Skip to main content

tv   Closing Bell  CNBC  March 29, 2017 3:00pm-5:01pm EDT

3:00 pm
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 whether this sluggish stock can power higher.
3:01 pm
it is up 3% today as a matter of fact. >> there we go. we begin with the world's largest fund company turning to machines to pick stocks. legalsly picker joins us at post nine with that story. >> hey, guys. stock pickers are out and machines in. black rock is overhauling active management business, conceding beating the market is hard and expensive and computers can do a better job for less. the revamp affects $30 billion of black rock's five trillion dollars in assets to start. at a high level the plan involves adding more technology and data science to the art of portfolio management. that means fees will be sliced in half for customers, saving them $30 million annually. the firm says it also means that some portfolio managers will depart. the firm is offering new products including those under the advantage brand, which gives retail investors access to black rock's quantitative investment strategies. keep in mind though this is still more hands-on than black
3:02 pm
rock's well-known etf business. some say it is a middle ground between active and passive investing. one thing is clear however. black rock may be the first to try this, but others likely will follow. j.p. morgan said in a note today, quote, industry wide, these changes could cat lyse greater active equity fee competition should black rock's initiatives be successful, in an asset class that heretofore has avoided fee compression. the analysts added other larger assess managers will imitate black rock's moves, putting pressure on smaller managers. guys. >> all right, leslie. stay right there. we will talk more about this. bring in someone that knows something about using artificial intelligence for investors. dan nadler, the cofounder and ceo of kinsho which searches for correlation between world events and impact on asset parents. we should know the parent company is a minority investor and we use it all the time and our newsroom. what do you make of this new?
3:03 pm
the largest active money manager in the land starting to use this kind of technology to pick stocks? >> first of all, it is not surprising when perhaps the greatest stock picker in history warren buffett told everybody to get into etf. we saw it happen not a month ago, so it is not surprising. but if you look at what larry fink said in his public statement about this, he said something very politic. he said, look, the democratization of information has made it difficult for active managers. it is a politic way of saying what oliver stone said in 1987 in the movie "wall street," which is we shouldn't overly romanticize the golden age of stock picking it. it involved a lot of things that existed in the gray area of if not legality, of ethics. so what larry is saying basically is we've moved from an age where people had hedge because of relationships. >> right. >> of the type you saw in oliver stone's film, to an age where a
3:04 pm
21-year-old with a laptop who knows how to use search traffic data or web traffic data might have just as much of an edge or more on how many iphones apple will sell as an insider does. none is surprising given structural changes. >> also when thinking about this story, trying to figure out if the story is about, quote, unquote, technology or just about the fact active management is not working, fees are not there, people are going to passive, very cheaply-managed funds and they're simply laying off a bunch of people that used to be in that business? >> that's the interesting thing about black rock doing this, is because their bread and butter these days are the passive investments, they're the etfs and things that people know black rock for. a lot of people i spoke with today didn't realize they had an active investing arm to their business. so it is a natural pivot for them to create something that is more of an active/passive combination as opposed to just traditional stock picking. >> i get your notion about the availability of information. i mean it has democratized, you
3:05 pm
know, social media and the internet and all makes it more available to everybody at the same time. but the one instandingible in all of this is how the market will respond to that information. how do you predict that using this technology? >> well, i think it is less about predicting how the market respond and more about another structural force, which is that there are fewer stocks to pick, right? so if you think about the types of tools i have access to, i have access to tools that are probably 1,000 times more powerful than the retail investor. what i have concluded is over the last few years it would have been hard to do better than own ingham zon. in a world where that's the case, right, where all of this data mining, all of the tools and so on bring you to that conclusion, what you're getting is a lot of consolidation in the technology space, which are the names that most of these active managers hold. you are getting most of the so-called stock pickers moving -- not that they're going away. they're moving from working on wall street to working in the corporate mna diplomat of google, facebook and amazon,
3:06 pm
right? you are getting companies taking longer and longer to ipo. so when disrupters come about, they're taking longer and longer to ipo, which gives much more time for a google or amazon to go and acquire them. there are stock pickers, just in the corporate mna department also of a lot of very big incumbents that are consolidating businesses. in a world like that where just own amazon, own facebook, apple and google, well, then what does it leave for active managers to do? i think that's really what it comes down to. >> the question becomes should you still hold amazon and google, and if you put yourselves back into your brain five years ago would you still have said, oh, it is obvious to me i should own amazon? the very stock everyone has been ringing their hands about saying the profit margins aren't there, the valuation didn't justified. that's the argument for something someone able to look through the metrics and understand the driving powers for the earnings or the business to grow longer term. is that something technology will help us do, make that simple call? >> yes, if you understand it not
3:07 pm
as a call about amazon but a call about what is beta to global growth. one of the other things larry fink said is i want to give people beta to global growth. well, amazon is just beta to global growth. >> no, no! what are you talking about? if you wanted beta to global growth it is easy to do. i'm sure technology can do that. what does it have to do knowing that amazon will put up the kind of total return it has over the last five years? >> you don't know the size of the return, but what you do know is they're in so many diversified businesses they're becoming sum a conglomerate in so many different spaces ranging from gaming to drones to traditional businesses, that if you want a way to peg exposure to a company -- and i'm not talking up amazon. i have no stake in amazon. >> but as an example, right. >> as an example, these tech companies have moved from doing one or two things very well to a diversified set of exposures that remind me a lot of what general electric was in its heyday, right. and so that's what these companies are coming to
3:08 pm
represent. they're almost etfest in themselves to all of the high growth areas of the economy. that's why they're rallying. you can't predict how far it is going to go, but i don't think larry is suggesting that. what he is saying is if you want to peg yourself to the growth in the global economy, there are a small number of very heavily diversified businesses that are doing that and you don't need to be a genius or an active manager to know they're amazon and google and apple as a couple of companies like that. >> well, it will be interesting to see how they do after they put machines to work there. good to see you both. leslie picker, that we nicknamed stock picker now with this story, and dan nadler. good to see you. get to "closing bell" exchange today where the do you is down 21 points. joining us, nick angeletta from deutsche bank. steve frankel is with us on the floor of the stock exchange, and holly is with us from the cm terks in chicago. >> steve, we had a rally in oil
3:09 pm
today. it was smaller than anticipated. oil went higher. once upon a time and oil rallied, stocks would do the same. what happened. >> correlations are completely off the sheets these days bill. you could see the dollar move. you could see the correlated move with oil. you could see equity moves. you could see the correlated move with the dollar. you don't see anything like that anymore. so if correlations are off, then you can't trade on them anymore. for me, it is still about the politics of the trade. we all thought brexit was going to be the death knell for the markets, that didn't happen. everyone thought trump would be the death knell for the markets, that didn't happen. where we were all shocked was on friday where the market had every reason to sell off with healthcare being defeated by his own party, the market still did not sell off. it is really shocking to me when you see speaker ryan get on and say, hey, we're going to try to put all of the pieces of humpty-dumpty together again and we're going to try tax policy
3:10 pm
again. >> right. >> and the market rimps higher. for me it means there's an overwhelmingly pent up demand for equities for now so don't get in the way of that train. >> nick, you guy vibrant soundbridge a good read on what people are doing in the market. what would you say is happening with your clients in the way they're investing right now? >> it is interesting. people are starting to feel like the markets are at the point where they need to put on hedging positions. we are seeing a lot of clients open up new options accounts with us, saying that, you know, they think that this market may have run its course for a little while at least and maybe trying to take some small money off the table. but more or less we're actually seeing better buys on the dips to be honest. when you see the futures sell off as we did on monday, immediately on monday morning market opened, we saw better buy side. >> holly, through it all yields in the treasuries keep going lower. i mean aren't they supposed to go higher as we all anticipate the fed raising rates, which they keep pounding the table about? >> you would, bill, think that the rates would be going higher
3:11 pm
here, but i think some of the reason we aren't seeing that right now is because they're anticipating a slower move by the fed than they had been recently. certainly you wouldn't think that based upon some of the fed speakers today, and i think the way to look at it is the fomc is sort of like a us air craft carrier. once they set about on a path, it is a slow, deliberative path. so while we are in a tightening mode, it is not a fast path to that tightening mode. while some of the fed speakers today started to say that they could see three more hikes, four hikes this year, i think the one to pay attention to is chicago's evans. i don't say that just because i'm in chicago, but he is a voter this year. he said one, maybe two more hikes this year. i think that's the way to look at it. if we don't see these animal spirits percolate even greater, i don't think the economic data is saying they should be tightening that fast, that aggressively. i think the markets are paying more attention to evans than they are to some of the more hawkish members who aren't
3:12 pm
voting this year. in fact, rosengrin who said he could see four hikes this year, he doesn't vote until 2019. while he is not relevant, he doesn't vote. i think the markets, that's why you're seeing yields lower here. they're paying more attention to the dovish members who are saying the air kracraft carrier going slower than some said recently. >> there's the list of the voting members of the fomc this year. thank you all. got to go at this point. appreciate your points on today's market action, such as it is. >> 45 minutes to go in this session. keeping an eye on markets, the dow down 25 points here. we've seen some green arrows across the other averages today though, so some differentiation there. that still the case, the s&p is up 3, russell is up about 5. >> the dow the party pooper today. upcoming elections could make investing in europe a tricky proposition this year. a leading eu analyst and investment manager weigh in on the risks and the countries that
3:13 pm
could offer the safest bests coming up. >> samsung unveiling flagship smart phones. but will customers forget exploding galaxy 7s of last year? we'll see. you're watching cnbc worldwide. ♪ the bond report is sponsored by pimco. transportation or government. we touch millions of lives every day.
