tv Power Lunch CNBC October 20, 2017 1:00pm-3:00pm EDT
earnings after the bell. unusual activity today. >> final trade >> sure. that was my final trade. >> new all-time high yet again in nvidia. i feel like a broken record. it's worth pointing out. semiconductors look incredible on the week. banks, too. >> cisco systems has been moving higher on no news. i like that. >> robert? >> kre regional bank etf. >> oh. >> all right. >> thank you. >> that's it good weekend "power" starts right now. hey there, i'm melissa lee, here's what's on the menu. josh is right, shares of general electric still lower trading at levels not seen in two years ge ceo speaking ex-cluively to cnbc saying the current cash flow is horrible and the latest earnings are completely unacceptable. what do you do with the stock right now? tax reform back in play, the senate narrowly passing a budget blueprint clearing a major hurdle in the president's tax plan has the trump rally been reignited? apple's new retail strategy. we take you inside the tech giant's new flagship store, what it's revealing and will the big bet pay off?
"power lunch" starts right now and welcome to "power lunch," i'm michelle caruso-cabrera despite ge's drag, although we're watching to see if it goes positive, major averages are hitting record highs again dow, s&p 500 on track for their sixth straight week of gains check out some of the movers the home builders are higher, the etf that tracks them, itb, trading at a more than ten-year high on pace for its eighth consecutive weekly gain. p mp p&g down 8%. paypal rallying on its earnings beat brian? >> thank you very much big day for the markets, big day for the markets really they say everything is bigger in texas including today's "power lunch" because guess what, we're back in houston and with the billion dollar buyer, himself, hanging out with his new toeam, the houston rockets.
$2 billion buyer of the rockets. going to join us for the next couple hours we have great guests we got the mayor on, might get a visit from cp iii and james harden, and the man many consider to be the best hedge fund trader of all time. a big huge hour from texas, checking in on the recovery, the rockets, hanging with tillman. >> going to be a lot of fun. >> tyler, i'll hand it back to you and see you in a few minutes. let's start with shares of general electric, shares rebounding from the worst level of the session, basically flat now, who would have thunk that still down 25% so far this year. a very un-ge-like performance. the new ceo john flannery speaking to cnbc today using words like horrible and unacceptable morgan brennan joining us with more morgan >> strong words from what was a really strongly disappointing quarter and this is a quarter that a number of analysts are
calling a, quote, kitchen sink quarter since it's john flannery's first as ceo of ge. it's all about restructuring we're still very light on details and makes the november 13th investor update all the more crucial meantime, to sum this up, i would say there are three big factors in play. cash flow, dividend, and asset sales. operating cash flow, by far the it biggest disappointment right now. ge had previously forecast $12 billion to $14 billion for the year today, it cut that in half >> the cash flow for 2017 is horrible $7 billion number, it's way off of our expectations, anyone's expectati expectations that is not a -- that's not the new normal $7 billion is not the new normal there's a number of steps we're going to take to improve that significantly in 2018 and beyond >> now, as we found out on the call, this is what spurred outgoing cfo jeff bornstein's unexpected departure management did say there were big restructuring charges that won't carry over until next year
and flanner is already taking steps to cut costs of course, it call calls into question the future of the dividend which, by the way, with a stock down 27% this year, now yields over 4% on that flannery did not make any promises it was safe even though a final decision has apparently not yet been made. >> i look at all the capital allocation things quite rationally if it makes sense to pay a dividend, pay a dividend if it makes sense to buy stock back, buy a stock back mikes sense to acquire a company or sell a company. i don't view it very emotionally really all around what's the best use for the company's resources, management capital, how does that accrue to the benefit of the owners >> which brings us to the next big topic. more divestitures. vowing to shed another $20 billion in assets over the next few years. we won't know what or how that's going to happen until next month. analysts are already pointing to
segments like health care, lighting and transportation as possible candidates and of course its biggest segment, power is really under the microscope right now, too, because we've been seeing that soften >> so even more changes from a company that's already been through so many. okay >> exactly. >> thanks, morgan. all right. after ge's biggest earnings miss in at least 17 years according to the spoke investment group, what's the outlook for the stock now? let's bring in barbara, she's analyst at morningstar good to have you here. >> hi, thanks for having me. >> i think a key question about the future of the stock and its price has to do with whether or not the dif devidend is going to hold do you see any way possible they keep the dividend in tact? >> after this surprisingly ugly quarter i think the risk of a dividend cut has increased you know, the reason for that is, you know, when you look at what management had laid out originally, we thought even if we came in at the low end of the previous expectations or missed it a little bit, they had options in place to sort of bridge that gap for the next couple years until underlying earnings improved but, i mean, it was a big miss this quarter
you know, industrial free cash flow is going to be very weak this year. and not only that, but the ge capital dividends to the parent now seem to be off the table so if it that is, indeed, the case, you know, we think that ge would probably do itself a favor for reviewing that dividend policy and potentially making a dividend cut. >> run viewers through the numbers, they need $8 billion to meet the commitment. cash flow's running at only now $7 billion they could borrow. then, by the way, there's going to be cap x as well, right there's a real squeeze about the money, the capital that would be available to pay investors. >> absolutely and so, you know, if you think about it with the new ceo putting his strategy in place, we think why not give himself a little bit of breathing room, you know, make the cut now. you know, put that out there and then give yourself a little bit more breathing room going forward when you're trying to reposition the company for growth >> you know, barbara, morgan brennan just outlined some possible asset sales would that be part of your prescription for the new ceo and if so, what would you get
rid of she mentioned one of the things, had been one of the profit centers and that was a medical devices. >> absolutely. in fact, i think health care is probably not one that i would point to and the reason for that is that is a good cash flow business and i think a lot of the changes that john flannery had put into place improved the cash flow in that business so if you think about ge having an overall weak cash position, i wouldn't like to see health care divested. you know, they sort of need that to boost those cash flows so indead, you kni instead i would look at maybe transportation, maybe that's a business that doesn't fit well in the portfolio, doesn't contribute as much as it maybe takes from the portfolio. >> what's in transportation? is that locomotives? >> that's locomotives -- >> jet engines, what. >> no, that's the locomotives business. >> locomotives. >> that's right. they have a very small mining-focused business housed in that segment. >> what should ge look like do you think? in other words, what do they keep, what do they sell up and what multiple does that imply for the stock?
