Skip to main content

tv   Power Lunch  CNBC  October 4, 2017 1:00pm-3:00pm EDT

1:00 pm
scott, let's give some names to people. >> unusual activity in intel. >> keep an eye on citibank. this thing's going higher. >> a rare dip in mike ron. >> killer whales gone, sell seaworld. >> intel. >> that's does it for us. "power lunch" starts right now. >> president trump in las vegas this hour meeting with victims. first responders and heros of sunday's mass shooting. the healing has begun but the search for motive continues. could you be on the hook for more than $70 billion in puerto rican debt the president says the islands bonds may have to be wiped out and you may be surprised who actually owns it pharmaceutical companies making 20% on their money today. i'm brian sullivan and "power lunch" begins right now.
1:01 pm
welcome to "power lunch." green arrows across the board. enough to push both indices to record highs. tesla is rallying a new call on the street and it's the most bullish one out there right now. the analysts who made that call joins us later to make his case for $500 a share. meantime netflix is also rallying its price rates at 225. >> here's what else is happening at this hour. the senate commerce committee unanimously approving a bill to get self-driving cars quickly to the market. secretary of state, rex tillerson knocking down reports that he may quit, saying those reports are ir-ronus and he has never considered leaving. job growth beating estimates for september but the number down from the prior month.
1:02 pm
hurricanes irma and harvey to blame for that. >> thanks very much. i'm tyler mathisen and what a timely day to be here in boston live at the cambridge cyber summit, a joint effort of the institute of cnbc. there are tech leaders and ceos and government officials from law enforcement, the intelligence community all talking about how we can protect against threats in the digital age. this hour tom fanning the ceo of southern companies will join us here, big utility and mike greg war, brian back to you. >> puerto rican's bond prices are falling following comments about president trump about the island's massive debt load. >> we have to look at their whole debt structure. they owe a lot of money to your friends on wall street and we'll have to wipe that out. you can say good-bye to that. wron if it's goldm goldman sachs
1:03 pm
you can say good buy to that. >> the president seemed to suggest that he is opened a wiping out the puerto rican debt. is that to be taken seriously on its face >> i wouldn't take it word for word. i talked to the president yesterday as we flew home on air force one. what we're focusing on right now is what you and i just talked about which is the primary focus of the federal effort is to make sure the island is safe and that we're rebuilding the island. >> puerto rico has more than $70 billion in debt and that was before hurricane maria destroyed large chunks of the island. there are over 18 classes of debt in puerto rico. the top three being general obligation. we think of hedge funds who actually owns most of puerto rico's debt, joining us now is kate long, the founder of puerto rico clearing house. great to have you with you.
1:04 pm
>> great, michelle. >> it's melissa. >> i'm sorry. >> the president had mentioned goldman sachs and goldman sachs perhaps owns some of the debt but the vast majority of debt is owned by individuals, mutual funds? >> about 75% of the debt outstanding is held either by directly by retail investors or through mutual funds and the number may be even slighter higher than the 500,000 and the other 25% of the debt is held by hedge funds or large institutional holders. >> can you drill down on the 75% who are mutual funds, et cetera? what sorts of debt are owned by mutual funds that would be owned by say a u.s. investor and do pranz citizens own any of that debt? >> so typicallythe stronger debt has stronger [ inaudible ] it's tax exempt and the big names you get in the mutual space are franklin -- and op
1:05 pm
hiemer and basically the weaker debt which has less legal security -- because there was retail investors and families on the island of puerto rico because they had specific tax preferences that allowed them to put it away as stake holdings and such. >> what is that stuff trading at right now, kate? >> it trades anywhere from a company pennies for the weakest debt which will be wiped out as president trump to maybe up to the middle 50s for the strongest debt that has most legal security. >> so when we're showing for example, right now we're showing something that's due in 2035, yield of 8% originally when it was issued. it's getting hammered today, that's the higher quality stuff. when 75% of the hold willers are
1:06 pm
individuals, a huge percentage of those individuals are people in puerto rico holding stuff that only trades at 2 cents any ways. president trump isn't saying they're going to be wiped out because, in fact, they've already been wiped out >> that's right. that's 100% right. so bonds change in a distressed situation trade below recovery and so you can expect a little higher recovery than the levels you're trading at but there's still significant hair cuts coming for basically all the debt in the district. >> it's brian sullivan. with all due respect to the president, you can't wipe out these bonds. it's property. there is a legal process. assuming that there is some sort of a negotiation agreement made to write down further or wipe out, whatever you want to call it, these bonds, how long will it take? a year >> so congress passed a law last year called -- there were two parts of that. the first was consensual debt
1:07 pm
negotiations that should've happened and didn't and now all of this debt restructuring is being done in federal court. that process will take years because even if the federal court, you know, rules on all this debt and gets to a plan of adjustment, say within two years, they'll be multiple appeals to the first circuit and the supreme court after that. a consensual process in contrast could be basically within a year. it's very important for puerto rico because one they have no market access now because of all this litigation. they cannot bro and two, in terms of people wanting to make new investments, in businesses there, very unsettled environment and people just don't want to go in. >> they've only got 3.5 million people on this island. they borrow 70 million, what do they spend the money on? >> yeah. that's a really good question. a lot of island people would like to know that. some of it did go directly to
1:08 pm
the power utility, the water utility. operating deficits. some of it was just went out the back door either in fees or who knows how. there's never been a significant in-depth audit of this debt and that is one thing that needs to happen. >> wow. unbelievable. thanks so much. cait long. the main stock index in spain is dropping over 2% today. it's had a very tough week in general. for the week it is down almost 3.5%. the spanish banks are getting hit very hard as well. down between 4% and 6%. this is all due to fears of catalonia that they'll declare independence. could this be a major tricket for the global markets. joining us -- >> thank you for having me.
1:09 pm
>> we see spanish stocks and spanish bonds selling off but does that mean that there's a bigger problem for the rest of europe is this one of these threats that we always talk about for the european union >> no. we don't think so. in fact, this is a purely spanish issue and you can see that in the market reaction that as you said spanish bonds and spanish stocks have been hit somewhat but so far we don't see really much, if any, sign of contagion and that's marginal and there's absolutely no sense in which the catalonia independence movement has any anti-european under pinnings to it. this time we see this as a purely spanish crisis that doesn't have implications for europe or global markets. >> why is spanish debt or stocks selling off? run the numbers for me.