3:14 pm
conduent. advancing the everyday. with e*trade's powerful trading tools, right at your fingertips, you have access to in-depth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. ♪ ♪ it's like having the power of a trading floor, wherever you are.
3:15 pm
it's your trade. ♪ ♪ e*trade. ♪ ♪ start trading today at etrade.com
3:16 pm
welcome back. look at that. amazon hitting a record high today. barkley's initiating coverage of the stock with overweight rating and price target of -- get this -- $1,120, a 31% premium over its closing price yesterday. the firm says amazon has more runway than just about any other company and that it will be likely one of the first trillion dollar market companies, but that is just a proxy for global
3:17 pm
growth anyway. >> up 35,000% since 1999. european markets up slightly today as the united kingdom begins divorce proceedings from the e.u. british prime minister teresa may in parliament trigger the start of two long years of brexit negotiations. what does it mean for investor cincinnati. >> joining us fran burwell, vice president at the investment council. good to see you both. fran, your head could explode if you think of all of the permutations possible during these negotiations. what are your expectations over the next two years as this process begins? >> well, i think that we will see actually quite a bit of unity among the e.u. 27, those who are on the other side of the table, if you will, from the u.k. so i expect they will stay firm with no special deals just because the germans have a lot of car exports, car companies involved. i think it is going to be tough
3:18 pm
for the british. i think that they're going to find that it is very difficult to achieve what they want and to not be part of a single market. we -- one of my colleagues described it today as we have to learn how to put up obstacles to trade so that the british will not be part of the single market at the end of the process. so it is going to be a challenge, both for the economists, the politicians, the lawyers and the people. >> right. >> i think it is -- >> and i think you see -- i think you see today the markets reacting because there's more predictability that this is moving forward. so that's from -- for the markets that's good. >> would you argue the major transition effect for the global markets to the british pound? >> thanks for having me. yes, i think the british pound has been the story for -- in relation to the equity market. we know what the relationship has been. one is going up and then the other one is going down. but i think that relationship would change because we have -- so far we have seen the brexit
3:19 pm
trailer but now the film is in cinemas, and this is going to change because if there is a negotiation and if there is a fruitful negotiation, then, yes, stanley would authorize to 130, the equity market will authorize and investor confidence will authorize. in fact, if you see the inflow, the money inflow for the msei european etf you see record money flowing into it. i'm not pessimistic when it comes to the european markets. i think european markets offer more when it comes to risk-to-reward ratio. but on the flip side, if this negotiation process derails and we have no deal in the next two years, then certainly u.k. is not the market that you wanted to look at. i think germany itself, that country represents a biggest reward-to-risk ratio for us. >> brian, what do you think? you mentioned the eu, the 27 countries remaining will stand firm together. do you think the brits have the
3:20 pm
resolve to cut a strong deal as well? >> i think they're just going to find it very, very difficult. i think that companies that are in the uk because they want access to the european market, easy access to the eu market are going to have to rethink that and are probably going to end up going to germany or moving at least some of their operations there, and to ireland. but i think one of the other big risks for the european economy right now is the french election. i am hopeful that marine lepin will not win in the second round, although she may in the first round and be knocked out in the second round. a win by her in france could be -- i think is likely to be more destabilizing for the continental europe economy than will be the brexit negotiations. >> fran, just on this point, do you think that for the uk its long-term success hangs on how large its financial services industry is? >> i think -- you know, that's
3:21 pm
what the british have always kind of looked at as the anchor of their economy. but, you know, you see more and more in london discussion about these new international trade deals that they're going to negotiate. but those are going to take several years, and most of their negotiating partners are not going to be willing to really start the hard bit of negotiation other than justin formal talks until they know what the final deal is with the european union and what the wto tables are for that, schedules are for that. so it is a long way away before they have these trade deals that they are kind of pinning their future on. the eu just finalized the trade deal with canada, and in two years, unless they come to some other sort of agreement, britain will fall out of that trade deal. >> well, it is just, just getting started. so it is going to be very interesting to see how it proceeds from here. thank you both, fran, naeem,
3:22 pm
nice to see you. appreciate your thoughts. >> thank you. >> we have 40 minutes left in the trading session here today. after yesterday's gain, the dow is down 24 points right now, but the other major averages are slightly higher. >> nasdaq up nearly half a percent. samsung launching the latest edition of smart phone here, trying to put last year's battery blowups behind it. we will show you what is new with the galaxy next. >> also ahead, stephen king, not that one, but the ceo of dave & buster's ceo will speak with us exclusively. we will talk about whether the chain's mojo is heading for the finish line, whatever that means, coming up. your heart is healy enou for sex. do notake cialis if youtake ni, or adempas® for pulmonary hypertension, as this may usan unsafe drop in blood presre. do not drinklcohol in excess. to avoid long-term injur get medical help rht away for an erection lasting more than four hours. if y have a sudden decrease ls hearing or vision,
3:23 pm
or an allergic reaction, stop taking cial and get medical help right away. ask your doctor about cialis experience exciting offers on les event is here. our most tilling mods ever eget up to $2,500 customer cash les event is here. on select 2017 models for these terms. experience amazing at your lexus dealer. we cut the price otrades to give investors even more value. and at $4.95, you can trade with a cle advantage. fidety, where smarter investors will alwaybe.
3:24 pm
3:25 pm
samsung electronics traded higher in seoul ahead of the u.s. launch of its new android smart phones, the galaxy s8 and s8 plus i guess it should be. meanwhile here in new york apple saw shares near record high. it has an iris scanner. here are some of the specs. a fingerprint reader, encrypted facial recognition software among other features. sports a 5.8 inch screen running-to-edge and almost top to bottom. there's a special dock available take enables users to plug into a keyboard, mouse and monitor and watch out, siri, here comes bixby, the artificial intelligence assistant that is being supported by samsung. >> i like that name. >> it is kind of cool.
3:26 pm
>> earlier this week the company plans to sell the refurbished galaxy note7 phones, you are looking at damage there. they permanently sclapd it last october after a global recall triggered by phones that self-con busted. researchers blamed the batteries. >> i think consumers are willing to cut them slack and will buy the s8. let's not forget, they've been a very, very popular phone. >> sure, and a new technology with the iris scanning and i saw t-mobile earlier trumpeting to customers they will have attractive financing deals available for this phone. they know it will be a very popular one. >> i just -- that may be some at the margin will flinch. they've gone on to apple or other phones and blackberries certainly would be -- >> where is yours? >> -- an alternative. >> if you are wondering where the 0.1% market share is -- >> no way blackberry has a zero percent market share because i have one. anyway, i think the s8 probably will do well. we'll see.
3:27 pm
head to the close. we have 34 minutes left in the trading session here with the dow still down about 25 points. >> and it is no fun and games for dave & buster's. today the stock is down. the entertainment restaurant ceo speaks with us exclusively about what it is doing to get more customers in the door, that's next. ♪ if you have medicare parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a great time tshop for an aarp micare supplement insurance plan, insured by unitedhealthce insurance company. medicare doesn't cover everything. and like all standardized medicare supplement insurance plans, these he cover some of what medicare doesn't pay. so don't wait. call now to request your free
3:28 pm
decision guide. it could help you nd the aarp medicare supplement plan that works for you. these types of plans have no networks, so you get to choose any doctor who accepts medicare patients. rates are competitive, and the the only plans of their kind endoed by aarp. remember - these plans let you ply all year round. so call today. because now's the perfect time to learn more. go long. you're watching cnbc, first in business worldwide.
