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tv   Power Lunch  CNBC  May 22, 2017 1:00pm-3:01pm EDT

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>> do you think the ten-year yield goes up? >> a little more on the outside. >> it's kind of stuck where it is right now. final trade corvo, cell phone manufacturer. they have an analyst day on thursday. >> xrt bouncing. don't trust it. i don't think it holds at $40 level support. >> all right, thank you. "power lunch" starts now. and thank you, scott. i'm melissa lee. here is what's on the menu. the art of the deal. president trump speaking in israel, deals with the saudis, $350 billion and counting. defense stocks surging on the news. president trump and israeli prime minister benjamin netanyahu are about to deliver a joint statement any moment now. we'll bring you there live. mark fields out as ceo of ford after only three years in charge. that stock down 30% in that t e time. the road ahead now for the automaker. and a video that has gone viral. a sea lion looking for a snack
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snatches a child instead. that's quite a tease. look who is joining us. "power lunch" starts right now. >> welcome, i'm becky quick. all three indices up for the third straight session. take a look at this now. the s&p up over ten points. the defense is in focus after billions of dollars in deals announced in saudi arabia. lockheed martin one of the big beneficiaries of the deals it announced. lockheed hit a new high, some of the other defense stocks also hitting lifetime highs. oil is on the move crossing $51 and hitting the highest level in more than a month. right now sitting back below that at $50.65. amazon hitting another all-time high. up more than 120%.
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this comes ahead of tomorrow's shareholder meeting. >> becky, it's a privilege to have you on the program. i'll keep the coffee brewing. we begin with the president who in just moments will be speaking from israel. all of this taking place before a dinner with prime minister benjamin netanyahu. we're also waiting on the president to make a joint statement. eamon? >> reporter: the president of the you states has been hoping for a reset domestically and internationally in terms of foreign policy on this long foreign trip. an unscripted moment in israel alongside benjamin netanyahu for the president, president trump surprising the media and apparently some of his own staff and handlers when he paused to take a question about the controversy swirling around his meeting with the russians and what intelligence information he passed on to the russians in the oval office meeting two weeks ago. here is the moment in which the president surprised everybody and actually gave a statement. here is what he said.
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>> i never mentioned the word or the name israel. they were all saying i did. so you had another story wrong. never mentioned the word israel. >> reporter: benjamin netanyahu followed up on that comment from the president by saying the intelligence cooperation between the you states and israel is very strong, sort of underscoring his support for president trump. what the president was doing there, brian, is denying something that he hasn't been accused of. the initial reporting on this story suggested that what the president did behind closed doors inside the oval office was pass iing along some classified information to the russians about an isis plot. the concern was that classified information could be reverse engineered by the russians and they could figure out the sources and methods to develop that. later it emerged that information had, in fact, come to the united states government from israel according to several sources. the president there denying that
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he said the word israel in the oval office to the russians but, of course, he was never accused of having said the word israel in that meeting itself. >> we'll see you in a bit. thank you very much. that saudi trip not just about politics. hundreds of billions of dollars in various deals were announced as well. here is a rundown of the specific companies benefiting. lockheed martin, general electric looks set to win the sale of $7 billion in technology and honeywell, two tentative deals with saushy aranco. halliburton and baker hughes getting either technology or equipment deals as well and another winner national oil well varco, drilling equipment and land rigs. last but not least black stone group rolling out $40 billion infrastructure investment punned with half the initial investment coming from a saudi wealth fund.
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there we go. we see the president and benjamin netanyahu set to enter the press briefing room where they will give a joint statement. >> right now the market seems to be giving the president good marks on his first overseas t p trip. can he keep it up once he leaves the middle east and heads to europe? fred kemp is with the atlantic council and a miseast adviser is with the washington institute. fred, you nailed it on friday when you said there would be deals on this trip. how would you grade the first portion of the trip? >> unfortunately, becky, i didn't do the investments i should have done on friday, anticipating those deals. up to $400 billion worth of agreements. not only are these important deals but they also are an important sign the president wants to be the ceo president, the $40 billion blackstone fund is interesting because it will go to funding infrastructure deals in the united states so it has a double advantage.
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israel will be trickier. he'll have to walk away tomorrow trying to pursue what he's called the ultimate deal and that is after his meeting with abbas, the palestinian president, tomorrow want to walk away saying he will have discussions on peace. if he does that he will tell him the arab allies will be closer -- this will be off the record with the israelis -- the arab allies who you've grown closer to lately because you're both against iran, saudi arabia, you can become even closer to them if you start down this peace process. >> many of the people we've spoken with today said a big advantage that he had walking into this he was not president obama. he is almost the anti-obama coming in, the relationship between these countries and president obama were not great. what do you expect to see happening from here? what's the potential upside or down side? >> i think certainly the upside is he is able to change the
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subject in washington, get away from the russia scandal although the last comments in the last hour or two doesn't help that at the all. he also will hopefully reset the relationship with the israelis. that's a piece of cake, a walk in the park for him. as you said, he gets to say i'm not obama. when george bush left the white house and obama came in, there was a lot to be said for, well, he isn't george bush. that transition is always one that a new president gets to enjoy and will get to enjoy the possibility of coming back to washington having a very succ s successful trip. as presidents go along in their terms they start to enjoy foreign policy more because it isn't washington. that's an opportunity for him to try to build some constituency and support and some public support and some power outside.
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>> eric, to that point at times the president will be criticized for being short on detail. but maybe that could yield the greatest of victories for him, correct? that's what you think. >> i certainly think if he tries to delve into the details of the israeli/palestinian conflict in his first go without the kind of preparation that i suspect years and years of expertise lends you, i think he is better to fly at the wave tops and try not to get into the details. but i suspect each party will try and draw him into endorsing something that gives them an advantage going into any kind of peace talks. he'll have to really be disciplined. and that's not something we often see from this president not to get drawn into the details. >> fred, we spoke last week, good to chat with you again. two quick questions, "a," how would you grade so far -- i know it's early in the trip.
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how would you grade his performance and do you think it's positive he's out of washington, d.c., and out of the country, for that matter, to get the house in order? >> i would think he'd like to stay away as long as he could, brian. as measured by control of message a very powerful speech. he stayed off the tweets. he controlled his messages. just one comment on his message in israel. it may not have been talked about much in washington but in the israeli press a lot of complaint including by two former officials that donald trump was giving away israeli intelligence. the real test, brian, comes in europe, i think. obviously in nato he has to show himself both as the leader of nato but also a person who can get nato countries to pay more for defense and help him more in the south of nato. and then he'll face the kind of public protest and public scrutiny he hasn't had to face
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so far on this trip. >> folks, just so you can see on the one side of your screen we are watching video today of a live feed right now of nbenjami netanyahu introducing president trump and his wife melania, jerrod ku jared kushner you've seen in these pictures. we are awaiting a joint address and that will be coming shortly. we'll bring you that update when it comes. fred, one issue that i wonder when it comes to peace talks, he does seem to have a close relationship with netanyahu and netanyahu has brought that up today. is that a plus or minus when it comes to getting the palestinians and israelis together? >> i would love to hear what eric says on this as well and i know he's walking a thin tightrope where he wants to be netanyahu's friend, but on the other hand he's giving mixed messages about what he expects in peace. eric is right he should be vague and not give details, but he will not be successful if he walks away from this trip and the two presidents have not agreed to meet with each other.
