been postponed until friday, st. patrick's day because a blizzard coming to washington. if you've ever been in washington during a snowstorm you know it's the city that does sleep. it goes very quiet very fast. she'll be here on friday drinking some green beer with the president. >> snowstorm makes driving around dupont circle even better. hit it and put car in reveers gear. time now for street talk our daily dive of the big wall street calls. melissa you'll kick it off with a twofer. >> you had mania and molina. humana is most leveraged in medicare. aetna also outperforms. molina getting price target up to 42 because most leveraged in medicaid exchanges. >> molina has had a rough landing. second start is marvel
technologymarvell technologies. susquehanna raising it to two bucks. they called the company marvell 2.0. management made the case for long term revenue growth. the company should raise cash likely for deals. susquehanna analyst notes margo hired an m and a specialist. third stock, walmart, raymond james out with a bullish note detailing his recent visit to what he's calling really cool walmart. one of the new test centers in a community near orlando. this company has consumer touch screens. the analyst visited the store three times. in our humble opinion the analyst says it's a cool store. >> is this a new test store that's different than the current walmarts. >> what could be coming for other walmarts.
>> walmart is a big company, great company. it's like the next version of us. much cooler. fourth stock, small cap blueprint medicines, goldman sachs upgrading it to a buy from a neutral. technical firm proof of concept candidate for drugs. a lot of risk but less so according to goldman. another 20% move on top of today's move. that's it for street talk. it was a good one. >> best of the week. >> big news just broke moments ago meeting between president trump and germany's angela merkel postponed to fry because of the big weather. first meeting of the two leaders of the two biggest economies in the world. what to expect from this crucial meeting. even though it's not until
friday we'll still talk about it after this break. ♪ can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you. dearthere's no other way to say this. it's over. i've found a permanent escape from monotony.
welcome back, everybody. the second hour of "power lunch". glad you're with us. i'm tyler mathison. two hours until the closing bell. here's what we're watching at this hour. spring is just around the corner but also just around the corn sear big storm. millions in the northeast bracing for a massive storm. the blue areas represent the snow. snow coming from the west to the east and also blue and green down in the south, rain there. moisture coming up the east coast, expected more than two feet in some areas. it's going to be travel chaos! we're live at jfk airport. president trump picking another cnbc regular to be part of his inner circle. what that appointment could mean for drug prices down the road. and the streaming wars are heating up. pandora unveiling its highly-anticipated premium radio subscription service. what it means for rivals like
apple, like amazon and spotify. >> let's check out some of the movers. shares of navistar moving. carl icahn bought over 17%. icahn has been in navistar for a number of years. visiteon shares are moving higher. the stock could have another 20% upside. the biggest winner is wynn resorts, semantic and nvidia. >> reporter: despite the fact that the new bilson lie 50 some pages there are still wide ranging changes that would have to be implemented across the health care industry and the president alluded to some of that complexity morning. in a meeting with nine regular
every day folks who are dissatisfied with their participation on the exchanges of the affordable care act ranging from small business owners to mothers of large families, to farm executives, technicians, they all gave their personal stories as the president attempted to appeal to the emotions of critics of the new health care bill that's coming from both sides of the aisle. he said the centerpiece of this bill would be choice. >> now they will be able to pick the plan they want. pick the doctor they want. they will able to do a lot of things that the other plan was supposed to give and never gave. you don't pick your doctor you don't pick your plan remember that one. we're not going to have one size fits all. >> reporter: they are promising flexible plans that americans will be able to choose the plan that fits them. businesses will be able to choose the plan that fits their current employees. the issue with the current bill is most actually doesn't go into effect, assuming it gets passed into law until 2018 at the ea y
earliest. it could be one to two years before those changes to consumers and companies. bottom lines were felt. this afternoon in a press conference that's still ongoing press secretary sean spicer coked those concerns and said while they are committed to the current plan they are open to changes and said anyone that comes to the white house with a good idea to improve the bill will be listened to. >> that existed for the last several administrations and asked every attorney general to submit their resignation. it is -- >> it matters in the sense that the president made a commitment. if he made a commitment why did he change his mind? >> again, as i mentioned earlier he call him to thank him for his surface last week. he followed in the past practice of last several administrations and ask everybody to step down and i think that's -- >> i have two questions. the first i think especially in
light of what was related today, the president tweeted much of the media success rude and we should be nice. so my question is, is it our job to be mice and do you think we're nice? >> thank you. i will just leave it at this. i've been asked my personal opinion several times. that's not my job. there is sean spicer answering a question about whether the white house press corps is rude or not. but more pointedly our eamon javers asking a key question about the departure of preet bharara, now former u.s. attorney for the southern district of new york asking specifically what had changed between the time after the election when mr. bharara went to trump tower, met with the then president-elect and was told he could keep his job and the president wanted him to and last week the president requested the resignations of all of the remaining obama
appointees to federal prosecutor jobs and mr. spicer basically said that the white house was acting in the traditional way in asking for the resignation. >> which is very true. it happens every single time. >> that's true. >> this time around there was a little asterisk. were we surprised? donald trump is going to keep this guy which is not typical. he must like he's going after mayor de blasio the mayor of new york who is very controversial because of his corruption. he's very aggressive. >> they were investigating albany. >> very aggressive on insider trading which he had been against the big banks so to speak. maybe that's why he was going to stay on. apparently not. >> something changed. >> he also got a call and the president called him but he couldn't call him back. >> that's a protocol. >> a conflict of interest.