3:29 pm
3:30 pm
shares of duncan brands trading lower after goldman sacks downgraded to an actual sell from neutral rating. the firm cited increased competition from mcdonald's breakfast promotions and high valuations. that stock down 2%. kellie ike enceo shaking his head. >> yes. with half an hour to the close, big news today is that it is your birthday. >> it is my birthday. >> happy birthday. >> how great is that. >> with a lemon pound cake and all friends here to celebrate. >> do i get to blow it out. >> please, and make a wish. >> i made a wish. >> and the marked is up seven points. >> happy birthday. >> thank you. >> what are you keeping an eye on? >> listen, today feels like yesterday where now the market is completely discounting the failure of last week, looking forward to economic reform. certainly acting very well
3:31 pm
today. not a lot of volume though, which is a little bit concerning just because it really goes to the commitment, right, of our long-term asset managers, really committed to the move. i guess we're going to see that as we go. i think we're topping out, just because i think we will hit a little bit of resistance as we move into april. >> i'm going to ask what impact that usually has on the market. >> you know, there's always this pattern. the day after tax day, the market starts to get weak. if you look into the last couple of years, april into may when the market starts to dip after tax day, i would suspect it is going to happen again. the only reason it may not is if all of a sudden trump comes through with economic reform package, which i'm he not sure is going to happen in the next two weeks. >> that's a pretty quick timeline, even for a deal artist. >> thank you for the cake. >> you are so welcome. big plans this evening? >> no, listen, i'm 56 today so it is not a big 60 birthday, but i will go home. my wife will cook for me so it will be perfect. >> very good. i want you to know you are an amazing cook and do a lot of it yourself. >> thank you. >> so real quickly before we let you go talking about oil today, the u.s. exporting like, you
3:32 pm
know, the third largest amount ever last week in terms of oil, a lot of refined products, too. what impact do you think it is going to have? >> oil is up a buck today, own on yesterday's report, we still bill less than the prior week. opec will start to say that the cuts are working. we have become a big exporter, that's great for us in terms of our oil industry, but i think it found its base right in here at the 47 level and it will be $47.55. ft. trades in there it will be perfect. >> 56 the big number today. back to you, bill. >> happy birthday, kenny. nigel lawson, the british politician, nigel travis is ceo of dunkin brands. let's move on. >> hi, everybody. here is what is happening at this hour. president trump joined by new jersey governor kris christie and senior administration officials hosting an opioid and drug abuse listening session at the white house, calling the
3:33 pm
drug's use an epidemic. >> we want to help those who have become so badly addicted. drug abuse has become a crippling problem throughout the united states. drug overdoses are now the leading cause of accidental death in our country, and opioid overdose deaths have nearly quadrupled since 1999. >> bridget kelly, a former aide to governor kristie, was sentenced to 18 months in prison and one year probation for her role in the traffic scandal. on a lighter note, for the first time ever cray ola says it will rye tire one of its 24 iconic crayon colors. it is inviting customers to share their favorite colors and predictions on social media. it is going to reveal the decision on friday, which is national crayon day. so i went through this 24-box of crayons. >> yes. >> all right. and i pick a blue -- it is not
3:34 pm
going to be blue because you wouldn't get rid of blue or orange. >> not a primary color, yeah. >> or red. they look exactly alike. one is cerlean. >> that's my favorite color. >> i saw that was in there. >> don't get rid of -- i think one of the primary colors could go. >> you think? >> i bet they would get rid of blue before cerulean. >> what are you choosing? >> obviously not cerulean. >> you narrowed it to two. which one? >> i think either white or apricot. >> white? >> kelly evans, that's the one i say, i say white. i know it won't be a popular choice. >> it is too waxy. >> you can't color on white paper. >> you can't see it. >> look, i made a mark on my mouse pad, which is black. what is that? that's gray. >> but you can kind of see it at least. >> what is the point of white crayons. i know it's been around since 1903, but this would be the one to lose right here, gang. right here. >> or apricot. >> or apricot, yes. >> i was going to pick app
3:35 pm
railway continue because you can't see it either. >> yes, precisely. >> great minds think alike. >> dan nadler also picked apricot. all of the great minds here. >> there you go. >> predicts that apricot is going. >> here is my question. what are they going to replace it with? why haven't they said yet? >> it is a pr stunt so they'll -- we'll know on friday which is national crayon day. >> yes, and it has worked so far. >> yes, it has. >> got us talking about it. >> because we're talking about it, exactly. >> thank you, sue. >> see you next hour, guys. >> see you later. >> shares of dave & buster's meantime trading lower following last night's earnings report and despite an earnings beat and inline revenue the company's sales guidance was below expectation. >> joining us to talk about the earnings and challenges in the restaurant business is dave and buster's ceo, the other he stephen king. i guess you would be stephen king and he is the other one. >> that's correct. >> how sick are you having to deal with that. >> true. all my life. been a lot of fun. >> i'm sure. talk about the challenges that you faced this last quarter.
3:36 pm
>> well, first of all we had a great quarter. i mean we were up 3.2% in sales, up 15% in overall revenue. so we look at the quarter and go outstanding quarter, right on track for everything that we had said. essentially we beat every metric of our guidance. so, again, right on track from our perspective. i think as you look towards the industry, think the industry is struggling. i mean in the same period, if you look across casual dining, casual dining was down about 2.4% during that time frame. so there's clearly some challenges that are happening across the industry. >> and we should mention your stock's been on a tear. performance has been great since the ipo and, you know, up 20, 30% over the past year. stephen, when you look ahead, not just the issues that the restaurant industry is facing, which i understand have to do with rising labor costs, maybe a shift in consumer behavior there and things like that, but we had a guest yesterday who said the
3:37 pm
only restaurant names he would invest in right now are the technology first one, companies like panera, companies like domino's. is dave & buster's going to become more of a technology place? is that necessary for your next chapter here? >> well, i think the key is to be differentiated. you know, we have a highly-differentiated product by virtue of the fact we offer games in addition to food and beverage. so, you know, we lead with games first. we advertise that as the primary messaging. if you look to the last quarter, our game's revenue was up 6.9%. so that's clearly resonating from a consumer standpoint. one that we think will continue into 2017 as we look to 2017, we have a great portfolio of games on tap. >> right. >> we're bae going to continue to try to leverage our connections with movies and things like that, and just remain relevant from a consumer standpoint. >> you know, i know you will take this the right way, but i have never considered you to be a restaurant chain anyway.
3:38 pm
i mean whenever i read about dave & buster's i hear about some of the new mobile gaming are you doing, introducing and all of that. your ticker symbol after all is play. it is not eat, and i never hear about a newburgher you a burger coming out with. you are a technology playground that happens to serve french fries at the same time, right? >> i would agree with that assessment. again, we lead with the entertainment component of it, but we do know that we have to be good at food and beverage, and we take food and beverage very seriously. we have people that wake up every day working on, you know, a new best item for us to serve to our guests. we know that they want to have that comprehensive, all-inclusive experience where they eat, drink, play and watch our sports offering as well. >> so i'd love to know then drilling down just on this year and on the guidance that you issued, what are some of those trends in the restaurant industry that are something of a headwind? anything else you're looking at in the consumer behavior that
3:39 pm
has you a little bit more cautious? >> well, first of all, we're pretty optimistic. we're saying we're going 12 to 13% uni growth next year. we have six stores under construction. we have opened three during the course of the first two months of this year so we're optimistic. we are continuing to go forward and move forward with our development plans. but i think over time our story becomes much more about a uni growth story than it was sort of hypersales story it was over the last couple of years as we repositioned the brand and renovated the brand and really put it in a different place from a consumer standpoint. if there are things that i'm concerned about going forward into next year, i mean i think labor is a headwind. i think it is going to be a headwind for us, and i'm talking about labor inflation rate, and to a legals erectilesser extent availability to make sure we have the right people to open the stores i referred to earlier. >> any of it dove tail to what
3:40 pm
is happening under the trump administration? are you looking for positive benefit there? >> you know, we haven't really forecast anything into our projections that is a benefit from the trump administration. i think the consumer is generally in a pretty good place. now, having said that, there's a lot of dislocation in terms of them moving between different vendors, different brands, but i think in general the consumer's in a pretty good place. things that help us are disposable personal income, consumer confidence, low unemployment are all good things for our top line. >> before you go, you have been so successful with this business model, why isn't anybody else tried to mimic it? >> i think there are some people playing around the edges of what we do, nobody who is spot on our positioning. but i think the idea of combined destination and dining is one that has legs and i think there will be people who copy that. >> i mean chuck e. cheese would be something comparable to that, but it is a whole different
3:41 pm
demographic there, right? >> i'm thinking of some of the things in brooklyn -- >> a wildly different gem graphic. >> i get that. >> there are places that have pool halls combined with a restaurant combined with a ping-pong table. >> sure, been there. >> yeah. that's where we might see more competition. >> thank you, mr. king. >> hey, i appreciate it. thanks for having me on. >> stephen king, ceo of dave & buster's joining us today. we're head tinge the close. about 20 minutes left in the trading session here. dow down 26 points. >> and the other averages positive. >> the workings of washington have made the markets nervous for the last nine days. now a potential government shut down may be looming. an update on that coming up. >> and new orleans is now as the big easy, but president trump not making it easy for illegal immigrants there. and new orleans mayor mitch landrieu is fighting back. he will explain how just ahead. stay with us. >> cnbc sector report sponsored
3:42 pm
by energy sector etfs.
