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tv   Power Lunch  CNBC  June 27, 2019 2:00pm-3:00pm EDT

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sales a little bit i think that can be a difference, but it is another player >> we will be watching i will go downpower lunch and tyler mathisen >> new at 2:00 for a thursday, china holding their ground between talks with president trump and xi we will go to the state of play at this early hour over there in japan. boeing shares getting slammed after a new flaw was found and coffee stocks are hot right now. we will tell you why and if it is worth getting in on this trade for a cup. power lunch starts right now let's give you a check on the
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markets at this hour the dow carving out modest gains, it would be high fer it wasn't for boeing's drop you see there it is up about three quarters of a percent. we're also watching nike courtney just talking about it >> the trade war front and center today china playing out terms for a trade deal kayla tou kayla tausche still live in japan. >> yeah, the president may be laying out terms this week and we know how the u.s. might respond to them. they want a relaxation of that ban on huawei parts. the president said he is willing
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to negotiate on that and he expected it to come up that is not something that any u.s. negotiator has come up with they would prefer more purchases than fewer president trump wanted double or triple of china's $1.2 trillion purchase offer finally china said they want a balanced deal. they want to recognize the dignity of both the u.s. and china and as recently as this week sources tell me that they told his counter part in china that that wasn't possible because of the violations that whooi in a has had over the last few years that brought the two countries to the countries they said a deal this week at
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the summit was highly unlikely, but the base case for most strategists is for a truce to be inked this week, for the two sides to keep talking and work out the thornier issues later. i'm told robertlig lightheiser wants it finished as well. >> the shares are down big costing the kou more than 50 points overall there are new concerns about the 757 max jets that could delay getting him back into the air. >> this is revolving around a potential software issue the faa test pilots in a simlator were working through a
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specific situation, but when they put the plane through that they determined there was not the response that the plane should be giving as a result they have flagged it and boeing is looking at a fiction for this issue will the recertification that many expected in the first half of july be pushed back and does that ultimately delay the max getting approval to fly again. he continues to build the max. they have not slowed production. look at this picture that is an employee parking lot in is a 737 max in an employee parking lot at boeing. they have to put them where ever they can here is the production schedule right now and guys, this is one reason why the stock has not dropped much below $350 per
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share. if you cut the production schedule further you would see the stock really take a hit. ultimately this will be driving earnings shares of boeing down more than 2%, guys >> i would part that aircraft right on the lines, phil that is really over the top. >> you love that, don't you. >> can you imagine driving into work -- i'm right over there by the max. >> all right, phil, thank you. let's dig deeper into this new uncertainty and what's next for bowing and the stock joining us now is mike boyd. he is is bullish, still, on the stock with a buy rating at 448 price target how surprisingis it that as they put this software and aircraft through it's paces that something like this would come up and is it a major set back?
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>> this is why they're going through this they want to find anything that could possibly go wrong. this is what they should be doing. they will probably find other things that could go wrong with it when the airplane takes to the sky again it will be safer than your living room >> let's talk specifically about what they found. as i understand it was an faa test pilot that found that recovering -- there was software that meant that recovering from some of the anomalies was more difficult than they expected and was potentially a catastrophic event. >> yeah, and by the way i'm not a pilot, the skies are safe, but the fact of the matter is that they will find anything that could be catastrophic. that just mines in the chance that it happens those are too
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high of odds there is only like 16 maxim l max simulators out there and they might need more to find anything that could happen with this airport >> let's talk about how the grounding has affected airlines. the major lines are united and southwest. >> they are doing it very effectively. so we're not going after la guardia and finding the flights that max canceled, but today, for example, in american airlines they have about 2.8 million more flights out there
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we will have more flying, not less there is just not enough of these around to have made a big impact >> how would you grade boeing on how they handled this entire matter >> i think it is tough to handle when you're dealing with this. i don't know if they have been aggressive enough going out with this or not. i would not pass on that i'm not on their shoes trying to deal with congress and folks like us. >> but boy a lot of pilots and others in the aviation community do have real concerns about how the flight instrument system was rolled out and what they were told and not told before and after the crashes. >> absolutely accurate >> but you said earlier and i want to button it off with this. once this aircraft gets back in
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the air, you said it will be safer than sitting in your living room. i interpret that means you would have no reservation getting on the flight once their certified snd. >> yes, even now when we had u.s. pilots saying the airports were safe even then i would get on it. now it will be one of the safest things in the sky, now they're looking at everything it effects. overall i would get on it and put my family and friends on it. >> thank you >> let's focus in on what the latest revelations mean. we have an aerospace engineer who has a buy rating at $448 on boeing people are bla ark not having t
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faith shaking, they think it will all work out, why is that >> it is a very transitory moment ultimately it will be one of the safest aircraft, and it is just a matter of what it means for 2020 and 2021. for now what we're dealing with is the process of the ffa recertifying it, international regulators, secondly what this means for flight education and training with additional simulators >> we're talking about a loss hoar for bowing, aren't we >> we're pushing it into 2020. there are some loft aircraft that we're moving permanently. but we have not really seen significant cancellations.