1:10 pm
is the idea that if this region separates, therefore the overall government losses a source of revenue? why are people -- what's the transmission mechanism for losses when it comes to these various equities >> so this is a very standard market reaction to a political shock. you're seeing in the immediate aftermath of the shock and you can think of this as an uncertainty shock that, you know, bonds would sell off and so would the stock market. i think what will really -- people will really start to focus on any fundamental market impact if the situation worsens significantly and independence becomes a meaningful prospect, we're some distance from that. that's not to say things couldn't deteriorate further. in fact, we expect that it will and there are indications that the catalonia government might declare independence
1:11 pm
unilaterally later next week. i don't think at this stage the market is really thinking, oh, independence is going to happen. >> if it did or if it looked like we're going that way, do you think it would negatively impact the united states stock market >> that's very unlikely. as i said, first, it might be an issue for europe but it's very unlikely that it would effect global markets. one can think of the u.s. as a global market and even if it did, what we would expect based on our experience with other political shocks elsewhere in the world is that the impact would be very short-lived and fadeout relatively quickly. >> okay. thank you. president trump arriving in las vegas moments ago. he will meet with victims of the mass shooting as well as first responders and heros. jane wells live in front of the mandalay bay. jane >> reporter: hi, brian. the motorcade is moving to the
1:12 pm
medical center right now. let's show you that video from a few moments ago as the president and first lady landed. they were greeted by republican governor sandoval and president was saluted by a sheriff joe lombardo. they're on their way. it's not clear if the president will take questions in a story that has so many questions left unanswered. we have this other news, stephen paddock's girlfriend arrived back in the country from the philippines. that is her in the wheelchair. the sheriff said she will be questioned by the fbi in las vegas within the hour as they try to figure out why stephen paddock did this. he reportedly sent her out of the country two weeks earlier and the sheriff feels confident a motive will be discovered. >> we're comfortable that we have the suspect into custody but something more may come of that investigation and i want to understand the motivation that you describe, okay, to prevent any future incidents. and, you know, did this person get radicalized unbeknownst to
1:13 pm
us and we will want to identify that source. >> reporter: the fbi and local authorities say it will take days to process the crime scene inside paddock's hotel room where it was clear he spent a lot of time planning this attack. >> this individual and this attack didn't leave the sort of immediately accessible thumb prints that you find on some mass casualty attacks. putting aside the somewhat dubious claims or responsibility that we will see in each one of these instances, we look for actual indicators of affiliation, of motively and intent. we don't have those sort of indicators. >> there is a beefed up law enforcement presence at every property on the strip and inside the wynn we have video where they're using metal detecting wands on guests. we are trying to find out from the coroner when we might get autopsy results from steechbl paddock when those might be made public to see if he had a physical condition or what the toxicology tests results may show, anything to try to figure
1:14 pm
out why he snapped. back to you. >> jane wells, thank you very much. appreciate it. a surprise decision from the fda making one big drug company investors very happy today. the name and the reason behind the big move coming up. right now back to tyler at the cambridge cyber summit. >> thank you very much. the ceo of southern company will join us after this on protecting our powegr fm ha. r idroa ck
1:15 pm
throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise
1:16 pm
1:17 pm
welcome back. "power lunch" live in boston where cnbc and the aspen institute partner for the second year running. the focus here is to look at ways we can combat urgent cyber threats and secure the country. tom fanning is with me. the ceo of southern company, one of the nation's largest utilities, he's also the co-chair of the council. tom, great as always to of you with us. let's start with a little detour and that is to talk about the recovery from the recent storms, florida, texas, now puerto rico. i know you've been involved as part of your industry role. how do you think it's going? how huge is the challenge for puerto rico? >> just enormous. the escc not only does cyber and
1:18 pm
physical security threats it picks up these natural disasters from a coordinating standpoint. harvey was very interesting. it was a rather small hurricane, only 300,000 outages but turned into this enormous flood with enormous humanitarian consequences. irma, on the other hand, was an enormous hurricane. 8 million plus outages through the peninsula of florida up into georgia and beyond. so completely different storms. now, when you think about puerto rico, it again is take completely different situation. when we think about restoration activity in hurricanes, you think about putting the wires back up, the poles back up and whatever else you need to do. puerto rico is nothing about restoration. it's all about rebuild. that is infrastructure is on the ground and the challenges, the ability for our industry to provide resources, people, equipment, unparalleled but the challenge we have right now is
1:19 pm
not the availability of resources, it's the logistics of getting it there and once people get there with those resources, do they have a place to live, do they have food to eat, water to drink and do they have personal security. big deal. >> it's going to take months and years -- >> let me tell you something, the federal government has been doing a heck of a job here. i don't know that comes across all the time in the public -- >> it's been of some controversy, obviously. >> it has. listen, what i said on the floor at fema, fema's doing as good a job as they can, homeland security terrific job. guy named chris is handling that. i think they're doing as good as they can. >> let's switch to cybersecurity and i want to ask sort of a theme attic questions. the threats to the electric grid, the transformational infrastructure of our country, are we ahead of the bad guys or are the bad guys ahead of us >> i think we're ahead of them. i think the capability of the
1:20 pm
united states is fabulous. in many cases dealing with other nation states you're in the old cold war era of mutually assured destruction. please understand the context of my comment. when we talk about cyber threats to the electric infrastructure, i think about it not in the context of punks, thugs and criminals. i'm thinking about it from the standpoint of exessential chal threat, the ability for the bad guys to turn off the grid, to interfere with american commerce. mill sense is through harmonizing federal government responses through harmonizing private industry efforts and that's not just the silo of electricity, one of the things i've been working on very diligently is recruiting other ceos particularly in the financial sector and in the telecom sector to come together to have a harmonized kind of effort to understand how can we best prepare for and respond to in terms of technology, systems
1:21 pm
and information sharing machines. >> i want to squeeze in one more of my questions, then i'll turn to michelle for a question here. my sense is that when companies are hacked, threatened, broken in to, that it's at that point that they go to law enforcement or the feds. are companies doing enough, do they have the right relationships with law enforcement ahead of time? >> tyler, that is fabulous. that's the point of getting this harmonizization of private industry -- 80% of infrastructure is owned by private industry. we must play offense. we must pitch not catch in dealing with either the administration or congress or state and local governments to work proactively in this so-called public/private partnership and so far i can report that in these three areas it's working exceedingly well. >> michelle, jump on in. >> thanks so much. it's michelle caruso back in
1:22 pm
studio. we've been showing video about data points about puerto rico's energy infrastructure. it's really old. they're average plant is 44 years old compared to the united states where it's only 18 years olds on the mainland. they're still powered 47% by petroleum versus 0.6% on the mainland of the united states. they borrowed all this money yet never actually invested in a lot of the energy infrastructure. how much money do you think it takes to get their power grid back up to snuff >> yeah, boy, michelle that's a heck of a question. as i said, i think the issue is not going to be restore, it's going to be replace and one of the issues we have to think about, really not just puerto rico but really across the united states is this notion of resiliency of our major infrastructure. as a matter of national security
1:23 pm
and i think we will see this is kind of a test case. now, people have talked about this is going to take months to recovery, in many ways it will because the economy obviously is taking a dive and if you can't enact commerce on that island, boy it's going to be a recovery of some prolonged nature. but i will say this, i think that we can pull together the resources to get things done in a short matter of months, if you will. we'll get the grid back up, we'll get the generators back working and we'll start putting people bang to work but boy oh, boy that's a tall order. the bigger strategic issue that you raise is this notion of resiliency as a matter of national security. >> tom, thank you very much. appreciate you being with us. we'll see you will again soon i hope. >> tom fanning. a surprise decision from the fda, huge moves in a number of stocks plus the most bullish target yet for tesla. can it become a $500 stock. we'll talk to an analyst that
1:24 pm
says yes. "power lunch" will be right back. just like some people like banging their head on a low ceiling. drinking spoiled milk. camping in poison ivy. getting a papercut. and having their arm trapped in a vending machine. but for everyone else, there's directv. for #1 rated customer satisfaction over cable switch to directv. call 1-800-directv.
