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

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i think it's compelling down here and i think there's more upside in akamai. >> core voe had a great quarter last week. >> twilio bought it today. >> going back to the financials, gs. >> igm, north american tech. >> good stuff. good seeing you. >> likewise. >> "power begins now." indeed it does, scott. sthuch. welcome, everybody. i'm tyler mathisen. here is what is on the menu for a two hours of "power." counting down to the fed, a decision is less than an hour away. their take on the economy, interest rates, and much more coming up about an hour from now. apple still the stock of the day trading a bit lower after earnings yesterday but shortly the ceo tim cook, as scott just mentioned, will go one-on-one with "mad money's" jim cramer. we'll talk to jim ahead of his big sitdown and find out what he wants to learn from the chief apple guy. and call it the trump bump.
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shares of the morning times up. as the president would say bigley on the back of its strong earnings. the ceo of the nyt joins us live. "power lunch" starts right now. welcome to "power lunch." i'm michelle caruso-cabrera. major averages are lower but holding steady ahead of the fed decision. this move in the nasdaq down 29 points. right now that's the biggest drop in more than a month. the nasdaq still off lows of the day. check out what's moving, a retail wreck this hour. groupon and etsy leading declines on the back of their weak earnings. groupon down 15% and etsy is down almost 10%. melissa? >> i'm melissa lee. puerto rico announcing a historic debt restructuring on a portion of its $70 billion of debt. the move comes after talks with bondholders failed fbi director james comey grilled defending his decision last year, just
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days before the presidential election to reopen an investigation into hillary clinton's e-mail. and facebook making a major move to crack down inappropriate material. the social media giant adding 3,000 people to monitor live videos of murders and suicides and other content. more on this big story straight ahead. but we begin with the countdown to the fed decision. we are less than an hour away and wall street is in a holding pattern here. straight to steve liesman in washington with the very latest. steve? >> reporter: melissa, thanks. the fed expected to send an indirect signal that its june rate hike is on track. it will look through the recent economic weakness and emphasize a better medium turn outlook. writing, quote, while the latest growth inflation and jobs data have been disappointing, most fed speakers have taken these disappointments in stride. jpmorgan expecting the statement today to do the same. 65% saying they ex inspect that next rate hike in june. 53% looking for three rate hikes.
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71% think the balance sheet will start declining in 2018. the bond market is more tentative. since mid march yields have fallen about 30 basis points along with the gauges of economic growth and softer inflation on what looks to be right now to a lot on the street waning prospects for fiscal stimulus. the fed got some support to look through the economic weakness this morning. the adp jobs report at 177 is more than most think is needed to cut the unemployment rate and the ism suggested good growth in that critical sector early q-2 data not necessarily the auto data is saying the fed is correct to look through the weakness and stay on track for a june hike. >> got it, steve. thank you so much. the markets are lower across the board as we countdown to the big fed decision. this is noted investor who expects the summer interest rise will go along with a correction in the stock market. rebecca patterson is a cnbc contributor, managing director and christina hooper with
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invesco. good to have you here. rebecca, was steve right in what he was saying in terms of the fed looking past the soft data and focused on a june rate hike? >> i rarely disagree with steve. the market as of this morning is pricing in about a 71% chance that we get a june rate hike and barring some major shock, a le pen victory from france this weekend or something that rattled the markets in a big enough way that they might pause, i think we are likely to get a hike. >> chris tea he intinchristina, of jeff gundlach? >> i understand his perspective. i would say what makes stocks more vulnerable than a rate hike would be news leaked about balance sheet normalization. i think that really is going to be critical. understanding what the fed's plan is for that because, arguably, qe had a bigger impact on stocks than it had on bonds. and so the unwind of had, we're in uncharted territory, could be
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more impactful for stocks and bonds and make them more vulnerable. >> do you think so, too? >> i think the fed will do everything it can to make sure the qt, the quantitative tightening we might get later this year, will be so well telegraphed and so slowly they're going to do everything they can to make sure it doesn't happen that way, that stocks can look through. >> at the same time it's interesting because we had the reaction, a violent reaction in the markets of a taper tantrum. we are hearing about balance sheet normalization and the market is barely sneezing. we have a vix sitting at ten-year lows right now. we have bond yields -- it's a complacent market even in the face of the prospect of normalization. is that -- does that give you hope the markets will take this completely in stride? >> absolutely. i think the base case is that markets do take it in stride. but, for example, minneapolis fed has been very vocal about saying the fed should release a
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transparent plan just in the off chance that markets do have an outsized reaction. >> what more would they have to do to be more transparent? they've been signaling this is going to come and they're going to do it and they're going to do it very gradually. i guess the market reaction is, hey, we know it's coming and there are other forces in the market, the economy, the presidential agenda and so on and so forth, the change and the attitude of the business, that seem now to be trumping the fed. >> no pup intended. >> sort of intended. >> the balance sheet is part of the equation but it's only one part of the equation. if they start tightening the balance sheet, letting things roll off but economic data is improving or it looks like we're closer to getting tax reform that could help growth or more deregulation, i think he cequit again, can look through this and stay supported. right now we see u.s. data softening a little bit.
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if we were in that regime and doing quantitative tightening i think stocks would be more vulnerable. >> if we were in that regime, that's the question. if the fed sees that things are softening, they're going to ease off the tightening on one front or the other whether it be hikes or normalization of the balance sheet, right? >> that's everyone's assumption right now that the second you get even this perception of a little equity nervousness, the fed backs off and i think it's interesting that in recent weeks we've seen a number of fed officials hinting that they think equities are fully or a little overvalued so maybe they wouldn't be so unhappy if equities did pull back a little bit. i think most valuations today are showing u.s. stocks are at a minimum fully valued. >> ladies and gentlemen, thank you so much. rebecca patterson and kristina hooper. rebecca will come back to talk about the french election you mentioned. it's a $3 trillion -- almost said billion because trillion seems toe crazy but it is $3 trillion and it is growing and already a lot of talk about the risks and impact of etfs on the
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markets. brace yourself now for a whole new level of risk. forget leveraged, double leveraged, triple leveraged. regulators giving thumbs up on a quadruple leveraged etf. that means four times the gains, four times the losses. it's long and short. it plays off of futures. how good an idea is this? how risky for investors? bob pisani follows etfs for us and cnbc contributor herb greenberg is never without an opinion on these kinds of matters. bob, this is a fund that you can choose the long side or the short side and get four times your gains. >> reporter: yeah. we've discussed this many times in the past. i'm a big etf backer, not of inverse e it tfs. it's simple. it's not a good product for the average investor. it's a product for day traders. it may be fine for them but nobody should hold on to these for any length of time and, in my opinion, that means any more
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than a day. >> it is matched to what index, bob? what am i playing here? >> these are the s&p 500s. so if you're up 1%, the s&p is up 1% in a day, you're going to make 4% if you're leveraged. if you're in first, the s&p is up 1% a day, you lose 4%. but this is only on a daily basis. due to the fact you get compounding of daily returns, the returns change over time so, for example, if the s&p is up over a one-month period, oh, gee, i'm up 4%. but it won't be because it resets every day and there's no way for you to know what those numbers are going to actually be. i'm fine with it if somebody wants to day trade and they have a bet the number the next day will be terrible and they want to bet against the s&p 5b, fine. holding this more than a day or two -- >> going to try to conduct a trade here. so i buy 100 shares of this thing today. the s&p is up 1%.