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what we're really doing is moving the 2019 cash flow into 2020 >> first it was moved to the back half of the year, and now 2020, it just keeps being shifted out. i understand this is not a loss, but shouldn't there be more push back from the community to the company than to just say look, how could you not know this would take so long or why are you not getting your arms around this internally. why are you not giving us more clarity about the time line. i remember when people said they are pushing it back, and they're being super conservative >> last night was one of the first press releases i think there ay are limited in terms of what they could say i think the communication could be more quite. we met with them last week at the paris air show and i think
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what is important is the backdrop for air space and air traffic is still limited this is still a strong industry overall and i think people are not per teshed by the deliveries being pushed out >> this, when you read the reports about how the plane was approved, the testing and the systems, there was plenty of things along the way that don't sit right as you read through it somewhere along the line allot -- a lot of little decisions were made. the stakes are higher when you're boeing, do they need to make more changes than they made a lot of little things got away from us in this one. >> i disaagree when you look at the development
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time line, they're quite similar and they're very comparable to other narrow bodies. it was not aabbreviated time line. there is only 18 simulators out there. and more training for pilots rather than simple ipad courses. >> all right, sheila, thank you very much. >> coming up, june turned into a great month for the markets. but earnings season is on the horizon. will the numbers be strong enough to keep that rally going. erhi yke reports after the bell. evytngou need to know before that one comes out. coming up on power lunch
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you see this here? there is your fourth quarter there are hopes that perhaps some turn around in the global economy and the main reason that we're getting flat is tech earnings are crumby this year because of the global slow down. three con suck titive -- consecutive quarters no new tariffs and the talks continue more importantly they're betting the fed will backstop the market they will lift the earnings estimates in the third and fourth quarter as a result the flattish earnings that we have now will translate into improved earnings and maybe we will get 4% or 5% earnings growth this is a stretch but this is where the market is right now. >> back to you >> thank you, robert just two trading days until we wrap up a stellar month for the second quarter and the first half
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what can we expect as we move into the second half of the year let's go to hugh jackson you see concerned that values are a little high and that basically the market has to pull an inside straight here. >> no question about it. we got a big move up in june 8% move up in june the bad news is i think we had some real upside potential, almost as much as 16%. when we got to the end of may and the start of june, but we used a lot of that up. as i do the numbers we're about 55% above where we should be we're now talking about 8%
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so everything has to go right. that is built into the market, and when we think about what bob was talking about, the earnings numbers have to come in on the second half and you cross your fingers and hope they're even better than the slow down in growth that we're going to see in the second half >> so they need to be less worse than we might be building in i know that you're above your your normal levels of cash >> that's right. with we use cash as opportunity to buy when the markets are having a dip it has been a very calm market for the last two years
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that will change, but it is not a surprise that growth is slowing. we can't have 20 plus percent year after year after year there is sizzle in the stake and we think the steak is still good and that will make prices go higher that has to do, i think, with federal reserve and trade. >> mila is there stocks you like here sectors you think are good value? >> we like small and mid cap stocks we like internation nainternatie to be broadly diversified, we like tech, they have multiple ways to grow we're looking at digital advertising taking off, 5g, the internet of things, cloud
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computing. >> you say that don't necessarily reallocate and you have a couple stock picks you think could be defensive, i suppose, in the context you describe what are they? >> yeah, listen, i listen to her and he is has a lot of others are in a cycle as you flow is a long cycle. the longest in bull market history. you have to be prepared for the possibility that we will have a fair market and a recession. that's why i'm saying yeah, i can make the case for that 8%. a little further to go in the kwurt psy current cycle. it is not over yet, but i'm also saying start to build some defense in so you get companies
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like walmart, detroit edison they work well if things start to go bad on us. those are two companies and apple, it is a technology stock. it also has a good yield, i'm saying build a little defense into a portfolio that still says we have a little further to go but not a lot further to go. >> thank you very much, thank you as well. >> if the markets are going to climb to new highs it will have to be big cap tech stocks that lead we'll have more on this performance coming up. and big corporations were a popular punching bag last night. can we expect more of the same tonight? power lunch will be right back so ...how are you feeling - on a scale of one to five? wait... one to five?
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when it comes to feelings, it's more like five million. there's everything from happy to extremely happy. there's also angry. i'm really angry, clive! actually, really angry. thank you. and seat 36b angry. you're clive owen. and you're barefoot. yeah... there's also apprehension. ...regret... ...relief. oh and there's empathy... ah, i got this in zurich! actually, what's the opposite of empathy? but what if your business could understand what your customers are feeling... and then do something about it. you can turn disappointment into gratitude. clive, you got to try this. i can't i'm working. turn problems into opportunities. thanks drone. change the future of your business change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this.