1:25 pm
1:26 pm
mylan is on pace for having its best day in nine years. meg tirrell looking at this news and the ripple effect it's having as well. >> it's a generic version of teva's ca pax yoen which is teva's biggest problem. this came ahead of expectation. mylan has seen a few set backs. getting the approval today maybe
1:27 pm
a yearly ahead of what analysts had expected. you are seeing teva down there as mile lan is soaring on this news. this accounts for 19% of 2016 revenue. $3.5 billion in u.s. sales, $4 billion in total worldwide sales. analysts are now expecting that mylan could bring this to the market at 25 to 40% discount capturing maybe a 40% market share here as a result teva does see a hit to its q4 epc. this is an injectable drug. he wanted to speed those up and we see copaxone getting improved. this is expensive drawing, $90,000 a year for that lower dose of it. and we are seeing ripples not just from mylan and teva but buy owe gen a little bit and a lot more from mow men ta which is
1:28 pm
working on a generic competitor. mylan beating it there so mow meanta seeing negative hits. david mar ris, thank you for phoning in, i appreciate it. >> ig want to skip right to the impact on teva since it's such a dramatic drop on the share price. in your note you say that there's uncertainty around generic ca pax yoen. >> unfortunately a new ceo who hasn't yet started and you figure most new ceos coming in reset earnings guidance. they previously said it would be about 25 cents a quarter. they came out today said, yes, sure enough. if current consensus is about $4 and then you're taking out a dollar maybe for ca pax yoen for next year at a minimum, now you're at $3 and the generic pricing environments been getting worse sothey do have new approvals coming but if the
1:29 pm
generic pricing environment continues to get worgs, they've reset earnings once, are we looking at a current consensus at 4 z-larz that could end up being below $3 when this new ceo starts and that's a real possibility? >> in terms of the generic pricing we've heard this throughout reporting, is part of it going to be accelerated by scott gottlieb's push to approve more generics and faster >> gottlieb's done a great job. there's only so much the fda can do by setting price. they can't go out and tell people what to price drugs but they can speed up approvals. here's a good example. in the ms markets there are no generic competitors. this is the first one. this will really reset the pricing for other things but what he gives with one he can take away with another. so one thing to keep in mind, a complex generic like epipen there's no ab rated nonmylan
1:30 pm
generic out there. that could be one of the things he targets next. we caution that what you get with one you may get with another. >> i was going to ask you about that because people are saying there could be more upside from mylan here and teva if complex generics are sped through the fda approval process and mylan has also been delayed on generic advair. what do you think the potential is for an epipen competitor getting approved >> based on our conversations with teva the fda is active dialogue, almost daily dialogue trying to help the applicant get a product approved. i think that's going to happen. i think it is a focus of the agency. i think the move today is a little bit exaggerated. i think there are reasons for it and simple math that shows that it is but i can understand that people are excited. they've only had bad news in the generic industry recently and now you have a little bright news here with a key win for
1:31 pm
mylan. >> david, thanks a lot. the pricing that you quoted, that's on the generic competitor >> that is the list price of the brand copaxone. >> what do we think is going to happen when it comes to generic pricing. >> 40% discount and as more generics come on the market that will get weighed down further. >> got it. >> thank you, meg e. should the ceo of wells fargo be forced to stem down over the bank's fake account scandal. we'll ask the senator who grilled him. the dow hits another record high. we're back. two minutes. tfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation.
1:32 pm
flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. ♪ i'm living that yacht life, life, life ♪ ♪ top speed fifty knots life on the caribbean seas ♪ ♪ it's a champagne and models potpourri ♪ ♪ on my yacht made of cuban mahogany, ♪ ♪ gany, gany, gany, gany
1:33 pm
♪ watch this don't get mad (bell mnemonic) get e*trade and get invested
1:34 pm
hello, everyone. i'm sue herera. here's what's happening at this hour. brett mcgirt the top u.s. envoy in the fight against isis meeting with egypt's foreign minister in cairo. discussing the progress of the countercampaign and efforts to oppose the militants' groups aspirations for expansion. a jordanian official says a motorcycle exploded in front of
1:35 pm
the jordanian embassies military office in paris. it is unclear whether anyone was hurt or whether that explosion was accidental or intentional. the european union is ordering luxembourg to recovery $295 million in back taxes from amazon. the e.u. commissioner says amazon profited from a special low tax system allowing it to escape most of the taxes it owed. >> our position concerns the tax treatment of two amazon group companies in luxembourg under a luxembourg tax ruling. it allowed to shift the vast majority of its profit from one company to the other company without valid justification. you are up to date. that's the news update this hour. brian i'll send it back to you. >> a lot of people may not know that the guy who designed amazon's tax strategy and worked
1:36 pm
there forever, he was granted an honorary consul late from luxembourg to seattle. that's how close the relationship was. >> that's amazing. busy week for president trump and congress. the president visiting las vegas today after touring the damage in puerto rico. the meantime congress grilling the former ceo of equifax about their data breach one day after the ceo wells fargo is forced to defend his reaction to the fake account scandal. joining us now senator heitkamp. i'll ask you this pointed question, do you think tim sloan should be removed as ceo of wells fargo? >> i think that's really up to their corporate governance structure. i think we expected something more after the last removal and so hopefully our questions will lead the board to ask further questions and make those decisions but what i want to see is i want to see a change in
1:37 pm
corporate culture where you don't hear i'm not familiar with that, i don't know that. in big, big problems that they have and that's not what we heard and as a result what we did hear is we're really, really big and we represent a lot of people pane just trust us and that -- that boat left the shore a long time ago. there isn't going to be any more trust us. >> what you asked him so pointedly was you sort of walked through a couple of points where you will said i don't know, i don't remember, the l.a. times didn't tell me this, you pressed him pretty good. he did a pretty good dodge and weave. tell end of the day were you satisfied with what you heard, senator. >> absolutely not. when you're looking at people repossessing cars that shouldn't be repossessed and the ceo says i don't know about that. i'd have to look into that, give me the name of your constituent and i'll call him. that's not the point. there were thousands of people who had this happen to them.
1:38 pm
when you say, you just told us that you're not going to force arbitration on people who had false accounts set up but that's exactly what they're doing at a court case in utah and he will says i did not know about that and he doesn't know he has a case in the 11th circuit. there's one of two things either he does know and he's not telling us or he's really woefully ilprepared and there's not a change in corporate culture when you see that. >> do you envision any legislation coming about as a result of this >> i think the combination of equifax and wells fargo and the concern that everybody has about corporate accountability, one of the things that i've been working on has been changing in the intent element in white collar crime because obviously people think that as long as i didn't know i'm not going to suffer the ultimate consequence which is white collar crime, i might get fined or this might happen to the business but
1:39 pm
nothing's going to happen to me. until -- the frustration that people in my tate of north dakota have is you take the whole economy and no one went to jail. how can that possibly be true? if we start developing a level of personal responsibility of corporate leadership with the ultimate penalty being a criminal prosecution we'll see changes in terms of the duty to know. >> how would you apply that to the case of wells fargo? should somebody go to jail >> i think somebody should go to jail. >> who should go to jail >> the person who is the most culable for making the decisions and i think that was the head of the retail division. i think the point of the hearing is to try and figure out how we continue to see these problems. you think about wells fargo. we started out with they're opening up accounts without permission. then we find out they're putting people on -- making people buy car insurance that they don't
1:40 pm
need and then repossessing cars when that insurance isn't paid. so it's like this cumulative thing, look, you keep telling us trust us we've got it. we heard the message. we're really sorry and then they turn around and say, something else happened but we didn't know about that, trust us. we're really sorry. what's it going to take to change the culture so there's accountability at the top. this happened at our community banks. that message is, it's the fault of the people who are the materials and the loan officers in banks in north dakota and not the fault of upper management. that's again a dodge of upper management responsibility. >> it sounds like clawing back some of the bonus, some of the salary -- since the hetd of the community bank at the time that may not be the end of it. there may be more fallout. >> absolutely. i think that all of these
1:41 pm
examples illustrate things that we need to understand if we're really going to protect consumers of these institutions. equifax. i have no relationship with them. i've never told them what they could do with that data and now my data's been breached and oh, by the way, initially they said and to protect yourself you need to spend x number of dollars. i think elizabeth did a good job walking through how that actually benefits companies like equifax and we can't have that consequence as a result of a breach as large. take a look what happened today with yahoo. clearly congress needs to have a sit down and a come to meeting of minds about what the expectations are not only to prevent breaches but how people need to react when that happen. >> senator, thanks so much of your time. we appreciate it. to the bond market now rick santelli is tracking all the
1:42 pm
action. >> it was all about ism nonmanufacturing today. let's look at a chart. this series was started '97. here's a 20 year chart. today we had to read a 59.8. we've only had three numbers stronger. we had them in august '79, 61 change in '04 and 61.3 in 2005. august that's what we're comping to but that is a powerful number and it changes the complexion of many markets today. created this whole top that we haven't traded below, same on day 30. maybe the dollar index is the best example it did reach its high water mark right at 10:00 eastern. the moral of the story, there's a lot of things going on and central banks may do a lot of different things in the future but in the end sometimes the markets give us good info, strong fundamentals will be the underpingings of future trades.