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so i think that's the crucial issue is he'll give a speech after the abbas meeting tomorrow and will he be able to say the two men have agreed to resume the process or agreed to meet. >> eric, your thoughts? >> i think that's right. i think that's a good goal to come out of this trip on. i think one of the challenges is where do you go from there? i know there's the temptation is to dip into this and come back to it. it's warm and friendly relationship with prime minister netanyahu. he's going to be the catnip here. fundamentally the next steps are hard. even the first steps of confidence building measures, say, having the palestinians agree there will be no more funding of these martyr foundations or the israelis agree that they won't build s settlements or authorize settlements outside the
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separation barrier, those are huge steps and certainly netanyahu's cabinet are not going to be pleased about that kind of step on the israeli side. so each of the next steps beyond agreeing to talk are big, big accepts. >> becky, could i add one more thing to that? >> sure. >> i think he has a real problem in navigating this and understand iing and i think president trump understands this that president netanyahu's threats are not from the left. it's not from people who want to make more peace, it's from the right, people who fear that donald trump or anyone else might prompt him to go too far. and he has to navigate that very, very carefully. and, if anything, netanyahu will have to keep his rights in order, more skeptical of going forward in the way eric has outlined. >> fred, the story today obviously is in jerusalem and people are on pins and needles whether or not the president will make any gaffes during the middle east part of his trip. looking ahead to europe, what sort of land mine could face
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them as he goes to a region, had been an advocate of breaking up the eu. >> well, i actually think, becky, you hit on the one that i'm watching most right now. two things. he said nato is obsolete. will he portray himself as the leader of nato? will he say i am assuming the traditional u.s. role. on the eu he has not yet really pronounced that the eu is obsolete or not. a lot of people will be watching. how far does he go in embracing the european union, the largest economic sphere in the world, and will anything come up in terms of trade because he prefers bilateral trade deals. but with the eu that's not possible because all of their members have to do their trade deals through the eu, so watch to see if there's any mention of the transatlantic trade. >> eric, what does he need to get out of the g7 meeting?
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>> he's got to operate in an international environment where adulation is not the sort of only currency. i think europeans, as we've said, are going to view him a lot differently than we see in the middle east. there's going to be a lot more trepidation as he comes into it. i think coming out of the g7 if he can show himself, as robert said, the leader of the west and to show himself to be able to do business with europe in a way that doesn't reflect sort of i'm going to fight every opportunity, that's what he wants to come away with, to clean up this trip with a good clean advice knit europe. clean visit in europe. that will be hard with the range of topics. >> he's dealing with some new european leaders as well. obviously emmanuel macron.
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donald trump himself six months into the term. is that going to shadow or cloud the g7 meeting? will will angela merkel really take it over? do you think there's another angle the president can take to maintain -- i don't want to say the u.s. dominance, that's the wrong phrase, but what do we have to do to maintain our perch? >> well, i think president trump is a personable guy and i think that kind of glad handing comes naturally to him and if he doesn't sort of walk in feeling tired and frustrated that he's no longer in the middle east, i think then that sort of operating will probably win friends in europe. they certainly want the president to lead. they want the president to succeed even if they have qualms and concerns about his policy. i don't think it's hard to get over the bar for president trump but it requires him to maintain
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the level of discipline he had in saush. >> and if you're just tuning in we're waiting for a joint statement with president trump and prime minister benjamin netanyahu out of jerusalem. it will be a joint statement. unsure whether or not they will take questions. that's what we're waiting for. that's a live shot on the left of your screen. in the meantime we have the markets up by about 11 points on the s&p 500. 2393 is your level. just about a point off. the nasdaq is doing the best of the major three indices. 40 points is the gain there. and the dow is adding almost triple digits right now up 98 points or half a percent with the ten-year treasury slightly lower in today's session. fred, in terms of what needs to happen at this joint statement, what can donald trump say to sort of tie a bow on this and say this was a victorious, quote/unquote, visit with israel? >> i hate to be redundant but think steps to the ultimate deal, and i think that is an
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open door to potential resumption of the peace process and a meeting with president abbas. we may not hear that until tomorrow. we may not hear that until after the abbas meeting. so this may be not as high profile. in europe i'm just very bullish -- it looks like you may be going -- i'm bullish on the economy right now with the cyclical upturn. i think in europe all he has to do is go away and do no harm if he just stays on message and doesn't undermine thing. he has macron, amerimerkel, allt of center leaders. they'll want him to come off okay. >> you thank you both for your time today. we appreciate your insights. fred, we are now watching the president of the united states, donald trump, and the prime minister netanyahu coming in. we'll listen to what they have to say right now. >> thank you.
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>> president trump, donald, sarah and i are absolutely delighted to welcome you and melania to the prime minister's residence in jerusalem, the eternal capital of the jewish people, the jewish state. we've known each other for many years, and it's always good to see you. it's also wonderful to see the blossoming friendship between our two beautiful wives, sarah and melania. you're so welcome here and we're so pleased to see you. we're honored to have you in our home. you've been today, mr. president, to the western wall, one of the holiest sites of judaism, to the church, one of the holiest sites of christianity. we protect the christian sites
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as no one else does anywhere in this region. christian sites, muslim sites, obviously jewish sites. we're committed to the freedom of all faiths and to the rights of all. mr. president, i appreciate the fact you went to the western wall and you're the first acting president who has done that. the people of israel applaud you for it. we had a terrific discussion today, and when i say terrific it encompasses everything. we could talk about deregulation. we could talk about economics. i think we quote each other. we understand each other. so much of the things we wish to accomplish for both our countries. i want to thank you especially today for your deep commitment to israel's security, its well-being and its future.