>> a protocol issue that attorney generals are not supposed to take calls from the white house. >> we don't have any answers. >> let's move on. another frequent cnbc guest is about to take a prominent role in government. scott gotlieb has been named to head the fda. >> there was a note saying thank god it's gottlieb. he's a known entity here. he's talked about thaert industry and a known entity to the pharmaceutical industry. scott gottlieb is an american enterprise fellow. he is a doctor which is one of the reasons why the industry likes him. other purported names being batted around weren't dock, to were not trained researches. people were nervous about that. gottlieb served in the fda under george w. bush and centers for
medicaid and medicare. what is gotlieb likely to do? a lot of people are focused on this complex generic drugs. to concussion on areas like. increase transparency in the fda. some folks say he may be good in the area of rare disease drugs trying to speed up those approval process. some of the criticism is he is so close to the industry. he served on advisory boards of companies like glaxosmithkline. that could come up. i'm not hearing people -- >> whenever we had him on, people will immediately recognize that as a place that's pro competition. more favorable to business. free markets. et cetera. i would think the left will have an issue with him because he fits into this whole very
right-wing cabinet that we've gotten under president trump. >> there's surprising folks associated with the left. the former acting iing administ of cms, he gave him his support. other names were far out there in terms of wanting to change the fda. a lot of people on all sides maybe saying it's good we have somebody know what to expect from. >> in terms of speeding the fda approval process you think he'll be mostly focused on speeding the approval of generics to market. >> that's an area he focused on especially in the area of drug competition. fda can't focus on prices. but it can speed competition. that's gotlieb's take. others think he'll speed up the process. >> what does that mean for biotech and pharma. let's bring in barbara ryan.
the industry is relieved. there are a lot of other candidate out there who are not doctors and terrified a lot of insiders in the industry. at the same time he does work on speeding the generic approval process in the end won't big pharma not like that? >> i think it's a balance. so i think, you know, if you look from the perspective of generics have allowed for head room for innovation. and i do think, you know, meg made the important points on scott's background. but i think he brings a skill set and experience level that gives him a unique appreciation for all the stakeholders and the lack sometimes of transparency and communications from fda have often created a lot of uncertainty for companies and investors. so i think that he uniquely can understand that because he has been on both sides of it. i do think he'll work to improve the bureaucracy and expedite the
process on both side. from a generic perspective he was instrumental in hatch waxman which facilitated small molecule generics getting to the market and scott's view is that the regulations and requirements for the facilitation of bio similars are lacking. putting in place guidances that will drive the development and ultimately commercial entry of bo similars but at the end of the day being a physician and having and about fellow at aei he also understands the value that medicines have delivered to patients in society as a whole and will be very, very focused on all initiatives that will maintain innovation. >> anything in his history, barbara, indicates he could be willing to look at patent protection. some say if you actually said that you can have a patent starting from the day that your drug is approved learn to of
time in which that drug is protected from generic competition that could help because on average it takes 12 years to get a drug through the process. if you started protection from the day it gets to market it could change the entire equation and actually, speeding up generic approval could be more balanced in that way. >> that's a good point. these things were addressed in hatch waxman. while there was an acceleration or facilitation of generics getting to the market there was a balance there too in that pharmaceutical companies were then given longer exclusivity protection. if their patents expired through the development of regulatory process they were given protections of ten years exclusivity. even if the patent expired the fda wouldn't audiotape prove generics. again he's a very thoughtful individual. and i think he is very deliberate in his communications. so i think that -- >> are there any stocks you should buy definitely because he
