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tv   Power Lunch  CNBC  March 29, 2017 1:00pm-3:01pm EDT

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not until it stops going higher. >> numbers are going higher. they've got a good margin expansion story. >> josh? >> schwab, false breakdown, now rallying back. >> tempurpedic. >> unusual activity. thank you for watching. "power lunch" starts now. it sure does. i'm michelle caruso cabrera. cutting jobs, dropping fees, overhauling the way it manages money. man versus machine over at black rock. their big shift to computer generated management, what it signals for wall street and, better yet, is it going to help you make more money? junk equity, some investors think snap sets a bad precedent for shareholder rights. the call to get snap and other companies to choose to do the same thing banned from the benchmarks. and, yes, we're not kidding fitbi it t for cows. they take 10,000 steps a day the
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milk tastes better or something. the ways tech is disrupting the multibillion dollar ag industry and pretend i'm brian when i say this, i'm "udderly" insane "power lunch" starts right now. ♪ i pretended you were brian so well i rolled my eyes. let's take a look at the markets this hour. the dow clearly under pressure but the nasdaq higher once again, up for a fourth straight day and for the 12th time in 15 days helping the nasdaq. a big move for shares of that stock is hitting fresh interday record highs. check out some of the movers right now that we're tracking for you. sonic 5%. restoration hardware soaring about 13% on its earnings beat and optimistic forecast and dave and busters down 3% earnings beat but same store sales missed that mark. brian? >> i think they're a bunch of
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bull and you milked them for all they're worth. i'm brian sullivan. here is what else is happening this hour. boston fed president eric rosengren calling for four rate hikes. sales rebound iing to their highest level in nearly a year. the second highest level in over a decade. and toshiba's u.s. nuclear business westinghouse electric, you know the name, filing for chapter 11 bankruptcy protection. nuclear projects bogged down by delays and cost overruns. the company is straddled with about $10 billion in liabilities. ultimately, tyler, you reap what you "sow." >> gosh. he never disappoints. >> to the big story on wall street today and that is black rock laying off portfolio managers and taking a bigger step towards computer generated money management. leslie picker has the details. >> reporter: hey, guys, gone are the days of old-fashioned stock pickers and enter the machines. that may be the takeaway from
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black rock's plan to overhaul a big part of its active management strategy. black rock is taking traditional investing methods but fusing them with technology and data science and, in doing so, the firm will be cutting its fees in half. it's perhaps the most aggressive repudiation of the traditional stock picking by a major asset manager to date and a direct response from criticisms from clients across the industry about higher fees and underperformance among fundamental stock pickers. now u.s.-based active managed equity funds experienced record withdrawals last year according to reuters with much of the capital flowing into passive investments such as etfs and index funds. black rock is of course known for their etfs with more than $1 trillion in assets but active equity investing contributes 16% of the firm's revenue. the strategy impacts about $30 billion worth of black rock's assets. and as part of the revamp black
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rock is introducing what they call advantage products which give retail investors access to their quantitative investment team. this all means that 7 out of 53 active fund managers will be leaving their posts as a result according to a person with knowledge of the matter with dozens more employees expected to depart. guys? >> leslie, thank you very much. now a view from wall street with art hogan, chief market strat the gist at wunderlich securities. dom chu is also with us. gentlemen, welcome. doug, let me start with you. can you beat a machine? >> yeah. i think the best performance is generally when man and machine work together versus man alone or machine alone. >> can you do it -- can you beat a machine and do it cheaper than a machine? >> you can beat a machine after expenses, certainly. man and machine together will outperform over the long haul, and really this is a measure of the fact active management has underperformed and that's really what's driving the black rock.
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>> art, the idea is to cut costs and also boost performance. do you see it that way, and do you think they're right in doing this? >> tyler, obviously our industry is always evolving and one of the things if you want to attract investor dollars you need to offer value proposition and at the a lower price. black rock is finding that hybrid in between active and passive with the use of computers and machines. i think at the end of the day the argument really comes down to can active beat passive? that hasn't been the case for the last couple of years. we've been in ultra low interest rate environments so most business models work with the low cost of capital. interest rates go up, the business models don't work in a rising industry, an environment with higher cost of capital. active takes over here. >> here is what i don't understand, why don't i just buy an etf then? >> exactly. why don't you just buy an etf because in a market where correlations will be beating
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that again. >> i have all these choices and i can go into an e it t f or i could go into an actively managed fund that's actively managed by a computer. i don't quite understand what i'm getting if i do this. >> that's exactly what your choice is and that's offering an array of choice. the bulk of what black rock does is impassive. 60% of what they do is active and of that active they're making it a hybrid. it's not all human beings and a lot of machines. it's complicated. >> active just means not indexes. that's what we should be clear about in this conversation. active doesn't necessarily mean a guy picking a stock. it means you're not allocating according to a benchmark. >> i disagree with that. >> that's the technical -- >> no, i think -- >> i disagree with that, melissa. i disagree. >> that's fair. >> it's fair. the textbook definition of what people realize as passive or
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index investing is exact ly tha. you're only buying something that track as definable transparent index that doesn't actively engage in trading back and forth of stocks. active management is about whether or not a person can add outperformance by picking certain things over others. >> a person or a computer. >> whatever it is. >> but here is the thing about when we talk about this computer quantitative approach to investing, it's very much more -- i mean, predicting the markets is a fool's errand but those who do use history as a basis. quantitative managers are big history buffs. the way they pick their stocks is to go back and do something called a historical simulation otherwise known as a back test. they take these factors. they put them in a big soup. they figure out whether or not 20 years ago over the last 20 years if they repeated that same recipe it would have outperformed the market. that's the reason why when it comes to quantitative investing. >> don't a lot of them do that now? >> that's a little bit of
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driving with the rear-view mirror. >> it's 100%. >> and the cubs won the world series. >> you can back test letters, letters of the alphabet, pick stocks that way. one of the letters is bound to work. but i think from our standpoint and our take on this is active management actually can pay off when you get a much more volatility in the marketplace. right now we're at very historically low rolling volume tilts. and i think one of the things -- >> you say it's volatility -- you say it's volatility that gives the active manager the stock picker an edge. art says it's a rising interest rate environment that makes -- that changes business models and causes the weaker models to fall away. i've heard over the years lots of definitions -- lots of defenses for why you ought to have some money in active management. i think if you go back and you look at periods of volatility, if you do go back and look at history, even if you look at
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periods of volatility, of rising interest rates, i think the repeatability of outperformance by active managers isn't there. >> it's very hard -- persistence is not there. go ahead. you can go ahead and speak. >> no, i think the point we're missing here, tyler, is not that active over a period of time, hasn't been passive. it's the function of are things correlated now and is there a reason for that. if you can tie a causality to a lower interest rate environment where the weaker business models can still be profitable, i think that volatility that doug is talking about is correlations breaking down. everything can't move together or else there is no stock pick. >> they're going to take people out of their business model, costs out of their business model, attract more money, i would think, because their costs will be lower and maybe because their costs are lower their ability to outperform will be higher, right? that's one thing -- >> actually they're taking a big
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hit to revenues initially. >> yes. >> this switch from active to quantitative. >> not that big. $30 million. >> not black rock, right? the performance for the investor is better because cost is lower. the stock itself may suffer because they're going to have fewer revenues overall for the company. >> get in here, dom. >> the point of this is active computer management different than active fundamental person management in this point. it's man versus machine. black rock is taking the view they're going to take their portfolios they are able to trade around and in and out of and instead of having a team, an army of analysts and portfolio managers picking this out they'll have data scientists go back and look at the statistics, look at the numbers and see generally what has outperformed from a factor-based standpoint over time and that's the way they're going to pick stocks going forward. it's this he haevolution of
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technology as opposed to just this idea that active versus passive is the basis. >> i think it's like a driverless car. you're going to have the technology here to pick stocks. you already have it. there will be a human being looking over it. there will be somebody there. >> we'll sit here while max talks. >> it will be man with machine. >> i agree with you, doug. >> we'll see. >> what i agree with doesn't matter. >> thanks, guys. thanks, art and doug. we talked about lower employment. what about fewer official stock pickers, we saw mike mayo and his team get fired at csla, they got rid of the research department. you need fewer research a analysts, right? if you have less and less stock pickers, you need less and less people. >> i would say this is a pendulum like many things in the market that's swinging one way. you have a lot of people going straight up in index investing. if that stays that way, there will be opportunities when herds develop because it's a herd mentality. you are going the same way everybody else is going. >> and it hides bad companies.