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i have no doubt that as we work together, you and i, the alliance will grow ever stronger. i want you to know how much we appreciate the change in american policy on iran which you enunciated so clearly. i want you to know how much we appreciate your bold decision to act against the use of chemical weapons in syria. and i want to tell you also how much we appreciate the reassertion of american leadership in the middle east. i look forward to working clo closely with you to confront the dangers we face together in this violent and volatile middle east. i believe that together we could roll back iran's march of aggression and terror in this region, and we can thwart the ambition to become a nuclear
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weapon state. i also look forward to working closely with you to advance peace in our region. because you have noted so succinctly that common dangers are turning former enemies into partners. and that's where we see something new and potentially something very promising. it won't be simple, but for the first time in many years and, mr. president, for the first time in my lifetime, i see a real hope for change. the arab leaders who you met yesterday could help change the atmosphere, and they could help create the conditions for realistic peace. these are all great signs on your historic visit. it's a visit that i think hasek owed down the ages because the great abraham lincoln is
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reported to have said that there was no city on earth you so much desire to see as jerusalem. well, mr. president, donald, there's no city on earth where you are more welcome than right here with us in jerusalem. welcome to jerusalem. welcome to israel. >> thank you very much. and it's a great honor to be with my good friend, prime minister netanyahu, and, of course, sarah, thank you. and thank you for the beautiful tour. melania is still talking about it. thank you very much. you honored me and melania by being one of the first world leaders to visit the white ho e house, as you know, and we had a very good and sound discussion.
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and now you honor us again by welcoming us to your home on my first trip abroad as the president of the united states. this is a land filled with beauty, wonder, and the spirit of god. i've been amazed by the glorious and beautiful monuments and holy sites and the generosity of your incredible people. >> thank you. >> because it's all about the people. i was deeply moved by my visit today to the western wall. words fail to capture the experience. it will leave an impression on me forever. today we reaffirmed the unbreakable bond of friendship between israel and the united states. a friendship built on our shared love of freedom, our shared belief in human dignity, and our shared hope for an israel at
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lasting peace. we want israel to have peace. but we are more than friends. we are great allies. we have so many opportunities in front of us. but we must seize them together. we must take advantage of the situation, and there are many, many things that can happen now that would never have been able to happen before, and we understand that very well. that includes advancing prosperity, defeating the evils of terrorism, and facing the threat of an iranian regime that is threatening the region and causing so much violence and suffering. during my travels, i have felt many hopeful signs that lead me to abelieve we can achieve a
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more peaceful future for this region and for people of all faiths and all beliefs and, frankly, all over the world. in my visit to saudi arabia, i met with leaders of the arab and muslim world including king solomon who treated us so beautifully and really wants to see great things happen for the world. he really does. i got to know him well and he really does. these leaders voiced concerns we all share about isis, about iran's rising ambitions. and rolling back its gains and about the menace of extremism that has spread through too many parts of the muslim world. i'm encouraged that they pledged cooperation to confront
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terrorism and the hateful ideology that drives it so hard. america welcomes the action and support of any nation willing to do the hard but vital work. in eradicating the violent ideologyies that have caused so much needless bloodshed and killing here and all over the world. we are willing to work together. i believe that a new level of partnership is possible and will happen, one that will bring greater safety to this region, greater security to the united states, and greater prosperity to the world. this includes a renewed effort at peace between the israelis and the palestinians, and i thank the prime minister for his commitment to pursuing the peace process. he's working very hard at it. it's not easy.
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i've heard it's one of the toughest deals of all. but i have a feeling that we're going to get there eventually. i hope. i'm certain we will have very productive discussions, and we're going to have very productive discussions in my opinion with the leaders of other nations, also. and i feel strongly about that because there's a lot of love out there. and people from all nations, even nations that you would be surprised to hear, they want to stop the killing. they've had enough. america stands ready to assist in every way we can. our deep and lasting friendship will only grow deeper and stronger as we work together in the days ahead. i thank you again for hosting us
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in this beautiful and ancient land. truly it's a land of wonders, and it's my honor to be here with you. thank you. i appreciate it very much. a great honor. thank you. >> thank you. >> where would you like us to stand? there. president trump wrapping up a joint press conference with israeli prime minister benjamin netanyahu in jerusalem, trump calling netanyahu a, quote, good friend, saying israel is a great ally and then a new level of partnership should and will happen with that country that are will bring greater peace from both nations calling a peace deal, quote, perhaps the
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toughest deal of all. for his part netanyahu praising trump for visiting the western wall in the old city of jerusalem, thanking him for supporting israel noting common dangers are turning enemies into partners. netanyahu the comment that will be viewed as a knock on the obama administration saying he appreciates the, quote, reassertion of american leadership in the middle east. >> he also said he appreciates him drawing a red line for syria with the use of dhemcal weapons. obviously these are all knocks at the obama presidency. >> and specifically he said that, well, prime minister netanyahu said that he looks forward to the alliance of the u.s. and israel when it comes to fighting iran and preventing iran from becoming a nuclear state, that stood out in terms of highlighting where the cooperation could lead to in terms of peace in the region. >> interesting that he quoted abraham lincoln in this. abraham lyincoln -- this is netanyahu speaking -- saying that he had heard abraham
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lincoln said there was no city on earth he would rather see than jerusalem. he turned to the president and said there is no city more welcome than jerusalem to you. >> the first sitting president in the old city of jerusalem which is what abraham lincoln said is the place he would have liked to have seen most. your point is well taken. the not so subtle swipes at the obama administration. >> that was a laundry list. >> using the term red line. noting the, quote, reassertion of american power. >> and saying for the first time in my life i see a real hope for change for peace in the middle east. >> "forbes" announcing a new ceo as the stock continues to struggle. netflix went public 15 years ago today. a company that sent people dvds in the mail. i think we all remember those days. two in one month is ply plan. a lot has changed. what's next for the company? hey gary, what'd you got here?
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this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade our 18 year old wase army in an accident.'98. when i call usaa it was that voice asking me, "is your daughter ok?" that's where i felt relief. we're the rivera family, and we will be with usaa for life.
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dearthere's no other way to say this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake, our hearts racing as one. i know this is sudden, but they say: if you love something... set it free. see you around, giulia ♪ mark fields is out as sceo f ford. the stock is down 35% in the nearly three years he ran the company. >> melissa, we're starting to hear reaction to the new ceo at ford and cautious optimism. everyone isality admitting they
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don't know what the game plan is. jim hackett takes over as ceo. what kind of experience does he have? he was on the ford board of directors but really most of his executive correct for many years although we should point out that he left the ford board to take over the company's autonomous vehicle development program, in charge of smart mobility overseeing the entire division and as part of that he realize s that ford needs to mae quicker decisions. earlier today when he was talking to reporters how familiar he is with how slow ford is when it comes to making decisions in a rapidly changing industry. >> both of us feel like over years, what happens in big corporations the bureaucracy and the hierarchy is probably
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overwhelm overwhelmed. what can be faster decision making. >> reporter: at a minimum he'll have to make ford move as fast as its competitors in detroit and we're talking about general motors and fiat chrysler which have both outperformed ford in the last year. take a look at shares of these stocks. one thing to keep in mind with jim hackett, everyone is saying he is a change agent, trying to change a company more than 100 years old with a lot of divisions, divisions people are saying some of them are not returning any investment here. get rid of them. how quickly will he be able to move and what kind of a mandate does he have to quickly start reshaping this company will be the real test. >> earlier today you mentioned you thought jim hackett was a temporary ceo and you named other people but could it be that if ford needs to change its culture, it's competing against technology competitors like tesla quoted tech executive be
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the best way to go. >> reporter: you could see that. they brought in someone from outside the company and jim hackett's experience has not been within the ford company. it has a strong bench. hendricks in charge of global planning from now on and jim farley running ford of europe. he'll be in charge of a number of regions. they are most likely to move into the heir apparent role once jim hackett can move the company in the right direction. when that day comes they are likely to be looked upon as the people who would take over. >> phil lebeau in chicago. >> julia boorstin has some breaking news. cbs ceo les moonves has extended his contract. he was named ceo when viacom split from cbs in 2006.