got this job or avoid because he got this job? >> no. i think broadly as meg said it's pretty positive for the industry and eliminates the uncertainty of a real rogue point of view coming in to the fda. >> okay. thanks, barbara. barbara ryan. if you haven't heard there's a major snowstorm expected to hit the east coast tomorrow in many areas and expected to get a foot maybe two of snow. joining us now, tom costello live at jfk airport. tom. >> reporter: this storm is going to affect travel up the i-95 spine of the country. let's look at the misery map from flight aware. what this is showing us we have about 4400 flight cancellations. 4400. tonight and tomorrow. and the most affected airports by that will likely be boston, newark, laguardia, jfk, baltimore as well as philadelphia, reagan national airport down in washington. no surprise the airports most
ahead of the curve in terms of cancelling flights already are going to be southwest, jetblue, american, united and republican airlines. all of them saying they are waiting the flight cancellation fee, if you decide you need rebook. you're encouraged to do so if you're flying into or out of the mid-atlantic up through the east coast of the country over the next few days you might want to consider rebooking. it's likely going to be a real mess here especially in the new york city area. by the way this is also likely going extend west. buffalo will be expected to see an impact on flight travel. probably pittsburgh as well. right now today we got chicago o'hare and mid way affected because the storm has been impacting operation there's. the bottom line is we have 4400 flight cancellations now. likely to pick up dramatically over the next several days. i would assume that by this time tomorrow, nothing will be flying into or out of laguardia and jfk. we'll have to see how this plays
out and how long it lasts and how long the catch up is. as you know that can last several days. >> here's what's coming up on the remainder of the program. angela merkel meeting at the white house. nope. it was pushed back until st. patrick's day because of that storm. but still impacts your money. we'll tell you what to expect when that meeting does happen. we got more gasoline in storage now than any time in the last 27 years. but it may not mean lower prices at the pump. we'll tell you why. on the 31st anniversary of microsoft going public what's old tech doing to say relevant and valuable to your money? that's still ahead on "power lunch". [vo] quickbooks introduces rodney.
white house announcing about half an hour ago that president trump's meeting with germany chancellor angela merkel postponed to fry due to the storm hitting the east coast tomorrow. it's the first meeting between two leaders of two biggest economies in the world, of the two of the biggest in the world. this isn't the only big event we're watching on the global stage. there's a long list of hot spots to watch for potential market disruption. this morning president trump plans to host china's xi jinping all mar-a-lago. the date not known yet. trump has been vocal calling china's policies unfair. france, jirm and netherlands, the day after tomorrow. analysts watch for another wave
of anti-establishment victories. the netherlands, tensions rising between the netherlands and turkey with turkish diplomats being escorted out of the inland in the last 24 hours. in uk, theresa may will trigger article 50 the official notification of britain's intent to leave the eu by the end of the month. there were rumors it would happen tomorrow. another issue in the uk leading scottish politician calling for a second referendum on scotland's independence. with all of those potential trouble spots and events what's the best way to invest in the global market right now? let's bring in a global strategist at wells fargo investment management. good to have you here. i see all that and i think even what we're looking at in the united states maybe the u.s. is still the best place? >> that's probably a pretty good point to take away from this. look at our system and think about how dysfunctional it is with two houses of the congress and presidency but you consider
europe where you have 17 countries who are all jockeying for position. trying to set one policy that affects them all equally. it's not that simple over there. >> i keep hearing europe is cheap. >> it is cheap. that's the thing as investors we need to think about. if it's cheap now and gets cheaper. we want investors to don't maintain those allocations. be a little bit of a tough time for them to perform. but that tail wind should translate into better performance. >> you want to be overweight in u.s. market but because of the outperformance you want an internationally diverse portfolio. what's your hedge? >> one of the things we're doing taking our strong bet on the debt side. so we are under weight almost close to zero on international developed fix income. think about negative yields, weak currency prospects. we've come close to negating the