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crud companies will hide. >> we reached out to black rock. they didn't want to talk. >> middle of the pendulum, active managers underperform. that drove a flow of funds into etfs, total passive investment and this is the middle road where the fees are lower, you have something in between. >> i would say this. a lot of financial advisers will say since the financial crisis we've been in the bull market and everybody does well in the bull market. when things go down. >> another point, i promise we'll leave after this -- >> six minutes over. >> i promise we'll leave after this. a lot of investment managers, maybe most of them who are serving retail customers are driving money into etfs. >> themselves. >> not into individual stocks. >> so why pay them? >> that's what they're doing. they're putting that money into etfs and other passive -- we debate the definition of passive is but other passive products. >> thanks. >> i'm quiet now. a news alert right now.
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seven-year notes up for auction. to sue herera with the latest. $28 billion specifically in seven-year notes. the yield at 2.15%. the bid to cover ratio stronger. as a matter of fact the best demands since november was 2.56 versus the recent average of 2.51. indirect bids 71.1 percent. and direct bids 8.4%. brian, back to you. >> sue, thank you. still ahead from robo financial advisers to robots working the farm and cows wearing fitbits. yes. disrupting agriculture. get your steps in. but first forget disappearing pictures. disappearing shareholder rights. why some are saying snap chat is just terrible for investors. stick around. the mercedes-benz of tomorrow will transform
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for a free quote today. liberty stands with you™. liberty mutual insurance. welcome back to power lunch. i'm steve liesman with more breaking news. fed president john williams say ing it should not rule out more than three rate hikes this year, three additional rate hikes this
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year. some slowing of growth, he says, could be needed. the fed should work, he says, towards a, quote, goldilocks economy that means on focusing on sustaining the recovery. he says the recovery has already been sustained. the main thing on gross is from the supply side. and those supply side problems are largely out of the fed's control. williams is the third speaker today. let's look at what else has been said. four rate hikes this year are the number that he actually wants. and out of chicago, fiscal policies could mean more rate hikes. but stan fischer yesterday in an interview with cnbc, the vice chair, said two more rate hikes seem about right and the market took a very dovish sense from that. a lot of fed speak today.
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>> steve, thank you. steve liesman. snap has been derided by corporate governance for not giving a say to shareholders in terms of shareholder rights. what if shareholders were forced to buy the company because snap is included in benchmarks like the s&p 500? with us is ken birch with the council of institutional investors. this is not an issue at this point. snap is not up for inclusion for at least another 10, 11, even 12 months at this point. why are you sounding the alarm? >> it won't be up for the s&p 500 for a while. it will be up for consideration for other indices sooner. it's something we're thinking about and considering.
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with the s&p 500, and it will take a while, but even with that it would be good to set the ground rules given snap with the no vote ipo was a breakthrough and a troubling breakthrough from our standpoint. >> according to s&p bylaws, if you call it that, rules for inclusion, there is nothing to say anything about a company with no shareholder rights, correct? you're looking to change this for other companies in the future? >> calling into question this type of voting structure but there are some nonvoting classes right now. all the companies that have them have a voting shares that are out there in the public. we think tess important to
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clarify now. >> a company that has no rights for any shareholders. dual class companies. now we wonder, okay, this is the first time that index is having to consider this question, correct? >> that's correct. the first time since the 1920s. the indexes weren't in business at that point. >> the issue is that you can say, well, if you don't like the fact the company doesn't give shareholder rights, don't buy the company. but if you buy an index like the s&p 500 then you're stuck buying that. that's what your issue? >> exactly right. we don't think an equity, like voting rights, is an equity. it needs to be a duck not just labelled a duck. >> why is this different from a dual class company that might give you 0.1 or of a share? >> there's no accountability other than perhaps through litigation you could argue for
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the holders managing the company for the next however many years while they're alive. >> why did wall street take it public? i'm sorry to jump in but we have to. why did wall street take it public? oh, this is a terrible corporate governance structure. don't worry. >> because they pay fees. >> that's the real reason. >> it will work in the short term. speculative purposes and this is a promising ipo, a high risk but promising ipo. and so the longer term factors -- >> so, to you, ownership without voting rights is not owner shsh at all? >> right. that's right. >> ken, thank you. we appreciate it. >> okay, thank you. >> ken birch, council for institutional investors. cnbc's parent company nbc universal is an investor in snap. >> do we have any voting rights? >> cnbc? >> no. >> oh, in snap? >> i don't think so. still ahead, moving toward it technology. is this yours?
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>> not my style. >> a look at how tech is disrupting agriculture next. >> those are pretty cows, aren't they? 't they? centurylink to keep their global campus connected. and why a pro football team chose us to deliver fiber-enabled broadband to more than 65,000 fans. and why a leading car brand counts on us to keep their dealer network streamlined and nimble. businesses count on communication, and communication counts on centurylink. please repeat the objective. ♪ thrivent mutual funds. managed by humans, not robots. before investing, carefully read and consider
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welcome back, everybody. drones and a fitbit for cows, yes. technology is disrupting america's farmlands in a major way. aditi roy is live in california with more. aditi? >> reporter: that's right, tyler. crazy stuff going on here at the
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worlding ary agri-tech. it promises to disrupt dirt by allowing soil to hold on to more nutrients. they are raising $30 million in the last 18 months alone. it includes drone deployment. receiving funding and scale ventures and makes software for drones to map out fields. livestock another area being disrupted. both call themselves fitbit for cows saying they track the animal's activity and then backed by coastal ventures and the arms of both monsanto using cameras and computers to harvest crops more effectively. lower tech costs have sparked the boom.