3:43 pm
( ♪ ) it jusfeels like anything is possible here iupstate new york. ( ♪ ) at corning, i test smart glass that goes all over the world. but there's no place like home. there's always something different to do ke skiing in the winter, jet skiing in the summer. we c do everything. new york state is filled with bright minds like samantha's. to find the companies and talent of tomorrow, search for our page, jobsinnewyortate on linkedin. and the wolf huffed like you do sometis, grandpa? can be hard to breathe. ll, when you have copd, it can be hard to get air out, which can make it rd to get a in. so ialked my doctor. she said... symbicort could help you breathe better, starti within 5 mites. symbicort doesn't replace a resc inhaler startifor sudden syms.
3:44 pm
symbicort helps provide signifant improvent of your lung function. symbicort is for copd, inuding chronic bronchitis and emphysema. it should not taken more than twica day. symbort coains formotel. cines like formoterol increasef deatfrom asthma oblems. symbict may increase your sk of infections, osoporosis, and eye problems. you ould telyo doctor if you have a hea condion or high blood pressure osoporosis, and before taking it.. symbicorcould mean a day with better breathing. or high blood pressure osoporosis, and bewah out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort ee for up to one year. visit saveonsymbicort.cotoday toearn more. the stuff we miss during
3:45 pm
commercials, i can just say. market's on edge after weeks of partisan fighting over healthcare and now lawmakers have less than one month to quell market jitters about a potential government shut down. here we go again. eamon with where the president and congress stand on this issue. eamon. >> hi, bill. there's so much focus here at the white house on the question of what could be the next big legislative log jam. the deadline is april 28th to avoid a government shut down. there's been a lot of speculation about whether or not president trump would insist on funding for his border wall in any spending deal that happens between now and then to keep the government open. that could be a very sticky problem because democrats would absolutely be against that, which would raise the partisan tensions around that issue. sean spicer, the white house press secretary, was asked about did border wall, whether it had to be in this spending deal at the white house briefing today. he didn't really answer the question. here is what he said. >> i'm not going to get into the
3:46 pm
specific details. i know if you saw the budget that was put out, i think it is 1.26 or $1.27 billion that was put into the fy 17 for the beginning of that wall. >> reporter: so i can tell you that behind the scenes i have spoken to a white house official this afternoon who had this to say. white house official saying, there will be a border wall and there will be money for security, but it may not all happen in this shutdown bill. the idea there is that the trump administration may be willing to get past this deal before it insists on spending for its border wall, which if you're in the markets and you're concerned about a possible government showdown drama at the end of april, that would tend to be good news for you. they seem to be suggesting they're willing to do this deal without the border wall in it and look for other vehicles later on in the year to finance that border wall. that's an interesting piece of news here this afternoon, guys. >> that is an interesting wrinkle, but then you have democratic leader in the sen at, chuck schumer, saying he feels they're making good progress in the negotiations on all of this.
3:47 pm
>> reporter: right, and you could see something where you don't even have to get to what is called a contingent resolution, but actually ultimately doing some of the regular old fashioned appropriations bills in a big what is called omni bus bill. that would be more regular order here in washington. you could see a low-key negotiation this year. we will see. you tend to get more brinksmanship as you get closer to the deadline and everybody decides we have to have my priority, a possible fight over planned parenthood, over the border call. all of those things could explode the dynamic, but as it rive now official also are telling me they're not going to insist on the border wall. that should indicate clear sailing. >> eamon javer at the white house. dow down 35 points while averages continue higher. >> as a prelewd, we will debate the value of the $270 billion fashion trend known as athleisure right after this.
3:48 pm
well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. whyour boss?ork for? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. ♪ what we do every night is like something out of a strange dream except that the next morning it all makes sense.
3:49 pm
to power global e-commerce fedex networks are massive far-reaching and, yes a little magical. ♪
3:50 pm
lululemon stockst trading higher up, almost 4% today, ahead of earnings coming out after the bell. you will be dealing with that tonight. joining us to debate whether it has more room to run, maury
3:51 pm
brown from web bush securities and david trainer from new constructs. maury, you are the bull. but this is a stock that suffered for a while. why do you like it? just on a valuation basis or what? >> well, no, i think our -- you know, our long thesis for lulu starts with pricing power. we have seen them over the last 12 to 18 months able to raise prices, you know, across multiple categories in their store while others are struggling to achieve pricing power. instead they're having to discount to move product. we think that speaks to, you know, the brand resonance with consumers. so going forward, you know, we're looking for them to continue to expand, expand their business domestically. you know, we believe in their targets for 2020 of getting to four billion dollars in revenue, doubling the revenue base. we think there's a substantial margin opportunity. so we have a trajectory, certainly for the quarter trends to data across retail have been challenging. >> right.
3:52 pm
>> but i think that aside, we feel very good about where the brand is positioned going forward. >> all right. david, you feel very differently. why? >> we think a lot of profit growth is already baked into the stocks. there's more risk there than people may realize. they're over stating proftis a little bit, our robo analyst technology pointed out they understated taxes about 20 million. they have about 440 million more on the balance sheets so the business is not as profitable as people think. it is also a crowded space. i mean at the end of the day what are the barriers to entry for yoga pants? it is spandex, been around a long time. i don't know how long the first mover advantage and the brand awareness they've successfully created will persist in the form of strong margins and profits. i just think it is a long-term story, i don't think it is. i don't know how much of a moat you can build around spandex. >> morry, address what he is saying there and put it in the context of athleisure when you consider some of the other
3:53 pm
competitors in that category. do you like them as well or is lulu a special situation? >> sure. i would say there's no shortage of competition, right. you certainly have the well-capitalized players, nikes, under armours, adidas, and you have the others that are less innovative an sort of more me-to product that had to move product through discounting. i think lulu competes well with the large wholesalers, nike and under armour. i think they have a little uniq unique niche in that they're controlling their customer experience. nike and under armour are at the mercy of retail partners. i feel like they've been able to withstand, you know, tons of competition coming in the last couple of years, and, again, it has not held back their sales, and it has not held back their ability to raise prices over the last 12 to 18 months. >> yeah, david, kind of the same question to you. would you avoid the whole
3:54 pm
athleisure now -- >> i think a lot of the stocks were overheating. not too long you asked me to compare nike and under armour and a similar situation with lulu's and sketchers. at the time under armour had a sketchy value asian. now that athleisure is hot you will see more capital poured into the space from nike and under armours. they don't have to spend money taking risk in new spaces until they know they're going to be solid. vertical integration can be a real hamstring for profit growth because there's a lot of capital build r bit into the stores nike and under armour don't have to worry about. they can focus on creating distribution without the capital that goes into inventory on she was and those things. >> good stuff. morry, david, thank you both. appreciate your thoughts. >> thank you. >> thank you. >> and you will have those numbers from lululemon coming up. >> in a couple of minutes here. >> we have the closing countdown coming your way in a moment.
3:55 pm
>> after the bell, we have artificial intelligence replacing stock pickers, rapid decline in market research and some say it looks like wall street is broken. can it be fixed? you're watching cnbc, first in business worldwide. ♪ say hello to at&t's best, unlimited data deal ever. it's a total game-changer. so now the whole family can binge,... ...surf, shop, navigate, listen, game, stream and more. all without the hassle of worrying about overages... ...or running out of data. it's less than $40 per line per month with 4 lines.
3:56 pm
and remember, it's at&t's best, unlimited data deal ever. so get at&t, get unlimited and get everyone more for less. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be.
3:57 pm
and at $4.95, you can trade with a clear advantage. with e*trade you see things your way. ♪ ♪ you have access to the right information at the right moment. ♪ ♪ and when you filter out the noise, it's easy to turn your vision into action. ♪ ♪ it's your trade. e*trade. start trading today at etrade.com the "closing bell" is sponsored by e trade. start trading today at etrade.com. hi there. we've got -- how much time left?