position on this completely and allows us to stay neutral on text side. >> you think the dollar remains strong and specifically against the euro because of the election uncertainty going on >> that plus the fed is raising rates. until the european central bank does more to act on some of the discussions they are having it's hard to see how the euro gets going. >> france is so interesting right now. we're at this moment where france could -- everybody is worried about marie le pen and she's a throat the euro. however if she loses the two other guys are way better than francois hollande . couldn't we have somebody in charge of france who is interested in growth and the things that actually make the country grow? >> that's a great point but the tricky part there and one of the thing i would point out, the currency has been transfixed and doing better because of some of the uncertainty. think about if do you have one of these more mainstream cane win, europe could gown more in
that scenario than if le pen wins. >> what about great britain. >> brexit will be triggered. you see the impacts because of the uncertainty. we'll be more positive on europe than tuck because you have so much country specific risk. >> thank you very much. >> thank you. a stock too small for the s&p 500 is having an ugly day. plus a big fight breaks out at a nascar race. we'll show you the video of grown men rolling around on the ground and punching each other. you don't want to miss that. ll . what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create,
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it's like having the power of a trading floor, wherever you are. it's your trade. e*trade time now for a special storm track edition of the good, the bad and ugly in today's trade. let's look at the good. amex foster wheeler the stock is soaring of a it was announced the company will be bought. that sends your stock up 11.29%. >> the bad frontier getting kicked out of the s&p 500. it's now about $2.52. today down about 2%. ugly day folks for gamestock
downgraded to market performed. she downgraded gamestop. off by 4%. it happened faster than the firm first thought. there you see gamestop. that's the good, the bad and ugly. about 50 million people in the northeast bracing for a monster storm, snowstorm later today and tomorrow. how are businesses preparing for it? morgan brennan is here with that story. >> hey gang. people are preparing for it. businesses and people in the new york area ahead of the snow and within. we have consumers stockpiling with lines at grocery stores and gas stations today. you can see that in this video. thousands of flights have been cancelled. amtrak says it will operate modified service tomorrow with no acela trains running between boston and new york and limited express service to d.c. utilities have crews running around the clock. coned has additional contractors on stand by. the good news until now an
unseasonably warm winter which means government has supply of salt and businesses haven't been impacted by lost sales. but this storm is coming late in the season. some of the traditional blizzard winners will take a hit. for example, home improvement. sales for the industry will fall 1.2 billion compared to the same week last year because consumers are not starting their spring planting this week. companies like home depot and lowe's don't have that winter inventory. restaurants are sales that never get recouped. apparel retailers. but there's a winner. that's natural gas. cold weather ahead of the storm means prices have jumped up about 5% over the past week. demand for natural gas is at a record. these price pops tend to be short-lived. we'll see. >> feel terrible i don't do any spring planting. >> i started planting last week.
>> indoors. >> pots. pot indoors. >> in pots. >> you want to tell us something, melissa. only legal in colorado. yesterday's nascar race was like a blast from the past because it involved a brawl. kyle busch went after johnny logano after the race. logano spun him on the last lap. logano said it wasn't intentional. car got loose. logano's pit crew stepped in. kyle busch swung at logano, missed and got taken down by logano's crew. the drivers should have been able to fight. too bad for kyle busch. six logano crew members on him. logano walked away. kyle busch got the worst of it. if they get in a fight let the drivers go. what did you guys think when you watched it live? i did watch it live. i knew it was going to happen. okay. there we go. whenever there's too much of something prices tend to fall. that is happening with oil.
crude oil fell below 48 a barrel earlier today. jackie d. has more. maybe not. jackie? going once. >> after the break. >> she's doing spring planting. we'll be back right after the break. ♪(music plays) ♪ heigh ho heigh ho ♪ ♪ heigh ho heigh ho it's off to work we go here's to all of you early risers, what's up man? go-getters, and should-be sleepers. from all of us at delta, because the ones who truly change the world, are the ones who can't wait to get out in it.