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he has had a pretty impressive run since then. the stock is up 100% and 17% so this shows cbs planning for the long term going through 2021. his salary will remain at its current level and will be eligible for bonus and long -tem performance based incentives. the agreement provides for him to be a senior adviser for an additional five years and will include an option to establish a production company under cvs when that contract expires in 2021. back over to you. >> julia, thank you very much. coming up, the rise of robot investing is changing the face of markets and your money. plus, an upgrade for a big p pharma stock. one analyst thinks this name is set for a 30% rally. that name coming up in "street talk" after this break. they call him the whisperer. the whisperer? why do they call him the whisperer? he talks to planes. he talks to planes. watch this.
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hey watson, what's avionics telling you? maintenance records and performance data suggest replacing capacitor c4. not bad. what's with the coffee maker? sorry. we are not on speaking terms.
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welcome back to "power lunch." stocks are in the green and on pace for their third straight day of gains. the s&p 500 back into positive territory for the month. a look at big names hitting lifetime highs today that include mcdonald's, deere, reynolds american, and nvidia.
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bit coin is hitting an all-time high up 121% just for this year. if you invested $100, today it would be worth $72.9 million. >> not bad. it is the rise of the machines. a new "wall street journal" piece says the mathematical calculations, there's such a thing as human free investing. what does that mean for you and your money? the chief global strat the gist with global asset management. you can't stop progress, i get it. as i tweeted out, this dangerous mathematical group thing because if the quants have the same idea sending stocks up, right, that's
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why ten are running the market now, what happens when they flip and want to sell at the same time? because the machines don't care. >> i would say quant investing is one approach to investing. we should think about it as almost a sleeve in a much more diversified and comprehensive investment portfolio. >> 29% of all stocks are traded by machines versus 13% a couple years ago. individual equity trading is going away. etfs are taking over. there has to be some risk, is there not? >> certainly there is and that's why i would caution we would only want a portion of a portfolio invested.
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this does also offer the opportunity for fundamental investing, active, selective managers to really outperform because inefficiencies are created when so much of the market is essentially traded by machines. >> i think, brian, the point you're making and, david, i'll ask you this question, is what is the impact on the individual investor's portfolio of all this machine trading that's going on underneath the markets? if i'm an investor investing my own portfolio or financial adviser in a normal portfolio and all of this quant trading is going on, what do you think the impacts are on my portfolio? >> i'm skeptical it would mute -- no question about the trade unwinding. the markets while on average have had low volatility i wonder if structurally they're becoming
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more volatile, faster trading, robo advisers, those types of things. more money is moving through the system faster and faster. the fundamentals are propping up the market and valuation is hanging over the market and you're stuck in the middle. what you get is low realized volatility punctuated by big random spikes in volatility and that's that structure i was alluding to earlier. >> so a spike in volatility like the 45% spike that we saw last week what we can do is trade our portfolio. >> keep in mind that we typically are holding stocks for longer term. the key way to do that is to have that exposure.
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>> i wonder, david, if everybody -- and i know if all the mit ph.d. equations turn out to be the same and then those flip and their signals say sell, how do we protect ourselves? how does mom or pop protect him or herself against hedge fund computers? what can we do? we have quantitative strategist. we're not anti that. you have to be careful. i worry we are mapping very unusual investor behavior. crowd thinking, behavior finance, ideosan kratic moves. and it's economics and finance
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is a soft science. we're trying to map math and engineering over the top of it as if it's some panacea. we see the value in quant strategies but it's not a panacea to the entire portfolio. >> i guess we'll leave it there. i have a sneaking feeling that this conversation is not going away anytime soon. would you agree? >> absolutely. >> we'll talk price discovery next time. thank you. the future janet yellens and ben bernankes are competing today in the national economic challenge. steve liesman is playing quiz master, the second match of the challenge that is about to begin and, steve, what can you tell us about all of this? >> reporter: well, becky, i'm here at the national economics challenge. the 17th annual challenge. call it the spelling bee for economics and you've joined us at the right time because we are go to begin the final round here.
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one chat hootchie is back from arden hills, minnesota. the first question -- oh, this one, come on. who wrote -- >> you may not confer and you have five seconds. >> marks. >> that is incorrect. >> i'll read the full question. who wrote dos capital and what other famous book did he or she write? >> you have 15 seconds. you may confer. >> carl works and communist manifesto. >> that is correct. >> why are you beginning with that question? come on. of the british pound sterling the australian dollar, the japanese yen or the yeuro, whic
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is worth the most -- >> mt. view, you have five seconds. you may now confer. >> the british pound. >> that is correct. >> off to a quick 2-0 lead. question three. >> more corruption of the kids. question three, if the demand for cigarettes is perfectly an elastic and there's a decrease in the price of tobacco, what will happen to the price and quantity sold -- >> chatahoochie you may confer. >> the quantity is the same and the price will decrease. >> that is correct. >> nicely done. >> steve, do you want to read the whole question? >> sure. if the demand for cigarettes is perfectly an elastic and there's a decrease in the price of tobacco, what will happen to the price and quantity of sold cigarettes? i think the answer is you shouldn't smoke but that's the other thing. here we go, question four is one
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from fed governor brainard on video. >> of the three traditional tools of monetary policy, which one is most often used? >> mt. view, you have five seconds. you may now confer. >> open market operations? >> that is correct. >> you are look iing at some brainiacs and overachievers. this is going to continue throughout the show. we'll be speaking with the winners later. they're better than we are at guessing some of these answers. we will continue to wait and see what happens with this. but we will get to talk with the winners later today. in the meantime when we return on "power lunch" it's been 15 years since netflix went public and investors rewarded for their investments that is understating it. it's up more than 12,000%. can the meteoric rise continue? we will debate that. plus, a sea lion snatches a girl. the not so friendly encounter is ahead.
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well, apparently sea lions aren't the cute cuddly creatures they look like. watch this video in canada.