3:58 pm
we have two-and-a-half minutes left in the trading session here. let's start not with the stock market today. let's start with oil. this big rally that we saw that still only takes wti still below $50 a barrel but up to 49 and change here after the inventory data came out showing a smaller bill than what had been anticipated. under ordinary circumstances what would happen, you would see the stock market follow suit, and that didn't happen. that's an interesting change in correlation between those markets. steve grasser was talking about that an hour ago, and it is something to keep an eye on. the other thing interesting about all of this, you would think the potential inflationary implications of a rise in oil, if we're going the see this continue, would be that interest rates would go higher, and that's still not happening as well. the yield on the ten-year down to 2.38%. so bob pesani, i think the market is telling us they don't think the rally in oil here is long -- is going to continue
3:59 pm
here. >> going to continue he tried to say. well, we have chevron up today. that's helping the markets. it is kind of a strange day because it is two-to-one advancing declining stocks but the market is generally slightly do the down side, the dow is, about evenly split between advancing and declining stocks. i would say it is an indeterm gnat day. i was waiting for a trend to develop. half are on up the side, half on the down soid. we had have a below normal line for probably the sixth day, probably three billion across the new york stock exchange platform. normally we get about 3.6 billion. the good news is nobody is dumping stock or selling stock, but the bad news is there's not a lot of buying enthusiasm out tlchlt we're still looking for some kind of clear trend. i would say intermediate trend, the trend for many stocks remains on the upside. a few like energy and bank stocks i would say are in a modest down trend trying to find a bottom right now.
4:00 pm
still didn't resolve anything today but not a disaster. >> yes, the dow is the out liar among the major averages. everybody else slightly positive on the day as we go out. stay tuned for the earnings from lululemon among other things, coming up the second hour of the "closing bell" with kelly evans and company. see you tomorrow, kell. ♪ >> thank you, bill. welcome to "closing bell," everybody. i'm kelly evans. some dispersion, if that's the word here, on wall street today because if you look at the dow it is lower but every other average was higher for most of the session. as we look at things here on the close, the dow dropping 40 points, 20,660 is your level, dropped about a fifth of 1%. s&p adding a few points, moved higher through the session. the nasdaq up more than a third of percent today, russell up about that much. the nasdaq putting up fourth straight gain.
4:01 pm
apple and samsung trading at highs today. according to axios it is going public. we're going to talk to the journalist that broke that story today as people talk about the ipoest heating up. we have senior markets commentator and columnist michael samtoli. guy dominic checks in. and daniel hughes is here. welcome, everybody. michael, what was with, you know, dow going one way, everyone else the other today? >> yeah, it was obviously -- i mean kind of around the flat line. i think net it was positive, the broad market. if you look at equal weighted s&p, that was up about a third of a%. the average stock out performed what you saw on the headline indexes and the dow. then you have the old stalwarts of the nasdaq, amazon and alphabet, you know, that kind of default leaders when there's not otherwise a trend, but retail bouncing hard. obviously energy was the leader, too. i think it is this non-commital day. i think monday's morning low in
4:02 pm
the s&p 500 might take on more importance, people saying, hey, that was maybe it, a 3% pull back, an intraday low, but not determined about today's action. >> you think 3% is the new 10% when it comes to corrections in this market? >> i think there's still a lot of people on the sidelines, frankly, but that retail bounce was an interesting one because i think people really thought, you know, the mall companies are down for the count, and that's certainly not so. so people are looking for value. they're picking up value. the fact is there's a whole swath of companies that have actually not participated much in this trump bump or whatever we're calling it, but the big names really have. you know, the s&p's return so far this year of 5.5%, nasdaq, you know, almost 10%. so investors have to be pretty pleased with what they've seen, even year to day and we're not finished with the first quarter. >> guys, this back to 2015 kind of year where it is leading the way so to speak? the nasdaq's performance has been impressive in its
4:03 pm
resilience even as the dow went on its worst losing streak since 2011 was notable. >> could be but i hope not. quietly netflix had a bid to it. amazon bounced since they reported earnings. i will say this, the leadership has been until recently at least, you know, the banks were on fire. they've obviously given some back, but i find it interesting. i also say this, and i think i'm skating in pete najarian's lane, but even on a pretty wicked down day, the vick spiked up to 15. it closed today lower with lower sales, so volatility index is telling you people, whether they're complacent or enthusiastic, you can put your adjective in there, the volatility index is telling you that the market wants to continue to grind hard in my opinion. >> guy, backing out a little bit, what do we think here? trump was elected, we went on a huge run. we've kind of been running in place for a little while, still not far from the all-time highs. how much depends on washington?
4:04 pm
how much may be the earnings season about to get under way here and other factors? >> i'm hoping earning season plays a big role. bob casoni has been talking about it for weeks now. i'm hoping earnings takes the baton, but i'm of the belief so much is predicated on the hope, at least, that president trump can push forward the agenda he has basically ran on. i think people are hoping that obviously tax reform comes, dollars repatriated comes, and the regulations that have stifled business have lifted. so to me most of this, if not the entirety of the whole thing recently at least, has been the hope that president trump gets things done. >> yeah. by the way, those financials, some of the decliners today, goldman, j.p. morgan in the dow and united health down 1%. >> i think the bond market didn't you give the opening to have a big update for the financials.
4:05 pm
eric rochier not fighting, saying maybe should have three hikes. the market shrugged. we are arng right now two or three rate hikes and i think this market has shown when yields don't go up the equity market is a little tentative. i think it is just a one-day tentative move. >> i'm glad you brought that up. some interesting comments on commercial real at a time. steve leishman is here to tell us what the fed member had to say. >> i think mike is making a great point. they had this hawkish talk from fed officials and the markets doing what they did and erik rosen gls gre rosengren saying a total of three hike sincere what we should have. here is what he said in boston. >> i think it is appropriate given where we are right now that the pace we should be thinking about is not keeping things constant. the pace we should be thinking about is roughly every other meeting being appropriate to raise rates unless economic data come in either stronger or much
4:06 pm
weaker than what our forecast is. >> so here is what the january fed funds looks like here. we're trading about 128 right now, off a little bit, but part of the way to that 137 which would be justine the third hike. rosengren is talking about a fourth one. he was not the only hawkish speed today. john williams, san francisco fed president, said he does not rule out more than three hikes in 2017 or two more. charlie evans, the chicago fed president, said fiscal policies could mean more rate hikes, but stan fisher, maybe he is ruling the day here. i interviewed with him yesterday and he said two rate hikes seem about one. one fed governor versus three fed presidents. i think people are siding with the fed governor, kelly. >> thank you, steven. as i mentioned as well, mike, when he says he has seen commercial real estate values quite rich and morgan stanley is saying buy housing, not commercial real estate? >> in the past he has pointed to commercial real estate.
4:07 pm
he is wary of the system heating up a little too much and then you have to close it down a lot more. so i do think that's one of those reminders that that's another part of the fed's kind of purview, that they want to make sure that financial speculation doesn't get out of hand. i don't think that's a dominant mode of the committee right now. >> i want to call your attention to shares of lululemon which are sinking on its earnings report. we will have full details on that in a moment. first it was down 12%, now more 14% to 16%. we will have more in a moment, danny, but coming back to what has happened in the housing market, you know, single family housing looks pretty good. it is the commercial side where there's some concerns. >> yes. there's been concern in the commercial side because of -- you don't really see it as much in new york city, frankly, but you're seeing a lot of feeling this and you're seeing a lot of investors pull out. so i think that market will concern us when we see some more transparency and what the fed may do next month, i think that's when you'll see investors actually react to that. we have a lot of anticipatory
4:08 pm
angst right now where investors don't know which way to go. i think we'll see a lot more regulatory and tax reform happen already, which isn't realistic but i think that's the bill they were sold. >> you're talking about valuations stuff. steve imodi joins us with a quick market flash. >> kelly, it is reported in talks to buy the financial arm of cabela's, this according to "wall street journal" citing sources. according to this report, synovus would resell to capital one and keep the deposits that, again, according to "wall street journal"s that synovus in talks to buy cabela's. they were halted and as you can see down about 3%. we will keep an eye on that name, kelly. >> thank you. this is for the financial unit
4:09 pm
at cabela's there. interesting stuff. lululemon earnings are out. to courtney with the full run down. >> it is lululemon's guidance pulling down the share so that's where i want to start because lulu shares are down something like 16% in after hours trading. the first quarter earnings guidance is very light compared to the analyst's consensus as is the full year earnings guidance for lululemon. the first quarter revenue guidance of 510 to 519 is below what wall street is looking for. then as we back up and look at what happened in the fourth quarter, lululemon missed just by a penny there for the bottom line. reporting earnings of a $1, the street was looking for $1.01. revenue beat slightly at 790 million. comps strong. comps to currency, total comps of 7%, that was stronger than the street was looking for. kmenlts from the ceo said although we've had a slow start to 2017, our teams are passionately committed to delivering a robust plan across
4:10 pm
project innovation, digital north america and international. still a reminder to our viewers, lululemon shares down 16% after hours and a conference call coming up about 20 minutes from now, kelly. >> stay with us. >> this is interesting because revenue growth with lululemon has decelerated over the past several quarters. this is telling investors again -- again, it is not something that is apparent, you have to wear yoga pants on this one. but it is interesting to see that management has not pulled through what investors wanted to hear. stock was up pretty significantly today over the course of the day, but it is very disappointing to investors i think. >> yeah. courtney, correct me if i'm wrong here, i'm looking at this now. so for the first quarter -- and this is where a lot of the disappointment is centered, the street thought they might do 550 in revenue, let's call it, and their guidance is between 510 and 515 million. that's a good pit shy. >> exactly right. so that's one of it. and also if you look at the
4:11 pm
earnings for the first quarter, the street was looking for 39 cents and lulu is guiding for 25 to 27 cents, a far bet below where the analyst's targets are right now. the growth margin i will say is impressive for the fourth quarter. they launched 54.2% and the street was looking for 53.7. that's metrics we look at closely for lululemon, so that was strong. i will say lululemon has a bit of a history with conservative guidance and ultimately beating it, but this is pretty far below where analysts have flags staked in the ground. >> i don't know if you are a big fan, you are quiet over there. >> come on. >> yeah. >> i think lululemon in every color. i mine come on. >> what do you think is coming on here? >> it is hard for me to speak. i'm in a room the size of an airplane lavatory so it is hard to figure out what is going on. i will say this though. dani hit the nail on the head.