1:43 pm
and this number goes a long way in arguing, if you're looking at a 2.5%, you may not be as crazy. >> noted. burgers and semi-trucks, two areas where analysts see opportunity. street talk is next. plus tesla shares up more than 60% this year. we'll talk to a analyst whose really bullish on the stock giving it the highest ice pr target on the street. "power lunch" will be right back. people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life.
1:44 pm
or they could get even more.
1:45 pm
despite reporting disappointing delivery numbers and slower than expected production, a 500 price target which is the most bullish target on the street. joining us now is ra immediate shaw joining us. >> thanks for having me. >> you're a chip analyst, right?
1:46 pm
>> correct. >> when you're coming off the tesla valuation you had to meld various sectors in order to come up with this $500 price target. what are the sectors you drew from >> i looked at the software sector. i see tesla's as a technology company whose biggest asset is manufacturing and the end product happens to be electric vehicles and energy storage, but you've got a company with exponential groaning, negative cash flow. that looks very similar to sass companies that trade at multiples as high as ten times sales. so when we look at tesla and where it's trading at today we think there's a lot of room for the multiple to expand. >> you view it as a tech company with its largest asset being manufacturing. i would think that would be the reverse in the world of technology. manufacturing is not an asset and that is actually just something that you don't want a
1:47 pm
company to actually do. the more that's in the cloud the better and here tesla is, it's so tied to the manufacturing process and not just to the manufacturing process, but expanding that process to various lines, soon a semi-truck. that seems like it would be a wait on that valuation >> they've got what we believe is an insurmountable lead in vehicle range and what we're looking at is company that owns the manufacturing for the battery and much of the supply chain that leads to the car and melissa that's enable them to deliver a vehicles like the model 3 that can provide a range of 315 miles for about 40 to $45,000 and that's significantly better than what's available in the marketplace. i would go back to manufacturing as the key reason why they have
1:48 pm
this big advantage in vehicle range. >> i was going to say, my issue with tesla is just that when you look at electric cars. they're cool. but you've got to smiemds -- you've got to have a garage. you've got to upgrade your circuit board. aren't there natural barriers to growth here? i hear your point but at the end of the day they make cars, big expensive, cool but big expensive cars >> it's a fair point, but we're talking about a very large market opportunity here. i think in the last month we've seen enough evidence from china and india talking about a complete ban on carbon emission vehicles. california's talking about it. you've seen a number of traditional automakers like ford and gm say they're going to move a significant portion of their fleet to electric vehicles. so this market, this ev market
1:49 pm
is not a fad. it's happening. when you think about a market size that's 100 million unitsz, if tesla can get 1% to 2% of that market you're talking about a company that's going to go from $8 billion of revenue last year to north of $60 billion in the next five years, that is an unprecedented run up in revenues, very rare for a company of this size. >> when i hear about all those automakers piling in traditional automakers piling money into investments in ev i think greater competition for tesla. the moment they get that edge on the battery and on that range per cost for vehicle, does tesla's competitive edge dwindle? >> possibly, but you're not going to see cars on the road that are even remotely comparable till i think 2020 or 2021. and, you know, it's -- talk is cheap. it's very easy to make an
1:50 pm
announcement and say we're going to introduce 20 or 30 new models. where is the capex, where they going to get the battery capacity from? tesla has spent three years working on their giga factory. they've spent close to $5 billion. nobody's spendinggigafactory, they spent withxdpanasonic clo to $cbillion. nobody's spending any sorts of so i think they've got to lead.x to me it feels like it's at least a three-yearit advantage >>ñ?romit. p >> what we'reñilooking at are shares of gopro. they did take a dip in the last 10 or 15 minutes or so as the google product event is starting to wrap up here. the reason why is because google announced towards the end of theircpresentation a new that they are introducing here and what it is is they have alp camera tha@i captures motion photos and smart enough to
1:51 pm
recognize greatfá expressions, lighting and framing some of the words coming out of the event say it will be priced at $249, but it could bej view by traders and investors as a competitor to gopro'sok cameras. that's the reason for thee1 drop we'll keep taking a look atjf bh of those stocks. not añilot happening. thanks, tom. despite having a republican-controlled house and senate, the president is unable might have a fight on his hand now over taxes.w is he to blame or is it congress' fault? they're the ones who write thex uip rt&háhp hc
1:52 pm
hey, you every talk to anybody about your money? yeah, i got some financial guidance a while ago. how'd that go? he kept spelling my name with an 'i' but it's bryan with a 'y.' yeah, since birth. that drives me crazy. yes. it's on all your email. yes. they should know this? yeah. the guy was my brother-in-law. that's ridiculous. well, i happen to know some people. do they listen? what? they're amazing listeners. nice. guidance from professionals who take their time to get to know you. ...from godaddy! in fact, 68% of people who have built their... ...website using gocentral, did it in under an hour, and you can too. build a better website - in under an hour. with gocentral from godaddy.
1:53 pm
1:54 pm
welcome back, everybody to cyber summit one of the bestqways tolp combat cyber threat may be through public ande private partnershi chairman we were talking about whether your company had been hit with  hack at what point did you decide, and i assume youlñhavew be what point did you decide to
1:55 pm
take it public to take it to the board and to take it to law enforcement >> that's a great question happen better not be the day you we have ae1+ plan in place whetr ouri] customers or our own infrastructure and depending3n the issue, the disclosure is very specific of when it goes and executive management,m,@ wh it goes to the board,xdand when do we bring outside agencies and the. he greatest vulnerability in software today >> the greatest vulnerability i really in ñidentification for example, you havee1çó1 an >> my credentials. >> yourñik credentials.