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a girl stits on a dock getting a better look at sea lion nearby. the sea lion jumped up and bites her dress drag her in. thankfully a man jumped in and got her out. neither the man or the girl was injured. >> that was a quick thinking guy. because the sea lion came back. >> he trieset again, apparently everybody was feeding the sea lion. >> sometimes we get close and comfortable with nature. >> if we show you a scare video it's probably still going to turn out okay. >> right. now some people know the outcome. >> i rubio ruined all the future of "power lunch." sorry. on this day -- nasdaq viewed at $15 a share. since then the stock has grown 12,900%. can the company keep going.
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plus steve bannon got a buy on the stock. on the other side, michael ba backter got a 72 price target. michael, you think over the next 15 years netflix will hit your price target? >> yeah. i think that could happen in the next year or two. the companies trading in billion dollars. they only charge $84 on average per subscriber, they're burning $20 in cash per year per subscriber, it's crazy math. there is no cash flow. they're building a library that has much lower value and they're hoping that someday they'll create a hit. they have one, stranger things, and nothing else. they added three billion to that library, i don't think they created three billion value i think investors are playing for pop. >> andy why don't you make the
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math work for michael? >> i don't think it can work on air because i don't know what numbers he's using. >> how do you justify your price target? >> from our perspective the investment has continued to be exceptional and well-stent. it shows up in the incremental margins. the contributions have been 20%. the money is returning or is driving subscribers. the cash spent is total appropriate in our view because it's going to original productions and yes, that has to be spent up front. based on the track records we think it's appropriate. >> at the same time andy, i appreciate that but there must be something in the base case that has you concerned. if you were to point out one thing that has you concerned over the next few years or so what would that be? >> we're always worried that
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you're going to run into some sort of wall in terms incremental adoptions. the main thing about netflix is it's learned so fast. so while that's a concern, it's been something that they've addressed pretty well historically. >> michael, you been at this for a while and we've talked several times being this. what do you think gets the market to see, oh, you know what packter has been right? what do you think is going to lead to that moment? >> the first thing has been the break down. as soon as they decide one of sfimts is a bust, marco polo, bloodline, each that they don't own yet. when they start taking back leans people will start to wonder what's going on. in fact, they are ordinary charges against an ongoing
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business. and think you're going to start seeing them spend the cash and write it down as they go, you're going to see negative earnings. >> all right guys i got to leave it there. thaeng for joining us. you may wonder what it's like buying a tesla car, not good says one of the widely respected tech analyst in the street. on the second hour of "power lunch" after this break. prestige creams not living up to the hype?
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i'm becky quick and here's what's on the menu of "power lunch." ford shifting gears on its future. how much did the ford family have a role in terms of this move and who are they? he's one of most widely followed tech analyst on the street. the worrying signs he's seeing in tesla. and searching for the next janet, the best high school schools around the country duking it out to become the nation's next generation of economist. we have the winners. "power lunch" starts right now. and once again it's a good start to the week for your money, stocks up for a third session. wednesday 300 point sell all, a
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distant memory. the dow is up a couple hundreds points more. energy is the lager today if you need to find one. cisco, boeing, three-travels leading the dow right now. on the negative side there aren't many. visor, chevron and nigh competent among the worse performers. melissa. president and netanyahu delivering a statement. president expected to unveal a budget proposal this week that will include major cuts to enentitlement programs. e lon with more. >> high guys, just everybody every secretary will see cuts except for defense. the skinny budge the white house outlined in march included massive reductions in agencies like the education department, state department, the energy
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department. i'm told this budget will go further by tackling entitlement programs, not social security and medicaid, but think of food stamps for needy families. those are part of reform package that i'm told the president will reduce the dollar by $275 billion over the next decade. that was part of the house healthcare bill that recently passed that the senate has not yit weighed in on it. the president's budget is usually a vision statements, includes policy priorities but often times it is not necessarily a politically realistic document that could put the president in some treacherous water. modern republicans were already divided about whether to support
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the peel of the medicaid expansion, that could threaten that support further. $54 billion for defense fending is still in the budge. also money for infrastructure, and the administration will claim they can do all of this and balance the budget over the next decade. back to you. >> question becomes is wall street ready for another big plan from washington. let's bring in brian. brian, we know that washington is a lot of politics as e lon just pointed out. but if this is something that brings more division between the house and the different parties, is that something that come dates the president's plan for tax reform and what does that mean for the markets? >> it probably means more volatility. good afternoon becky by the way and welcome to "power lunch." i would say yes, the markets are looking for volatility.
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if you look at the charge of the vix and scope it up against the ten year pressure they've been going down for several years. the market needs bit more of volatility. the more clarity we think from any kind of budget package the better. our numbers for 2017 don't include any kind of -- any kind of tax cuts because we want to make sure we know and see them first. so i think study as we go through the summer months we continue to believe on a short-term basis for the next three months or so, three to six months i'm sorry, the parks are going to be more range bound than anything. >> you mentioned correlation between the vix and ten year treasure yield, doesn't the yield for stock value -- i mean it's support of stock value than they are right now so it will lessen the the case that stocked are fullry valued or
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undervalued? >> that's a great point melissa. when you take a look at the risk agreement yum i don't think anybody looked at their models. so we can see a period where the evaluation the market can continue on so. we're not investors for 23 months we're investors for 25 years. over the next 12 to 18 months we believe the risky assets we believe in the stock market is the higher category of utility and tell kon. we do believe interest rates are heading higher and we do believe investors, first part of this year unwound the trump trade. >> brian, we been asking that question for a long time, and not to blow the entire segment, but i worn if there's a another side to this let's say nothing
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lets done. trump smile under this stuff and the administration can't get they're you know what together. could that be a positive thing of getting through the so-called, quote trump agenda? >> well -- >> we want certainty we don't want uncertainty. >> right. where you're going with that actually, brian, if you look back in 1994 in the mid-term of president clinton nothing happened post-when he lost the super majority. so post like gridlock and post when nothing gets done. we can see a scenario where we see long-term interest rates stay lower like this. so we could be chugging along here. remember, we continue to see a lot of dimension, return for monetary policy, we need to see some sort of fiscal policy kick
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in. we do believe that less regulation across the board, fda or ecc is quite positive on the undering side with respect to these sectors with the long term perspective. >> brian thank you. greet to see you. >> thank for having us. top corporate story today, big shake up at ford, mark fields out of ceo. the stock is down 30% during the year field was in charge. robert here looking at the ford family. robert. >> the bill ford is exactly how the company felt a few weeks ago saying quote, we are has frustrated by you at the stock price. our network is tied up in this company of course we want it to go up. ford told phil lebeau, a bored decision, it's very clear the
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errors of fields depend on the country for a lot of income and both are under a lot of pressure right now. ford owns 2% of the economic shares but shares 4% under the vote. the family's encouraged not to sell ford to anyone but each other. the family had a network of around $2 billion back in 2014. today there are no current members on the ford list knowing exactly what that are worth. that pie is being divided into a lot more slices, in the 5th generation you have cousins, second cousins and a much larger complicated ownership. the family pays its bills with the income from the dividends, while those are generous they yield 5.2% right now. >> we've seen situations like this at other companies. i'm thinking at dow jones and