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i'm up 4% if i sell it, right -- >> reporter: you have $104. >> then what? >> you have $104 in your account. >> and it's reinvested the next day? >> reporter: and that's why you have to reset it. that's the whole point about resetting. the next day you start at $104. suppose the s&p 500 is down 1%. that means i'm even, but it doesn't necessarily mean that because you're down 4% on the $104 not 1%. i know this gets dorky. the returns over time very tremendously from what it looks like. >> it's dorky but there's also a short side here, too. you can take the short side and do the same thing. so if i want to bet it's going to go down a point, i can do that. herb, what do you think? >> i think the best comment came from the guys at themis trading
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and they said, why do we need this? now that we have this, what's going to keep them from going to five times, ten times? where do you stop? i think bob makes the perfect point, day traders, the people who mo what they're doing or allegedly know what they're doing, fine. but if we get into a volatile market and a bunch of people, human nature is some of these traders, because this is gambling, they think they're smarter than everybody else, that they will know when to trade out. you don't know how many people with a lot of money will get caught at the wrong time and that has a bigger effect on the markets not just on them. >> where is the fcc in all of this? bob or herb, the fcc is approving this. shouldn't they be looking out for investors? which kind of investors are they looking out for in approving this sort of product? >> reporter: they've made it very clear in the past that they expect these etf providers who are leveraged and inverse to provide very clear guidelines this is not for people to buy and hold and they do that if you
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look at the websites they make it clear these are daily investments. i think herb is right. i think they should issue more clarification and maybe put some kind of limit . generally i'm a free market guy. i agree with the point. there is -- herb's right. why don't we do 100 times leverage? there's a point it could be disruptive. the one thing i would say about this, leverage and inverse etfs are a very small part of the market, about 1.5% of all the etf products out there. that's small and it's not getting bigger. it was larger a few years ago. i'm not terribly concerned about any disruption to the market that might occur, but who knows, if you could go to 100 times maybe it could be disruptive at some point. >> explain to me, herb, where the liquidity comes from or whether i don't need to care about liquidity. >> i think you always need to care about liquidity.
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i think michelle was saying, hey, free markets, let everyone do what they want to do. i think that's where you're going, michelle, correct? >> i don't like the whole nanny state. where is the s.e.c.? why aren't we protecting people who may be so dumb they don't know what they're getting into. most people know what they're doing when they do this kind of thing. >> they do or they don't. in had case they don't always -- no, remember, unlike an option where you have to go in and sign a piece of paper that says, you know, i think i know what i'm doing and then they'll let you do it, here i can just go and do it. i can go and do it. >> it's their money. >> it's their money. but if bob, let's just say, there's unlikely to be a big impact, but if there is a big -- we don't know. why was black rock, how many years ago that black rock was coming out? >> i know we will regulate against every counter factual that may or may not happen for circumstances we don't know are going to happen. come on, guys. they're wrapping me.
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>> oh, michelle. >> that means i get the last word. i like it that way. thank you very much. facebook's big step to monitor violent videos a good move or a move closer to censorship. revenue shy of estimates and a dip in iphone sales. where does the company go from here? our jim cramer joins us ahead of his big interview with ceo tim cook next. (fans cheering) because when you really, really want to be there... but you can't. (cheering) at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready. because we're helping leading companies lead with digital.
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welcome back, everybody. big interview on "mad money" tonight. tim cook will sit down with jim cramer in just a few minutes jim will join us -- well, he's going to join us right now live from apple's headquarters in cupertino, california, with what we can expect. jim, welcome. as always great to see you from sunny california. what are you going to ask him? what do you expect the important points he's going to make will be? >> reporter: sure. i want to ask about the notion here is a stock going from $93 to $147? what changed? is there a service revenue stream even though there's a commentary they missed the quarter, isn't this the idea there's a new phone coming up and business was pretty strong. a reality check about what people think about versus those who own the phone and the stock.
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>> what do you think -- i was struck yesterday by how a couple of their lines of business, the ipad and the mac seem almost to have become after thoughts. it is a two-horse race here at apple, the phone and the services. >> reporter: absolutely. you look at 60% phone and the rest is single digit until you get to service. service is about razor, razor blade. procter & gamble sells 22 times earnings and this stock sells at 16. you could argue it sells at 13 times earnings. i'm trying to figure out since we have becky quick with warren buff if fet this monday from 6:00 to 9:00 a.m. why we shouldn't view it as a consumer product company versus with facebook after the close or alphabet which reported last week. there's some disconnect there i don't get. >> jim, i heard you enjoyed our discussion about the leveraged e
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it tf. any thoughts on that? i would love to know what you think. >> reporter: oh, thank you for asking me. this is a travesty. i remember when they put through the 3x. a lot of people don't know what they do. i'm in sync with herb. this is a dangerous product they should sticker it saying you will lose money if you don't sell at the end of the day but they don't do that. it doesn't exist. it's a travesty. don't understand why they're allowed. why don't we take money, throw it in the chimney, use it as some sort of kindling and throw in a duraflame log. >> i think the first time somebody uses it and blows it they're going to learn pretty quick how it works, jim, no? >> why do we have a create a product that ruins main street? looking at who will win the d h derby, after the derby is over that ticket is worthless. i have news for people, after
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the day session is over, that ticket is often worthless. these things are harmful for investors' health. the etf-ization has to start soon. they start because they're afraid of single stock risk. i'm ready to take the risk of facebook or apple. i'll take the single stock of amazon or netflix. i don't see the risk that much but maybe i'm not a giant advertisement for things that just make it so we don't make as much money as we should. >> point taken. looking forward to this tim cook interview. >> thank you. appreciate it. what does wall street want to hear from tim cook? an analyst's take. $160 price target. i'll kick it off with that very question. what do you need to hear from tim cook? what didn't you hear on the conference call yesterday? >> everyone wants to hear about services, and services is great. they were very confident they will grow services almost double
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by 2020. i think that's great. i agree with jim the stock is significantly undervalued when you think about what other businesses like that trade at. today you get the hardware business for ten times earnings. the question i would ask him really is around hardware pricing power. if you look at the last five years, everybody would agree the entire smartphone market is actually slowing down. apple's iphone prices have gone up. the mix is actually skew iing me towards this bigger phone that has a higher price. they have pricing power. now that might not last longer term because they have to penetrate india. >> sure. it's interesting because on the conference call it did seem like it tim cook and others who are participating on the call were trying to make that pivot trying to sell services very hard talking about that a lot, talking about the 18% growth that we saw in the quarter and yet as you outlined, there seems to be a sales job that needs to
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be done for wall street. ubs had that interesting piece saying active fund managers are largely underweight, under own apple right now. why would they. with the launch later on this year. something is not being communicated. >> people are not looking at the services business. they're not ready. the services business is not big enough to do a true some of the parts. you would get trading at ten times. i think as probably a year from now, maybe even two years from now people will be much more willing to value the services business. there's general agreement this will be a big phone cycle. this will be huge. there are questions about what happens after that and so what is the right multiple to pay for this. >> as they go into emerging markets and sell at a lower price, tim.