>> we definitely look at health care and aviation as the two gems of that ortfolio, you know, those two businesses we expect to continue to be strong going forward. you know, we -- we think it will probably hang on to oil and gas and power, you know -- >> what is the mission of ge, what do health -- what do these three businesses have in common to warrant being under the same roof >> you know, a lot of the technologies that come from these businesses do feed into the rest of the segment so if you think 06 healof health carey have imaging technologies, for example, that help oil and gas imaging flow, aviation and power often share technologiieies amos each other i think ge is one of the few diversified industrial businesses that can claim the type of economy in scope -- >> threatening to go positive, only lower by 2 cents after selling off so dramatically. >> such an ugly quarter. i think there are two things, one, i think the market already priced a lot of these concerns in and two, flannery is taking a
long-term perspective and maybe investors are reacting appropriately. >> barbara from morningstar. thanks for joining us. >> thank you very much. >> we're at session highs for all three major averages. in the meantime congress taking a major step toward ftax reform what happens next? ylan mui is live in washington. >> reporter: republicans plan to announce the date for rolling out their tax bill once this budget is, as they say, signed, sealed and delivered and that budget could be wrapped up as soon as next week. republicans significantly sped up the timetable last night when the senate passed its version 51-49. now usually the next step would be for the house and senate to get together and to negotiate a time version but now republicans are saying that they can skip all of that and save themselves weeks of debate so what they would do instead is the two chambers, they ironed out their differences last night and one thing that they did was increased defense spending later on in a way that will make the house happy and in return congressional republicans drop their call from mandatory
spending cuts and both the house and the senate have now agreed to a tax cut of $1.5 trillion. so this means that the house can vote next week to just adopt the senate's budget and then they will be done they will have the vehicle for tax reform, and they can move on to actually writing the bill now, of course, some details are already leaking out. it's unlikely, for example, that the deduction for state and local taxes will be entirely eliminated, and house speaker paul ryan confirmed something we've been reporting for a while, h e told cbs this mornin there will be a fourth rate for healthy households, he said this is something president trump has been personally pushing for. >> ylan, thankss very much. we appreciate it now that it passed the senate, will it reignite the so-called trump trade? margaret is a portfolio management, part of leg mason. fund is up a very nice 20% this year
kochb gara congratulations to you on that that's a great performance four stars by morningstar. the market seemed to react positively to this news last night that the budget agreement had been agreed to by the slimmest of margins. >> well, yes, certainly the market is up i think it's more business fundamentals than it is news coming out of washington look at what we've seen this week in terms of results and in terms of ceo commentary. honeywell, really good results across the board and they're very optimistic about improvements that they're seeing in the economy you heard good things from american express earlier this week you see emerging markets are improving. now tax reform clearly -- >> do the politicians not matter >> woell, we've seen lots of bak and fort h in terms of things on the docket, whether infrastructure spending or affordable care reform or tax reform i think the market is taking more of a wait and see i don't necessarily see our companies that are all u.s.-based taxpayers ripping
today on this news i think the point is that if we do get tax reform, it's clearly positive to earnings and positive to gdp in 2019. >> you don't think that's priced in right now do -- as we get more progress toward tax cuts, whatever you want to call them, the market rallies more or is it there already? >> i think the market could rally more. >> how much more. >> i think, well, look, if you assume major tax reform, major corporate tax reform in 2019, it could add five points or so to corporate earnings growth. >> that's a lot. >> why does the effect pass to 2019, not 2018 if they pass it this year or pass it next year, they would probably makeit retroactive -- >> they make it retroactive, it could be sooner. otherwise it takes a while for it to work its way into the economy. >> the more powerful effect might come in 2019. >> yes, and corporations to start increasing cap x to show better results and for the market -- >> so with the fundamentals you see, you seem to think the fundamentals are good, we didn't
get to monetary policy but i guess you baked that into your formula. where should i put my money now? >> well, look, i mean, with the market up as much as it is it's definitely harder to find ideas particularly in tech things that have really moved in excess -- >> a lot of am don, microsoft. >> we love amazon. the sector we've been spending more time on is retail, a sector that underperformed the market in each of the last three years. we believe in amazon -- >> because of amazon i think the market is so myopically -- >> you think of amazon as retail or tech? >> i think it is both, really has two businesses, right? >> sure. >> within retail, i think the market is really discounting that amazon's success is at the expense -- >> so, yeah, tell us. >> i think costco is really interesting because the thing about costco that is so neat and really protects their business is because they have a membership fee income. they operate their stores at break-even who can compete with break--eevn
that creates a really nice mote around their business, if you look five years out, i think costco as a business model -- >> you own it now, thinking about it >> i own it now. >> i wanted to ask you about celgene on the failure of the crohn's disease drug already concerns about slowing growth in some of their other drugs like otezla. still hold onto this any doubts in celgene sfaand long-term prospects? >> i think the good knnews about celgene, they have a diverse pipeline, don't need every product in the pipeline to work in order for them to fill the hole when it goes after patent >> come back any time. weekly rig counts. i wait for this every week the rig counts are just out. seema mody is at the commodity desk, counting the rigs. >> so excited. u.s. oil drilling rig count down
for the third week in a row off by seven at 736 so the supply/demand equation certainly still part of the discussion when looking at the price of oil, which is higher by 14 cents when looking at wti crude, brent crude, the international gauge for oil higher by around a half a percent at $57 a barrel. michelle, back to you. >> all right, thank you very much, seema. coming up, medical devices, are they susceptible to hackers? we're going to talk to the head of a cyber security team trying to protect pacemakers. we're going to go back out to brian in houston. hey, brian. >> reporter: hey, michelle, thank you very much. well, the horn literally sounding on "power lunch." see the rockets practicing behind us here that's okay because we happen to be with the owner. this guy coming up after the break, we're going to have an in-depth discussion about the business of sports why buy the team, harvey relief. there's so much to do about the consumer, really we're calling you the consumer king now. you don't know that because we just made it up. we're going to have a great conversation with tillman right after the break. "power lunch" rolls own an the
welcome back to "power lunch," live in houston at the toyota center with the rockets practicing behind us the 2-0 rockets. we're joined by our good friend, the billion dollar buyer, new season coming out soon, tilman fertitta first off, welcome, thanks for having us in your new home. >> it's great. always to have the "power lunch" team in houston, texas, with e feel special. >> thanks. i didn't tell you to say that.
i appreciate that. i just realized something, too, not only are you a billionaire, now the owner of the rockets, you're also the only undefeated nba owner ever. >> you're right. >> sell it now and -- no, i'm kidding. why -- let's talk about this, seriously, though, tilman. you got a lot on your plate, 600 some restaurants, golden nugget casinos, hotels all over the country. why buy the rockets? >> everybody wants to be a part of their hometown, and i started following the rockets 35 years ago, and have been a part of them in different ways for 35 years. but to final will i haly to have opportunity to own a team in your hometown, it's the most special feeling in the world there's a lot of openowners t et want to buy different teams but have to in different cities. to buy a team where you grew up, when i followed the rockets when i was in junior high school with alvin hayes. >> yes. >> that's how far it goes back this is a great feeling. i love it. and looking forward to this great season.
>> okay. i'm going to ask -- we're at the beginning of the show, if you're going to punch me, do it now i'm going to say something, you might want to hit me you had the chance to buy this team, what, 25 years ago 20 -- when was that? >> 24 years ago. >> for how much? >> $80 million >> $80 million 20 years pa s ag. so you're a value guy, you're successful at almost everything you do, why is 22 a fair price for the rockets? >> a lot happened in the last 24 years. maybe if i hadn't missed out 20 years ago, i wouldn't have created the company i did, i would have been a sports junkie. a lot happened with television, everything else over the last 24 years. never been a sports franchise sell for less. people can say, gosh, $2.2 billion, i still think in the next seven, eight years, this franchise would sell for $3 billion. now, i will never sell this team okay i can promise you that but you will start seeing some of these major market teams trade at ridiculous prices.