1:56 pm
say you run a data center and you have privilegedxdaccess to particular machine and you getf compromised because we're in a world now where machines trust machines and it's not about a one to one relationship between a human and a machine and it's a relationship between one machine and onew3machine with literally thousands of machines. @rc it's a credential breach andelw do you make the credential more (t&háp &hc% is it two-factor authentication? >> two-factor authentication is the minimum wstandard >> it is a pain upon. >> it is a pain and that's what happens with consumer applications and there are ways of protecting people and the problem is the customer experience is difficult so we tend to, you know, shyñ away fm that now the same way that you would protect a privilegedt identity user throughxi two-factor authentication, and makeñ it easier on customers by using artificial intelligence. for example, if you are on a downloading th=u.ndsof
1:57 pm
theqnight and that's want tnot usual pattern, it will shut down all of the servers if that's what you want us to do server and notify your manager'% manager. (t&háp &hc% >> it is the only way that you can fight the differente1 vecto that come in because we don't know how they'reç going to be attack and the creativity changes almost every single day. >> we have toe1 leave ituthe. >> mike gregoirex ofçóca technologies >> back up to you, michelle. >> thanks for that, tyler. >> home prices are+4kqpáing up again and it's making potential buyers lkioong forñ risky wayso pay for its monthly mortgage again. housing going back to its embattled ways next.çñlw
1:58 pm
1:59 pm
2:00 pm
o the secondj hour of "power lunch. here's what's on the menu. does the president himself see the biggest obstacle to getting his legislation passed thew3dsurprising results of tc new cnbc survey and[ what's o is new again as home pricesw3 continue to soar,lp buyers are once again taking bige1 risks. should the market beñ worried >> and google's newxdgadgets. the tech giant unveiling a slew
2:01 pm
of new products to take on amazon and apple the man that run'se google's hardware will lay out his plan as "power lunch" starts right ♪ despite everything else that is goingx on, it is another day and another record for your money and the majorlp indexes continue their slow grindw3 higher consumer discretionaryñk stapl technologyf lagging performers and both of those, by the way at all-time highs. ge, apple, intel and pfizer are your worst dowq performers. the stockt(rally tps and t ince the inauguration. the cnbc all-america survey asks what's getting in the president's way? 1e= steve liesman!u has the numbers >> pretty interesting results5a here juc i want to show you what the results from the traditional
2:02 pm
president. opposition from the opposing ko biased media coverage, that can come from the ñ5epublicans, congressional republicans. that all makes+sense. look at the number one reasonçón ourñipoll here,ñ melissa his erratic personalt behavior. 39% of theç public. our poll is created with a democratic and republicanñr pollster they analyzed this chart ujuk çóareful,jfxdónot everyt or respondent has the same answer down by party. it is the number one reason for democrats alongok with the numb two reasonç inçóinefficiencyt running the administration, and (%i un. independents, what do theyl think? also number one eptic personal republicans and the biased media coverage, and opposition from congressional democrats. >> number four,xdopposition fr democrats, and bia!e)k look at the number threex thing 1xd
2:03 pm
republicans. that's another sign of our times here that republicans are blaming republicans for the problems they're having. there's a whole othery explanation here i wantçóto get at first take a look at i% of the president's policies. 68% love his infrastructure idea 53% like individual tax cuts we get into the non-economic issues and the agreement with the president falls off fairly sharply. immigration ban, just 43%. healthcare, just xd2%, climate change is the worst polling thing for the president at just 35%. take all of that detail now>!" let's add it up and his approval rating and unchanged at 38% and despite what you don't see here and i$/in our article,ok tr#îumoptimism on the economy and almost no change on these numberí a better approval for the president when itxdcomes to the economy. n>> interesting data. stick around for this.
2:04 pm
former white house!press secretary foru george w. bush an former chief economist for vice president biden. tré#r,a] is it possible that so-called trump lagenda, and i don't want like to use that term because it is the congressional+ agenda, the gop agenda, congress writes the laws and not the ú! things are pretty good rightp'd high-ranking senators and congress people s1edon't want to muck it up >>ç well, i think that's rightn terms of tax reform which is the next big and really critical republicans it does come down to a combination between math and the when you look at senate mathisen tor corker has expressed strong concel as has senator paul and then you think of senator mccain in the tax cutter wing of the party and susan collins is more of a
2:05 pm
deficit officer and rightok the you're s.t.a.r.t.ing with four republicans that are leaning no. you saw trump travel with heidi heitkamp to north dakota and he did the same thing with senator donnelly from indiana and he needs votes from the democratic side from those democrats that face re-election int(states th trump won handily. that's what's up in the air right now. >> we put a lot of time pressure and he's been in office almost a done i'll make it worse the majority of congresse including most of the gop have years, if not decades. they've had plentyv of time to even when they were the minority party in congress. is it clear they don't have a comprehensive plan?e1o >> it is definitely clear because as we speak, they're tweaking the plan in
2:06 pm
improviseatory ways. we are learning they're giving up on the elimination of hts51 not the stuff youxdput on your food, state and local tax deductions aéd"they were going to eliminatee that and have $1.3 trillion, and once you dr" to leave it in place which is kind of obvious, by the way, because there are republicans in blue states who are not ready to hand their constituents a tax increase.q oncemyou lose that, the costf the plan obviously skyrockets. to reduce their ask in terms of tax cuts and probably more budget resolution and build in even larger budget'deficits d you run head-on into the3÷ problems that trent has identified there are still some of the deficit hawks on the republican side are chicken hawks at the end of the day. they don't care that much about the debt, but there are a few r@c
2:07 pm
>> i think there's a bigger somewhat encouraging to the trump camp and when you look at 39% you're back to the president's personal erratic behavior, you're back to a much morwónormal-looking thing and you're back to the economic roof. >> yeah. >> there is a possibility, if the president sees this, to not quite run the table, but he's got a very solid base. he doesn't go down or go up, unchanged despite the stuff that's happened and we have 38% approvalc rating. he could get, and i think independents are truly independentlp on the issues and theyw like some of his plan, jt a little nod towards public could changec the numbers and l of that, by the way, could change the calculous on tax cuts because right now what you have is a president who comes to the table with only 73% support from that number needs to be an 80,
2:08 pm
85, consolidateñihis base and gainñ a few independents and a of of a sudden what the president wants the president might get. >> but why do you need tax cuts if people are saying the economy is percolating along -- >> that's a totally different discussion which we're not going to start now, jared.x >> that was actually my point. that was actually my 1ástion of you, jared, was thi",ct thing. >> but we have to go, guys >> good to have you here.q president bush visitin-puera
2:09 pm
massive debt loadand theo inability to get power back on in the wake of hurricane maria what's become clear since the hurricanexdk is despite borrowg lots and lots of money, it didn't invest in the ñisland's energy ñrnfrastructure. thejf medium plant aid in puerto rico was 44 years compared to on the mo) of united states. these plans are so old they still run on imported oil.tç 47% of the"d
2:10 pm
at congress for helping to steve malonga is with the >> how are you doing >> theye1 borrowed t(70 milliod never seemed to upgrade the energy infrastructure and people will be without power for months and months and months. what did they spend the money on >> salaries, for instance. they failed [?÷cut costs not only in the publicw sector. they saw this coming and this is something that's been@wery clea for a long ti for a long time. they've taken power plants off line because they were so oldlp and before the hurricane wefáw3 powerqoutagest(simply because e other plants are overloaded and this is a very difficult problem. having said that, trump's statement is a little bitlpxñ outrageous because more than half of their debt is pension debt and theép creditors in
2:11 pm