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you and i both use to work. as the family age and increase in numbers this is something that can overturn a company. >> it can. but you can't underestimate the human factor is that this family cares about their legacy and this income from this company. and when family members and kids stop getting or that income is in jeopardy then they'll take action. it's a little bit different than when they in sent vice versus other shareholders. >> the dividends have increased but it's only if they have to -- loan perhaps where they're caught in that sort of -- >> well- like dow jones and those other company it is family cares about getting their cash stream. if there's a threat to that, the company wants to give that income to the family. so i think that's certainly a factor in addition to all the things that phil's talking about
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with technology and strategy. >> robert frank thank you buddy. your next guest has written on ford's team, joining us al in the fight to save ford. also the author of a new book, read teeming. rebecca lin land executive analyst and kelly blue black oo joining us as well. al, i red your book a few years ago, here's the question, ford as a company can say why they're making this move, i think robert was spot on. this is probably the biggest company in the world where the family name is literally still on the front door, it is the logo they control the stock, is this a family decision to boot out a guy probrought down the
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family foreign? >> i think it is true on that. it's true the family depends on the company for their income, wealth and lively hood. the issue here was the momentum that al started when he took on the company in 2006 and how that started to dissipate after he left the company in the summer of 2014. from what i understand talking to the leadership of the company over the past few years, i said when mark fields took over ceo, i said it's going to take a big guy to sit on his hands and not fix what isn't broken. that's what alamo alley was famous for he was able to step on hiss ego and build this amazing team. unfortunately as i understand it, mark has felt the need to put his thumb print on the ford organization and what that has done is created another
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bureaucracy, clouded the air and made it hard for the company to focus on the objectives. >> you used the b word and i'm glad. based on some of the stuff you did bryce was al be the constant salesman, he'd come on nbc and say brian i'm going to get you the latest ford. >> it was more than bruksy and it's important coming down to not fixing what is broken. when allen left ford i asked him, are they going to be able to keep doing what they've done? his answer was look, i've taught them how to fish, i've given them the system if they continue to use that system it will keep them successful. we saw the same thing happened at boeing, where after allan left boeing his successor felt
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the need to tinker with the system even though it was running fine. >> hey, republican obecca, one phil said today he thinks they're going to be doing technology throughout the company. this is not just about aton mouse driving. that sounds like more money you're investigating and may be quite a while before you see a pay off. is that something that the stock market is going to react kindly to? >> well i think the stock is -- i looked at it a minute ago and still floundering. wall street got what they wanted, they got a new ceo and they're still not happy. i do think the investments they're making are necessary. and to bryce's point about the culture, this is what -- it's amazing how often people talking about the ford culture and it's described as cut throat and
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bow bowie accuratic. i think we need to see the company making investments in technology, in its people and getting people excited to come to work again. you know, the energy that emanated from allan any time he was in the room or on t.v. or anywhere was tangible. and while i think mark is a great guy and a very good manager, he didn't have that same type of charisma that really engage people much as also dan does. >> bryce, some management experts will say ford didn't give mark field a fenough time. he was only ceo for a short time frame. what's your thoughts on that was you know, were there clear missteps opponent of mark fields? >> no there weren't. but i think you hit the mark on
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head. when allan left ford, ford was on the right course -- >> so he's ruined it? >> well it was chang and change. i wouldn't go forward and say it's ruined, the company is still macking a lot of money. talking with bill ford back when allan left, one of the things he told me,-o you know, even thoug we're successful the thing that still keeps me up at night is our success going to go to our head, make us lose or edge and not having the culture to make us win. hack card is a great addition to the company. his expertise, what he's known for is coming in with a very positive culture, that's what allan did. also in addition to that, having a vision for a company that's bigger than just what it's doing right now. if you look at what he did with steal case. he took it and said we're not
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just making office furniture woo macking work spaces. that type of forward thinking, of challenging the organization to become better than itself is something that allan brought and every company needs it if it wants to stay ahead in the market. >> thank for your in sight. thank you. here's what's coming un on "power lunch." one of wall street most watched tech analyst of tesla. this stock has tripled more than one year, it's hid record highs multiple time this is year including today. high school student across the nation competing to become the next bernankes. coming up on "power lunch." hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could.
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but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.
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. not good. that's how an experience was described buying a tesla model x. sources say the customer service was to blame. tony welcome to the show. you put a deposit down on a model x july 2014, you got the cur delivered in july of 2016. is this what your experience is based on? >> yes, it is melissa. >> so not good. where did it fall short? >> well look, i have to underscore i am a sample of one
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and most tesla customers are delighted with their car and generally happy with their service experiences. but, there were a number of things that stood out at us which i think is just endemmic to tesla at this point in its revolution. the first one is there was no visibility whatsoeverf processes that simply didn't run well. it felt like this was a company in hyperer growth mode which it is. it was challenging to get financing. there was poor hand off between sales and delivery. i think our worry was really if salesman service are strained to do when tesla's delivering 80,000 cars a year we're worried that it could become much more strain when they deliver 300 to 500,000 a year with model three. >> sure. that was perhaps that's why you
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didn't have much visibility on model kprk. there were issues with the -- let's be clear this is through july 2016. isn't there hope that tesla has ex panned and ramped up ahead of the model three launch knowing it's going to be on a much much bigger scale? >> i think tesla is trying to do so but the numbers are very significant. last year -- over the last year tesla ran through service location about 25%. again tesla's expected about a five-fold increase in the number of cars that it's going to be shipping. we're just not sure that the ramp is going to be significant enough. now tesla's working on improving its processes, it's also talked about putting mobile service vehicles in the field so they can use vehicles to come and service cars remotely at a customer's location or home. but ultimately the question is,
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you know, can they scale quickly enough given how significant the volume of cars that they're expected to ship over the next one to two years. >> tony, they don't lease tesla's do they? >> the tesla will finance it directly. >> the reason i asked, if you go to a cars.com and look for a used tesla, there seems to be a lot on the market given the size of the overall population of tesla. i was wondering why there were so many 2015, 2016 tesla's have appear to be up for sale. >> i think they're highly visual but generally owner satisfaction is very high. now there could be people who are either disappointed in the car, which would be the small minority. tesla also have a loaner fleet
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and -- that it uses. so some of those loaner cars may be going into the used car market. this is a company generally that has extremely high customer satisfaction and consumers generally love the product. as you mentioned brian, the residual and resale values haves held up very very well. >> toni thanks for joining us. >> my pleasure. when we come back, the good, the bad and the ugly. all of that in today's trading. stick around "power lunch" will be right back. ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement
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welcome back to "power lunch." it's time for the good, bad and the ugly. the good, share rallying today has stock rebounding after a drop. they were concerned about the proposed take over by amazon's boots. on to the bad, the buy your firm company down after 3% announcing fda approval. this is due to potential heart related side effects. then you have the ugly today, it
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is an ugly day for asuall. brazilian went down 5%. oil on the other hand moving higher costing $51 a share. the closing trades are ahead plus the winners of the national economics challenge will join us next. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. ♪ get ready, because we're helping leading companies lead with digital.