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hi, everybody. i'm sue herrera. two former penn state university administrators pleading guilty to misdeamnor child endangerment for their roles in the jerry sandusky child molestation case. tim curly and gary schultz were original lie charged with felonies. in france the trial of a man once considered the man's most wanted fugitive got under way today. he's a accused of the did l 1974 drugstore bombing that killed two and injured 34. he denied being behind the attack. a swear drought in somalia threatening further misery for many residents. the landscape is littered with dead and dying cattle. in a estimated 6 million people or about half of the population are in need of aid. some good news for people
with low credit scores. the three major credit firms will remove some tax lens and civil judgments data from credit reports starting in july. about 12 million consumers are expected to see a bump in credit scores as a result of that. that's the news up where date this hour. melissa, i'll send it back to you. about 90 minutes until the closing bell rings. let's gelt a check on the markets. dow struggling. nasdaq managing to stay in positive territory. thanks to chip names. intel and merck the biggest losers. oil market closing for the day. crude closing pretty much flat for the session. staying with energy and a new and different problem for the developing market record gasoline supplies. maybe that's why the price of gas is solo in new jersey these days. jackie is live in the gasoline capital of america, who knew it's seymour, new jersey. >> reporter: good afternoon to
you tyler. that's right. the perfect storm brewing to push crude oil prices lower. right? we know opec may not extend its cut. that's a problem for the market. we found out from the department of energy we have record crude oil vince. this is the straw that broke the camel's back. in february gasoline supplies hit a record the highest we've seen in 27 years that the eia has been keeping track. put all these factors together you see this market continue to go down. the problem here is that this is winter blended gas that's being stored. we're going to go into the summer driving season and we need that summer blend of gas. what will do with everything in storage. some are saying we'll export more. those exports are going up and that will help correct the market. others say no we have glut on our hands. a survey was out today saying gas prices are up only two cents. they are up 51 cents from a year ago. remember how low crude prices
were at this time last year. where do we go from here? a lot of wall street analysts thought we would be rebalanced going into the rest of the year and people were not expecting to see the price crack like this to see us under $ooh a barrel. could be good news for consumers. they could see their gas prices go down at a time when they should be going up. but it also could be a problem for energy stocks. not just big oil and remember we got our big dow components but also the refiners as well. this is something to watch. back to you. >> we're watching it. coming up, a rough week for oil. down 9% in the past week. let's bring in the managing director of rbc capital. why has volatility and on the down side primarily returned to the oil markets >> we have two problems. we have these record inventory builds in the u.s. on the other side what events
are working against the selloff is opec having strong message discipline. for most of this year they kept coming out saying we have this, compliance is great. it starts to break down. not only did the saudi oil minister say we look at data but we need to check compliance. >> he said that in our interview. he sort of -- what's the term threw shade at russia. do you part, russia. >> that's the problem. they want russia to do their part. russia is supposed to do 300,000. only did 120,000. russia said we'll get there by april. iraq is out there threatening to grow production the second half of the year. that bodes well for all over. >> don't we keep producing more in the united states. >> we keep producing. the saudis know the permean be a problem. now we have some wavering on the
saudi side which makes it a perfect storm. again for sentiment. >> the price goes where? >> our view is the fundamentals are not aster bill as they look. if you focus on u.s. data oh, my gosh we're awash in crude. we're seeing draws in other parts of the world. japanese data, we're seeing vin inventories come down. inventories come down in europe. rest of the world is rebound. u.s. is the last market to rebalance. >> what you said didn't get a lot of attention was the iraqi minister saying we can be at 5 million barrels. he threw it out in the middle of a panel. >> does anybody believe him? their disaster bureaucratically. >> iraq is an amazing story. you have all this fighting but iraq has managed to grow their production. second largest country in opec. look at their production numbers. people think 5 is a stretch.
but the iraqi oil minister put a microphone in him. if you had him here he would say we'll do 5 by the back of the year. i would say that same oil minister didn't want to take the opec deal in december and was told to do so by his prime minister. >> if the u.s. is the last place to rebalance does that mean the spread widens. >> you want to be constructive on brent not wti. we want to keep watching statements by the saudis where we are in terms of the u.s. numbers. sentiment could be -- >> how much oil is iraq producing. >> they are supposed to be producing around 350,000. they are about 447 right now. if they are going to do five in the back half of the year that's 500,000 barrel a day job. no way they will let them do that. >> for context, gulf war i we
predicted they would produce 12 a day, 12 million. there were times when we talked about iraq producing 12 million barrels a day. >> iraq is saying we'll go to 8 million. they have been remarkable. it's their come back story. >> thank you. the s&p 500 has rallied 2% in the past month. small cap stocks have taken a beating in the russell 2000. time to buy or sell. that's the sub jeskt our trading nation. that's coming up.