4:12 pm
when you have desell vceleratin growth with high valuation stock, when the growth ends they are taken to the wood shed. there will be an opportunity to buy this stock and it is probably pretty close to where it is now. i would love to take a look at what they said for me to give you further guidance. >> i know you look a little jammed in there. >> keeping a lid on it. >> a little -- people tell me it is like a mug shot photo in here. >> i don't know. guy, you know, people manage to have a lot of mobility sometimes in there, in airplane lavatories -- never mind. >> i know your product of the '70s and let's leave it at that. >> what i was going to say, that notwithstanding, you know, lulu is two-third also of the way through first quarter. this is a jarring gield in the first quarter that's kind of the most of the way done. i think that's probably why the street will have no patience and start to say, hey, lower the bar. >>ably the way, not alone. we have talked about this before, the retail climate took a sharp turn for the worst after this holiday season. it is interesting to kind of dig
4:13 pm
through and figure out what is happening. >> nike, under armour, a lot of the names were taken out to the wood sheds and guys, although they have returned soon, some kind of happiness this year, i still think there's a long way to go. >> and a lot to learn. okay. lulu shares down big. guy, thank you. >> later. >> appreciate it. >> we will let you get out of there. that's guy adabi joining us from the nasdaq. also joining jim cramer on "mad money" tomorrow to discuss this. it will be interesting to get his perspective on what is happening in the storeser here. that will be at 6:00 p.m. eastern time tomorrow. don't miss it. d dani, by the way, thank you for joining. stick around to catch more of guy on "fast money." a dire warning for investors. is wall street broken? that's the question many are asking as more terms turn to robo advisers and demand for research falls off the cliff. up next, we will look at whether
4:14 pm
the model is broken or just ee voofling. then speak to new orleans mayor mitch landrieu, leading the charge against president trump's threat to cut federal funding to sanctuary cities. it's all ahead. you are watching cnbc, first in business worldwide. personalizing treatments with dna and recommending who should play. a dress that thinks, which crops to grow, tax prep to help keep payments low. you can find me on an oil rig, i answer questions small and big. hello, my name is watson.
4:15 pm
4:16 pm
4:17 pm
i welcome back. the winds of change are bloeling through wall street. today black rock shaking up stock picking business by replacing active portfolio managers with technology. this on the heels of a royaltiers report on crisis with investment research. only about 1% are actually read of the reports. bloomberg terminal rentals down 1% last year. second time they have fallen, and wondering if wall street's business model is broken. paul miller is joining us to discuss and fred lane from lane generational, which is part of raymond james. welcome to you both. powell, i guess the big question we'll put out there about wall street's business model, what do you think it will have to be going forward? >> well, it is going to be different just like anything else. i have been in this business 20 years and every five or six years, you know, it changed. i think that, you know, one of the biggest changes over the last couple of years is the active managers have gone away.
4:18 pm
a lot of the hedge funds, especially in the financial world where i lived, just disappeared because everything goes by trends now, not so much by individual stock picking. the etf industry has really grown up and that's also pushed out a lot of active managers. as active managers go by the wayside you will see self side research firms also decline. >> fred, i guess one way of looking at wall street is as a content tretor, right in they're sending out ideas, getting paid for it. the fees they're getting paid for what they put out are going down and maybe there's less demand for those individually des. so i guess where do you think a lot of the sell side and buy side firms have to meet when it comes to making money out of their interactions? >> well, let's step back a second here. you know, 20 years ago -- i have been on wall street for 40 years, and i don't like to admit it but it is true. i was very young when i came to wall street, and i heard about
4:19 pm
the death of research analysts in the late '90s. and it is true that institutional commissions continue to fall and it is true that the pressure on research departments is greater and greater. at raymond james we value research greatly and have a wonderful research and i was at another firm with a premiere research department. we used it actively at lane generational. i think it is important to distinguish between the largest firms who have gathered lots of assets and those that the scale that they have is such they almost have to either be in index funds and etfs or in their actively managed strategies essentially there are only 300 or 400 stocks which are essentially closet indexing funds. i think there's a bifurcation between the actives and the passives. paul speaks to the likely death
4:20 pm
of the actives. i will take the opposite side of the argument. i think it will turn out that the -- who is going to survive here are smaller managers who are managing in a more i had yo sin krating way. we don't feel the need to own energy, we don't own energy. we follow certain sectors and we've concentrated on those and we own fewer than two dozen stocks. >> yeah. >> you can't do that if you manage a $10 billion fund. i think the trend will be toward more smaller funds. >> paul, i wonder if we will see kind of a dumb bell where you have a bunch of those smaller stock pickers still around, still able to do what fred is doing, paul, but at the same time you need to be so big to have scale with massive technology investments that you have a five trillion large aun like black rock. what happens to everybody in the middle? >> well, they're going to either get swallowed up by the big guy or go away. that's what we've seen over the last couple of years. i agree with the other host in the sense that things are going
4:21 pm
to change, and they're changing all the time. but you're right, when you are having -- some of these big research firms, there's not enough active managers or trading going out to support them. so they will have to either change their model, go more small-cap -- like that's what fbr is going to do, go much more small-cap -- or change the structure completely. >> kelly, i think if you take these points together and you say there will be opportunity for smaller firms, boutique firm also with a concentrated differentiated strategy, but will happen in aggregate for the average investor dollar. >> right. >> it will be managed in a lower touch, lower cost way. maybe that's okay because basically the market's probably efficient enough for most people to get their investment management that way and get ideas that way. >> it sounds like in the past if your money would have been kind of tied up in mutual funds, charging two to four to five percent, and they still come out ahead? >> it is a hybrid. there's not a pure index. there's a little overlay to it
4:22 pm
of a slant or some kind of a strategy. >> fred, what do you think it means for the head count? how does technology come to play in all of this? i know you're ideosyncratic and there will be a market, but what is the role for the number of bodies you need in seats and how technology is changing that? >> i think technology -- this is a very highly-paid industry by and large, and people are very highly paid in many cases for producing very little in the way of alpha, i.e. returns greater than the market. so if you can't return -- if you can't generate an economic benefit greater than -- you know, greater than a beta index, you're out of business. so basically what i think this cost pressure's here -- by the way i want to make one comment here. these large firms, the larkest firms, black rock and their ilk, have done a great service to the u.s. investor. the more people invested in stocks, get used to the concept and can deal with the volatility, and obviously
4:23 pm
index indexes dampen out volatility, that's their beauty and their evil, but in terms of returns, but nonetheless they've done a great service. but those firms obviously gathering more and more assets and having, you know, fee pressure because they don't have very well differentiated products one index compared to the other, he withey will lower their cost by taking out head count. the question becomes who will pay for the research currently provided by so many firms. >> right. >> there will be a shakeout in research, and frankly active managers like us will pay for it but we won't pay for it if we get the benefit. i think we'll get the benefit, continue to get the benefit, and it will allow research to continue. i think 20 years from now we will be talking about the continuing evolution of the model. >> paul, what would you add, having obviously, you know, just been right in the thick of all of this? >> i think one of the best things you said in the beginning was 40,000 research reports going out and 1% is read.
4:24 pm
i think that's exactly the problem. there's way too much research being done out there right now, and they have to kickback. some of these banks i used to cover would have 35, 40 analysts. 20 years ago they had 12. i think research jobs have to get smaller and some of the guys have to leave the industry. >> all right. gentlemen, thank you for joining us today. >> thank you. >> paul miller and fred lane as we ponder the future of wall street. in the meantime we have a market flash on con cophilips. seem ah has those. >> reporter: that's right. we have con cophilips selling gas assets to synovus energy for $13.3 billion, a mixture of cash and stock. con owe cophilips says this transaction will allow the company to rapidly reduce debt to $20 million and double purchase reauthorization. separately, synovus an offering of common shares. you are seeing synovus falling after hours.