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>> what would you like to see -- >> over a year ago in anticipation of this phone. the dynamic, the key is the install base. the install base is 50% bigger than when they launched iphone 6. they slow down a lot. you will still sell lots more units. >> i can't wait for wireless charging. i am so tired of cords. that alone is huge. thank you. >> thank you very much. coming up, home prices may be rising but most local housing markets are nowhere near recovered. we'll break it down next. actuald your business back? say goodbye to slow downloads, slow backups, slow everything. comcast business offers blazing fast and reliable internet
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we are 33, almost 32 minutes away from the fed decision on interest rates. we'll get a few insights on what they have in store. industrials are in a holding pattern. stocks really are as well. the s&p 500 about a third of a percent. the nasdaq has been the year's biggest gainer down the most right now about half of a percent. shares of the "new york times" are up today as the president might say. this on the back of some strong
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earnings amid continued presidential jabs. we have a lot to talk about. "the new york times" ceo mark thompson will be in the house next on "power."
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hi, everybody. i'm sue her era. here is your cnbc news update this hour. president trump hosting palestinian leader abbas at the white house today. the president expressed optimism for resumed peace talks between the palestinians and the israelis saying there's a good chance there will be peace in the middle east. >> we want to create peace between israel and the palestinians. we will get it done. we will be working so hard to get it done. it's been a long time. we will be working diligently, and i think there's a very, very good chance and i think you feel the same way. >> a large explosion struck a coal mine in northern iran trapping dozens of miners and killing at least two. several officials blamed the explosion on accumulated gas and said it was affecting rescue
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efforts. the post position draw for the 143rd kentucky derby held today at churchill downs. the prerace favorite, classic empire at 4 to 1 drew the 14th post. always dreaming the second favorite at 5 to 1 is in gate five. the race will be held on saturday on nbc. ladies, get your hats ready. that's the news update. michelle, back to you. i know you love hats. >> i do. i do. thank you, sue. >> you've got it. we've been talking about soaring home prices, but you might be surprised to find out most local markets are nowhere near recovery. diana? >> reporter: michelle, don't be fooled by big national numbers. yes, when you look at indexes of major metropolitan housing markets they show big price gains. barely one-third of the homes in this nation have recovered to their prerecession price levels according to a new report from trulia, in denver, dallas, even
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oklahoma city and nashville nearly all the homes have recovered to their prerecession peaks and most have surpassed that peak. but on the flip side vegas, tucson, ft. lauderdale, new haven, connecticut, camden, new jersey, and riverside, california, among others, they're not even close. in the markets that have seen the greatest recovery it is largely due to income growth. we talk about supply and demand but trulia look at four factors -- employment, income population and interest rates and income growth correlated more to growth. when incomes rise, households tend to spend more on housing which pushes prices up. supply and demand are a factor, but the very tight supply of listings is most prominent in markets that are seeing that big income growth. that's where more people want to buy especially younger buyers who are currently renting. the supply issue is worse at the entry level and that's where price jumps are the biggest. now we have lots more of this including some fantastic
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interactive maps on go there now. melissa? we will. thank you. shares of "the new york times" surging more than 12% on the back of strong earnings saying it added 348,000 digital subscribers making it the best for subscriber growth in "the times'" history. the print side continues its decline. ads in the print edition decreased almost 18%. since the election of president trump "the new york times" stock is up almost 40%. hardly failing. here to take us inside the numbers, president and ceo mark thompson. mark, great to have you with us. is this the trump bump, and what are you seeing in terms of trends going into the second quarter especially as people seem to start becoming inured to the president and his statements. >> the story of our business and the acceleration of our digital business predates donald trump's campaign and trump's election as president. there's no question we have some
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rocket fuel in the subscription business in recent quarters and we expect that effect to reduce over time but we think the underlying acceleration which we were seeing as far back as 2015 in our digital subscription business is going to continue, and digital advertising, we had a very good quarter for digital advertising up 19% year over year and that's not correlated with the news cycle. that's to do with the way in which we're developing and innovating in digital advertising. we feel very good that our digital growth is going to continue to be very strong and it's going to more than offset those declines you talked about. >> when? when does it offset it? >> i want to be clear, it did that this quarter. we grew total adjusted in this quarter despite head winds in print. already we're demonstrating the ability to grow total revenue, 5% on the quarter, notwithstanding the print declines. >> when does digital revenue overtake that? >> the growth is good enough
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already to offset declines in print, at least it was in this quarter. in total numbers it depend on what happens with print but within a few years i suspect our business will have more digital revenue than print revenue. >> are you or are others ever going to get to a point where you're going to be able to charge for a digital ad what you would charge for a big full page or a center spread in the "a" section. >> already digital relationships we have which are far more valuable than any print relationship that we've had if you look at individual ads. so our relationship with samsung 360 video is an enormous -- it's enormous commitment by samsung. it's a great partnership. we love that. there's never going to be a single digital display ad. which is going to make as much
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money. >> one more in here because i think of the changing retail environment in new york city and around the country. big advertisers in newspapers used to be the department stores. >> the reality of the changing face of retail is something we see mapped across in that category in advertising. tech has been important in growth as the u.s. economy as well. one of our jobs is to make sure that we are tracking, as we think about advertising opportunities with the bigger secular changes in the broader economy. >> overall your ad revenues are still on the decline, correct? >> can we highlight -- we have it up on the wall 2014, $661 million in ad revenue. this year 2016 only $581 million
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in add revenue and the expectations $515. that's going in the wrong direction. >> we believe that we have a great formula for growing digital advertising. we believe we will be a consumer first in the future and a significant part of the revenues will come from direct relations with those who pay us and it will be a significant additional revenue. >> 2014 we got this in total revenue. we have this for the wall. 2019, $1.6 billion. you're still not growing revenue. >> we grew 5% year over year. i'm committed to getting into the habit quarter by quarter of
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growing total revenue by growing total digital revenue quicker. we've shown we can do it. a believe a steady pattern of growing revenue and total operating profits. >> tell me whether today when you take print subscribers as the most paying subscribers in the history of "the new york times." >> $1.8 billion print subscribers when it was just the print world in 1993. today we're roughly at the $3 million mark. you take the two and these are different people. >> what do you know about them? why are they buying?
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a havevariety of reasons. >> intense interest in the news cycle and in the political news in the u.s. is definitely a factor. they are younger, many of them. more female than the previous cohorts. only a couple million subscribers. how do you convert them more and more? it is to rely on subscriptions. >> a very big part of our challenge, and it's a challenge for our newsroom and marketing department, is in the funnel and it is to encourage users to sample more, to try more, to become more engaged, to come more days of the week and month so they become more engaged and things like our new podcast, the daily, things like our morning briefings are there to encourage people to think of this as a
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regular point of contact. >> as you see the shift away from print how is that saving you money? does it cost more money to deliver that addition as oppose ed to digital? >> there are very, very high distribution costs with print. >> so the conversion saves you -- >> i want to be clear. >> spend more to acquire customers? >> we don't. the heart of this, which is about journalism -- we have a very big newsroom and we're committed to our journalism, the costs are a fixed cost if you want to be at the "new york times." >> brett stevens, you brought him over from "the wall street journal." he was a never trumper there. you've had a few in the past.
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his first column where he acknowledged the climate change was real, which is big for a conservative. the response was devastating. many threatened to cancel subscriptions. have you seen that? >> we've seen a very small relative to the size of our subscription, a very small number of cancellations. they want to be exposed to a broad range of opinions. i think actually broadening the range of opinions and is part of a plan i think strongly is a good thing and will be ultimately very good for business.