>> you think this is just the beginning. >> i think it's just the beginning. >> how much did steve ballmer change the market, though, when we paid 2 bills for the clippers >> i think it was headed that way. did he maybe move it up a couple years? yes. i probably moved it up aup c co more years this is where it's going there's a lot of money out there. people want to own these sports team it's moving -- some the equities i had in my other companies into this this is a generational asset here that is never going down. >> 2-0 so pretty good start this is incredible i was joking yesterday that the nba is the new nfl and the nfliv ratings. nfl is down. doubleheader opener was up 53% in ratings, probably unsustainable amount, but why do you attribute this big jump, to what you attribute this big jump in basketball laratings? it's pretty incredible >> it is incredible. we're really becoming a world
sport not just like soccer the nfl is having some issues with the cte and with their other issues of the national anthem. >> the anthem. yep. we're going to get to that. >> and it just is. i think the younger audience likes the nba. mlb, average audience is 60 years old then the game lasts for 3 1/2 hours. and -- >> this is a true international sport. they play is everywhere. >> but it's energy and it's -- why have restaurants changed? because we want the entertainment value today. whatever we do today, and especially the younger millennials, they want entertainment. okay this is entertainment at the highest level. >> you feel like you got a good deal on the asset. >> i think i got a very fair deal on this asset if i had it to do all over again, i'd do it again. >> we have the full two hours. i want to end this part of the sbr er be vi interview with this question the nba has a you must stand up
for the anthem >> it shows how forward thinking the nba right now, that's a policy that was put into place not just recently, it's the national anthem. i believe in protest anybody -- that's what's so great about this country we can protest about anything. but why not have had a rule that you stand up for the national anthem you do anything before the game, after the game, i don't care what people do but it's the national anthem so why do you ever want to be decisive >> yeah. to tilman, we got a couple hours left with you. i think chris harden and james paul may try to join us. >> you never know, might be walking this way. >> the owner here, $2 billion buyer, himself, tilman fertitta. i'll send it back to you really interesting interview coming up in a few moments with john arnold, considered to be the greatest hedge fund manager in all time. apple is opening a new store in chicago today apple's vision is for its stores
to be much more than stores. josh lipton is live at the new chicago location hi, josh. >> reporter: hi, melissa, i just had a chance to speak with apple retail chief angela arands, talked about her vision for the stores, retail workforce, competition with other big tech companies. that's all coming up next on "power lunch." it's not just a pay check, you actually like what you do. even love it. and today, you can do things you never could before. ♪ ♪ you're developing ai applications on the cloud. finding insights hidden in decades of medical documents. and securing millions of iot sensors. so get back to it. and do the best work of your life. ♪ ♪
and do the best work of your life. 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 apple shares up 35% this year today the tech giant opens a new store in chicago
there's a new vision for this one. much different from the apple stores you've been used to josh lipton is in chicago to explain. hi, josh >> reporter: melissa, this new store in chicago is going to open its doors for the first time in just about five hours. that means apple now has 497 stores in 19 countries all around the world it's not the only tech company that's opening new brick and mortar stores. for example, amazon is opening new stores, too. i spoke with apple retail chief angela ahrendts about amazon and other big tech companies and whether they pose a long-term threat >> i don't think about it frequently i've read that they're investing and alalibaba's investing, goog even said they're going to invest billions and open up stores i have read that honestly, i think it's great, for the economy, i think it's great for employment and i think it reinforces the physical retail is not going away that there is a purpose. people want the human connection they want a place to pick up their products, et cetera. so i think it's -- i think the great news is, as you said, we're nearly 500 stores ahead of
them the tenure of our employees is unbelievable we have an over 80% retention rate in america, alone so i think it will take them a little while to catch up. >> reporter: we also talked about a.i. and automation and the potential impact those kind of technologies could have on the retail industry, and i asked angela ahrendts whether her retail workforce should feel threatened or risked by these kind of technologies here's what she said >> i think the world just keeps changing last year, alone, we added four new positions in the stores. including the creative pro which i talk a lot about that helps unlock your passion, et cetera so i think the onus is on retailers, on us, to continue to evolve that's why the space in chicago, here on michigan avenue, is totally flexible we can move anything . >> reporter: now, angela ahrendts has a new vision for these stores she actually doesn't call them stores she calls them town squares. should be places where people meet up, attend live concerts,
maybe take a class or workshop open question for traders, investors, whether that kind of communal set is going to lead to greater sales growth guys, back to you. >> when you walk in, does it feel different to you from an apple store that you been in before, josh >> reporter: well, certainly, ty, first of all it's on the chicago river so it's a very different feel in that sense when i took a tour of the store with angela ahrendts, it feels different in the sense she has a very clear vision of where she wants to take this store for example, there's this giant video wall downstairs near the retail space which is right on the river front there. that's going to be for classes that's going to be for community. i can tell you guys that, you can't see it, but right off camera here, apple erected a huge stage, clearly someone zbo going to perform later that's the idea. does that translate to sales growth we know these stores are already productive, generate about $5,000 in sales per square foot. that's way more than any other
retailer >> right all right. thank s very much, josh, appreciate it. coming up, going to go back out to houston, brian sullivan, for a rare interview, and we'll be back in a minute. >> reporter: all right, ttyler, thank you very much. we got the rockets down here they're pack b advertising hard we're going to pack a little tv after the break with a rare and exclusive interview, john arnold, who was until mark zuckerberg the youngest millionaire in the united states now doing a lot of great work with his foundation. ar a mbelk about policy, big phmanday a little bit about energy john arnold coming up right after the break on "power lunch.
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i'm courtney reagan, here's your krcnbc news update for thi hour trump fed watch. janet yellen back at the white house today. a source telling krcnbc that th fed chair was meeting with top economic adviser gary cohn for lunch. former attorney general loretta lynch meeting with house intelligence committee staff this morning, as part of their probe into russia's interference in h the u.s. election she met with the senate intelligence committee yesterday.