4:25 pm
you on the flip side you see conoco fill limphillips higher. keep an eye on that. >> is president trump threatening to withhold federal funding from sanctuary cities? how will it impact cities like new orleans? the mayor of that city has been pushing back against the white house and we'll hear from him next. media company "buzzfeed" may go public next year. could it spur the next wave of ipos? that's coming up later on the "closing bell."
4:26 pm
4:27 pm
4:28 pm
welcome back. so-called sanctuary city mayors met with department of homeland security in a closed door hearing today. it came on the heels of attorney general jeff sessions threat monday to pull money for state and local government that refuses to comply with federal immigration laws. some mayors insist they're not violating federal or state lawyer laws. one joins us now. mitch landrieu. >> thank you for having me. >> the immediate impact of the attorney general's announcement on new orleans is what? >> the first thing to understand about the entire debate is there's nobody who cares more about public safety on the streets of america than mayors and police chiefs. that's exactly what it is that we do. secondly, nobody according to what the attorney general said yesterday, that was in that room today as a sanctuary city, we're ah all in compliance with federal law. thirdly, none of this would be an issue if congress wouldn't
4:29 pm
pass comprehensive immigration reform. the mayors of america and the police chief stand ready to make sure we protect the citizens of america from violent criminals irrespective of immigration status. one of the challenges that we have though with the mixed messages coming out of the white house, the attorney general's office, the department of homeland security about what constitutes a sanctuary city. there's no legal definition in law for it. subsequently, what the penalties would be. most of us operating in our cities under federal order anyway, either by a federal judge or federal lawsuits or things of that matter. so the mayors want to work with this administration to try to narrow what it is exactly we are talking about. what mayors don't want to do is become the civil deportation force for the united states of america. >> so we're showing that your city receive nearly a billion dollars in federal funds since 2010. that would mean a significant chunk of your funding goes away, right, if they say, hey, you don't match up to our definition, you know, we want you to be more proactive on this
4:30 pm
front, what have you, and if you lose that money what does it mean for new orleans? >> first of all i don't think there's any chance we will lose the money because we're in compliance with federal law. the attorney general said anybody out of kplienls with 1373 is a sanctuary city. first of all, no definition in law and most cities are in compliance with that. i think we're get evening lost in the rhetoric. sanctuary city doesn't mean anything under federal law. what the mayors want to do is work with the department of homeland security and the attorney general if all they want to do is get violent criminals off the streets of america. by the way, if you think about it irrespective of immigrant status there's lots of crime on the street we need help with and the best way to fight it is in partnership with federal and local jurisdictions. we opened up lines of communication with the department of homeland security. we will be working through this to make the streets of america safe, but simultaneously try to find a long-term answer to the issue of immigration which only congress could do. so the mayors really urge them
4:31 pm
to get on with that because they've been talking about it for a long time. it is their job and it is time for them to get it done. >> haven't used the term cordial, but aggressive, haven't heard that in a while. >> you know, you can be -- this is interesting from washington because you can be soft on the people and hard on the problem as opposed to being hard on the people and not talking about the problem. >> okay. i follow you. just because you made a good point here which i understand came up in the meeting and said, everybody discuss the fact that sanctuary cities is a political term, not a legal term, and if it is to be used there needs to be a legal definition. what is the point of new orleans being a sanctuary city? what does it mean to you? >> first of all, new orleans has never been a sanctuary city. we're not a sanctuary city. we are open and welcoming city. our city is bit on diversity in our culture. we have people of different races, kreeds, ethnicities, and in the entire area and all over the country that are undocumented at this point in time. i think we can agree we're not
4:32 pm
going to pick up the dreamer kids and deport them. i think it is implausible to pick up and deport 11 million people. if we are partnering to find, as the president says the gad guys, and we can agree on who the bad guys are, violent criminals, mayors and police chiefs will be right there. we don't want to drive all of the other individuals who are not criminals into the background and make our streets more safe and stress our police officers who, by the way, are fighting terrorism, fighting homeland security and doing public safety with the threat -- and this doesn't make any sense -- taking away funds that will stop us from doing that job. so the president's budget, for example, cuts funds for homeland security. it cuts funds for the cops program. it cuts funds that support police officers. for a president that said he supports local law enforcement to the mayors and the police chiefs who are the generals to on the ground, that seems backwards tous. we'll work with him but we want to focus attention on violent criminals.
4:33 pm
>> before we have to leapt you go let me ask you this. if there's a definition of sanctuary city, a legal one put forward and it is going to be enforced -- in other words if a city takes that designation you don't get these funds, is it a prior for you to you to have new orleans effectively remain a sanctuary city? >> again, as i said, new orleans never claimed to be a sanctuary city and we're not one. we have been in compliance with the federal administration. we kept telling the administration that and they keep using that term to make a political point about violent criminals. if the point is to get violent criminals off the street, we're going to make sure it happens because that's our first priority. >> you're not interfering if police officers are trying to deport an illegal immigrant, something like that? >> a police officers job is not to deport. the police officer's job is to protect public safety on the streets of new orleans irrespective of immigration status. they need to do what they do, we do what we do, we should work together to try to figure it out but we can't step on each other, and they can't pull our
4:34 pm
attention away from fighting violent criminals by making us a civil deportation force. it doesn't make sense or the streets safer. >> sounds like they're working closer to formalize all of this. a lot of money at stake. thank you for joining us. >> thank you. good talking to you. >> that's new orleans mayor mitch landrieu. time for cnbc news update. >> hello, kelly. bill paroni, former aid to governor kristie was sentenced to two years in prison and 500 hours of community service for his role in the george washington bridge traffic scandal. fellow defendant kelly ee seefd an 18 month prison sentence and one year probation. both will appeal. price water house coopers will remain in charge of the balloting for academy awards, despite its sna few at this year's academy which led to the announcement of the wrong picture. major league baseball suspended new york mets pitcher jara
4:35 pm
jarais familia for 15 games. it follows his arrest last october for domestic violence. the charge was later dropped by prosecutors. familia will not appeal the decision. and virginia police are looking for a woman who portrayed herself as a target employee and got away with stealing $40,000 worth of apple iphones. she showed up at a store in alexandria on march 15th and was able to gain access to the store's stock room. you just saw that video showing her carting the merchandise right out of the store. that's the news update this hour. kelly, i will send it back to you. >> pretty brazen. >> absolutely. and everybody is caught on camera, people don't realize that. >> exactly. in a shopping center? >> right. >> thank you, sue. >> thanks. >> sue herera. new ipo buzz on wall street, and this time it involves a media company. up next we will speak to the reporter that broke the story about "buzzfeed's" ipo plans.
4:36 pm
later we will have the latest from the front lines of the battle against alzheimer's including two new approaches to fighting this disease. stay with us. with a clear advantage.an e fidelity, where smarter investors will always be.
4:37 pm
4:38 pm
welcome back. lululemon shares are down nearly 18%. they just reported earnings in
4:39 pm
the last quarter's results were okay. it is the first quarter guidance that was weak. the revenue and the earnings much lower than what the street was expecting. again, the ceo will be speaking to jim cramer tomorrow for more on all of that axios is breaking the story that "buzzfeed" is reportedly planning to go public next year. they've grown from a website publishing viral video to a global news organization with offices around the world, an entertainment center in los angeles, and nbc news is an investor in "buzzfeed." let's bring in michael en, the cofounder of axios who broke the story this morning. hello, mike. >> good afternoon. >> people have been looking for more ipo excitement down here. is "buzzfeed" the kind of company that will deliver it? how big a deal would it be? >> absolutely. huge excitement about this. this is lights out the number one modern digital media company looking at an ipo in the first half of next year. so in the early planning stages,
4:40 pm
they haven't hired bankers yet, but it will come. jenna perretti said he is not a seller, he has gotten many offers over the years for media companies, but they plan to make it public. one of the reasons this is so interesting and why your question is spot on is this is going to start the new wave of the modern content companies. so you have the earlier generations of internet content companies, your yahoo!s, your huff posts, your aol. now "buzzfeed" is likely to start a wave that could include vice, include box which has nbc investment and media which includes brands like the dodo and now this. see that's one of the reasons they' there's going sob so much excitement about this, is it paves the way for what might happen for the other brands that have come to define the
4:41 pm
internet, "buzzfeed" leading the way. a fascinating combination of media and text. like a very smartly designed their tech to make share stories carry further than just about anybody. >> yeah, mike, it is interesting. on that point you have facebook out there refuses to call itself a media company. twitter similarly. snap came out and said, no we are a camera company. i wonder, who knows, obviously this stock is not rin yet, but how "buzzfeed" might present itself because they want to seem to emphasize the technology side, basically the way they help advertisers make their messages viral and such. i wonder as a media entrepreneur yourself, how do you think they're going to couch that? >> well, i actually know the answer to this because i asked them. it was such a good question. you're right, that has been the genius of peretti who runs the news operation. they saw the importance of sharing, of distributing your content across many platforms. so they're going to be a media tech company.