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i want to say we have multiple viewpoints already. we want to be the richest available to the american public. >> mark thompson is the ceo of "the new york times." the calls you need to hear about today including a down grade on this stock. it's a mystery stock.
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time for street talk and the stocks you need to know about. raymond james lifting its price target to $93 sticking to outperform rating after the company posted strong earnings and lifted revenue for 2017. rj raising growth assumptions, earnings, and cash flow estimates. 2018 estimates as well. >> mcdonald's is the second
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stock. the firm is raising its price target from $141. goldman seeing better visibility into u.s. franchisees buying into the experience of the future. this includes mobile offerings and delivery getting a little bit of a boost. >> raising to $196 after the company raised estimates. the outperformance driven by the engine division. better demand in china. early indications of oil and gas and mining markets recovering plus more potential upside from the joint venture should alleviate autonomous trucks. >> and twilia which is up in the air after uber, the largest customer, began to shift away. the stock has been downgraded. wrong to underestimate the risk of losing uber. it could react sell rate next
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year. the price target $33.94. this morning, wow, getting clocked. >> uber was 12% and all of a sudden, there's a risk here. >> news. >> tyler? >> thank you very much. the battle for the french election enters its final round and who will be there? michelle caruso-cabrera will be there. you're flying tonight, aren't you? >> yes. >> is it going to change anything? le pen, macron. her battle plan for your money in the battle for the french election.
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yes, the markets are keeping a close eye on the fed today and friday's jobs report, but the battle for the french presidency also very much on the minds of investors. marine le pen and emmanuel macron are set to square off in a debate. heading into the election this weekend. let's bring back rebecca patterson, also managing
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director of trust. a lot of people watch this and see it as one of the key vulnerable moments for emmanuel macron. he's not a good debater and kind of boring. if things will go badly this is the moment it will happen. >> he has to keep his cool when. >> has to keep his cool. le pen will try to show she's a stronger candidate. he's wildly favored by markets and polls to win. our rview, it's not over until it's over. >> markets complacent. markets prefer macron. believes in the euro. maureen le pen does not. >> very different than brexit and the u.s. election. le sppen is not likely to win. if she did, the risk of france leaving the euro would go up.
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french stocks spillover to europe, the u.s., big enough to put the fed on hold in june. >> macron, a lame duck from the beginning? doesn't have a majority? >> another good point. not run on a big growth, big bang platform. he has to build a coalition government. steady as she goes with france. european central bank easy. tail winds for european equities but doesn't mean europe is fixed. just under 10% for the whole region. >> how would you position it? vol tiatility low in the united states a no brainer, for that outside -- you know, the -- >> the just in case. ironically. >> yeah. >> the unlikely event. >> we added a little european exposure after the first round
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but remain underweight european equitying in our portfolios. macron wins, looking opportunistically after the next months. le pen losing, assuming it happens, takes a big risk off the table but doesn't mean europe goes from bad to good. the risk of italian elections, structural head winds for the region. fa fallout from brexit as it plays out could affect europe as well. going in with eyes wide open. >> thank you. good to have you on. >> don't forget, live all day in paris on friday. and the countdown to the fed continues. eight minutes away from the latest decision on interest rates. no hike expected there but investors, of course, closely watching what the fed has to say about the health of the economy. we will find out live next. bad , the future's going to be a nightmare! does nobody like the future? c'mon, the future. he obviously doesn't know intel is helping power autonomous cars
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and the 5g network they connect to. with this, won't happen in the future. thanks, jim. there's some napkins in the glovebox. okay, but why would i need a napkin? you could have just told me a bump was coming. we know the future. because we're building it.
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about four nf and a half minutes away from the fed report. and president of money strong scott minored, google hooim phe
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welcome to one and all. david, expect surprises here in the language or the result? >> certainly not in the result. i think the fed will keep rates unchanged. basically tune in in six weeks. in the language have to acknowledge weakness we've seen and don't worry if things will strengthen. what they have to do, make sure people keep june is say live meeting and a danger, too downbeat in current conditions people will pull june off the table and then they're going to have to fight expectations that they actually want to raise rates. i think the message will be, don't worry about recent weakness in data. the economy should strengthen in the second quarter. june is very much alive meeting. >> nodding? >> looking for the transitory word to come back given what we've seen recently with oil prices. the fed's favored measure of inflation fallen back below 2%
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again. >> transitory? in other words, what we're seeing now, don't worry. it's temporary? >> only last a few years. >> basically. >> yeah, i get it. >> scott? >> well, i'm really going to look for, tyler, what are they going to say about the balance sheet? they've told us we should be expecting two more rate increases this year. there really are only three live mealings. the meetings with a press conference and i don't think they'll want to make an announcement about changing the balance sheet and interest rates at the same meeting. i'd like to see guidance in where, you know, they think they're heading and how they'll communicate changes in the balance sheept polit policy. >> why do you think balance sheet balance would happen today why not at the next meet? >> they really don't want to be talking about the balance sheet at the same meeting they change
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rates. >> you mean the meeting after june? >> well, i think they need to raise expectations how to deal with the balance sheet. three meting e in meetings left. june, september, december. if the market had a tantrum over the balance sheet i don't think that's the thing janet yellen wants her last december meeting to be about. i think they'll want to do something by september and need to set the stage how they'll address it. >> david, jump in there. >> i don't really agree with that, because with all due respect, i think what, when they move the balance sheet they have to be careful how they explain it. they want to put that in a statement. janet yellen comes in front of the cameras an hour later, sees how the market took it and make she understand what they're doing. moving the balance sheet, questions and she'll want to be in a position to answer the question at a press conference. >> following your logic, june when the rate heike happens.
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and meeting without a press conference, go further out to see the balance sheet in your world? >> yes. they said they would announce a change in their views on the balance heat, how they'll handle the balance sheet. they'll do that, but tend to do it in december. most of major changes in policy occur in december. go all year and starting in january cut the -- >> wait that long for clarity on this? >> fed forofficials have been v forward. i think it's going to be seen as fairly dovish. the market's ready, prepared for balance sheet language. >> interesting to hear you say they have to communicate, have to communicate. i feel it's the most communicated thing. >> it's over communication. heal has been. sara eisen's recent interview with stanley fischer brought up
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specific points. he's the vice chairman. i think the market is teed up here. >> sorry guys. make sure we hit it on time. quick check on the markets. s&p down 6.5 points. russell down 10. nasdaq down by 31 points right now. get straight to steve liesman for the fed's decision on interest rates. steve? >> no change in interest rate policy. the federal reserve maintaining a 0.76% to 1% range for the federal funds rates. it expects future conditions to "warrant gradual hikes" a sign rate hikes could be coming down the road and no change in its balance sheet policy. the federal reserve will continue to reinvest those securities that roll off, and so continue that balance sheet policy. it did note economic weakness saying that growth and activity "has slowed" saying household spending rose only modestly and noted a decline in march core inflation. it did say, "the fundamentals
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underpinning the continued growth of consumption remains solid" added "the committee views the slowing first quarter to be transitory" and to stabilize around its 2% objective, note the business investment firm gauged solid. unemployment rate declining add the decision unanimous among all members. a couple notes took over language from previous statements say the risks appear balanced to the economy, still sees monetary policy as accommodative and saying rate hikes in the future likely gradual. and says rates for some time will remain below a normal level you'd expect over the long run. no change, pretty much taking over a lot of the language dealing with the weakness in the economy, saying it expects that weakness to be transitory. ba to you. >> steve, stay there. bring back our all-star fed
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panel. president of money strong, scott, googanheim and david kelly with jpmorgan funds. over the markets, not much reaction in equity or reaction in the bond markets or ten-year yield roughly at 2290. scott, kick it off with you. what's your interpretation of what was just said? >> i think that it's basically what we should have expected. you know, that the economic weakness is probably transitory. they want to stay on path to increase rates, and i personally thought we'd get a little more activity about the balance sheet, because they are very clear from the minutes that just came out a couple weeks ago. they'd like to start moving on the balance sheet this year. so that was a little surprising to me but they get another opportunity going forward. >> so, david, in your world, what does that mean in terms of communication about what will happen with the balance sheet? >> well, as i said, i think -- this is a dovish fed.