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. hi everybody, i'm sue herrera here's your cnbc news update at this hour. iran's newly elected president hoeding a news conference criticizing arabia. saying the kingdom has never seen a ballot box. he also says stability in the middle east is impossible without iran. troops battled in the west bank while trump visited. -- in jails have gone all hunger strikes for 36 hours now trying to get better conditions. a driver of a tractor trailer was killed. and check this robbery out,
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a puppy dog entered a dollar general store in california, grabbed a loaf of bread and came out and struggled with the dollar general employee before fleeing. how far as you can see-collared the next day along with his accomplice. there you go. that's the news update. >> poor puppy. >> he's very cute and very clever. >> doesn't set an example for the other dogs, no steeling. >> he's been trained to do a little shoplifting apparently. >> high cash, gluten free for that dog. >> thank sue. jackie at the commodity desk. >> crude price gaining another percent of the opec meeting. an ex tngs is probably on the way. session high 53 low 75. i'm quoting a july price, june
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rolling over today. opec is one piece but summer driving is coming and the dollar indentation which woulwell. he's always been an awesome guy, a gentleman, kind of a father figure. never afraid to say what he feels. so birthday, we hope you're doing well. we look forward to seeing you an cnbc. 89 years young. >> that's right. president trump delivering a joint statement with israeli president bennet ya hue a little over an hour ago. let's bring in daniel, he's a former israeli ambassador to the united states. good to see you. was there anything in either one president trump or benjamin netanyahu has to say that stood out to you? >> i think it was quite natural for them to discuss and commend
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the unbreakable alliance between israel and the united states which is really a natural alliance. i think this alliance is very very important. when israel and israelis have trust in confidence in the united states and its president, then they are more amenable to move forward with the pal sten yans and make some painful concessions, of course with the expectation that they will be equally met by concessions by the palestinians. >> yeah. and there was -- i don't know how to say this, i'll just say it which is that netanyahu has taken swipes at the obama administration was he not, using terms like red line, and says he looks forward to the reae sergs u.s. authority in the region. what do you make of that? >> i would say there is a difference between the obama administration and the trump administration with the evident this is a much more really lisk
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approach right now. trump is readvising the -- had agreed upon in 2004, namely that there is a recognition in the major jewish blocks in the sedan area, the west bank. and obviously israel need border, it's a code name for president under jordan valley. understand this is accomplishes and also the expectation by the president that the palestinians will recognize israel as the jewish state then israel can step up with make concessions. on the other hand, the president has asked israel and israel acquiesce to curve the building in construction on the west bank on the one hand. and he's keeping the embassy tell a vooef not moving it. so i think this is the approach
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we've seep here for many years. >> he called the deal between the palestinians the basically ultimate deal. do you believe one will get done? >> i'm not sure. the gaps unfortunately are still too big. i have not seen the palestinians recognizing israel so far, i don't see how they give up on jerusalem which is also a main stumble block, but maybe. the trump administration is capable of thinking outside of the box and in the absence of reaching the final order there, maybe they can go for what i call second best, like in long-term interim solution which is still a win-win for atargets. >> sir thank you very much for joining us. >> my pleasure. >> let's get back to steve liesman now with the winners of this year's national economics challenge. steve they were scary bright when we were listening to them
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before. what happened? >> well, what happened is mounds view high school from around.hills, minnesota won one division and the other division was won by the other high school. it was an incredible competition. these guys are scary scarry smart. let's talk to benjamin chen from mounds view. who's your favorite economist? >> adam smith. >> why is that? >> because the competition is named after him and i just love the competition. it's so much fun. >> how did you get into economics? >> well, my teacher had a wonderful economics class in which we did many fun activities and i just got really interested after that. >> let me talk to your teacher here. you've been here for quite a while right?
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martha rush right? >> yes. >> 11,000 student from 40 states competing you brought them back here five years in a row, what do you doing do to turn kids on to economics? >> i don't know. i just use lessons and help the kids experience and fall in love with economics. >> let's talk to something here from north penn high school. stephany sank. stef any donald trump says he can race gdp to 10% can he do that? >> i think it's possible. >> what would you be looking for inside a gdp to see if it will go up 3%? inflation and -- >> those are two ideas. tell me, reed denter worst your favorite economist? >> hike. >> why hike? >> free the markets, free the people. >> i got a show for you.
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maybe we have some -- i do want to spend a minute now and talk to nan morrison. nan won't you come over here. nan this thing keeps growing, last year it was 10,000, this year it's 11,000. what's the purpose of organization, what are you trying to get accomplished here? >> we're trying to get kids like these, engaged in economics to they with make great decisions and understand how the world works. >> why is it so important? >> because everything that you do, every decision you do and make everything requires a great understanding of economics and economics principles. >> talk about principles, you're a sophomore. >> yeah. >> you killed it. what's your name? >> michael pack. >> the stuff you knew is quite amazing. how long have you been studying economics? >> since about the second semester of freshman year. >> really. do you have any stock tips you
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can give me? >> none that i can -- i don't want to give you bad advice. >> that's a great way to start. what's going to happen to gdp next year? >> honestly, i don't have that much information about the current state of economics. >> we'll get you caught up. i'm going to through it back to you guys from the counsel of economic education national economics challenge. brian back to you. >> i think that michael pack, steve that was awesome michael pack has a big job in government. >> gdp going to do, i can't fwifr you that information right now. congrats to the arden hills guys. steve liesman thank you very much. >> thanks. shares creating new highs the stock has tripled in the past year. we'll talk about that. stick around.
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dearthere's no other way to say this.
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it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake, our hearts racing as one. i know this is sudden, but they say: if you love something... set it free. see you around, giulia ♪ it is time now for street talk. i can promise you melissa this will be the best street talk so far this week. >> i hope so. first up burglar clays upgrading
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the stock to weigh the big upgrade my land winning approval for generic version. the base business appears on more solid footing. surprise target goes up to $50.47. >> stock number two is finish line. upgrading the retailer. a few things about the stock, hardly because it's fallen 10% in the past month. analyst like the risk reward giving the pull back. a bit more specific and apparently, shoe trends are moving back towards running shoes. i guess the stand still adas is out running is anyone. >> third stock, the stock has been clobbered. analyst say evaluation to hard to ignore. the tune of 57%. >> nice pop there.