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>> nowadays a laptop computer, someone can access the same as monsana. how quickly and nimbly they can move. >> reporter: $284 million was raised in 2016 and 2017 is tracking to be yet another record breaking year. >> how do you make a cow more productive? how do you increase cow productivity? >> milk it for all it's worth. >> reporter: one of the things they track it before they become life threatening. >> i see. >> reporter: so they help save the cows. >> i see, okay. so cows -- more cows live hence more milk. >> a fitter cow. >> thanks, aditi. coming up, he is one of the most outspoken authorities on
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welcome back to "power lunch." shares of mylan. the company saying the fda gave it a rejection of its application for one of the biggest catalysts for mylan. you are seeing mylan down 1.7%. we were expecting a decision on this yesterday so there's a lot of speculation about what might be going on because we hadn't heard anything yet from the fda or mylan down. glaxo up as it won't have this competition at least right now. here is what's happening this hour, everybody. bill baroni, a former aide to chris christie was sentenced to 500 hours of community service for his role in the george
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washington bridge scandal. bridget kelly will be sentenced later today. both had asked for probation. hundreds of people taking part in a march in a vigil in london today a week after the terrorist attack which left four people dead. police officers and civilians joined together on the bridge to pay tribute to the victims. and first lady melania trump awarded courage awards. in her remarks she celebrated their bravery saying the entire world must join their fight. >> we must declare that the era of allowing the brutality against women and children is over while affirming the time for empowering women around the world is now. >> and that is the news update this hour. i will send it back to you on the desk. >> all right, thanks very much, sue. our next guest sounding the alarm that is way past due to break the gridlock in washington. in an op-ed on former
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comptroller walker says there's support in congress for pro-growth tax reform that will make our complex system simpler, fairer, more competitive, but, once again, the folks in d.c. just can't seem to get out of their own way. joining us now is the aforementioned david walker. good to see you with your nice patriotic tie. >> thank you, michelle. good to see you again, too. >> how do you feel about corporate tax reform in the wake of what happened with health care reform? are you optimistic it will still happen? give us what you think the outcome is here. >> there's a lot more bipartisan support for business tax reform for infrastructure reform than there was for repealing and replacing the affordable care act. there is an opportunity to make progress here, but the president will have to reach across the aisle and look to make things happen. there's a new caucus called the problem solver's caucus which is supported by a group that i helped found called no labels
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which has already reached out to the president, the treasury secretary saying they would like to work with them to try to do something in this area. lord knows we need it. >> what do you think of representative speak er ryan's plan that's been out there and caused so much controversy with the border adjustment tax. do you like that plan or do you have a separate plan? >> i think the border adjustment tax will have some difficulty especially in the senate. although i do think you have to keep in mind that one of the strategies here may be to try to do some aspects of tax reform as well as infrastructure reform and potentially even health care reform as part of the budget reconciliation process that only allows 20 hours of debate in the senate and cannot be filibustered. >> go ahead. >> david, did the president blow it by going after health care first? >> well, i think, in my view, it would have been better to go after tax reform and
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infrastructure reform first because there's more bipartisan support. at the same time in time the president campaigned that he wanted to repeal and replace the affordable care act as one of his top priorities. the republicans campaigned on that. so i understand why he did what he did, but i think he may be second-guessing it now. again, it's not over yet. it's not over. >> no, no, no. david, do you really see -- what is your evidence there may be more bipartisan support for tax reform than for several other initiatives here? of the votes i've looked at lately, practically all of them are straight party line, maybe with one defector. those are votes in committee. those are votes on the floor of the house. those are votes on the senate, 50-48, 215-205. they're party line pretty much. >> but we haven't had a vote on tax reform. we haven't had a vote on infrastructure investment. we'll see what happens. the fact of the matter is that
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there are people who have spoken out on both sides of the aisle with regard to the need for comprehensive tax reform especially business tax reform. we're clearly not competitive in that regard. in addition to that, there's been bipartisan support for infrastructure. i go back to what i just said, the new problem solvers caucus has already reached out in writing. they've had a meeting with the treasury secretary. this is a new dynamic that has not existed before. >> do they outnumber the freedom caucus? >> they do. >> okay. because that's the big issue, right? if they dig in its heels will we have issues about funding the budget, government shutdowns at this point? >> they outnumber the freedom caucus and they're also bipartisan. >> how many are there? >> close to 40 right now and growing. >> okay. the freedom caucus is in the 20s depending on how you count it. >> so really you think the lack of bipartisanship that i was referring to is particular to the issues not to something --
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in other words to the issue whether it's environmental regulation or whatever it is, it's particular to those issues and not to -- and not to tax reform but, you know, you're much more schooled in this than i am that saying i am in theory in favor of tax reform is one thing but then actually agreeing to the provisions of a bill that is being pushed by the other side is totally another. >> as has been said many times, the devil is in the details. we haven't had comprehensive tax reform since 1986. we may not get something as x comprehensive as that all in one fell swoop. it may have to come in installments. they may decide that they want to do something on the business side first. and then ultimately try to do something on the individual side. the business side is going to cost money on the individual side you can do that in a way that's revenue neutral. by the way, they were looking to be able to save some money through the american health care
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act, $150 billion. now they'll have to figure out how to make that up. >> will you be comfortable if they come out with something that raises the deficit? >> we need to focus on debt to gdp. it's too high. we have to have an innovative plan. >> that says you don't care if they come up with something that contributes to the deficit. >> i want to focus on the ratio. we have to get public debt down to 60% of gdp by 2035. it can be done. but doing nothing is not an option. >> the economy would have to grow faster. >> and you can't grow your way out of the problem. there's a four-letter word, math. >> thank you, david walker. >> you're welcome. >> and your nice tie. >> thank you. >> it is very nice. all right, on deck, four big doses of opportunity just for you including why one big firm thinks dunkin' donuts facing a
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great big hole in its business. "street talk" is next. every time somebody thinks amazon is overpriced, it just keeps going higher. one analyst says that may not be over. what amazon may do ahead you may find incredible. stick around.
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remember here at ally, nothing stops us from doing right by our customers. who's with me? we're like a basketball team here at ally. if a basketball team had over 7... i'm in. 7,000 players. our plays are a little unorthodox. but to beat the big boys, you need smarter ways to save people money. we know what you want from a financial company and we'll stop at... nothing to make sure you get it. one, two... and we mean nothing. ♪ ♪ and we mean nothing. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor,
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to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential it is time now for street talk. recommendations on the stocks that we think you need to know about. >> cyber security firm getting an upgrade, the analyst saying he's hearing more and more often in conversations along with palo alto. they have mostly worked through sales force restructuring, bigger deals. price target, $50 and, by the way, this is a fresh 50-week high for the stock. >> the second stock, dunkin brands, parent of dunkin' donuts, goldman sachs cutting it to a sell. sales have big down side risk and cut estimates partly because of the weather but increased
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competition from mcdonald's. they say store growth may be at risk. a $47 target on dunkin brands. >> speaking of foot traffic, sketchers, getting the down grade, susquehanna. they face ongoing challenges. no longer expects significant revenue acceleration in the unit. to athletic footwear but few of the dollars appear to be going to sketchers. >> it's not working apparently. the fourth stock is sun trust upgrading from a buy to a hold. the analyst thinks is likely the next two years. boosts etf estimates, says multiples are higher than management and management does not have the track record of a
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model company but the management is, quote, cut from the same cloth, so they bump the price target to 67 from 56. it gives it just over 10% upside from here. all right, and because we love you so much, america, we are throwing in a one-time bonus free talk just for you. that stock is because despite all the naysayers, shares of the seattle-based startup hitting yet another all-time high. let's bring in cantor fitzgerald. 15% more upside from here. what are the one or two key parts of your thesis that is so bullish on amazon? >> one is what's happening in the retail industry at large and the other amazon in particular. for retail you know that over the last 6 to 9 months we've had over 1,000 store closings and across the whole country and
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different verticals in particular when you look at amazon they've been very good at launching a lot of house brands in things like apparel and electronics. so our thesis is as you have billions and billions of dollars and we estimate moving out of these or lost revenue opportunities from these stores amazon will end up getting a big chunk of that. we think they're going to get 20% of the lost revenues from these store closings in 2017, about 40% in 2018, and over time even more, and that's what drove our increase in price target and revenue estimates. >> part of this also that works nicely with the thesis amazon's private label, as you pointed out. you're projecting a whopping ten times increase by 2022 in revenues for private label? >> exactly. but even a $20 billion or $25 billion in private label revenue by amazon, today we think
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private label is $2 billion, $2.5 billion. you look at a costco, private label is about 25%. you look at kohl's, about 48%. for amazon revenues driven by private label i think is pretty achievable. >> youssef, raising your price target on amazon made a lot of bulls happy today. thank you for joining us. appreciate it. >> thank you, guys. >> let's get to dom chu. >> brian, shares of cyber security stock fortinet. analysts upgraded the stock to an outperform from a prior neutral and raising the price target to $50 from a prior $58. the team says they have made progress restructuring and it could benefit as it moves up market. shares up more than 30% just over the past 12 months.