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con generously dovish. whenever you make a decision they'll take the dovish side and they'll take their time. have to get rates, two, three more hike rates. and if long rates don't go up enough, no point in raising short rates if long rates don't go up. some people out there think the yield curves going to inverse. long range go down as fed hikes on the short end. i don't believe that pi higher short-term long rates means somewhat higher long-term rates. >> why hasn't the ten year moved? 2.28%? >> ten year slowing growth in the economy they didn't acknowledge in the statement. i don't think april falling in the first quarter. car sales numbers not a figment of somebody's imagination, continuation of a trend. auto sector a huge support for the current economic recovery as
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anemic as its been to your point, some of the other data, weak in the first quarter, brushed it off as transitory. you prish predicted that. seen as more hawkish. same time, no change in the balance sheet, no discussion about the balance sheet -- >> and mentioned their inflation metric had fallen below 2% again. to me, very dovish fed statement. >> adegree with mr. kelly? >> yes. >> and watch that 2/10 spread closely. 100 basis points. >> how can you see it as dovish? kissing off the conditions for not hiking saying inflation will return to our goal. that the weakness is transitory, those are all the things that the fed needs to hike and saying those things are going to be in existence in the future. so those would all be, from my estimation, the opposite of dovish. >> i agree with that. growth is slow but the supply side is really slow. as unemployment rate comes down, even only 2% growth, it's
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tightening up the labor force. look at long-term goals. 1.8% growth, pretty much there. 4.78% unemployment. below that. basically at the long-term goals everywhere except interest rates. >> and i do think -- >> gradually tighten. >> guys, this fed -- >> they have said enough all the way down to dudley. the most dovish. said enough of the balance sheet to have said something today and didn't. >> no expectation, diane, among anybody in the market that would say today. paying attention, they've clearly said that they're going to lay out a plan. going to have a discussion about it and lay out a plan. i didn't know any single analyst who expected today to have any information on the balance sheet. >> i thought scott mentioned it now and kelly, you said you thought it was a dovish statement and they were con
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general wacon general italy dovish. >> they need to express it carefully in the press release. janet yellen needs to answer questions. any announce smont come in a press conference meeting. i want to be clear, david. i wasn't expecting them to lay out the plan here. i was expecting them to do twoos tee up the idea and get it more firm in people's minds there is an announcement coming and it's going to come this year. >> and then the minutes -- >> they are trying to do that in speeches. >> they've said that in many, many speeches that are out there, and the trouble you have i think is the trouble dave put out. if they'd made some mention you have to talk about all the mention. that's the thing. the fed is on track i think to come up with a plan assuming the economy comments that would reduce the balance sheet. as dave said, there's a lot of technicalities here that have to be laid out. >> right. >> does the fete ted tell us wh
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it's going? the rate? any hint will cause massive speculation. they want to do ittal carefully, like qe early on. >> and markets want to know or define at this point, scott, given what was not said in the statement in your view, what does that do to your projections for rates for this year? >> it doesn't change my expectation on rates at all. but it does leave me with the feeling that they're being ham-handed here. that they need to get -- i mean, using their language, they've got two rate hikes to get in and aannouncement about the balance sheet. i don't think they're going to make an announcement about the balance sheect at the same meeting that change rates. announcing about the balance sheet is forward guidance and they won't want to use two policy tools at the same meeting wanting to see how the market
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responds. they need to set up an expectation they'll use a meeting this year to lap this out. i hear what rich says. or steve says, and that is, that they have said this in the minutes, but i thought they would use the announcement today to give a little stronger indication that they've got something coming. >> stocks have come off lows. dow into positive territory. and the other major average is off the bottom. >> balance sheet, no change in b.s. policy. >> well put. >> i don't know. >> well said. >> all right. >> thank you, danielle. 's scott, david and of course our own steve liesman. the dow mentioned turning positive, barely. get to bob pisani on the floor of the stock exchange with more on the reaction to what we just heard. >> it's sideways essentially. because the market heard nothing new. no information to change the expectations of where traders think that the economy is going, or where interest rates are going.
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so they said gradual rate hikes expecting that to rate hikes for this year. no change in the balance sheet. ultimate paragraph before the last one virtually unchanged for a very long time. economic activity slowed, talk about potentially transitory and fundamentals underpinning consumption are solid. so the market expects two rate heighths this year. nothing in this changes that opinion. the market expects q2 and q3 data to improve over q1, weak a while, normally improves. nothing changes anyone's opinion on that. a couple asked whether a mention of tax cuts or influence of fiscal stimulus in there. virtually nothing in that. not surprised there isn't either. bottom line is, the market continues to see two rate hikes, market continues to believe improvement in economic activity, and continues to believe improvement in earnings this year so far numbers seeing on earnings haven't changed at
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all. steady as she goes right now. bottom line is, most of the volatility has been greatly reduced in the last month thanks to french elections, thanks to better earnings and tax cuts finally being put in motion. that's why we are just shy of historic highs in the market. back to you. >> that's the stock market viewpoint from bo b pisani. rick santelli, anything in bonds? >> no. you need add microscope to find the moves with this once. some move in the dollar index you see on the intraday chart. look at charts, 127, up to, look at 10s, 128, arguably 228, 229, 230. maybe basis point. really what's notable today was how much buying interest we saw in 30-year bonds kind of flattening the curve a little this morning. i found most fascinating, right in the first line. they said the labor markets
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continue to strengthen even as growth in the economy slowed. let me see. the last meeting march 14th and 15th. one jobs report. 98,000 was my memory. i don't know how they could -- that's their favorite area they look at unemployment rate, forget all the unemployment we don't count. but that right there was hard for me to r50ed beyond that. far as the last panel, i love steve's comment. got to be careful about giving hints regarding what they'll do with the balance sheet. the problem with central banks. the word "hint" should never be used. everybody that trades markets should have an idea what the central bank is going to do. kind of a plan and stencil and a rule book that's sorely needed and i don't know how that gets fixed. ba to you, melissa lee. >> thank you, rick santelli. now that we have the fed decision what's the next best thing for the market? earnings. mark zuckerberg and elon musk both stock up more than 30% this year. get you set up for both those
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for a free quote today. liberty stands with you™ liberty mutual insurance new health care reform bill could move forward in congress as soon as tomorrow. right now republicans are scrambling to get enough support. more from washington and the vote count.