small cap stocks underperforming their bigger brethren. this is a big time buying opportunity or a reason to sell small caps. let's bring in our trading nation team. what do you think? they've been selling off a little bit in the short term. more to come or buying up? >> i think there could be more to come just until the fed announcement on wednesday. we usually see a little sort of risk off as we come to any of these big announcements or big dates. and also i think sentiment has changed slightly where people
thought we were going get these huge tax cuts. we haven't seen that. we've seen more information about health care. might be a little less positive sentiment about these companies and you may want to look at your large cap stocks for now. >> jonathan, from a technical perspective does the sort of sell or avoid the small cap stock theory. >> we take other side. it's and about rough start for small caps in march which historically is the best month of the year for small caps. averaged about 3% gain in the last 15 years. that creates the opportunity for the back half most. we're at some over sold levels when you look at a brett indicator, most oversold since january of 2016. and then you combine that with the fact, erin mentioned sentmen or positioning. if we look at something like the positioning of the russell 2000 futures. after the election it was one of the hottest trades.
everybody was buying small caps and had one of the biggest long net futures. that's completely reversed. we're now at a net short. bullish seasonality, oversold readings and positioning is a tail wind. we think you should be able to head higher on small caps at the end of the month. >> thank you very much. for more trading nation go to our website unless your internet connection down. pandora turning up the heat on apple and spotify. what it means for the streaming wars. three decades ago today microsoft went public. it's 30 years old. publicly traded it is. the highs and loss of the company. finding its way into the cloud. the stock is up 20% on the year. has this tech giant got its groove back? hence the music. we'll be right back. >> announcer: and now the latest
welcome back to "power lunch". pandora shares up 1%. unveiling it's highly-anticipated premium subscription service. it's an answer to spot if i and apple music. david faber spoke to them. >> 10, 11 years ago we launched internet radio. all the folks said the same thing. aol, apple had plaerjized radio products. we were the newcomer to the space. we built a much better product. here we are years later king of that category. we think we've seen this before. again we look at the subscription space and think no one has done it right. >> it's amazing to take a look at pandora's shares price. up 23%. there's a high shortage. this is one people were saying there's so much competition out there how can they survive.
probably a take over target. >> i liked his point about you go into a space where you think oh, all these big guys exist and you know they are going to dominate because of their size. because they can be on every single desk top in the country. they don't focus on it and becomes a great product. >> 30 years ago today microsoft made its debut. it soared 89% since then. what lies hide. josh lipton is in san francisco with that story. >> reporter: if you invested $1,000 in microsoft at the ipo price of $21 it would now be worth almost $900,000. not a bad gain especially for those early employees. in fact these are the first 11 employees of microsoft. you can see co-founder bill gates there in the front row now worth $87 billion according to forbes. also in that front row hiding behind that big beard and long
hair is co-founder paul allen now worth $20 billion. so how did this stock perform under microsoft's first three ceos? up 73,000% understand the 14 year reign of bill gates. roger kay of end point technology said for much of that period gates capitalized on the dominance of his operating system with microsoft launching several versions of windows. under steve ballmer different story. the stock dropped 31%. ballmer as well as gates who continued to work at microsoft as chief software architect are criticized for missing big trenz like social and mobile. but they prioritized. skeptics point to valuation concerns and they are worried about the company's legacy businesses tied to the pc namely
windows and office. but bulls like bernstein counter microsoft makes a lot of money from those frchs which it is modernizing. 69% of analysts rate microsoft a buy. a big uptick modernizing. 69% analysts rate microsoft a buy. a big uptick. >> josh lipton in san francisco. >> let's bring in alex zuko. the highest on the street. good to have you here, alex. you saw -- it's so interesting looking at the performance, huge growth obviously under bill gates. then ballmer gets in there and they struggle to find themselves. what's the next thing they're going to do. nadella now focused on the cloud. are we looking at a company that we all know from our desktop pcs is going to be a cloud computing company in the future? >> yeah, i think that it is and i think that the opportunity is still fairly nascent.