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one of the stocks beat up over the last couple of years showing life today. back to you. >> thank you very much, dom. flipping homes like it's 2006. is that a good or a bad thing? we will ask the star of the newest prime time program "the deed." thcommand rformance les event is here. experiencexciting offers on our most elevated suvsver. get up to $2,5 customecash on selec2017 models for these terms. experience a azing at your les dealer. hth bad boy is a mobile trading des
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welcome back, everybody. we're having a good conversation. i'm sorry you didn't hear it. builders fear that president trump's immigration policies could keep those people out. live in denver with that story. hi, di. >> reporter: when we first brought our cameras out to this site about half the workers here just stopped in their tracks not because they were all illegal but they were all very nervous. denver is undergoing a severe housing shortage, and builders like gene myers on this site which is still within the denver city limits say they could be putting up 50% more houses if they had the hands to do it. >> let's just be honest. the backbone of the industry in
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denver is hispanic labor. >> reporter: because americans won't do the work. >> exactly right. sometimes i'm confused about this concern about immigrants taking jobs away from americans. >> reporter: now gene has been working with juan, a mexican immigrant, for over a decade. juan tells us despite the fact he's a citizen, he's afraid he could still be deported. he also says many of his construction worker friends are already heading back to mexico. >> some people that i know they are even getting ready to leave like buying a piece of property out there or building a house out there if they don't have one because they're afraid they might get deported or something. they're getting ready to go back. >> reporter: now there's such strong demand out here and so few houses that the prices are going up. we saw denver home prices up nearly 10% year over year and that's the hottest market in the
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nation, second only to seattle. back to you guys. >> two questions. i don't mean to be naive but why does a guy like gene, who is a u.s. citizen and is working clearly making a nice living, why is he afraid of being deported? >> reporter: i asked him the very same question and his answer was the laws keep changing. he doesn't trust anything. he says his friends don't either. whether they have their green cards or are citizens or not they think basically anything can change under the trump administration. >> all right. and, second, if there's so much demand for houses out there, why not build more that are cheaper? >> reporter: because the builders can't afford it. i will ask alex to pan right over there. if you look over to the left you'll see big piles of lumber. that lumber is now 30% more expensive than it was barely three months ago because of new taxes and trouble with canada. if we see more border adjustment taxes you'll see prices on cement, the prices on all of those products coming from
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overseas get even higher. gene myers, the builder i was talking to, says with the cost of labor rising, double the wages for labor plus that higher cost for materials, they just can't build those low-practiced homes we need so much. >> diana, thank you so much. why don't we stay on real estate and our latest episode of home flipping show "the deed" has chicago-based guru who handles over a billion dollars of real estate deals every year taking on another tough partner. as we see here emotions can run high. >> i don't know what to tell you. i don't know how to measure windows. >> when the deal fails, it goes into foreclosure, do they call the guy who measures the windows? >> of course not. >> i'm angry and frustrated. if this was 20 years ago, things would have gotten ugly. screaming won't get the job finished. what i am going to do is take action. i don't have faith in you as a project manager, right, and you
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should know that's not your profession going forward. it shouldn't be. so you are bar red from construction. >> wow. let's bring in the host of "the deed" of conlin and company. don't give away the show, shawn, but what happened when you told her that you're barred from construction? >> i mean -- >> did she say, it's my house? >> no, she's wonderful. she just came back from vacation. >> but she can't measure a window. >> listen, she's probably right if she gets somebody else to do it. she learned a lot, let's say that. i think it was a baptism by fire. she should have been doing and paying more attention. >> you discover how emotional all of this is. is it the same with house flipping? >> oh, yeah, and i think it might be even scarier in some ways because you'll see some of the people have put their life savings into a flip assuming it's easy and obviously it's not
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easy. if anything can go wrong you apply murphy's law to home flipping. if it can go wrong it will. and it does. >> the choices about finishes they make as opposed to what the market will bear. >> let's say you have a penchant for gold, it doesn't work everywhere. >> i bought a flipped house, the house i live in now. but the one thing i did not do, i did not go and check whether all of the flip work was done according to code, whether all of the permits were secured, whether everything was done the way the township -- >> uh-oh. >> i don't want to know. >> come over to my house. >> the martini shaped bathtub was not -- a little weak at the base. how stupid was i? >> it could potentially become a concern. let's look at the glass half full. >> i want the full glass. >> fair enough. let me give you the bad news. when you go to sell, "a," obviously you've pointed it out on television so i'm not sure --
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>> how smart that was. >> you could have had a comma so you may not have meant that. the buyer should get an inspector and make sure everything is to code. what were you thinking? >> i am such an idiot. >> can you make money flipping homes when interest rates are high or low, any market, or do you have to have a certain market? >> obviously much easier in a market with lower interest rates, but the thing you'll see is still the one way for an average person in america to actually maybe make a fortune. we talk about-face book and i repeat myself on this, the odds of any of us doing that are better than getting hit by a meteorite. >> i love chicago. it's better than new york. chicago is better than new york. >> it's a good city. >> however, they have lost 21,000 people, a city on the
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population decline. how much harder is it to make money in a declining market than in a phoenix where everybody is moving? >> obvious ly it's amazing. anecdotally while they are the statistics and facts, the center of chicago is incredibly vibrant. there's a major tech industry. >> that whole randolph thing. >> and that's a great example of pioneers get shot in the back. i was there too early so i didn't make real money in the neighborhood. there's a ton of people moving back into the center of the city, young people to work at corporations and tech companies. so that belies what's going on. >> can you flip homes when you have a real job or should it be your full-time job? >> it should be your full-time job. but, again, it is the one where you can still make a fortune and most fortunes in this country are still built on real estate. >> i caught the you on "squawk box" this morning. i agree with you 100% wholeheartedly, but you had said when you buy a home, you buy a
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home and it's not an investment. don't look at it as an investment. i've always looked as my home as an investment and traded up. why? >> millennials particularly are now coming back into the market and everybody had forgotten the beauty of owning your own home is when you go home and look at the burgundy shaped bathtub you have in your home, it's your home. there is a feeling, an emotional attachment to home. dollars and cents are important but a home is a home. a flip is business. they're two different things. >> well, we enjoyed having you on and can't wait to see you show. >> tonight at 10:00 on cnbc. thank you. >> good pitch man. all right, for sale, your private internet browsing history. what it means for you and for internet providers next. yes?