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>> michelle two gop lawmakers say they are supporting the bill to repeal and replace the affordable care act after meeting with president trump at the white house. 's representative it's fres upton of michigan and billy long of missouri. moderates unhappy with changes to the bill proposed by the more conservative freedom caucus. some of those changes that representative upton suggested include devoting $8 billion over five years to reducing out of pocket costs for people with pre-existing conditions. >> i think it is likely now to pass in the house. we'll see what happens. i'm not on the whip team, but then it goes to the senate. they'll be a conference. this bill will change from where it is today likely from my perspective and others, probably change for the better. >> in a radio interview today house speaker paul ryan would not commit to holding a vote on the bill this week but said, "getting really close to an agreement." vice president mike pence is expected to pay a visit to
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capitol hill this afternoon before the house is slated to go on recess tomorrow. so, guy, the time is running out for a vote this week. back to you. >> all right. thank you. tesla shares taking off this year around 46% year to date. the most pain. it stole for short sellers in 2017. traders shorting the stock lost $3.7 billion this year. surpassing the combined losses of trader shorting apple, amazon and netflix. will earnings this afternoon drive the stock higher? joining us, the senior research an legitimate at oppenheimer. great to have you with us. >> thanks for having me. >> seems the stock is all about the model three, yet model three reservation holders haven't been given the option as of last check i had to actually configure their cars. are you concerned there could be a delay? will you hear about that on the call? >> i think we are expecting delay in terms of the rollout of the vehicles which isn't a surprise for anyone covering the stock or owns the stock.
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i think the really issue at stake, whether this company continues to be disruptive in the transportation sector. i think we'll get a lot of support for that going forward and the timeline is part of the detail on the longer-term trade for folks on long side. >> seems a lot of investors have given tesla the benefit of the doubt for many, many, points at this point. why aren't you? you downgraded the stock with the solar city acquisition. that's happened. it's closed. what's holding you back at thick-of-this point? >> valuation. we've done a number of different analyses where this company can be from an earnings power standpoint and still coming out way mid-200s type price target. where we may be wrong, thinking where the company might be ten years from now and trying to parse that into the stock. not comfortable going beyond the five-year time horizon. >> you don't want to see elon
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musk putting out a blurry picture of the semitruck and how to put this in the model? isn't that part of the tesla vision? do you accept as an analyst tesla will be part of the change in transportation in the future or just can't count that yet? >> you are issues are around return on capital and allocation. at first studious with their cash buying the fremont facility at a severe discount and generating a lot of return for investors. at this point investing a lot of money and not return in any other capacity than market share and ideas. the point we see them taking meaningful market share within each of the target markets and can get a line of sights to real earnings power, then we can get excited about the stock again. until then, we're at the hold rating watching the show. >> tough show to watch. in terms of this article in the "wall street journal" saying the fec is investigating tesla solar
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city about cancellation rates, how much overhang is that in your view? >> minor. a lot of in-fighting between the utility industry and the residential solary companies starting to force a change in the utility business model. we have seen that happen in a lot of directions. these concerns are minor, if there's anything material here that the sc zshg z s.e.c. is ge. i don't think it amounts to much in the end. >> colin, great to speak with you. thank you. all righty. a big deal and a daily deal, plus an ugly incident turns into something more pleasant. we will explain, and jim cramer sits down on "mad money" a sneak peek coming up on "power lunch."
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the french election is sig kaent because it could signify the end of the euro. >> when the news came out, the market skyrocketed. >> polls were right. >> the reason the markets are acting this way, macron is very pro-euro. this story is about the future of europe. fans in boston turning an ugly moment into a nice one at yesterday's red sox game. >> number 10. adam jones. [ applause ] >> that ovation was for the
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baltimore orioles outfielder adam jones. turned into a standing ovation in many parts of the park yesterday. he had been the target of racial slurs and other unbecoming behavior at the previous night's game. >> mookie betts is applauding. time for the good, the bad and the ugly in today's trade. start with the good. straight path communications, the company says it has an offer for $2.3 billion or $136 a share from a mystery bidder. believed to be verizon. agreed to be bought by at&t for $1.6 billion. now at&t has a few day tossup its bid. s and why does everybody want them? straight path owns a lot of spectrum. bad, groupon, online company down after missing first quarter revenue expectations. ugly day for akamai. services company down 15%
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following weak guidance and multiple analyst down grades lower by 16%. en mark zuckerberg telling a facebook conference the company would do all it could to prevent violent videos from being broadcast on facebook and today took a big step in that direction. we will talk about that and the company's earnings next on "power lunch." looking for balance in your digestive system?
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liberty stands with you™ liberty mutual insurance hi, everybody. i'm sue harare. your cnbc update at this hour. rex tillerson laying out an america first policy to employees at the state department anded to him the change in poems dolicy does not the u.s. is abandoning its core values. >> it's america first for national security and economic prosperity. and that doesn't mean it comes at the expense of others. our partnerships and our al alliances are critical to our success in both of those areas. rirl israeli prime ministe benjamin netanyahu will hold
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back calling the unesco about zerd and harassment of israel has a price. an american airlines shaving off an additional two inches of economy class leg room on some of its seats in its new boeing 737 jets. the new planless have more seats than earlier versions. that should make everybody happy. >> i'm not nobody will miss it. >> that is the news update. >> what? all going to end up sitting on top of each other. >> yeah. one inch at a time. all of a sudden we're -- >> exactly. all of a sudden like this. >> all right. sue, thank you. >> you got it. 90 minutes away from the closing bell. stocks lower although the dow ever so briefly turned positive after the fed decision on interest rates on change of course. weight watchers soaring better than expected earnings and a fifth quarter subscriber growth and what we think is an unrelated story. general mills and kellogg's
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reporting lows. and to jackie deangelis. prices seeing a volatile session turning positive here into the close. looks like settling unders 40ds $40 a barrel. bullish factors seasonality and demand, expectations. maybe some buying the dip and hope we'll have an opec extension. bearish factors, not positive report when it comes to demand trends and added libyan supplies. traders worried about the supply/demand balance with shale producers coming online as well. seasonability kicking in, higher from there. shorts aopec won't happen and price pressure to come. back to you. >> thanks very much, jackie d. facebook says it will hire 3,000 people to monitor videos after a murder was posted on the site. julia boorstin has the story. julia? >> reporter: right.
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mark zuckerberg announcing today 3,000 people added to the operations team currently has 4,500 people. able to evoo reports about offensive videos and facebook says it will make it easier for users to report problems and the copiy to contact law enforcement. zuckerberg posting on facebook, "we've seen people hurting themselves and others on facebook. we're working to make these videos easier to report so we can take the right action sooner ". whether responding when someone needs help or taking a post down." and also, keeping people safe is our priority. we won't stop until we get it right. this isn't just about the deadly shooting recent lip posted on facebook, but preventing suicide, removing hate speech and child exploitation. a big move to make you feel safe about the content placed next to their ads, guys, back to you. >> stay with us, julia. is this a good move for facebook
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or is the condition is a step too far and a threat to users' privacy? editor of recode ac nbc contributor. enough? not enough? >> a good positive step. they absolutely need to do it. i don't know if it's enough. so much hid video uploaded to facebook. youtube, other services. especially facebook in terms of attracting these kind of terrible, terrible incidents. not saying facebook is encouraging that. simply when you have about open platform like that, it's going to happen. doubling that group to about 3,000 more, i don't even know if that's enough. >> adding people is one thing. having the right standards is quite another. that seems to me to be the hard part. what do you allow to be posted? what do you not? and with what logic? >> exactly. you can't just base that on an algorithm is the thing. you need human editors.