schools in puerto rico set to re-open next week, more than one month after hurricane maria devastated the u.s. territory. this as the governor confirms that the death toll has risen to 49. and first lady melania trump continuing a washington tradition, donating her inaugural gown to the smithsonian's national museum of american history the dress will be featured alongside others worn by michelle obama, laura bush, jacque kennedy, and martha washington that's your cnbc news update at this hour. back over to you, michelle >> got it, thank you so much, courtney. all right. markets right now just a few points from intraday highs take a look. the dow jones industrial average higher by 1138 point s&p higher by 11 nasdaq higher by 33. we're checking on shares of the ge, member of the doumw jones industrial average tried to move toward positive territory. gotten very close. still down 4 cents, well off, however, the session low brian, back to you >> reporter: michelle, thank you very much. we're back here at the toyota
center with the rockets practicing behind us joined by their owner tilman fertitta. we're pleased and honored to be joined by john arnold, may not be a household name but probably will be down the road. john arnold considered by many to be the greatest hedge fund manager of all time. reaping a report eed 317% return in just 2006 making him a billionaire he has since retired and now with his wife, laura, is running the laura and john arnold foundation, doing really interesting research work into criminal justice, education, public finance doesn't do, i'd say, a lot of tv, john, i don't think any tv thank you so much for sitting down with cnbc. >> great to be here. thank you very much for coming back to houston. after the storm, there's a lot of media press, the nation got a lot of attention on houston, but after a week, the story moved on and there was a string of disasters and the virgin islands, puerto rico. >> one after another. >> florida and people have forgotten about houston, but there's still a lot of work to be done here. >> there is. >> really appreciate you being
here. >> no, listen, this guy is not going to let us forget it. he told us to come back. on a serious note, i feel like an honorary houstonian you guys have been so welcoming. there's a lot of things to discuss. let's jump right into it your guys at your foundation have done a lot of work, big thinking, seen your tweets about fema harvey is behind us, okay? what's done is done. is there a way do you think you guys have studied to prevent -- you can't stop storms. how do we build smarter -- i love houston, but as you said, the city is designed poorly, if designed with any thought at all. what do we need to do? >> two things, first, be honest with ourselves about what the threat is. it's too easy to ignore what the threat -- we can do that with how fema has accurate flood maps, right, we also -- >> they're 30 years old. >> they're 30 years old and there's also a lot of politics involved with drawing those flood maps so fema wants to bring in a new flood map that's accurate, up to date and neighborhoods resovolt
don't want housing prices lower, don't want to be forced to buy insurance. there's a real backlash against having accurate data the second aspect is we need to be honest about what's a 50 year flood, 100 year flood, 500 year flood. we had a 500 year flood this year i studied probability in college. this is possible but highly unlikely as the ocean temperatures have been warming, as development happens, we have more impermeable surfaces, we will have more floods we need to think about what's the real risk of these needs, which then leads to what's the right cost/benefit analysis on what to do >> take the hedge fund manager's approach, take the logistical approach to this because it's politics, but it's also an emotional issue because you're dealing with people's homes. >> we are. >> it's hard. >> we are. no one wants to be told, i bought this house, and it wasn't in the floodplain, now you're telling me it's in the floodplain and i'm going to have a hard time selling it. >> yeah. >> you hit it dead-on, john. first off, fema, on the coast, they tell us exactly how high we have to build so we never get it
again. but they don't do that in h a noncoastal city and say, well you live by a bayou, you live by a lake or a creek, you're going to flood x amount of times fema probably should come in and say you cannot build until you're eight feet above sea level or 14 feet or whatever and then next what you said, and i say it all the time, we've had a 500-year flood, a 100-year flood, and a 100-year flood 3 years in a row and you go two years before that, we had a 50-year flood let's get that right you you know? let's go back to your probabilities and say what is this really? because it's happening almost every memorial day or june in h the city of houston. >> richard faber won the equivalent of the nobel prize in science, one is people don't like to have the fixed payment stream to protect themselves against a potential unknown big loss in the future
and that's exactly what we see on dealing with national debt, what we see dealing with climate change, what we see with preparation for disasters is people don't
want to make that investment today to prepare a city for some unknown in the future. >> if you could figure that out, talk to every politician in the world, john. let's talk about something else before we get to energy, which is big pharma pricing. you've been very active on social media coming out. you've got an idea you would like to eliminate the middleman, make drug companies negotiate directly with medicare why are you so active on this topic? what do we do about it you guys have studied it. >> my wife and i started a foundation, arnold foundation, concentrates on public policy specifically in areas that is a market failure the pharmaceutical industry. >> a hot topic on capitol hill. >> we're going to agree on a couple things, first is pharmaceutical industry makes many great products. i take them, you take them we want to incent them to keep coming up with good products in the future, but also, number two is, that there's vast majority
of americans agree that the pricing peck nichl mechanism is messed up politicians from donald trump to bernie sanders agree the system is messed up the question is if everybody agrees the system wrong, why does it persist? i have a theory. the pharmaceutical industry contributes over $200 million a year through their lobbying, through direct political donations so the politicians will say one thing but when it comes to actually passing a bill, they don't do anything it's easy for them to be silent. i think the best example of this happened over this past week with the example of there was -- dea was getting aggressive about shutting down the pill mills they were making progress with this this was harming the farm suit can industry. >> so they pushed back. >> so they pushed back get tom marino, marsh isa blac n
blackburn. we end up with really bad public policy. >> we got to
fix that. >> right >> let's -- did you really make 317% in 2006 when you talk about -- talk to hedge funders, they whisper your name in hushed tones, do you really exist did you make 317% in 2006? >> i don't remember. to be perfectly honest, i don't remember. >> were you close? >> a very good string of years we had from 2002 really through 2008 where i think it was the best string of years that has existed in the hedge fund industry >> could you do it again now >> no. >> why not >> the two things changed. one is specific to the natural gas industry one more broadly to capital markets so natural gas industry which had been characterized as breaking into two periods. pre-natural gas shale and post with 2008 being about that cutoff period. so the period before 2008 was characterized by demand incre e increased every year
got harder and harder to find new supply and it was relatively supply and demand, so to get -- the market was not balanced it took very long moves in order to balance the market. it was a market that really had to balance twice a year. unlike many other commodity industries. >> are you worried about oil and gas prices now we've been to houston a lot. you think they're fairly priced? >> i think natural gas is a boring industry right now. oil is fascinating because -- >> why >> there's this big shift for decades the question has been about supply the demand grew 1.5% plus or minus half a percent each year and the question was supply. was it -- could opec stay together could the industry find enough new supplies and now over the recent years what was the growth rate in shale? i think the coming ten years is more about demand. so the question about whether we've had peak oil supply or not is secondary to the question about is there peak demand a lot of this is a direct impact of --
>> what's the answer >> it's a question of -- everybody knows that the a.v., autonomous vehicles, electric vehicles, are very bearish for the oil industry the question is how bearish. that's a function of a couple things how quickly will these come to market >> yeah. >> and then what's the adoption trend look like? h a lot of analysts are looking at this as a linear adoption so it goes from 1% to 2% to 3% there's a very good theory, i think best articulated by tony seva, whose idea is there's a convergence of the four technologies, electric vehicles, autonomous vehicles, very cheap electricity through renewables and the ride-hailing apps. those will come together to structurally change transportation in the future so people aren't going to own cars anymore in the future people are going to use transportation as a service. >> yeah, bearish for oil. >> ramifications for that are terribly bearish on oil. the question is is this a linear curve? or does this look more like the
technology adoption curve -- >> a slow burn or a crash. >> which is the "s" starting in 2020, peaking out in 2030. if so, the oil industry looks very different. >> i agree with what a lot of what you're saying we're not going to have demand for energy like we have in the past because the consumer is changing out there, just the way they live. but then when you look at shale and you look at -- we're not even doing a lot of offshore anymore because of the cost, even though we can produce so much how does oil ever get back to $70, $8 $80, $100? i don't see it happening do you >> it's hard short-term supply disruptions, you can have tightness in front of the market. the problem is you can't have a strip, a forward strip, that producers can hedge at $60 there's just too much production in the united states that can come on to that level. can happen in month one, month three. if you give a producer a year notice, or three years' notice, we're going to have $60 drip, they're going to be hedging and bringing on huge production.