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ease repeat the objective. vent mutual funds. managed by hums, not robots beforenvesting, carefully read a consider fund objectives, risks, charges and expees
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♪ welcome to the second hour of "power lunch." i'm brian sullivan. two hours until the closing bell. we are asking, is a machine
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coming for your job? another big wall street firm turning more to rebotts. are any industries safe from automation? plus, if you own this biotech stock, take your family to sizzler tonight. that stock up 20%. it does look like brexit is really going to happen. we talk about what may happen to your money as well. a check on the markets right now because we are sitting at session highs for the s&p and nass tack. gaining about 0.1%. nasdaq higher by about 20 points. two big tech stocks lifting those indices. deutsche bank cutting the stock to a sell lowering the target to $100 a share. all right, black rock's big move is getting a lot of attention today. automation has been cutting jobs for years. bob pisani is live on the floor that used to be a lot more crowded when he started down
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there. >> reporter: oh, yeah. that's right. see this floor behind me? in 1997, michelle, when i first came here there were 5,000 people on the floor of the new york stock exchange. today about 450. this is all a direct result of technology. this illustrates an important point. there is a technical arms race going on among the asset managers and the winner is the average investor. trading platt porms this was all about the ability to create computer programs that were able to trade stocks at intervals far faster than humans could. for black rock and the asset managers the ability to create programs out of decades old investment methodologies. call it value investing, momentum investing, i don't care. thanks to advances in big data andalytics these styles can be put into algorithms and like a lot of the nyc traders have gone away so a lot of the active managers are going to go away. the problem, of course, these funds generate big fees so the trend has been a problem for firms that are associated with
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active management. look at the stocks of these companies suffered so far this year. so where is it all going? they're still here. there's a small core of people. it's not going to disappear but it will not get any bigger and that will likely happen to stock pickers in ten years they're not going to be gone but there will be fewer of them around and this is the march of technology. guys, back to you. >> bob. bob, thank you very much. one of the reasons that many are concerned about the rise of the robots that machines are getting smarter. it is not just assembly line or manufacturing jobs at risk. computers are now learning. steve liesman is here we think -- >> yeah, it's me. we're calling this thing look out above because the machines are getting smarter. little doubt that they're moving up the thinking curve to mix a couple metaphors, moving up the spinal cord from the less complicated to the brain function
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functions. here is a recent survey by mit's initiative on the digital economy done by our friend mcafee. when certain milestones will be achieved by artificial intelligence and they are maybe too close for comfort for some of the folks in those jobs that could potential ly be replaced. take a look here. 2026 is a time when these experts think that machines will interpret most medical images. 2028 you will be sending dots, zeros and ones when they will direct the most air traffic. 2032 they'll perform 50% of managerial jobs at fortune 500 companies. and in 2036 you'll go under the knife from the terminate thor. they'll perform the majority of surgeries. most economists -- more are beginning to change their attitudes. it recent studies have suggested robots can reduce both jobs and reduce pay. you are stunned. speechless. >> why? listen, it if we still have
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women changing the phone cords when it comes to telephones, every single person in the country or the world would have to be flipping the phone cords. you free up labor to do other things. >> the nature of the technical innovation. one example used often by economists is the idea of giving a man a jackhammer. the man is still needed to operate the jackhammer. it increases the jack ham earp's efficiency -- i'm sorry, the worker's efficiency and productivity. these new innovations are replacing workers so that you don't necessarily need the man to hold the jackhammer. an old joke, the factory of the future will have a man and a dog in it, right. the man is there to feed the dog and the dog is there to make sure the man doesn't touch anything. so that's where we think we're going. when these new innovations come along and they replace workers -- >> that happened on farms, right? it replaced workers. >> it did. it did. >> that's replacing -- that's replacing a physical thing
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versus just replicating ideas. >> yeah. >> it will be easier to steal more jobs than the physical thing because the physical thing just moves on. as i understand -- that's what the nber paper -- >> the paper is the one everybody is talking about but there are others, even our next guest here -- >> look at you. >> i'm helping the show along here. >> steve, stay right there. >> artificial ly intelligent -- >> artificial something. >> so are robots a threat to wall street jobs and jobs overall? rise of the robots, author. martin, directly address the point that michelle just made. i mean, she makes a good point. history has said we always panic about technology stealing jobs. the blacksmith got a job at the ford plant and that maybe everything we think will be lost will just be gained somewhere else. history says that is true. won't it? >> well, that's the question.
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the question is, is this time different? i think it is and really for two reasons. one is the machines are now really beginning to think and they're encroaching on really that fundamental quality that so far has allowed us to stay ahead of technology, our ability to learn and adapt. that's the reason we're not unemployed so far, that we've remained relevant. machines are moving into that space. and the other thing is that artificial intelligence is going to be like a utility, like electricity. it will be everywhere. everything is going to rely on ai in the same way that everything now relies on electricity and that means it will be just enormously disruptive and will scale across everything. >> to get at the issue, i tried to explain it not to the satisfaction of michelle, and i'm sorry about that, but the idea there's something different about this transformation and the current technology compared to, say, when we went from -- when we started to mechanize industry. >> what happened in agriculture
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that was a big disruption, millions of jobs were lost. there was the whole rest of the economy out there to absorb those workers so people moved from agriculture, to manufacturing and then later on that automated and they moved to the service sector. now we have this accelerating thinking technology that will scale across everything simultaneously. i mean, it will impact every sector of the economy and it will really take on cognitive capability. it's replacing people's ability to think and to make decisions and to learn to do things. >> what has always happened is all that freed-up labor becomes the impetus to do something else. what wasn't possible before, what wasn't affordable before becomes affordable. >> if i can add to that the idea that you drive down prices and that frees up money to pay for things. i will tell you, and i don't want to you fall off your chair on this, the thinking has gotten
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so advanced on this notion of losing jobs to productivity -- to technology that there's talk about a guaranteed income. you've heard this. >> don't get brian started. >> don't bring me into this. >> let's just not -- i'm just telling you that's what the economists are thinking. >> where do the people go who are displaced? what do they do? >> that's the question. >> do they sit at home? >> in the long run i think we probably will need something like guaranteed income or universal income because we're going to have a lot of people left behind and, you know, you can look at our political environment right now and we already have that. we already -- >> don't we already? >> and that's a big part of the reason that donald trump is in the white house. >> an economy that doesn't create new industries, new areas. 20 years ago we probably wouldn't have imagined an internet industry that would have absorbed jobs from whatever else that was going out of the way. right?
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>> the four people who used to print the phone book, what do they do? >> there's nothing new created from the freeing up of labor or even education because that's going to be less expensive. >> if i could just tell you there's a good reason for donald trump to be elected because one of the things if you free up the economy for the creation of small business, free up capital, they could have been stymied, people moving in and, by the way, another aspect critical is job retraining and that's a negative side i think of some of the president's proposals, the idea of ending funding for some of those trends. >> at the federal level, steve, we've talked about this. retraining has to happen but some bureaucrat at the federal level decides what's better, go ahead. >> no, you provide funding for people to make their own decisions. >> martin, do you want to weigh in? >> retraining is important. i think it probably is most appropriate at the level of community colleges where it's going to be effective.