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people evaluating these things. >> and i remember julia, when they had humans evaluating what would go in the news feed stream. remember conservative outlets were upset when there was a former worker who had said that the kids hired were actually pushing more bernie sanders content, et cetera and pushing out -- my question is, doesn't this leave them open, julia, to once again accusations of liking some stuff, not allowing other stuff for political ends. >> absolutely right. comes to the news feed they want to make sure they're prioritizing not editorially and when it comes to enforcing standards, clear lines and devgss what the standards are. what's offensives, what's violent, extremist, that takes a little more editorial voice to be able to discern that stuff. it's not exactly the kind of thing that an algorithm can always identify. facebook has gotten in trouble -- >> sorry to interrupt you. do you know how it works?
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i imagine people sitting in a room watching tons and tons of screens or getting alerts that something in particular is getting 100 views, 200 views? how does it work? >> so -- users can find something when something feels inappropriate. users can flag something when it's inappropriate, violent, someone threatening suicide. when something is flagged these people review it. one. main issues with the murder streamed on facebook, the video posted on facebook, it wasn't taken down instantaneously and law enforcement wasn't contacted instantaneously. a combination of algorithms and people working together you're going to be able to get these offensive videos taken down faster. they really need a massive team and a little whack a whole situati mole situation. so much posted every single day. >> a case of the employees responding to something a user has identified, that is in their
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opinion objectionable and then they go check on it? >> have to check on it. probably elevate it to another level if questionable. it will certainly be more immediate than a video setting up there hours at a time not reviewed. inpro syce process. it is process. the reason facebook is doing it in terms of having video, facebook, google, twitter, all want more tv ad dollars. really the reason. need more individual yore, period. the reason why they're getting them on, at the same time, look, a rusen for professional video. one thing to have computer generated, could be fun, interesting, could be terrible. professional news always safe, for the most part. still grappling, figuring out what direction to go. >> facebook upping the ante in terms of screeners in video and therefore others will as well to remain competitive in the ad market? >> well, i think you're reari ig
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referring to google. the other company that's come under fire for this issue. a boycott of hundreds of advertisers because they were concerned about videos on youtube extremist. ads placed near. i think everyone has to up the ante here especially because facebook and google are increasingry going after television ad dollars. ad selling season, the tv players saying they're doing a better job targeting and measurement. now we have to see digital players, facebook, show they're making content more professional and safer. >> all right, folks. thank you, ed lee and julia, thank you as well. we'll see you after the bell when facebook reports their earnings. talk more about the earnings. video issue have any impact on those? bring in john blackwood, senior analyst as cowen. good to have you here. >> thanks for having me. >> does this issue with video and them having to hire people to monitor what's being posted, does this play into your
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analysis of facebook at all? >> no. it doesn't impact this -- the earnings they'll post in a couple hours. or probably this year. so for this quarter we're looking for 46% year over year ad revenue growth versus 53% in the fourth quarter. and you know, i actually think they can beat our number and probably post a high 40, low 50 ad revenue growth number driven by core facebook and instagram. mobile is a key driver for ad revenue growth for the company. 85% of ad revenue. looking for a 9% cue over cue decline versus four 4q. last year, 5%. if they're going to beat they'll beat on mobile and a leader in global mobile advertising. >> got it. you don't worry about the issue with hiring is that the 3,000 people isn't that much in terms of what costs will be? do you extrapolate that out in
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terms of their ability to manage what is on the platform? >> they've actually guided to a step up in operating expenses this year, and we have growth up versus last year, and my understanding is for the people that review this content, it's a lot of contractors. it's not like they're hiring 3,000 incremental engineers, high ticket. it's clearly an important issue, and something that i think initially they're going to address like your last panelist said with the reviewers. i was there recently and you look at mega internet mega cap enternet companies, google, amazon, they're all using artificial intelligence in a lot of the, to drive a lot of the parts of their businesses and things we use every day. i think over time they're going to try to hone the technology to solve for this difficult issue. >> do they ever get to find as a media company instead of social
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media company? their multipling so much bigger than a disney, comcast or anybody else. and don't face the same level of regulations as those companies do, using a spectrum. but as they move more, you read the "new york times" piece over the weekend, mark zuckerberg thinking insaysantly what they are, what media and video means to them. could they morph into something that's get a lower multiple down the road? >> they have a higher multiple than the media companies because they're growing faster. they're going to post 44% earnings growth this quarter. growing multiples faster than the media companies and why they get the multiple they get. he said the last couple calls they are going to become more of a video centered company. that makes sense. people still watch tv three hours a day. they want to continually drive engagement to both facebook, core facebook to instagram as well as messaging and whatsapp. >> sure hope two of those three hours of "power lunch."
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right, john? >> excuse me? >> never mind. only funny at the time. thank you so much. >> oh, yes. all "power lunch." yes. >> i got it. >> thank you. see ya later. >> you can come back. that's all right. the next bing thing, if it's tesla and facebook earnings tonight after the bell, what is the next, next big thing? job reports. t "trading nation" coming up. when this bell rings... starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures.
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shares of apple bouncing back after reporting a drop in iphone seams. stock down 2% earlier. now down fractionally. jim cramer sitting down with apple ceo asked about sales of the 7plus and cook pivoted from that. >> when i back up from china what i see is the mac business grew 20%. you know, this is extraordinary. the watch grew nicely. services is just on a tear there. chinese developers have really done a great job of delivering apps that people really want there, and so there's a whole set of things going well and we just have to get them all to hit. >> cook also asked about apple
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being compared to other consumer products companies on a pe basis. >> we can invest in our company and invest in our stock and we do believe it's undervalued, and so we're buying it back. so from that point of view, there's an opportunity in that as well. but over the long haul, i think it will -- i strongly believe it will be at a fair value, and so you know, that's how we look at it. >> really sounds like tim cook did not answer jim's question about the decline in iphone sales. full interview tonight at 6:00 p.m. eastern time on "mad money." you won't want to miss that and whether or not tim cook actually give as proper answer to jim's question. >> you know, i'm very intrigued by this idea where he talks about so many rumors about whether or not there's going to be another phone and, therefore, slows sales. >> people don't buy. >> that's with cars. you wait for --
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>> the next model. a logic there, but -- is it like the weather we get from retailers? >> the same excuse. >> excuse over and over, built in. >> exactly. your bet play ahead of friday's report? ask the team. ooh, who do we start with? boris what do you say? >> i say i am shocked the fed fund rates are now 90% to the rate hike in june. seems like everybody's ignoring the very tepid, very, very lackluster economic data. i think that dollar yen at these levels hitting serious technic the resistance is a great short. just because everybody thinks it's a done deal. any surprise, any small print on the nfp, say 125 maybe lower on friday should create a shock to the system and maybe get everybody out of complacency we have now.