case are public employees. away that debt because that means not/o! paying them. >> i think heñi3specifically referred to wall street and just inok]ñicase, golme9)ú se what happens next mere, do y think? >> ñrell, here's the thing. there is a?3bankruptcy procs going on right now congress created something, a?; for they had been inwl negotiatio. they'd been prettyq thorny and the board has canceled some of the deals that were made betweew puerto rico and the bondholders. so you have a process going on, and the hurricane massivelyçó interruptedçóthat legally, they pushed it back by about a month, thej whole process. in the meantime, however, what p& tox wade through and what kindf the they're part of?; a national
2:12 pm
include infrastructure aid for their electric grid. >> do@xúu think,ñ stephen, they deserve some kind of a break bec(qf the storm? >> here's the thing. i don't know what you mean by a breakx- >> maybe a grace period. the bankruptcy procedure youf talkeded to put in place for two years, but many people, most expected a lot of these bonds to default well before the hurricane came through why not offer a short -- i don't know, six-month repayment grace period and reset from there? >>ñ first of all, now that they're in bankruptcy, many of thoselp bondsñraren'tc beingpd right now anyway, and -- >> they're gettingñ a break, basically. >> that's what bankruptcy is about,t actually. >> areñ you talking about genel obligations? you keepx saying puerto rican bonds. there are 18 different kinds >> clearly, i think theok legislative process has to be slowed down rightw3now. the bankruptcy process, remember, in bankruptcy, there is no fixed amount of time, but thecbankruptcy judget can put a
2:13 pm
halt on this until a better what kind of aid it will get and what kind of infrastructure aid the disaster because we do that for naturalx disasters to other territories and across the state. >> laste1 -- if not a question it's a point, steve, maybe i'll 9 illinois, illinois, not saying puerto rico is not akbig sto, illinois's underfunded pension liability is twice total puerto rican debt. >> i get that. you know what the population of puerto rico is?ñ 3.5 million people and yet they'rew3third in the united states for how much debt they've taken on o steve, thank you so much we can talk about this a lot all right. here's what's coming up on "power lunch." cybersecurity summit where one problem in every security system and that's us, humano beings. as homes get pricier, buyers are
2:14 pm
getting hung rier for different kinds of mortgages is itçó2007 all over again? a new home device and say partnership for sn aapnd we are live at google's product event for a look at their new product fm"power lunch" returns right after this
2:15 pm
2:16 pm
. google's product event wrapping up in san francisco some big announcements on how the>#mpany plans to compete with apple and amazon. josh lipton is live on location with the first on cnbc interview. john?ñ
2:17 pm
>> thank you, michelle i am here now with rick osterlow senior vp. >> thank you for having me. >> it was a few weeks ago that apple announced its new iphonet lineup it's google's termt and you we new pixel phones and sharpere displays and the latest process from qualcomm, improvedt(camera i'vyeen analysts and iks. el pixel phones are having ÷zn8of market share and part of refy2uj operator, website,ñi countries. how isc google going to address that >> it's reallyq early for the w hardi!tq business and what we're mostly focussed on right nowzs a great user experience and over business and it will develop awesome products for users what we callxd(radically helpful
2:18 pm
products >> what about dol"s? will we see a bump upxdthere? will morñj people hear about e new phones you unveil today? >> aj key factor is how good t products are and we think word of mouth is a really critical we'f investment onok marketing so people can hear the messagecand know what the products are about. >> when you think about t%-ñho strategy with the pixel, does google want to be the premiums? smartphone maker you want to sell aoñ lot of ps in volume and take on apple and it'smoreoç of a niche product how do you see it? ew,lp innovative product and q br that by combining a.i. and software and hardware and we m will result on that, but our focus is on the user >> google did agree to pay htc over $1 billion and youw3will
2:19 pm
acquirejf engineers and what's that going to mean for your bu forward? >> it will help us innovate ever faster we acquiredw3á about 2,000 /sy talentedñ engineers from htc along with i.p. and we are excited to have them join ourñi (t&háp &hc% hopefully the deal will close in the next few months and we will use them to go to worke@(z creating a bunch of vxj products >> thank y'h#or joining us today. we appreciate it you. very much. interesting look there at google coming up on "poweri] lunch. auto stocks have certainly been hot over the last month. will that continue or if you own them should you sell them now? we'll talk about that, but firs let's get back up to boston, matheson with some ço weaket point in any security plan andt that is human error. stay with us right here on power lunch from the cambridge cyber summit in boston
2:20 pm
i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs.
2:21 pm
the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later. that's what it means to go long™. call now and request this free decision guide. it's full of information on medicare and the range of aarp medicare supplement plans to choose from based on your needs and budget. all plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. unitedhealthcare insurance company has over thirty years experience and the commitment to roll along with you, keeping you on course. so call now and discover how an aarp medicare supplement plan could go long™ for you.
2:22 pm
these are the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. remember, medicare doesn't cover everything. the rest is up to you. call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. go long™. ♪
2:23 pm
ok welcome back to x"power i'm tyler matheson.ko when it comes to datat(breache their biggestjf weapon is actuay us our identities and our behavior with us now matt moynihan, ceo of forceç point are we winning or losing the wa against the cyber attack >> i think we're losing. >> why >> i think when you look at cybersecurityjf most of it come down to impersonation and it's  tried and true technique and it is fundamentally flawed. wrong way? the world has changed. >> what was the old way? >> the old wó9÷was walls to kee people out and that was okay, but with clou$ñ computing, p'djf data are zty want than ever so at the end of the day it comes down of to understanding human behaviors and how they interact with
2:24 pm
critical data and i.p. noñimatr (t&háp &hc% >> we were talking to mike gregoire and he made a similar point that one of the ways to fight back today, and ixk=] that this is something that you've made a priorityie in yr company is to diagnose humant behavior patterns, and that can help you, one, detect, b, and two, fight back against intrugzs >> every company has a rhythm and flow to how they work in their day job and how data transits across an organization. >> it's almost like an individual morse code.t >> instead oft(] worrying aboue network events you really can have a needle jump outof the haystack and have that behavior. >> as you get into the world where there are so manye1 more seá(uq" devices whether it's my door, iç would imagine there would be people who would b.át( )eet
2:25 pm
tu against cyber threats are observing my behavioral cvcf1 o >> i think privacy is )aissue for the next decade, and i think you see it taking place in theo consumer world wherexñ amazon facebook, and it's thex same thing applied to the enterprise space. but the use of the data and the privacy implications that have to be taken seriously byc both compliance no doubt about it. >> tell me if i have th5ñwrong ?iw right  wd is drivenjf by the creators who come up with all kinds of, we can do this, we canjfñf do % i've got an ñçapp, 'dcan maki happen digitally and that the securityj part is not integral enoughñ to that process, that comes alongxdsecondarily to the creative side of it. >> is that a fair point? >> think it is a fair point.t( step ahead, the good guys or the
2:26 pm
bad guys steps behind the internet is fundamentally built on trust there's an academic community that does not tak7security intoj +p#count and so we need to keep up with the technology to secure case wife, give my i.t. guy the one sure to d/ or3not do to make themselves secure? >> i think in this new world, i think you have to understand,çóf you have critical dataf that c someone compromised it and employees that have access to the critical data in i.p. and what are you doing to protect them >>c thanks very much. zó >> good move. >> better weather. >> back to you that will be a wrap from the cyber summit in boston, michelle i'll see you back ati headquarters tomorrow so behave yourselves >> very inforscáive and on point, tyler thank you. homeq supplies are low. prices are continuing to rise. are buyers falling for the same
2:27 pm
risky mortgages that got us into trouble ten aryes ago? that's ahead on "power lunch." duncan just protected his family with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month. less than $1 a day! his secret? selectquote. in just minutes a selectquote agent will comparison shop nearly a dozen highly rated life insurance companies,
2:28 pm
and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $21 per month. give your family the security it needs, at a price you can afford. since 1985, selectquote has saved over a million families millions of dollars on life insurance.