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but i also think it's not going to be enough. one of the messages from what happened at black rock is we're talking about skilled professionals. this is not people that have low levels of education and low skills. these are professionals and you're seeing an impact on lawyers and accountants, on financial analysts. >> automated press releases based on whatever algorithm they've got. >> that's already happening. we can't educate ourselves out of this. in the longer run we're going to need something out of the box. >> there is a possibility that the technology can actually help and enhance our abilities. i mean, neurolace, an interface between the brain and computers could potentially unleash whole new levels -- >> having an argument about the short run to take -- there could be an argument about the short run, medium and long term
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effects. over time all these people may find new jobs. there could be very sharp, acute short run and medium run effects of job losses. >> agreed. >> thank you very much. automation along with trade issues have been blamed for eliminating manufacturing jobs in this country. joining us is marcy kaptur of ohio, a democrat, who wants to work with president trump on bringing steel jobs back to her state. good to have you with us. >> a pleasure to be with you. >> i hope you heard the preceding conversation. if you didn't, it was about the job replacing potential of automation, of artificial intelligence, and so while we may be able to address trade unfairnesses -- >> and they are vast. >> trade imbalances, in the long
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run which is the bigger threat to jobs in the steel industry or the coal industry? isn't it automation and not trade? >> i want to talk about the steel industry because it's being battered in my part of the kcountry because of chinese and korean imports. they have been manufacturing in a nonmarket economy system and creating vast oversupply of hundreds of millions of tons of steel and then dumping it in this country so it's not really a fair system when that happens. it's not capitalism as we know it. it's really state driven economies that are doing this. and two plants, u.s. steel and republic, have modernized their production facilities. we are very used to automation. there are 15 times fewer employees in these companies -- >> exactly. >> than before. but you still have to take -- you have to make something. it's just not an electronic trade. you have to reduce a pipe or a sheet as a result of what you
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do. we come from a participate of the country where we blend strategic metals. they don't do that in your part of the country. we understand a lot about manufacturing. we have a lot of automation. we have a lot of artificial intelligence and it's very important to what we do. but what isn't right is when we've done all these things and our workers have skilled up, operating machines that, frankly, i couldn't run and actually making those machines. someone has to do that. but then when you see chinese and korean steel dumped into your market and the government doesn't respond and use the powers that it has and you are told your pink slip by next june, that is not a good picture. it's unfair. >> you may be quite right. we may not know how to blend strategic metals in new jersey but we have the housewives of new jersey, representative. and that's something you don't have. >> we know. >> bless your heart. let me come back to something on
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steel and your position which is that we have allowed countries like china and south korea to dump into our markets. i am sure there are rules and laws -- >> there are. >> that forbid that. why haven't they been enforced? >> that's the question. that's why donald trump carried ohio, because he talked about jobs and trade and people out there, that is an electric issue because people understand what's happened to our part of the united states of america. >> so do you agree with president trump's initiatives on trade and what he wants to do? >> well, we're asking him to enact, to do some of the things that he said. he can initiate, self-initiate a dumping case. he can actually put a quota on the amount of this steel that can come in and give our industries a chance to recover. we don't have to accept this as our fate. there are tools that can be used in order to make sure it's a fair market and that no company is dealt with unfairly.
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i can tell you lots of stories about u.s. companies that have tried to do business in china and they're not paid for their work. >> congresswoman -- >> we operate by a rule of law, and we want to continue to do that. >> sorry to jump in, just time is short. you are from ohio and you made a lot of great points. i spent election day in ohio and generally. the morning of the election i turned to my producer and i said, this is before -- i said donald trump will be the next president of the united states, because i had spent a lot of time in your state and wisconsin. i saw firsthand how the democrats had lost the working man and the working woman. >> they didn't measure up. >> do you think your party can get them back or are they lost for a number election cycles because your party -- michelle, you might want to jump in on this -- has become the paerptrt the elite, coastal professor. >> i'm not one of those people. >> i know but you get my point. >> we have to work together, both republicans, democrats,
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independents. it's hurt too many people and it's too unfair to companies that have modernized, have done what you talked about, reinvested, automated, put in robots. now we have to build those robots but that's a whole set of jobs right there. but when you've done all those things and then you see another company being predatory in your marketplace, now that's wrong and, unfortunately, because we're a country litigous we need a turnaround. ronald reagan crea. we opened the market again. in this particular industry with what's going on we need that kind of thinking. >> all right. congressman, i enjoyed the conversation. thank you for being with us today. marcy kaptur of hiohio. >> here is what's coming up on "power lunch." congress passing a bill on internet privacy.
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what it means for you and companies involved. the president holding a meeting at the white house today on the nation's opioid epidemic. and an inventive new way to treat alzheimer's that could become a medical breakthrough. all that have and much more coming up.
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developing drugs is a hit n
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and miss plop position. nine out of ten fail. alzheimer's is more like 249 out of 250 fail. researchers at m.i.t. are working on a potential treatment that doesn't involve a drug at all. meg terrell is here with today's modern medicine. we know what goes wrong is one of the great mysteries of medicine. this new research out of m.i.t. may shed some light on the problem. >> one fascinating property of our brain is that large number of connected neurons can fire together to produce this rhythmic oscillations or waves at different frequencies. one frequency known as gama is associated with higher order brain functions like perception, attention in the formation of memory. research has shown those brain rhythms are impaired in alzheimer's so a team led by m.i.t.'s li set out to restore
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those in mice. they found exposure to flashing l.e.d. lights at the gama frequency restored that brain rhythm and what's more resulted in a reduction of the brain plaques associated with alzheimer's. >> it was unbelievable with just one hour of light exposure we saw that level was cut almost by half. >> reporter: the brain was not only creating less, it was almost stimulating brain immune cells back into action clearing the plaques all due to a simple flickering light. this is really mind-boggling when you think about it. these mice are just exposed to the flickering light and they clear the plaques from the brain. we do have to say this is in mice. even the researcher we spoke with there cautioned we've cured lots of diseases in mice and it hasn't translated into people, but they do aim to take it forward. >> 50% reduction in the plaques after, what, an hour? >> an hour.
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>> regular l.e.d. light flashes. >> flashing at 40 times a second. so it's kind of almost a blur. it doesn't even seem like it's flashing. >> do they change the frequency of the light flash with different results? >> that's a great question. they know this thing called the gama frequency are 40 hertz or above. there are different frequencies associated with different things that go on in the brain. >> wow. that's fascinating. a big pop on vertex, a cystic fibrosis study. >> these results came out last night unexpect edly, positives. good news in the biotech. a combo of drugs for cystic fibrosis that looked good. this should replace the company's drug or can be in many cases. the safety profile as well as the ef kaficacy that could exte treatment options to 90% of cf patients. other good news in the drug
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space, roche for multiple sclerosis more ms, it will be for relapsing. the company saying the price is $65,000 per year which is a 25% discount to other ms drugs on the market including the one compared with. a new paradigm potentially. >> they have a profit sharing agreement but in theory some of these patients that can go on to this new drug would be weaned away from the biogen drug which means less profits for them. >> people are trying to parse what this means. this will compete with ms drugs, so it could take patients away though they will get economics on the other end. >> $65,000. also today, story number three, president trump addressing a very important issue. opioid addiction and having a listening session, appointing emergennew jersey governor chri christie to run the opioid team,
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research -- >> well, there's this it listening session going on where the president is talking about the opioid crisis and having a funny exchange with chris christie who he has appointed to oversee these efforts saying one of the best things chris christie did on the trail was sharing some stories about the opioid crisis and say iing that opioid -- that chris christie was an early supporter of trump after he gave up his own candidacy. this comes as deaths of heroin overdoses surpasses guns. this is a growing problem. take a listen to what trump had to say today. >> this is a total epidemic, and i think it's probably almost untalked about compared to the severity that we're witnessing. >> almost untalked about with the level of severity. there is funding for the opioid crisis but still, i think, most people would agree it's never
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enough to help the magnitude of the problem. >> political careers will be made and lost over this. >> hopefully we'll make some progress. >> you've got a lot of people, "a," mass incarceration, "b," people addicted to opioids. ever go to the doctor, get hurt? how many do you want, michelle? here's a free sample. no thanks, man. i'll stick to advil. thank you. >> thank you. shares of nordstrom higher today on track for the fourth straight day of gains. the retail etf having a good day as well. is the worst over? and our powerhouse of the week, a former home of a baseball legend. we'll tell you who it is, where it is, and show you around when "power lunch" returns. field of dreams.