>> two more -- hold on i'm sorry, go ahead, tilman. >> you know, one more thing, the guys in shale and everything used to lose money at $50. now they've found a way to make money at $50 >> not all of them. >> but it's happening, though, because we figure out technology wise everything. i think we're going to struggle just like you said, go ahead -- >> to me was the question to me >> a question to him i know you wanted to ask him a question. >> just for the measure of time, john, before we let you go, i got to ask two more questions. is the stock market rally for real would you be long stocks right now no. >> is this the point in the interview where you ask if i'm cautiously optimistic or strategically -- >> i've heard that term on cnbc a few times, cautiously optim t optimist optimistic what do you make of it >> i have no idea. i think -- as a -- when i was running my hedge fund, i was very diligent about trying to identify what's my advantage in the market and i -- my advantage in the market is not that i can predict where the overall stock market is going or interest rates are going, where currencies are going. i think you have these systems
that are so complex that they overwhelm the ability of any one individual to predict. >> what do you mean by that? a has it destroyed alpha >> i don't know if it's destr destroydestro destroyed alpha. definitely dampened volatility asset prices don't change day to day as frequently as the stock market shows them to be. so it's -- i think this structural decrease in volatility is smr r many of a function now that the market is properly valuing these assets than it's underweighting -- >> you don't feel like there's a huge amount of risk out there in the market right now >> there's always risk the question is, does the market properly account for it? i don't know i'm a -- >> quickly, it may be ten years before we talk to you again. are you a bitcoin believer >> i have no idea what bitcoin is doing i think it's a fascinating
technology where it's going, it's impossible to predict. >> john arnold, laura and john arnold foundation. really a pleasure to meet you. thank you so much for coming on cnbc don't let it be a decade. >> it was a pleasure. >> thank you for everything you guys do in houston you just don't talk the talk, you guys walk the walk with the charter schools, with hurricane harvey we thank you very much you're a great houstonian. >> he and his wife, laura, personally, guys, donated millions of dollars to hurricane relief outside of the work and donations that the foundation has made as well doing good stuff in houston. need more guys like you, john arnold, thank you very much. send it back to you in new jersey. hacking your heart are pacemakers susceptible to cyber attack a doctor and ceo of a cyber security 23irfirm working to prc pacemakers we'll tell you how serious of an issue this is. "power lunch" will be right back
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of a software update, i put it off to the last minute i know there is going to be bugs and a problem with my e-mail, i don't want to deal with it what should people do if they are urged with the software and associated with the pacemaker. >> thank you for having me on. >> my advice is to have a conversation with their doctors and come with a decision best for them whether or not they should have the medical update devices are becoming more complex and connected so having practices and talking to patients are common place. mike, what's the worst case scenario here, these vulnerabilities were found essentially in the research lab. have we see it happen in the
real world outside the laboratory setting >> the fda are not aware of any instances where a pacemaker have been hacked to arm a patient it is unlikely this particular vulnerability has been exploited that way >> cyber security efforts right now is that there are not technology in place in these medical devices to detect if somebody were to hack these things when we are asked the question, has the device ever been hacked in an effort to harm the applicati patient, we don't really know. is that a concern of yours that somebody could actually take control of one of your patients devices and trying to do that patient harm >> that's a great question so i do have that concern but there is two important distinctions to talk about one, is there someone intentionally doing that the answer is less likely.
there are sophisticated network that may do that that's financially motivated. >> or terrorism. >> absolutely. i am more also concerned of the second scenario where these devices are becoming more and more pcs in your home. they may also be infecting our medical devices and it may not be an intentional harm for the patient but just the random thread scary stuff, guys. thank you for joining us, we do appreciate it. >> now we did reach out and this is what they told us we remain committed to keeping our devices secured and encourage patients to discuss the rich and benefit with their doctors to understand if the updates are right for them
president trump has been busy interviewing fed chair candidates who will wall street think he will pick. back to brian. >> six weeks ago, the water are here, many neighborhoods around like this in houston, the recovery is still away we'll ask the mayor of what's the next step and how will we prevent it happening again when "power lunch" returns. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day. whyour boss?ork for? yourself? your family?
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welcome to the second hour of "power lunch," i am michelle caruso-cabrera jan jan janet yellen is back at the white house today. who will president trump pick? exclusive results from the nbc survey, you will be surprised. >> the man behind president trump's most controversial seas deal it is an exclusive interview, coming up. second hour of "power lunch" starts right now ♪ checking on the markets right now, we got solid gains across the board, the dow is triple
digits, hitting record highs along the way. synchrony financial and people's united are leading the way there. pg&e and church and dwight leading. now, lets go over to brian in houston >> melissa, thank you very much, a big hour on tap here from the toyota center. it is hard to believe it is six weeks since harvey's ravage, we'll revisit six weeks ago when the water rushed through the city we'll chat with the mayor and the recovery and the work that's still needed to be done. plus, we'll have some fun with tillman's new friends, new guys, james harden and chris paul, they're pretty good for basketball and they're undefeated and now playing for the same time. >> we got a show where some
guests that make me feel short, that's going to be great >> everyone taller than you. >> brian, thank you very much. >> first day for the market from general election one of the worst recent in memory and the prospect of tax reform well, that may have reignited this so-called trump trade and the ongoing question who'll lead the fed. bob pisani is joining us now. you get to go first. >> ge is the market because any given day when ge was going up, the market tended to be going up boy, it is a long time since that happens this is a 20 year chart. ge peeked just as the market peeked in 2000s and the same time peeked in 2000s much worst, it has die ververge
the s & p. that's a divergence. there is the s&p 500 and general electric on the right there. disappointing earnings guidance in the last year generally, it is down on the days after that. that's how disappointing >> amazon is one of the choice of it. amazon is usually up a lot more than the overall market. there you see amazon on the last couple of years so i would not pick that. you want a company that's very broad in its investment. maybe its got its hands in a lot of businesses. the one that i would pick is
berkshire hathaway nothing matches perfectly when you are dealing with an index and individual stocks. it tends to follow the market carefully overall. honey well has diversities >> those are my choices. >> what's good for ag age and g for the market >> was there something similar to gm? >> what's good for gm is good for america. you heard of jp morgan >> i guess what i am getting is, gm got booted from the dow is there any chatter that ge could lose its perks that's $10 closest to the dow.