i think that microsoft really credits satya nadella has done rebirthing that company in the cloud world, both internally and externally the way they interact with customers. i think there's a tremendous opportunity as more enterprise work loads move to the cloud the things that you can do once they are there from an a.i. perspective, from an internet of things perspective, there's a tremendous opportunity to unlock. >> their cloud revenue hit 14 billion last quarter, up 49% year over year but, of course, the percentage growth is always big when you're working with smaller numbers. how much faster do you expect it to grow? when does it overtake the core bread and butter that we've known them for for the last 31 years. >> our model, we've got the cloud revenue growing about 30% for the next couple of years. we think that that -- you know, it's less about over taking and by the end of -- i think by
fiscal 19 we have it being 1/3 of total revenue the way we calculate it. we see that unlocking meaningful gross profit dollar growth and ultimately earnings growth. we have our $4 target in fiscal 19 because we do think that they've been investing in some of these initiatives over the last few years. that really unlocks in the out years. >> how do they fight off competition? everybody wants to be in the cloud whether it's amazon or apple or oracle or google? >> it's not like they have it to themselves. >> absolutely. i think where microsoft stands out is that it understands the enterprise better than most companies just having been there for a much longer period of time. it -- you know, it has the broadest suite of products from a full stack perspective on the infrastructure side, on the application side and with its consumer businesses i think it can bring some of that trend around consumerization of
software how you go from point and click to voice how you go from apps to smart apps. i think they've got the right -- they've changed the culture. they have products that are relevant and they have a vision for the future. i can't tell you how many cios have told me that microsoft gets our business and be it's really helping us go to the cloud. >> when you see a company like microsoft remake itself, alex, does that give you hope that ibm could remake itself as well? because that's what a lot of people are waiting for. >> you know, i can't -- it's hard for me to go one way or the other on some of the other bigger names that we don't cover, but i will tell you, i think where it starts, i keep going back to the culture point, it really starts with an understanding of internally how you structure your engineering, your sales and your service organizations for a completely different relationship with the customer than the ones that these companies have had in the past. and i think microsoft has excelled meaningfully better than other kind of legacy
vendors in that journey. >> thanks, alex. good to have you. made me think of when elephants can dance. remember lou gerstner, he transformed ibm once before. let's get to seema mody for a market flash. >> wynn resorts standing out. highest level up in nearly signatures months. a buy rating on the stock. the firm says wynn could gain meaningful market share in macao. they have started recovering after years of shrinking on the back of china's slowing economy and a crackdown on corruption. wynn resort shares have more than doubled since last january's multi-year lows. >> thanks very much. check please is next.
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former president barack obama had lunch with warren buffet over the week end. what do you think they talked about. >> where did they have lunch? >> i'm looking here. it's on our website. i believe it was in omaha. the meeting was not a fund-raiser. >> the president was getting some investment advice. >> conagra. >> he's going to get a ton of money for his book. 60 million bucks. >> don't put it to work in index funds. >> all right. so we talked a lot about the u.s. stock market. we talked about europe. we talked about it sod.
did you know the best performing stock market in the entire world. >> except for the super deep frontier markets is poland. up 14% year to date. >> so far this year in the two months? >> in the two months. done well, 14%. >> is that dollar adjusted? >> i don't know. i knew you were going to ask that. i was afraid. that's a slata of return. >> it's true. >> so bad. >> 14%. >> vlata? no? >> that's a car. >> that's a lata. >> the big deal of the day is intel 4 mobile i. there was some speculation when they announced a partnership. mobile ihas been the target of a lot of short sellers.
boy is that cobbling up in his face today. he takes full fault for that today. he has a big mia culpa. we'll be talking to andrew tonight. it is tough to be a short seller in a market that is going higher. call it mobile i. he's short tesla. we'll be asking him about all the shorts that are working and what it's like to make money. >> good for him coming on when he's wrong. >> exactly. >> takes -- >> yeah. yeah. >> it's tough to be short selling when your company gets -- your short gets bought out at a premium. big storm coming. brian and i are going home tonight. we are not taking the company up on its invitation to join people in some unmarked hotel. >> holland tunnel inn, baby. have you got your quarters? >> over/under. new york city, will there be more than 12 inches of central park? >> i don't know. you're the new yorkers. >> over. >> fewer.
>> 12. >> we have a bet. you're over, you're under. i'm under a foot of snow. you? >> where are you? >> under. 10 1/4 inches. >> all right. >> we'll see. thanks for watching "power lunch." >> got to stick with "closing bell." cbo on the health care bill. "closing bell" starts right now. ♪ ♪ welcome to the "closing bell", everybody. i'll kelly evans at the new york stock exchange. marky mark wahlberg who you're hearing from making a big deal on at&t. more after the bell. >> i'm pill frwill fred frost. intel making a big move into the self driving car space. $15 billion with mobile eye. drop more than 2%. we'll look at what the company needs to do to convince investors that it's a good