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but i keep it growing by making every dollar count.
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that's why i have the spark cash card from capital one. with it, i earn unlimi2% cash back on all of my puhasing. and th unlimited 2ca back fromompark means thousands of dollars each year going back into my busess... which ds fuel to my bottom . what's in your wallet? hi, everybody. i'm sue herera. 23 people were taken to the hospital following a leak. employees were evacuated and the
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leak has been stopped. officials believe the building will be safe again by this afternoon. british police from scotland yard observing a moment of silence at a new memorial to honor the victims of last week's london attack. the memorial outside metropolitan police headquarters includes a flame that honors the four that died. nasa releasing video of the monster cyclone that hit australia on tuesday. cyclone debbie hit the northeast coast with wind gusts more than 160 miles an hour. it was a category 4 storm just one rung below the most dangerous. and carl's jr. and hardee's unveiling new tv ads that openly mock the sexy tv ads that it used for years to spur sales. the company also revamping its yellow star logo and bringing in a new ceo to replace andy who is leaving. that's the news update this hour.
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melissa, back to you. we are 90 minutes away from the closing bell. the500, 2,362 your level up four points. the nasdaq up by 0.4%. soaring after beating estimates for earnings and revenue, also rh giving positive guidance for the current quarter sending that stock up by 16%. the oil market closing on the day. to jackie deangelis for the commodity desk. good afternoon. you can see that prices are strengthening going into the close here more than 2% pop today. $49.50 is where we were just trading. a couple of reasons here. we have a smaller build than expected in the d.o.e. report and a large draw in gasoline. these are seasonal trends that are starting to pan out so the market is getting more confident that we're heading into that boosted summer driving season. also you had rumors again that opec will extend the cuts, that it has to if it wants to keep the prices supported. and some production problems in libya.
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traders telling me that the technical levels that we reached today and broke through are an indication we could break 50 and go substantially higher. back to you. >> jackie, thank you very much. time for the powerhouse. each week we take you inside the homes of celebrities, sports figures and ceos. with the start of baseball season just a few days away we have a look inside the home of the baseball great cal ripken jr. >> this $12.5 million estate just outside baltimore is home to one of the greatest baseball players who ever played the game. baltimore orioles legend cal ripken jr. is selling his custom built 25,000 square foot mansion on 25 acres including his own field of dreams. there is a batting cage, professional locker room, enormous gym and full-sized basketball court. even the screening room is baseball themed. ripken calls it the first run
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theater complete with a candy bar and seating, ten bathrooms and five half baths. if baseball is not your thing you can lounge at the pool, go fishing in a one-acre pond or take a hike on the property's picturesque trail. >> ripken spent about 30 years living in the home, custom built in 1985, completely renovated in the late 1990s. his own batting cage. >> i wanted my own locker room. never mind. all right. did congress just sell your property rights to the big internet service providers? if so, can you at least make money off that? we have the stock side of that story. and teresa may reaches the point of no return. the uk is on its way out of the eu. what that means for global markets next on "power lunch." kevin, meet your father.
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the official brexit process began with uk prime minister teresa may invoking article 50 in front of parliament. >> the article 50 process is under way and in accordance with the wishes of the british people, the united kingdom is leaving the european union.
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this is a historic moment from which there can be no turning back. >> what's the new slimmed down european union going to look like? what effect on global trade, on the markets? a lot of influence over that in the years ahead. joining us now from london is the professor of strategic leadership and governance of the henley business school it at the university of redding. according to reports one of the front-runners to be president trump's ambassador to the european union. thanks for joining us, mr. mali. >> good to be with you. >> are you being considered? >> all that is true but the most important thing today is this historic decision to trigger article 50 as a result of the brexit referendum last june. it is a significant and great day for great britain because it does change its orientation looking ahead. i think that the next two years
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will be a period of very intense negotiation and there is some question, of course, about how the uk will come out of it, what it will be. >> if you are happy about this decision does that mean that you don't like the existence of the european union? how do you feel about the eu? >> well, for 40,000 years archaeologists tell us there were inhabitants of great britain. it's only in the last 1,000 that some political formation around britain took form and then in the last 40 years the uk was part of the european union. for the longest part of its history, of course, the context is it was never part of any such union and it's only since the treaty of rome that the european union has taken shape. >> the spirit of my question is should the european union exist as such, putting them all together, was that a good idea?
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>> i think the union has evolved over time from a kind of economic integration to more and more of an intentional political union. that's what the large debate was here in britain last year and over the course of the referendum. the vote was very close but the brits decided to leave the european union in large part because they wanted their sovereignty back and they were dissatisfied with the regime in brussels. >> so just to follow on what michelle was asking, is the eu sort of theoretically a good idea? is it a good idea that's gone bad or was it bad to begin with? >> it was a good idea, the treaty of rome formed by those six kcountries as a way to
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stabilize the economies and to move out of the wartime and to have economic development. it's evolved into something quite different, the sev centralization of power, the kind of socialist mentality, a lot of anti-americanism and, frankly, the brits were never fully in because they never joined the eurozone. they never joined the euro and they always had a high degree of euro skepticism so there was always some suspicion about whether they should be in the union. >> you sound so much calmer. you've upset some people so much the european council president has said that you exhibit outrageous malevolence against the values of the eu. he's terrified you're going to get the job. he may want to try to stop you from getting the job. >> aside from my having the job, whether it's me or someone else
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and will take it to the european union, the americans appoint the ambassador to the eu. it's not the case the eu chooses its own american ambassador. trump himself has been a big fan over the course of the campaign and other advocates have been longtime favorites of his. i'm not sure they'll favor other countries facing the eu. these are decisions made by the electorates in the countries over the course of the coming year. >> we reached out to the white house and asked whether or not he would be in consideration and they would not confirm that at this time. >> all right, folks. it has been a rough run for retail stocks. xrt is down 4% this year.
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a nice day today. is this the beginning of a turnaround trading nation is next. get ready, trading nation. he's hiding a card!
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it's time for you and your boys to get out of town. (laughing) left foot. right foot. left foot. stop. twitch your eyes so they think you're crazy. if you walk the walk you. it's what you do. if you want to save fifteen percent or more on car insurance you switch to geico. hide the eyes. it's what you do. show 'em real slow.