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>> go long? effectively saying the markets will drop off? >> i do. i think the market is just complete overconfident at the growth of the u.s. economy. i think when the nfps come in and disappoint to the down side, dollar yen the down side. >> pick up there. not a million miles away. sentiment incredibly strong. after tape, less strong. true of payrolls, durable goods, inflation signal. we'll look closely as the manufacturing numbers. look closely at revision going back to march and look at wages, wages, wages. we don't think wages are there and think autos are vulnerable there and housing space vulnerable there. we think rates growing higher and the market really isn't as strong as people think in terms of domestic. a lot of strength is international making really, really aggressively bought auto, even if they've come down, lawyers hou likewise housing. tougher summer than folks -- >> profits in autos? what profits happened in autos
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in general? >> look back over a long period of time. crowded trades. very busy. nice multiples and people are betting they come back part of the way. we think interest rate sensitive hit from both side. hit from a weaker consumer, whether jobs or wages. what we'll look at. >> max and boris, thanks. for more trading insights go to the website. yum brands. mcdonald's, cheesecake factory all in the news. delicious. we'll get you up to date on the stocks and discuss the future of the restaurant industry, next, here on "power lunch." >> announcer: and now ux the latest from tradi
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a lot going on in the world of restaurants and susan lee knows all about it.
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susan? >> i do. three woords words for you. bacon chicken chalupas. sold well in the first quarter. 25 million in fact along with a dollar dollar stack, propelling taco bell propelling taco bell shares and sales up some 8% in the quarter, offsetting a declining sales of pizza hut. ceo greg greed also says they will come up with more naked products, they say, this quarter. meantime, a big upgrade from goldman sachs and mcdonald's joining wells farpg owe and bernstein, the third upgrade in as many weeks. mcdonald's shares continue to hit record highs. analysts are bullish on the menu, and pushing to delivery. cheesecake factory has beaten or matched in the past seven quarters. after panera popped by acquisitions, cheesecake factory pointed as potential takeover product. let's see how the numbers do after the bell. guys. >> thank you very much, susan.
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cheesecake factory is not the only restaurant stock worth watching. darden trading at all-time highs. most restaurant are up over the past two months. let's bring in peter solei at btig to talk more about this. do we have both guests or don't we? alan, let's go to alan instead. alan, what do you make of what we're going to see from the restaurant stocks, especially since we've been talking so much about a decline in revenues and at the same time much higher cost when it comes to minimum wage? >> yeah, it is true. i think it is a really tough time to run restaurants right now. i mean in addition to the fact that costs are rising, you have customers that aren't really wanting to pay a lot more for the food. so you're starting to see people try to get innovative in all sorts of ways to make money over longer periods of time, while still offering cheap, good food. >> hence why the naked chicken chalupa works really well? >> well, social media is a whole
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driving force on its own. it is a trend we see moving up, so it is starting at chains. you have things like the unicorn frappuccino, this chalupa, things that are strong instagram bait, and even chefs at the highest end are excited in trying to get in on that marketing, you know, power. >> you know, peter, we are frequent -- oh, it is just alan. alan, we are frequently visited by a man who own as bunch of restaurants, may own more restaurants than anybody in the united states for that matter. but all last fall he said people just weren't going out to eat, and then right here in the preceding paragraph we hear about how many of these stocks are hitting all-time highs. what's the disconnect here? have people now started to go out and eat again or what? >> well, it is kind of the way people are going out to eat i think. i mean, you know, it is tough to get a sense for the entire restaurant industry because one person could be doing really well when another person is struggling to pay their rent because nobody is coming in on a
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friday night. but overall people are starting to come back. there's a lot of optimism, you know. january and february were really down, even compared to last january and february which are always slow months, but now people are really starting to feel very optimistic about the prospects of, you know, the summer, warm weather, people will start going out more. but also people kind of emerging from the funk of, you know, a lot of people blame the election. they say people weren't in the mood to eat and, you know, people are starting to kind of come out of that a little bit. >> i wasn't in the mood to eat. >> i mean you saw that article about women who insisted they had to cut their hair really short because of the election? there's all kinds -- >> shampoo sales went down, weight watchers did poorly. >> peter, listen, we finally have peter's camera going. good to have you here. actually cover some of these stocks. i'm going to reask tyler's question. costs are going way up. we hear people are eating out less, and yet these stocks are doing really well. what is up? >> yeah, i mean, look, we
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continue to think that in the first quarter there was an improvement in same-store sales as we went through the quarter. february was a really rough month. march really improved pretty dramatically as we saw the tax refunds, the tax rebates come through in the month of march. we are hearing good things in the month of april as well. yeah, i mean you saw it out of mcdonald's numbers which were good. starbuck's had good top line same-store sales. domino's comps were up 10%, all driven by traffic. people are still eating out and the results are proving that. >> so they've shaken off the highest costs that they -- i mean the revenue is enough to offset, and we haven't seen a decline in people eating out because the ticket price is higher when they get there? >> yeah, no. menu prices have been going up, probably a little less so in the past couple of months, but menu prices have been going up. they go up every year. i think it is a function of the restaurants base. you always will semen e menu pr
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rising. you see the discounts, it is all over tv, it is all over social media, so there are discounts out there. but, yeah, typically menu prices continue to rise. >> guys. good to have you, peter and alan, thank you so much. >> thank you. >> all right. tim cook, elon musk, marine le pen, that is not the guest list for melissa's next birthday party. >> maybe it is. >> we'll talk about all of those folks coming up in "check please." online u.s. equity trades... ♪ realize the smartest investing idea, isn't just what you invest in, but who you invest with. ♪
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. "check please." >> i want to remind you jim cramer will talk with tim cook tonight at 6:00 p.m. on fast money. we gave you an appetizer portion of it this hour. i was struck by diana olick saying only a third of houses have now -- markets that is, have retained their prerecession price levels. reminlds me why i never make money in real estate. i was given to go look at my parent's house which was sold when they passed away in 1999. i sold it for $525,000, arlington, virginia, now selling for 1.8 million. >> wow. >> that's why i don't make money. >> but the taxes and the cost of maintaining. >> taxes are low, 16,000. >> okay. then -- bad move. >> yeah, i stink. >> in terms of what i'm watching, we have two big earnings reports after the bell today and that will mean a lot to the nasdaq's trade tomorrow.
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tesla as well as facebook, both stocks doing quite well going into the earnings release. facebook is up about 15% over the past three months. how much money they are spending, that will be key because that has done in facebook in the past on earnings releases in terms of the stock move. and on tesla, they just need to talk about the model 3. they need to talk about an on-time ramp, and even if they say it is slightly delayed i think a lot of wall street is sort of baking in that delay. it is accepted. so it will be interesting to see how that trades, stock that is up 46% this year alone. >> i was struck by the ceo of the "new york times" telling us they were going to try to hire more conservative columnists. went to the "new york times" and was eviscerated by "new york times" readers, many threatening to get rid of subscriptions. he says they saw a tiny number of people cancel subscriptions. he went on to say they're going to expand the conservative voice on the op-ed page there. i will believe it when i see it. it would go against their history but -- >> you see liberal voices on the op ed page of the "wall street
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journal," and i'm sure they go nuts when alan blinder says what he says. >> and william sapphire used to be at "new york times." i head to paris tonight. >> bone voi auj. >> be safe. >> thank you for watching ""power lunch"." >> "closing bell" starts right now. ♪ >> hi, everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange, and it is good to be back. >> wonderful to have you back. i can't believe how much you have grown since you got married. oh, it is the shoes. i see. >> because the other shoes i took home so that i could have them, you know, and then -- so this is what we're left with. >> well, it is wonderful to have you back. >> thank you. >> again, congratulations goes. everybody sends their best wishes to you. >> thank you. it's been a great couple of weeks. >> the honeymoon is over. it was quick. i'm bill griffeth. happening right now, a face-off in


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