2:29 pm
2:30 pm
hello, everyone. i'm sue herera and here is a cnbc news update at this hour. secretary of state rex tillerson holding a news conference to this afterx sources say he had the summer amid growing tensions with the white house, and after nbc news reported tillerson referred to president trump as a moron.ñ >> i think it's the most important of the article is to reaffirm my commitment to this role that president trump has asked me to serve and to dispel with this notion that i have ever considered leaving. i have ansuuu$at question repeatedly for some reason it continues to be w3róisreported.x there's never been a consideration in my mind to leave. >> wells fargo will refund some customers who pay mortgage rate lock extensionc fees that were 20z february of this year. it saysçóabout $98 million in fees wereñrassessed toxd(pt(
2:31 pm
concerts after 58 people were killed while watching himñr perform in lasñ÷vegas on sun. in a statement, he said out of respect for the victims, it is the right thing to do. you're up-to-date. that's the news update thisñiz] hour michelle, back to you. >> got it. thank you very much, sue. let's take a lookcat theji markets. the dow, s&p, nasdaq and russell 2000 all hitting new intraday highs. they have pulled back from those if the dow couldv stay positive into the close it would notchc the fifth straight day of gain. crude oil is doing something 4oúq!it wouldid not thinkx it fellok back below $50 a barr. >> not only did it fall underwky there, we closed under that level, as well $49.98 so what happened today we were bouncing around between positive and negative territory. couldn't find any conviction because the data wasn'tdilçtel
2:32 pm
the clear story. on one hand, you have the eia invents oradrawdown of over 6 million barrels today and that was not expected and those supply builds areg this time ofñ year. there are detractors likexdu.s. seasonal demand slows down atok this time of t(ear. so the range that wec saw today was pretty wide. we were over 50,?closing und 50 and it seems that a pattern is emerging now. we tested thosew3levels now we've held with the close, and we can see it go lower in the next few days from here, guys we'll be watching for that thank you, jackie. home mortgage payments rise with them, consumers may be showing anj appetite forok riskier mortgages that offer lower payment. diana olick is standing by with that story it sounds like something that was very bad the last time itfá happened, diana. >> it was 2( last time around, maybe not thisç time. i'm saying re-enterok the arm. the number of adjustable ratexd
2:33 pm
mortgages jumped just over 40% th )juz inside mortgage finance. arms offer lowerw interest rat. take a look. last week the 30-year fixed was at 4.12%, the five and one arm was at 3.3%. the rate on an loan buf definition, of coursd period, moving higher or lower butt(they're all for some time (t&háp &hc% arm demand usually rises frome1q the first quarter to the second quarter, why because spring is the busiest season f]rhome buying and it's when families dominate the 1 higher-priced homes still, the jump in arms in the spring of 2016 was 16% compare that with this year's jump, 40%. this makesv4(t case that buye this year are struggling more the mortgage bankers association says they are watching this trend. !árp)e of arms todayjf is stil
2:34 pm
very low, very low compared to what it was during the last housing boom and let me stress, today's arms are fáunderwrittenc much higher standards. moreq on this online, realtycheck.cnbc.com.t >> let's bringo in the chief >> how dolp the arm applications and arm loans a p a percentage o thejf marketñ compare now from5 and 2007 that right now the share is ber slightly belowh]0% of allw3] applications that we're seeing that are actually arms, and ?sq+l that we've seen any time fromxd 1992 until -- through the bubble years, until 2007. so overall that remains really low, but we are seeing an increase and it does point toward the fact that people are the dollar go further. and make >> i'll try to be optimistic
2:35 pm
here, just because people are taking arms does not mean it will end the same way because there are so many other factors. >> right when you look at the analogy of 2005 to 2007 to today, and they say you see? it's a bubble, what is the strongest response for that person >> that's a grea" question. i would say it's not a bubbleg we're not anywhere near bubblel conditions certainly not the bubble conditions we saw back inxd2005 and 2006 right now we're seeing fundamentals are really driving the market we are seeing very strong demands andok we'reok seeing a w is that the homesxdthat are available for purchase tend to be more expensive homes and so people have to tryx to stretch, payment which is the number one hurdle ó found, butfá also tryin low enough for them toñx affon a monthly basis. >> can i just jump in on that. right now because a lot of people say yes, they're riskier and they are because by
2:36 pm
definition they can adjust today'se1 buyers aren't for 30 years you have a millennial generation which is much more mobile and have been renting for a while, maybe a five-year arm and afá l-?a=iq%iq%=9m and the no down payment loans that we saw in the qohese arms are meant for peop who are not necessarily staying in a home for very long and they offer a great rate and can be fixed and even up to 15 years. >> you've done stories about flipping coming back there are investors in this market who know that they're 3sell a home within a certain amounñ? o÷ time and they're not going pay that páet >> absolutely. that's thee perfect thing for a flipper and an'1 investor who wants to use an adjustable rateo loan because they'll sell it >> they do have certain limitations and they'll backc only a certain amount of loans and because home prices are increasingw dramatically and t increases may shrink over time and home prices are not going to fall nationally the way theyñ 
2:37 pm
the risk for lenders is a lot less, as well. >> i actually completely agree with diana there, and the only thing i would throw in is keep in mind that millennials are buying homes slightly later on in life at this point. so many are skipping the starter home so for some, this will be a home that they will be in for quite some time. so there you might want to consider getting aç 30-year fid arm where you have thej fixed 30-year fix side thatçógreat. however, if you know you'll be in the home for less than five, six years it might make a lot of sense for you to get an arm >> this is a topicx for an entirely new segment, people are staying in theirñ homes foreve nowadays aren'tok they have you done research to why the people aren't moving m to move >> you are definitelyw3seeing e people staying in the market for
2:38 pm
finding that people stay in 12 yearsrap" now when they're ready tol actually try ÷ozmove their home they'reñ seeing there's nothing out there forxd them to move to or it's too expensive to move and they choose to instead renovate their longer in some cases you might run into a sitm%=9 where you thought you might move and end up being ly because your mortgage is homex longer and str it be picked >> thank you so much >> thank you.ñ coming up on "power lunch," ford lays out0l its vision forh tund the future may be low on gas we'll telli you what they're saying straight ahead on "power lunch.
2:39 pm
opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
2:40 pm
2:41 pm
ford presenting its plans for the f=j) and the future3w may have fewer ford cars and a lot more trucks. phil lebeau is in chicago with that story phil 9p'ñ at least gasoline-powered vehicles, that's for sure, and at least some point in the future and here's what jim hackett laid out on wall street yesterday and it's prettywm+ó straightforward.
2:42 pm
$14 billion while emphasizingñr more investment in trucks and suvs you get it, the most profitable vehicles and sell more of those while de-emphasizing cars and ramp upñidevelopment of electr vehicles and here's axdprimary strategy it's not justxdford and it's a of the automakers and lomyatf where electric vehicle sales are strongest and5-they will reman strongest in china for many years toe come. we've talked about how that government is pushing people to plug in their vehicles so the automakers are going to bee rushing to meet that demand and speaking of rushing,x ford's c certainly understands the urgency of his job >> i want to declare to you that i get up every day feeling like time could bei] casted so i feel a senseñ of urgency. >> that's what investors want to heart especiallyçóc'estors ford, and fiatf chryslere1 thic
2:43 pm
margin the shares are up slightly today, guys and they have moved higher in the last month with the rest of the auto group, but they have been looking at what other automakers havew3been dog and have been saying we need to catch up >> yeah. what they've been doing and how the stock price has been doing >> yep >> phil, thank you phil lebeauu in chicago. let's dig deeper from the autot stocks joining us now is adam jonas the head of global autok(ate morg stanley. tus icappreciatet you being here. >> you got an auto rating on out yesterday, does that make you more"3[ bullish how does that change your view if at all? >>w we are under way ford i would agree with hackett -- mr. hackett'sko comments that there is a sense of urgency. i don't think ford islp unique if you're a ceo of an auto company atç this point in the cycle and you care about your share price andxdyou're trying support your share price, you
2:44 pm
have two ways toñ doxit, you increase earnings or increase your multiple fundamentally, at this point the cycle will listen and it's really hard to grow your earnings, right the consumers are starting to get a little bit tapped out. so then you focus on the multiple and i would just describe the current environment for autos and a magical, magical time, okay tw7hp) recasting their business models as tech, a.i. skeptical. we did see this before in fact, in 1999, ford recasted and other companies recasted businesses as internet companies and you might remember that, and guess what it worked for a la(le bit ford stockñç got up to $40 in9 before the wheels came off, and i thinkjf there wasn't much detl yesterday, melissa was on the creation of the separately c1rzueñ entities that focusedt
2:45 pm
entirely on auto 2.0l to attra capital. there's legitimacy behind that we haven't seen the detailslp y. >> is what ford and maybe gm trying to do is trying to appear more like a tesla? that's whyethey'relp selling themselves to investors. we'll have all of these on the market in the next six years or so coincidence thatt a la carte companies are not discouraging the market view of everyone will carve out and become a tech fir at a time whenq elon muskc has launched the model 3, that has what if demand radically exceeds ultimately supply for that model? melissa, it's not justi tesla.x they're making cars, okay? and frankly, phil, i mean, don't you want to drive one? have you tried that hairx dryer >> apparently, you have. your hair!u looks greatdlç so that's -- >> thank you >> that'sxda report card on the
2:46 pm
hair dryer >> and a convertible also. >> they seee1 the competition tfe something now and it's got the market a bit excited i thinke1 longer term, they're a very difficult place,xdfrank. don't count them out, but veryw difficult. >> we had ramit shaw and one of his points in the verio bullh vertically integrated. it's got an advantage when it comes to the battery, and controls the battery and the battery has the most range.x is that anything ts$be of açó competitivexdadvantage that tea has over a gmw3and ford and can gvm and ford compete if it does not have that vertical integration and the range on the battery they t(ffer >> near-term, it ise1 an "ju no. we do not think that's going to be anw3advantage. we think in the endxdstate we think that the shared mobility,
2:47 pm
is going to resemble what apple does with phone. ñ california, but assembled by in the blank tech or hardware firm in southeastern wisconsin or southeastern advantage. attention is infrastructure. if anyxq other auto company it there and there's a lot of them how many evs are going to sell andxdif they don have a well-defined plan on the charging infrastructure,ç we don't think they can be takenxd seriously. so that's something that we think provides legitimacy to tesla across the whole stack.# forces that makes them unique. >> it's not just tesla either. there's more coming. >> bingo, that's key, and we don't have a lot of time, but that çó]infrastructure issue. i've talked toñ$tqtwho lowt into getting electric cars.xd there's not a cord closee enou.