4:42 pm
i think the emphasis on the tech. the media is the spart that gives it the sizzle and is the part that so many of your viewers see and interact with every day, starting with what they once called a great cat site and now with foreign bureaus around the world, a great news operation run by them. strong coverage from silicon valley i always enjoy reading. >> michael len, stay with us because we have news on ivanka trump. let's get details first. >> we just got a statement from the white house announcing that first daughter is going to serve as an unpaid federal employee. that's different from her previous status as an unpaid adviser with a -- without any attachment to the ethics and transparency rules that attach to government employees. she has now issued a statement saying in response to some of the questions that were raised about that, she has decided to take this step. the white house has issued a statement saying that this is an unprecedented step for her to
4:43 pm
contribute to transparency and now she can make a greater contribution to the president's agenda. of course, we've seen her in many official meetings already, and this just provides a different level of attachment to the federal workforce and rules and regulations, guys. >> all right. thank you, john. mike, we turn back to you for the implication. what does it mean for this designation now to define ivanka trump and her employment? >> it means nothing about the larger effect of ivanka trump and it was implicit in what john was saying, is that ivanka's role is sho she is. if fact she has carte blanche to advise her father on big and important issues. next month we will see her going over to germany at the invitation of the -- of angela merkel to talk to a women's economic summit there. and so both on the international front, the national front, inside that west wing, she has such wide swath and purview that the bureaucrat bureaucracies of
4:44 pm
it won't make a difference. >> all right. mike, i don't want to give you a hard time about axios going public, if we're going to talk about "buzzfeed" startups and -- >> axios is on fire. today 72 for us and we just had our 65th person, april 10th, from the science channel. so -- >> not bad. not bad for the first 100 days. thank you for joining us this afternoon. >> thank you. >> that's michael len of axios. quickly, mike, i want to get your thoughts on this "buzzfeed" ipo. does it mirror airbnb, uber? >> it might be, off to the side of those but i think highly anticipated, mostly because i think of their role as a go-between for advertisers. that's the reason you care about these platforms, is because it is the new way digital ad dollars will flow. they have supposedly a better mouse trap at propagating the messages. >> that's a good point. privacy rules, the details and
4:45 pm
what it means for your data coming up. also 91 americans die every day from an opioid overdose according to the cdc. how both the trump administration and democratic senators plan to overcome that epidemic is next. you are watching cnbc, first in business world wide. sfloet ear. at pgim we help investors see the implications
4:46 pm
of long term megatrends that rug really tied the room together. any questions? bueller? bueller? stream all your entertainment. introducing at&t's new unlimited data plans. plus, get the amazing new iphone 7 on us.
4:47 pm
kevin, meet yourkeviner. kevin kevin kevin kevin kevin kevin kevin kevin kevin trusted advice for life. kevin, how's your mom? life well planned. see what a raymond james financial advisor can do for you. . welcome back. president trump holding a listening session on american's opioid crisis earlier today. he met with lawmakers and survivors alike and promised to help crack down the flow of drugs into this country. >> drug cartels have spread
4:48 pm
their deadly industry across our nation, and the availability of cheap narcotics -- cheap narcotics, some comes in cheaper than candy, has devastated our communities. it is really one of the biggest problems our country has and nobody really wants to talk about it. >> yes, so let's talk about it. where do we stand on the fight against the opioid epidemic? meeting tirrell joins us. >> reporter: we have heard the terrible numbers. depths from heroin overdose has surpassed those of guns. quadruple the number in 1999. as you see prescription opioids are still the most common cause, but recent years have seen a sharp uptick from heroin and synthetic opioids. prescription pain killers are big business for drug companies, generating $9 billion in u.s. sales in 2014, more than double sales in 2000. in addition to the president's
4:49 pm
listening session today, other government attention is being paid. yesterday missouri sen ton claire mccaskill opened investigation into the top makers of opioid saying that it didn't happen overnight. it happened one prescription at a time. this investigation is finding out whether the same practices that led to the epidemic continue to. mylan responded say anything a statement, quote, we hope that the senator expands her interest to include the top ten suppliers to the u.s. market. johnson & johnson telling us it believes it has acted appropriately, responsibly and in the best interests of patients, kelly. >> we hope it is maybe a bipartisan area where it could make a big difference in quelling this epidemic, and also in terms of important breakthroughs looking at new ways to treat alzheimer's. what are you seeing on that front? >> we know that the track record on alzheimer's drug development has been terrible. one study found 99.6% failure
4:50 pm
rate and the target of the biggest recent studies of those has been the plaques in the brain that are the hallmark of this disease. there are other earlier research going on and alternative approach company voyageer therapeutic using viruses to steer treatment into the brain. it's ap approach known as gene therapy, delivering genetic information to create proteins to correct what's going wrong in disease. >> we have some technology here that allows more than the anti-body to get into the brain. we believe there could be the effectiveness of these anti-bodies and slowing the progression of the disease. >> reporter: we should mention voyageer's market cap is a little smaller, just above $300 million. it's early and different. new research out of mit that suggests light, yes, light may restore a brain frequency known as gamma, important in higher order functions like thinking
4:51 pm
and memory. they found an hour of exposure to light 40 per second cleared amyloid in mice. it's an exciting and different new way of thinking of alwa alzheimer's. >> some privacy advocates trying to dismantle a ruling at protecting internet customer's data. more on that next. tomorrow, live from the arctic forum, russian president vladimir. plus all moderated on ""squawk box" tomorrow box" tomorrows a n box" tomorrows a n . you always pay
4:52 pm
4:53 pm
your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claims centers are available to assist you 24/7. call for a free quote today. liberty stands with you™ liberty mutual insurance
quote
4:54 pm
>> welcome back t. house voting rolled back internet privacy matters. julia has more. >> reporter: hey, kelly, president trump is expected to sign into law the repeal of the fcc privacy rules t. overturned rules will require carriers to provide privacy notices that clearly and accurately inform customers about what confidential information the car years check, how they use it and otherwise circumstances they share it. >> that included selling data like location and browsing history to marketers without consumer's permission, which is why privacy advocates are up in arms. for those that had voked for the rules repair, including the fcc chair ajit pai, consider it a win for internet providers, comcast, verizon and at&t, these rules would have put those companies to disadvantage to google and facebook that can collect more information about users. >> at&t and verizon have so much
4:55 pm
user data on how you use your mobile phone and what browsers you look at, what internet sites you are interested in. they're sitting on so much data. this opens the wave for them to monetize it. >> next, we could see more telecom deregulation, which can give telecom providers more opportunity to make money. over to you. >> thank you. american express, meantime, upping the credit card reward wars, those details right after this.
4:56 pm
4:57 pm
and a team of experienced traders ready to help you need it. it's like having the power of a trading floor, wherever you are. it's your trade. e*trade
4:58 pm
>> welcome back to credit card wars are raging. american express is now reportedly making a move to try to get customers away from that j.p. morgan sapphire card. analysts are expecting an increase for people that sign up for a new platinum card, increasing it to 20,000 points to a total of -- so 60,000 is the new points bonus, it was 40,000 before. one catch is users have to spend $5 item in the first three months to get these points up from previously. sapphire changes the name t. card came in at the right time. it's done extremely well. everybody is running to catch up. >> they're catching american express, of course, at a moment
4:59 pm
when they feel they have to defend this franchise. at least they used to have at the higher end, now it's not about brand, it's about purely a apples to apples comparison of what am i getting out of my spending. >> i know this isn't a time to take a trip down memory lane, what american express used to be, what wells far gogo used to. >> wasn't there a story, gary cohen had a real gold american express, lloyd did, he said i'm not going to play for the platinum and the plaque. in the old day the wall street guy would have the highest. >> in the meantime, good for consumer. >> consumer surplus, competition and innovation in this case is going to those people. okay, you can afford to splurge for $5,000. >> let's goba to lululemon, one of the most interesting things is gross margins were okay.
5:00 pm
something else is going on. >> no, it definitely seems it's either a traffic issue, first quarter just some hesitancy about it. maybe there is more seasonality that they expected in sales so far this year. but there wasn't much in the quarter that was actually reported. there was a problem. >> exactly, those shares are down 18% on the guidance. >> that does it for us, have a good afternoon, everyone. >> "fast money" starts right now, overlooking new york city, time's square the traders on the desk. tonight on fox, it's the rise of the robots. black rock saying it will replace stock peckers with machines, it could be good news for investors t. one and only kevin o'hery is here to tell us who the winners will be if robots take over wall street. one trump trade wall street missed is hitting higher. it can be a bad sign for the trump rally. what it is and why inv

56 Views

info Stream Only

Uploaded by TV Archive on