general electric has little influence of the dow jones >> bob pisani. >> thank you president trump narrowed it down to five steve liesman joining us who wall street should lead the fed. >> you can see here of the blue line who really pick 45% powell. 44% say janet yellen and going in the next, you can see two previous runners, kevin ward is in first place and any director,
who was in first place not too long ago, now less than 5% on both count moving along on the screen here, we ask who's your top pick dealing with these important issues yellen wins most of them who's the economic growth? john taylor wins the best choice keeping inflation stable at 2% janet yellen, another five categories on the next screen. janet yellen is the best choice for all of them and dealing for the next financial crisis as well as getting the next regulation >> steve liesman, thank you very much lets get down to brian in houston. >> melissa, it is hard to believe that it is six weeks since hurricane harvey ravaged
houston. our contessa brewer was in houston. look at this guy, he said he need not need help he turned down the life jacket we went back there this morning to the exact location just off the bayou, you can see that's the streets. the water is gone but the works still node to be done. all homes are abandoned. water line is clearly visible as well lets talk about how the recoveries are going with houston's governor he is the highest ranking, mr. turner, thank you very much. >> thanks. >> i got to read the status here we cannot forget about texas
>> 190,000 have -- 70,000 living with family and friends and 20,000 living in hotels. there is a lot of stats, mayor turner, where do we stand with the recovery right now >> we are making significant progress it is not going to happen over night. we are working very hard to get the debris up and in front of people's homes the damage is inside people's home housing is a number one priority and creating a sense of normalcy and dealing with our infrastructure need. we are making significant progress this was a horrific storm. >> one of the families that came by and check the house and they're displaced. they're lucky in a position where they got family near by and the water line is visible clearly at about 5 feet.
the whole neighbor is in ravage. do we know how many people are homeless or still displaced? still 70,000 >> no, i think there are thousands. we work hard to transition them back to some sort of houses. that's important the number of people in shelter are less than 500. >> most of them have been thankfully leaving shelters. >> finding another location where they can be housed without staying in the shelters. >> really the oil issue that occupancy was really low it is been really good for the department industry and hotel industry in houston texas. what was different about this storm is it did not just hit certain neighborhoods and it hit all demographics and a lot of million dollar homes destroyed
it was really 3% or 4% of houston that had any kind of water. would you agree with that in. >> absolutely. >>. >> it is a staggering number because it is a big number >> already businesses are back and everything is operating as usual. the big problem right now is you have a lot of people don't know whether to rebuild or bought out. >> so do you invest back in your home or do you buy another home or what's going to happen? that's the question we got answers sooner or later. >> these are issues tillman was generous enough to give us a look if you don't know houston, it is a big city it is like taking philadelphia from the sky and drop philadelphia and it kind of splatters out. >> it is insane. the area that were hit were ra v ravaged so hard.
mr. et mmit, the area that outse of houston, people got 10 feet of water >> absolutely. >> do they rebuild >> they're thinking even if my insurance company pays me out, what if this happens again are there areas we should not rebuild in >> the answer is yes >> how do you tell those people i am sorry, you cannot live here anymore. >> if you cannot get flood insurance, that kind of solve the issues there we all have to go back and re-examine we had three our five floods the last years >> should people be forced to buy flood insurance? >> they have to have flood insurance and in an area that you know that homes are going to be wiped out, we got to buy those homes and turn it back to green space. >> i don't think people who don't live in houston realize that houston is a big slob
>> 640 square miles just for the city of houston alone. all the greens that we have and creeks and bayous, you cannot go far in city without hitting a creek or bayous, when the rain comes it does rise >> we do have some issues. >> lets sell the city. [ laughter ] >> amazon, jeff bezos, if you are listening, the city is fine and everything is fine jeff bezos is looking for a second headquarter and he's from houston. can you guys put a competitive package? >> the recovery has been amazing for the city and county, we work well with one another. that's one thing tl division does not exist the county and the county judge and i have worked very well. the recovery have been amazing
debris we are moving the first wave of debris up and that's done in both areas of record times >> that's some good news >> should amazon come here though >> absolutely. >> why >> this is a city for number one of number one of capitol in the world and largest health and medical in the world this is the city of the last 25 years has moved and gone through the next level if you want to know where the united states is going to be, 25 or 30 years from now, take a look at where the city is now. we are the most diverse city of the united states america, 25 years that was not the case. the youth that millennial, we are second to la, okay when you combine the city with the county, you cannot beat that combination. >> well, you got a lot of smart guys like tillman and john arnold that live them. are you going to consult them? >> that's why we are sitting
with them right now. >> i thought you are just being nice >> the bottom line is for this area is the can-do attitude. we can do anything we put our minds to and that's what the people need to know. that's what mr. bezos need to know >> we go big or go home. >> mayor turner, thank you very much coming up in a few minutes, we are hoping some of these guys down here are going to pay us a little visit back to you. here is what's coming up, president trump cancelled some but not all of his over sea deals. we'll talk to the men behind what may have been the most controversial of those projects. congress just took a big step down the road to tax reform or tax cuts is the trump trade back on
much more from brian tillman in houston, that's all straight ahead on "power lunch. [phone ring] hello. hi, it's anne from edward jones. i'm glad i caught you. well i'm just leaving the office so for once i've got plenty of time. what's going on? so those financial regulations being talked about? they could affect your accounts, so let's get together and talk, and make sure everything's clear. thanks. yeah. that would be great. we've grown to over $900 billion in assets under care... by being proactive, not reactive. it's how edward jones makes sense of investing. 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.
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mr. trump also held a big conference in new york city at the trump tower. trump invests in georgia was not a licensing agreement. he paid a million dollars and promised 12% of revenue of every condo sold he was very excited about it >> i want to thank our new friend, partner, license to licensee, whatever we want to call it. we'll have a lot of fun and success together >> four years later, mr. trump gets elected as president and he ends the deal of 2017. the tower never gets built and it still haunts the president. >> due to t joining us now, is our robert frank and the two architects of
the trump, george deal, good to have you here, gentlemen >> thank you for having me >> there is as couple of questions that i have for this deal that have not been answered did he ever give it back when the deal ended [ inaudible >> i think there was reported, no the front fee was not refundable licensing deals include fee payments and fee payments are not refundable >> is there any chance down the road if and when the building is built that he can come back in and that can be renamed the trump tower and he could get the percentage of the revenues that was in that original contract? can this be restarted again? >> it is difficult to say right now because as you know we
stopped our relationship and now we are starting a new tower which i want to announce today with a new brand ta it is a silk tower and it is my company, the silk road group and it will have my name we signed with the private equity form and we are ready to start with the new tower >> would you like mr. trump to come in once he's no longer in office >> you know it is difficult to say right now but i will be happy to have wohim again. >> have you heard from mr. mueller or any investigative body in the u.s., have any of them contacted you about this deal and about mr. trump, will you be called to testify at any point? >> no, we have not heard from
anybody. >> except some of the media obviously have been reporting and looking into this deal and i think it is the wrong thing to say. calling someone to look at the deal which simplizes the deal and it was a mistake it was clearly not good for us of anybody dealing with mr. trump in the past. >> why >> it is a -- >> why was it not a good deal with him >> it was not reported in the media. i don't think it is the right thing to do. clearly, they don't know what the deal is about. >> why did they tell you they were cancelling it and do you think it was the right thing for them to do to cancel it? >> were you angry? >> was that upsetting to you >> it is difficult to say until it was a new reality mr. trump became president, it was different situation and we
agree to stop this contract and i believe it was of the tower. it was the ability to care about relationship of american and georgia which is a much more higher level in the building, right? >> so you think you're building would have hurt that >> difficult to say. i am sure right now what we are doing and we are spending around 100 million in the tower which is exactly same architecture concept like we did with mr. trump. without the trump name at the top. >> we did it exactly and when it was approved to mr. trump in 2012 when he visits the georgia. i believe it is super successful >> right
>> anybody is going to read the new yorker article it is very long. one of the questions that raises that is it possible that the russians have compromised on donald trump because he got involved in the steel and his kazakhstan money was involved and because of the working together of the intelligence agencies in that part of the world. do you think they would have anything on him? >> first of all, i hopeless people read the new york article because it is untrue i would start from one really important point when we are reporting something, we have to be honest about facts. the article, we neglected the facts and it gives a bad reporting. it is important for us to understand what the relationship is and trump's organization. there is no relationship the bta bank ended in 2008
bta got nationalized in 2009 the deal of mr. trump signed in 2011 >> but concerns of mr. trump's reputation do you think are unfounded >> let me tell you what trump organization is? it took a lot of team to do due diligence of three or four months we are ready to move forward licensing and it took about 18 months >> absolutely. >> a long time >> all right, gentlemen -- >> russia may have been finaled through kazakhstan, sensational news, that's what people are looking for. that's why we are here today because cnbc report facts all the time >> thanks very much for that >> thank you for coming on we appreciate it >> thank you very much >> melissa, back to you. anyone who says the market is priced in tax cuts may have
stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. yeah, i got some financialbody 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.