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finally, your smaller cap of the day, stock number four enteg grass, etg. go goliad man zacks go bullish on the stock. they say pull backs is a time to buy. revenues will pick up. less than 20% upside with today's move on. street talk is down now let's move on to trading nation. shares hitting a record high. ari wald, kevin cue recall. kevin, what you guys do in washington is crossing, do you value still nvidia, which by the way the minimum ls have gone up with the stock price. >> fortunately we don't own it. we have trouble valuing it at this level. this is exciting business in a sense and i can see why there's
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momentum. whether your talking about the graphics part or auto part supply business, either one of these channels are very competitive and i question -- ultimately i have trouble getting my head around what the ultimate value point would be. at a value investors, to-to-rich at these levels. >> ari wald i'm sure this is a trader favorite as well. when you look at the chart i'm sure people are trading the stock off the wall as well. what are the outlook? >> the outlook is bullish here. as momentum investors rearview technical research team the stock's got momentum and we look it. there is no such thing as too far too fast. this took has been too far too fast for 100%. there was a big break out above
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$120 petition 120 more recently. all above a rising two moving average. now that we're breaking higher again we see this as a resum shon of that longer term uptrend. we like the stock. >> it's got a lot of momentum. i know you made some happy on the video it's tough to value guys. thank you very much for joining us. for more trading nation you know the website but now by heart, trading nation.cnbc.com. >> when we come back moment lbu stocks have been building stocks. "power lunch" back after a quick break.
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welcome, the the home builderings etf up 12% to date, and toll brothers the standup. up 22% this year alone. so what should investors expect? joinings now is an analyst, and, jack, i know you like this stock, you got a buy rating on it, but there's concerns that you look like you are bringing down your expectations for earnings right now? >> brought down the quarterly estimate by a penny. we are still by the consensus estimate, a jv business developing rentals and condos in jv, and hard to pick that number quarter by quarter and came in to the lower end, but core home building side, we're above consensus on orders. >> and i know that for toll brothers in particular, the northeast, where they did a lot of luxury homes, things slow down. what's the problem in that arena with that particular segment? >> you know, i think there's a little bit of misconception
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about toll. if you look at the revenues, about 45% of the mix comes from the west coast now, and i think when people write down, you know, the avenues in manhattan and toll brothers, they think it's a bigger part of the business than it is. they did a deal back in 2013 and bought a big presence in the west coast. the issue for toll had been, you know, prior to this year, you know, softness in new york, supply, demand, condos coming on the market in manhattan, and that weighed on the shares a year ago this time. >> you like toll brothers, but you have buys for lenar and d.r. w horton. what's the story for the areap that overall? >> the bigger story is looking back and see 2017 as the year the home owners inflected and turned higher. we are starting to see first time buyer, and beginning of the great recession, you know, mortgage money is available, and it's demographics, 75-80 million
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people, you know, coming on the peak home buying years, compare that -- match that with the fact the industry itself has not been building enough homes to meet the supply, and represents have gone up significantly over the last five, ten years as well. you put that all together, and we're bullish on housing overall and reflected in the ratings of the group, but it's really a lot of demographics and under supply coming together, and those things should drive a lot of the names in the housing complex. >> what impact, if at all, jack, does just the increase in dealt load of the average u.s. household have on home building and sort of the buyers in the market. i mean, if you take a look at student debt, for instance, or even auto debt and rise much sub prime in auto, how's that impact the possible buyers in the market for homes you can actually qualify for the mortgage. >> sure. so most of the growth in auto financial over the last year is in the sub prime category. that's a 660 fico score and
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lower. there's not a ton of mortgage dollars available to that group now. the average fico score for a a fannie freddie is 40 range. it's a segmentation issue. now on the consumer side, i think when you look at where we are at today, you know, that first wave of millennials, mid-80s through 2000, they are ten years out of school now, paying down debt, and relatively speaking, we are delevered from where we have been historically and layer in sub 5% mortgage money, we don't think it's really an issue until you get north of 6, 6.25 on the 30-year mortgage rate. again, part of that is because represents are high. they are paying high rents today. because represents are high, makes home ownership in most markets more attractive. >> a hold on shares of kbm, correct? >> yes. >> why not a buy? >> well, you know, they didn't have a great balance sheet
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coming out of the downturn, and biggest drivers of profitability in home building is land and land pipeline. they were thinner, delevaged, did a nice job there, but paying at mafgt rarket rates for land, profits suffer. they did not bulk up on more affordable land over 2009, 2010, and 2011 like lenar or toll brothers has. that is part of the profitability, a home builder, you know, lower margins make them less attractive. >> all right, jack, thank you, again, for joining us, and watching tomorrow morning for the numbers. >> thank you. up next, check, please. tired of paying hundreds more a year in taxes and fees for your unlimited plan?
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shares of wynn right now, up by 3%, top performer in the nasdaq right now. bern steen with a note saying wynn is gaining share against las vegas sands as well as other competitors out there. mccau expected a fourth month of double digit growth, and i spoke to the ceo on "fast money" talking about a property that's open, supply coming up in the 40 quarter 2017 from mgm and he said, i welcome the business because it increases traffic to the area, and he expects things to even get better in the fourth
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quarter once those other competing properties are open. morgan stanley also saying that institutional investors have been increasing allocation in the first quarter and las vegas sands and wynn are the preferred stocks amongst institutional investo investors, helping propel wynn's shares higher by 3%. >> okay. check, please. here's mine. america, don't lie to me because i don't know. we know. if i had to give you one stock to buy in the past 90 days, apple, google, facebook, amazon, or blackberry. buy one of the stocks. which one? >> amazon. >> nobody would have said blackber blackberry, but up 55% in 90 days, tripling the return of the next best of those names, what's old is new again. becky quick has a blackberry. that was for you. >> she and kardashians. >> this one too, i use this more and more. folks, quickly tomorrow on "squawk box," congressman
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mccarthy, tomorrow's the day the budget gets dropped from the trump administration. talking about that and more. >> netflix's 15th anniversary, which did better, amazon or netflix? netflix. >> blackberry. >> quite a ride. thank you for watching. >> "closing bell" starts right now. ♪ >> oh, hello. >> catchy tunes. >> welcome to the closing bell, everyone. i'm kelly evans here at new york stock exchange with dr. bill griffeth. congratulations, can i go to you for my next physical? that might be weird. >> i'm not touching that. i mean that in many ways, but, yes, i got an honorary doctorate friday. still speechless. >> congratulations. >> i don't know how it happened. >> you had to give a speech for it.

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