2:48 pm
buy the $3,000 to $4,000 adapter. there are a lot of barriers liko that that we're not talking e about, correct >> i would say that is the elephant in the room welf recently spoke to theq r of an auto company that said th single biggest chall%zyno of operating a suite in the northern californiaxd5 regiono the car. it wasn't just a technical issue. working with the utilities issue, and i think that congres% and the lawmakers and the policymakers have a lot of workq to do before?htget swamped by chinese capacity and a lapse on technology over time >> adam, thank you for your time appreciateq it. welcome to 2,000 small cap index has been looking big time, lately, hittingi] an all-time hh to buy into the small-cap rally? we'll debate it on "trading nation" right after this
2:49 pm
so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. whyour boss?ork for? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.
2:50 pm
2:51 pm
time for street talk analyst recommendations on the stocks you need to know about. wynn bay go. it's quote, pulling over at a rest stop, ha-ha like that one, brian downgrading by the analysts saying that the outlook remains positive, but it's been fully priced target is 44 bucks it is down more than 6% right now. second stock, is jack in the
2:52 pm
box. the advisory group upgrading it. now an outperformed perform, he says the jablg has been quote cooking up more than burgers and tries in the kitchen i didn't know this, melissa, including talk that management could sell all or part of it's cadoba chain also jack in the box sales will improve led by the industry's first 100% rib eye burger. he's got 108 sounds great, $118 target on that stock 18% gum side, easy math, thank you, bob >> third stock, netflix, eba raising the ahead of it's earnings report to 245 the research shows strong subscriber growth momentum has sustained through the quarter. the rating on the stock is a buy. >> all right and your final stock is pack car. jpmorgan upgrading the truck maker from a neutral, class 8 truck sales of accelerated and recent months. look, i had no idea -- >> big trucks. >> look at this.
2:53 pm
orders according to jpm, up 44% year to date that's turning into what they call actual sales. day cab, right, not the sleepers, day cab truck orders are up 62% this year some of that's because environmental regulars you have to change, but the analysts the should their target on pcar is 83 bucks. that's about 12% upside and the fact that both of us got through that without coughing is actually a miracle that's why smishl happy she's sitting over there now the russell 2000 hitting a record high today -- never mind. let's go to president trump in las vegas. >> i just have to tell you that i just met some of the most amazing people we met patients that were absolutely terribly wounded and the doctors, the nurses, all of the people at hospital have done a job that's
2:54 pm
indescribable. and they were full the night that that happened, before it happened, and they found room for many people. how many people came in? >> we had 100 come in and we admitted 50. >> what i saw today is just an incredible tribute to professionalism and what they have done is incredible. and you never want to see it again nap i can tell you the bravery, some were very, very badly wounded and they were badly wounded because they refuse to leave they wanted to help others because they saw people going down all over. and it's an incredible thing this tremendous bravery. police department, incredible, the people themselves, incredible people leaving ambulances to have somebody else go because they thought they were hurt even more so. if the professionalism of the doctors and the medical staff, at this hospital and at other hospitals, you're saying how the coordination that you had with
2:55 pm
other -- >> covered everybody, did a perfect job. john, say a few words. >> we couldn't be more proud of the community response every hospital took serious patients everybody took care of them well and we've exercised our disaster plan in las vegas, and it was rolled out flawlessly. >> i have to tell you, it makes you very proud to be an american when you see the job that they have done and people that would not be around today are up there and they'll be leaving the hospital in a week or two weeks or five weeks, and in some cases, even in a few days, it's amazing. one in a few hours and you would never believed it. i just want to congratulate everybody. it's incredible. incredible what you've done. we've met quite a few people and believe me, they are very lucky to be here well, i think the only message i can say is that we're with you 100% we are -- in fact i invited a lot of them over to the white
2:56 pm
house. if you're ever here in washington, come over to the oval office. and they all say we want to do it, how do we do it? believe me, i'll be there for them the message i have is we have a great country and we are there for you. and they're there for us we're not going to talk about that today we won't talk about that not yet. we'll look into it i can tell you it's a very sick man. he was a very demented person. we haven't seen that yet, but you will know very soon if we find something we are looking very, very hard i'm going over to the police department, like wise, doctor, been incredible. the fact that they were able to locate that zone and get in there, they say 11 minutes whatever it was that kept them busy, stopped firing because he knew they were coming into that door at some point i think they did an incredible job. the professionalism has just been amazing so i want to thank you all and we're now going over to the
2:57 pm
police headquarters. and, doctors, thank you very much we appreciate it >> thank you >> thank you >> mr. president, any response to rex tillerson's comments? >> i'm very honored by his comments it was fake news, totally phony story. it was made up it was made up by nbc. they just made it up thank you. thank you, total confidence in rex. i have total confidence, thank you very much, everybody >> president trump clearly moved by what he's seen in las vegas also at the very end there, talking about rex tillerson, the secretary of state, his news conference earlier today where he completely refuted the stories that have been written that he wanted to resi ts gnhi past summer over differences we'll be right back.
2:58 pm
throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host.
2:59 pm
when you have the right financial advisor, life can be brilliant. ameriprise i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it could save you in out-of-pocket medical costs. call now to request your free decision guide. i've been with my doctor for 12 years. now i know i'll be able to stick with him. [ male announcer ] you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks,
3:00 pm
and virtually no referrals needed. see why millions of people have already enrolled in the only medicare supplement insurance plans endorsed by aarp. don't wait. call now. thanks for watching power lunch, closing bell starts right now. hi everybody, and welcome to the closing bell i'm cal le evans here at the new york stock exchange. >> and i'm bill griffith breaking news this hour, you saw president trump just meeting with first responders in las vegas in the wake of that tragic mass shooting. the president is also expected to make additional comments later this hour. and we'll bring you that live as soon as that gets under way. probably in about 30 minutes here we are told >> also, the former equifax ceo facing another tough day on the hill as yaho

33 Views

info Stream Only

Uploaded by TV Archive on