welcome back to "power lunch. "the walking dead" launching on sunday ahead expected of strong ratings. worth noting that cbs, those shares are more than 2% today. media stocks benefiting from anticipated tax reform as well as viacom striking a deal on tuesday. "power lunch" is back in two-minutes. 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
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well come back >> will it hold on >> we'll see, they look pretty good right now the budget passed in the senate is the trump trade back in play on the prospect now, maybe getting stronger of major tax cuts lets bring in richard weiss and peter costa, cnbc's contributor and empire of execution residence. >> richard, you are cautious and you think the market are --
>> that's right, well, one thing that's bullying stocks currently is corporate earnings and we have a nice flaw for equities but looking out for longer term, you have weak evaluation metrics and you have a rising interest rate on environment and tight tighter monetary policy. and so we do not see the fuel that will ignite corporate earnings next year as opposed to this year. we are putting our money elsewhe elsewhere. >> elsewhere meaning like? >> over seas equities which we have done very well this year and large part due to the dollars declined which is another troubling economic indicator and also market new and long and short portfolios
where we are taking advantage of the incredible disperging, tech stock is up 30% and energy stock is down 10% and give or take, you have a 40% ban at value. >> peter, richard is worried about rising interest rates and slow economic growth he seems to be worried of the dollar, how worried are you? >> well, if you ask me, tyler, eight months ago, i would agreeing with him 100%, over the summer of the last couple of months, i have been watching the in flows into equities and it is not, they're not price equities. they're buying an overall basket of equities. they're not looking at the under line stocks. it is money moving to a place of other place to go and it is not doing as a discretionary thing
the way they're setting it up, they're going to etfs and buying everything in this basket and there is not a pricing of mechanism inside the basket. i think the money is going to continue to flow in. i mean we weyou are talkingu the trump trade. that's still on. after last night's vote, you do have a lot of money trying to catch up some of the money missed moving from august to now i think that's what you are saying >> sarah huck l lebee sanders is telling us president trump considering having john taylor and powell both on the fed >> again, both cases expect interest rates to rise perhaps one more so like chairman yellen and the other. it does not change the overall outlook. there is tight ermon teer monety
to come. so our outlook remains the same in that regard >> richard, thank you very much. peter costa. thank you to you as well >> thank you lets get to brian in houston. brian. >> yes, melissa, thank you very much we had an interesting show, i hope and i think so far. a lot to do, we got tillman, thank you again for having us here it is a special treat and a lot of insights and a lot of recovery stories going on. it is been great when you guys are here, we get a lot done you are able to see how houston is back. >> is it back? >> it is >> do you have people that are still out of their homes and moving into apartments and hotels now but, i can tell you this -- my revenue is up in houston right now and that's exactly what i said what happened you are bringing in workers and
people in hotels and restaurants and the world is going well right now. the world is going well. >> i think you know we gave you a new nick name. >> it is true. i mean, again if you are just go joining us, many hotels and golden casinos and now the rockets. you are connected all over the country. >> lets move past houston. how is the united states, the american economy is doing right now. do you see that reflected in the golden nugget in lake charles? >> i have five casinos that are in total different parts of the country. nevada to the south and lake charles and biloxi our business is better than ever >> where does that stand i don't know how good that is. >> that's really good. if you are in the restaurant industry and you are running 3% positive comp for this month --
>> is that sales >> that's sales. i am doing $103 instead of $100 compared to last year, okay? >> when you think that august was so screwed up. september was screwed up because of the hurricanes and august and here we are in october, it is our first clean month and business is good everywhere. our opening gain here is up hundreds of thousands of dollars and ticket revenue the consumer, we keep waiting for it to crash with the market, i don't think they are >> you know because it is the big question i think that people say the stock market are record highs but a lot of americans don't own stocks does the stock market have any correlation of the quote on quote, "real economy." everybody invests in the stock market today if you are somebody that makes $60,000 a year, you find a way to put a thousand dollars in the stock market and your 401-k or whatever you go out and spend money in
the restaurant and playing slot machines -- >> you are not a stock guy it is interesting. you were chattering. you thought it may look attractive in this price why? >> because you got a new ceo cleaning it up i was public for 20 years, okay? >> of course, i was the only ceo ever every now you want to clean up and look into the future and you make sure that all the bad is bad. >> do you think it is flustered? >> i think he tried to flush jeff with it i told you i was going to send you a g-5 as a backup. >> united worked >> hopefully, they had a backup jet. >> lets talk about policy anies stuff that's going on. if congress just gets one thing done, what would it be from a
business perspective >> corporate tax reform. >> if you have corporate tax reform, i would get to take that money and create new jobs. when you build new buildings and restaurants and hotels and casinos. you with putting thousands of people to work and all suppliers have jobs. that's what makes capitalism works. i am giving it to the government to spend >> you noknow the criticism you are a private company so you can do whatever you want public companies, you know what they'll do stock buy backs and dividend increases and they won't hire or buy stuff. how do we know the tillman fertitta of the world and buying stuff and adding jobs for people >> bringing money back from china and where ever else, i have always said let the government do whatever they want to do but say you cannot use it
for a stock buy back, make you spend money and use it on cap x and create more jobs for the company. the governor love to dictate to us, they can dictate to us, we'll let you bring money back >> with some conditions attached >> with some conditions. >> by the way, january 3rd, you are finished wrapping and not quite done >> two more weeks. >> you are close in our filming, can you give us a tease, don't give it away but what's awesome about season three >> you get to bring in that's whapi what's happening in the world. bring in companies that really needed work because their business got so hurt oh, this is -- it is everything california >> is that a preview of a meal >> that's a grass fed piece of
cattle everybody wants organic today. >> i am going to get some animal activists after me after that comment there. thatdelicious. >> thank you very much you are not going anywhere we still have one more segment hopefully, the bearded one is going to come up and pay us a visit, guys. it will be really cool >> we'll be waiting. >> jp morgan chase, rallying on tax reform should you bet big on the big banks? we'll be right back.