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shares of dave and busters down 3% even though the company, earnings estimates and revenue was in line. the problem, disappointing restaurant sales. the stock is up more than 50% over the past year. company ceo stephen king -- not that stephen king, this stephen king -- on the closing bell at 3:30 eastern time. not nearly as scary as the other guy. >> but a good interview and i heard he can carry the interview. don't look. come on! >> fun of the best performing groups over the past few days retail -- quietly finding some buyers. will that last? aaron gibbs of miller, surprising. to what do you attribute the recent strength? is it a decease d feline recovery? >> yeah, i think it mite be. you look at macy's last year, it saw a 30% rally in october and
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november and then continued back down again and the stock has been getting clobbered along with these brick and mortar names. it's interesting this action in the group not just today but the last two years really highlights what you have been talking about all day in terms of passive versus active management in the stock market. if you've been a passive investor in the retail the last two years you've done very poorly. it just shows how much we still need the active investors. a chart that compares macy's and amazon, they trade with each other from 2008-2009 when the credit crisis ended and through about 2015 they traded in tandem and then they went completely different directions. the same thing can be said of the xrt which is equal weighted versus the s&p retail index which is cap weighted. in other words, of course i
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could say the best stock when you compare the best and worst stocks it would be a wide divergence. a whole group has done well and have done poorly. i think if you continue to work in a passive way in that group and i think in other groups in the future, it's going to be a problem for you. >> aaron gibbs, your view on retail. do you think it will finally turn around for real? >> you need to be specific. one, they've already outperformed the broader index and valuations are really pricey. they're well over the top of their range. you need to be choosy. when you look at earnings growth and the industries within the retailers, there's a huge distribution. some groups are expecting 28% growth and other groups that are expecting 8% contraction. and so that's why you want to select well and one of our favorites are the home
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improvement industry. your lowes, your home depots, some of the highest growth but still have some decent valuations and, of course, online retailers are the ones that are really killing it and are driving a lot of the returns for this year. all right, erin gibbs looking at the retail sector. for more trading nation go to our website did congress give away your privacy to internet service providers? if so, should you buy the stocks and get something out of the deal? that's next on "power lunch." and now the latest from overbought and oversold indicators such as momentum oscillators are used differently depending whether it's range bound or trending. look to buy when an oscillator
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fall noose oversold territory and then moves back above it. and look to sell when the oscillator rises into overbought territory and drops below it.
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ke . one law congress was able to pass, a measure killing privacy rules for internet service
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providers. what does it mean for you? julia borstein joins us from l.a. julia. >> well, tyler, congress voted to repeal the fcc privacy rules which president trump is expected to sign into law. the original fcc rules required carriers to, quote, provide privacy notices that clearly and accurately inform customers about what confidential information the carriers collect, how they use it and under what circumstances they share it. now, that included selling data like location and browsing history to marketers without consumer's permission, which is why consumer and privacy advocates are up in arms. for those who advocated for the rule's repeal, including fcc chair ajit pai, this levels the playing field between internet service providers and apps and websites. it was considered a win for internet service providers such as comcast, verizon and at&t. these rules would have put companies at a disadvantage to websites and apps like google and facebook that can collect
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more information on users. analyst craig moffett says this law's repeal is part of the fcc's push to put internet service providers under the jurisdiction of the ftc. as for what is next, we could see more deregulation of the telecom's base. republicans said the fcc is expected to try to overturn the classification of broadband as a utility which brought with it stricter regulatory oversight. guys. >> all right, julia boorstin. this could be a big win for large providers like at&t and verizon that are betting big on monetizing data. amy young says further deregulation could open the door to more mna in the sector. amy joins us now. great to have you with us. is it about better telling ads? >> i would say it is a first time in probably over a decade where you have a republican-led fcc, and certainly at&t and verizon have so much user data on how you use your mobile phone and what browsers you look at,
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what internet sites you are interested in. they've been sitting on so much data and this opens the way for them to actually monetize it. >> this really justifies or reinforces the value of content, and so therefore you think that some more deals in terms of a provider buying a wireless -- you know, the content-sort of deals that at&t, time warner represented could be in the future? >> certainly. i mean i think at&t now has a platform with their penlding acquisition of time warner entertainment and then verizon with their aol and yahoo!. aol and yahoo! you have to remember they're the third largest ad tech company behind google and facebook. when you combine verizon, yahoo! and aol, it lets them tap into a $25 million market opportunity. >> a quick question. are these broadband providers or whatever the term of art is, were they forbidden from selling or monetizing that user data or did they merely have to disclose
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and give the user or the subscriber the opportunity to opt out of allowing that to happen? explain to me what -- what they thought they were not being able to do that others like facebook and google and yahoo! were able to do because they didn't fall under the fcc. >> i think the fcc is really concerned because these are internet service providers and in general they should be more neutral to any platform that they provide. and so for them to have an unfair advantage over facebook or google in terms of mondayitization, i think it was the main point of what the fcc was concerned about. >> did they have that or did they not have it? did the others have an advantage over them? >> you know, i would say the others had an advantage over them, right. because google and facebook, you know, i don't know what the numbers are but most of their business comes from advertising, whereas verizon, tapt it at&t, subscription-base model.
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>> is this a deciding factor in terms of your ratings on any of these stocks? >> we've been bullish on at&t because i think with the acquisition of time warner entertainment it gives them a mobile video strategy. obviously this particular ruling lets them monetize and grow advertising in a big way. >> amy, thank you. amy young of mccrory. >> we're going to take a quick break. when we come back, a segment we call "check please." ♪ [pony neighing] what? hey gary. oh. wh's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so iwarrento help deal. pony, isn't that right warn? well, you could get suppt from thinkorswim's in-app chat. it lets you chat andhare your screen directly with a live person right from the app,
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check please. >> all right. we are getting headlines in related to the white house and russia and whether or not there's going to be an intelligence investigation. looking at live pictures coming from senator berns, senator warner about subpoenas they're going to issue to bring witnesses in on a russia probe. we have amon jagger standing by with more information. they say they have not coordinated at all on the scope of the russia probe. it is a direct reference to the fact devin nunes at the house intelligence investigation committee consulted with the white house and went to the white house first before telling -- >> there are obviously two parallel investigations. >> yes. >> going on. one in the senate, one in the house. i thought there was a joint committee on intelligence. i'm curious. in other words house and senate. obviously -- and that's senator warner of virginia, the ranking minority member. >> burr said the committee staff is within weeks of completing a
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review of thousands of documents. >> unprecedented quantity of documents in the russia probe, in fact. >> and they've made 20 requests for individuals to be interviewed in the russia probe as well. >> i'll tell you what -- >> and, wait. >> sorry. >> they're going to interview trump's son-in-law jared kushner when it has determined what they want to ask him. >> i mean listen, a huge amount of headlines, you can't escape it morning tonight. this dominated the news cycle. it is to me a little bit maybe telling or unusual that the market hasn't seemed to respond at all. the market is saying it doesn't necessarily care. america obviously does. it is an interesting bifurcation. >> yes. speaking of markets, we are watching the nasdaq. that index is in the green. really helped today by amazon. a huge push higher. we are talking to the analyst, making a bullish call on amazon, how it could benefit from the closure of stores. amazon hitting a new record high. apple also hitting a new
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intraday high. those two stocks helping to power the nasdaq well s&p 500. >> a robot would pick that stock, right, brian? >> i think a robot might be running that. robots running a retail store. >> thank for watching "power lunch." >> "closing bell" starts right now. kelly and bill, they're not robots. ♪ welcome to the "closing bell," everybody. i'm kelly evans at the new york stock exchange. >> no, we're not. i'm bill griffeth. two beaten down sectors ripping higher today, energy and retail. more on what is behind those moves, plus what the brexit negotiations that are getting under way, what they all mean for global investors coming up. >> and today samsung unveiling new galaxy phone. we have the details on how it plans to compete with apple. >> and lulu lemon is rallying. we have a bull and a bear, talking about


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