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about that here is what she said. >> he will have been announcement of that in the coming days. >> it could be taylor or powell. he's the supposed front runner the president did not say where he would put each one of them. >> michelle? >> all right >> that's all clear now. >> you got it? [ laughter ] >> it is going to be powell or taylor >> it could still be yellen. >> and kevin ward is still under consideration and as well as gary cohn. >> thank you you got it lets bring in the trading nation team, kathy lee is with bk management chad, i will go to you, is it an all integrate story? >> when the ten years start, you
saw a real rally that was out performance relative to the s & p, you have to keep in mind that you do also improve fundamentals on the economy and consumers as well as business trends on lending are quite robust and as well, you can have deregulation where you can get a capitol pay back to shareholders going forward the next six to nine months, we do believe of negative head wins as a federal reserve starts to raise interest rates, we believe they'll raise it three to four times kathy, what's your outlook of interest rates because it is important part of this bank story? >> i think the scope of the ten years at at least 2.4% i don't think the rally and financial is just an interest rate story there is a strong risk appetite out there and tax reform as well as the regulatory environment
that could come is conducive >> i think we have a little more room to go we are a ten year highs, that can be a head wind and the fed chair could put a damp in it i think in the long run, we may see new highs in the index before we see any type of meaningful correction. >> kathy and chad, thank you for your time. for more information, head to our website. >> lets head down to houston, hi brian. >> hey tyler, how are y'all doing back there coming up, sue, james harden, you may know him from the houston rockets. we are waiting for him to come
up to talk about basketball and maybe the anthem controversy as well who knows anything can happen from the larger than life texas size power lun size "power lunch. coming up in a couple of minutes right after this the latest from trading nation and a from our sponsor. >> unless you are an extremely short term trader, it is usually best to sell or buying the last hour of trading. that's when volatility tends to be highest the spread is between the bid and the prices increase. that's never a good environment to buy yourself.
time for "street take. the analysts' recommendations on the stock you need to know about. we start off with tesla. $170 price tag even true long believers, the analyst writes, will lose patience the analysts also saying the company will run through even more cash, with all the new giga factories planned. right now the stock, quote, has more questions than answers. >> lot of questions about the second stock, too, chipotle. rbc capital markets cutting
price targets on chipotle to 340 bucks to $400. remember how the new product, queso, was supposed to be the savior for sales this analyst not so convinced. after the higher labor cost, elevated avocado costs we've been talking about for ages. chipot chipotle -- >> remember how he hated the word, queso? just spanish for cheese. >> anyway, third stock, celgene, to a neutral after the company announced the failure of its drug to treat crohn's disease. add to the concerns about revilimid. other key drugs. analysts lowering forecasts for long-term growth 2020 goals of $21 billion in revenue looks s harder to achi. price target down to $136. >> final stock, lululemon,
upgrading the stock to a buy, listing ten reasons to buy the stock. some of the standouts they mentioned in the top ten, tops turned positive showing lulu isn't just a bottoms brand. >> i always thought it was a bottoms brand. >> quote, bras take the brand to a whole new level. he wrote that. >> what you do when you cover lulu. we'll head back to brian sullivan and fertitta in houston right after this quick break ♪ ♪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♪ ♪watch this don't get mad (bell mnemonic) get e*trade and get invested right in the heart of the was in his financial crisis,
and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor.
market flash here, watching shares of bitcoin, had been i believe above 6,000. it is nearing it right now 5,965, a new record high it did set in today's session remember we saw earlier this week, it was down 9% about concerns of initial coin offerings. it's more than rebounded since those lows those lows again, up about 5% right now, 5,965 on this cryptocurrency. >> despite all the stuff a jamie dimon said about it. >> exactly. let's head back out to brian in houston bri? >> reporter: thanks, guys, appreciate it. reallyrocket rockets' all-around basketball player, and new owner, by the way, tilman fertitta. >> thanks for having me. >> i know you guys are practicing we dragged you up here what's it like to have tilman
fertitta what did you think when he stormed the court after you won your opener with golden state? >> his energy excites our team, it fits our team well. i mean, he's the man, you know, he's excited to have, obviously us -- we're excite ed to have h for our boss. >> what did you think of when the rockets are being sold, tilman, i heard of him how much the value of the rockets increases the value of the players. >> yes yes. the most money ever spent for nba team he's a businessman, you know, hopefully these next few years i'll learn a lot from him and, you know, we'll see where it goes >> you don't realize how lucky i am i truly have the best player in the nba. okay and not only is he a great player, great rebounder, great shooter, assists, he broke a record last year that nobody had ever done before besides that, he is the leader this guy leads these guys. this guy is like a coach out there.
this guy works with us tells us who we should look at in free agency i couldn't do this without this guy right here and i'm the lucky one to have -- >> a love fest. >> that's what it's about. >> we better be. we better be. >> let's get some heat okay how did it come about? i read the story that how you and chris paul talked and came together and i don't know, did you see michael jordan's comments recently, james >> no, i haven't. >> a couple days ago, he basically said these, quote, superteams, rockets certainly one of them, warriors, rockets, maybe the celtics and cavaliers. you're going to have them and 26 or 28, quote, garbage teams. that's from mike do the fans have to worry about powerhouses? >> i think it's always been like that, though i think in the lakers era, the boston era, all those -- so obviously, you know, there's a lot of really good -- a couple really good teams and then, you know, whatever that's just the way the nba is as you build and you draft and you get better as time goes on, your team gets better.
you know, and so it is what it is for us, i'm happy to have the players that we have the coaching staff, the organization and obviously, you know, the owner. you know, i couldn't be more happier -- >> you're watching what's happening in football and the football ratings are down. >> yeah. >> you can attribute that to a lot of things, but certainly the anthem thing is a part of it nba ratings are up i don't know if you heard this, 53% in the home doubleheader season opener from last year >> wow >> i mean, that's in tv, james, that's unheard of. i mean, that's -- >> unbelievable. >> do you like the fact the nba has that rule or limits your flexibility as a player to make a statement if you wanted to >> you know what, i think each individual has their own opinion and their freedom of speech and so, you know, for myself and i think even for chris and our leaders, we don't want to draw too much attention to our team, obviously, we'll speak, say what we have to say to get our
message across but for our team and organization, we'll be together an whatever we do, whatever we decide to do and move forward from there. >> i don't know if you know this, james, you're sitting next to the only undefeated nba -- never lost a game as an owner. invited mark cuban to come on. mark might be watching mark, you could have been here thanks for joining us. >> with us, of course. >> of course thank you so much, james good luck. >> thank you, appreciate you guys. >> have a great season appreciate you guys. tilman, by the way, want to give it to your friend, giving to hurricane relief >> thanks for watching "closing bell" starts right now. the cash flow for 2017 is horrible we have to tighten the belt, we have to lead by example. i think our power business team s.ssed the market?