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stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. the world in which we live equally distributes talent. but it doesn't equally distribute opportunity, and paths are not always the same. i'm so proud of you, dad! man: i will tell you this, southern new hampshire university can change the whole trajectory of your life. welcome back to the southbound tech sector, it has been up by gains driven by megacap giants can they continue to lead? dom is looking at that forus
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>> it is important because the s&p 500 tech sector, the best performing by a wide margin. as you see here at the overall s&p 500, the ticker xlk handedly out performing the market. look at these names. the biggest in the tech sector microsoft is up. apple 27%. and cisco 30%. the reason why the five stocks are important, they're all positive by a decent amount. but those five stocks put together make up a 50% waiting in that spider tech ticker if you just take micro soft and apple together, they're 36% of that so if you are looking for tech drivers, these five names, ones to watch, they lead the way. thank you. >> ahead on power lunch, lace
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up, folks, nike is set to report earnings after the bell. plus coffee stocks are brewing this year, what is fuelling the buzz and "the real real" going public tomorrow. what you need to know ahead of e alr pricing today. thre deal. when power lunch returns
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i'm courtney reagan, here is your cnbc update at this hour. three dna tests will begin for children coming to the u.s >> the effort on the dna is to protect children we see a situation where children are being exploited we have had almost 5,000 cases of fraud fived at our border this year and we're concerned the number could be higher of adults bringing children that are not their own to the u.s. border >> authorities expect temperatures to surpass 105 degrees today in europe. in france the government is taking steps to look after and
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protect the young and the old, they cut driving hours, closed schools, and spain is dealing with wild fires as it climbs to 105 degrees. >> if you want to stay at the taco bell hotel in palm springs all 70 courtrooms were snatched up in two minutes. the v will open august 8th and close august 12th. >> a tack toe bell hotel >> they just want, what, the instagram posts? >> maybe you just like taco bell and you need a place to stay the night? >> yeah, maybe, lay out in that palm springs son and you will be extra crispy a interesting night at the
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democratic debates on tonight's panel things could get even more interesting. john harwood is live in miami for us, john take it whatever way you want and then we will come to tonight. >> that's right we're getting extra crispy in miami, too it is quite warm this is where the two debates work in compliment to each other. elizabeth warren the highest polling democrat, the one coming on in bernie sanders defense, he is did it on the issue of apolishes private health insurance. he is had dodged that question before but said he is was willing to get rid of it in favor of medicare for all. bernie sanders who is competing
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with elizabeth warren will echo the same position but joe biden will not do that an advisor told me today that elizabeth warren would be crippled with that stance buzz it would change everyone's vote. >> so tonight, the momentum of buttigieg has been notable and he is riding some economic ideas, what are they >> yes, it is funny when you hear him talk even though he cast himself as a common sense mid westerner he is leaning toward the warn side of the argument but he is not embracing the details. >> i think we certainly need to
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consider a higher marginal tax rate, but we should admit that when it was higher the american economy was growing higher we should consider a wealth tax that i think makes sense it is not very distortion fair and that is important. the least distortion faary is te estate tax we should maybe turn to a more equitable tax rate and if we can find a way to impleni implement it on a transactions we will see tonight if pete buttigieg and others -- as i mentioned before you can be sure that the front runner, joe biden, will be toward the center
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rather than toward the left on those questions. >> thank you, john we will be watching tonight and you can see it tonight too and shares of nike are higher ahead of their earnings easte earnings per share has not fallen, joining us now is paul who has a buy rating, a $100 price target, and i was going to say they're like ge but the ge from the' 90s. they rarely miss, any concerns they will miss time? >> we don't have any concerns they will miss, we think they will be relatively in line with expectations, it was a touch under 10% globally but we believe that margins,
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particularly merchandise margins can be better than expected. >> sure, let's talk about china, it is their supply chain exposure which i could guess is lesser now than it has been but probably still there and their demand exposure, right the china market has been a huge growth story for them for so long now >> they will be a major focus in tonight's print. as you mentioned they source about 26% of their footwear from their market indonesia is a big player as well and from a revenue standpoint this is ultimately a market that nike has befored very well in we think they will be relatively close to that once again
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that st despite the volatility that we have heard about >> you know i can't -- i don't mean to put words in your mouth, but if i am building a portfolio of individual securities, i can't imagine one that doesn't have nike in it. >> we agree, ultimately tonight nike will talk about their fiscal expectations. they have eluded to single digit growth they have an extremely attractive a gor krl gor rhyth t kps certainly it is a over hang, but fact is that there are high expectations for nike who is performing well.
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we had volatility and softness in some of their wholesale partners and ultimately people will be very focused to see if nike is able to continue their topline momentum in north america and china as we have previously discussed. >> paul, thank you very much coming up on our tasting menu, fading hoping for a home the dr has a pr problem. and aarbies has the answer to meatless mania
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it is time for a taste of a
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few other stories. according to a new survey released today, just 24% of renters say it is extremely likely they would ever own a home nap home that is 11 percentage points lower. the biggest thing is saving for a down payment only 24% think they can scratch together the money for a home. i think the results are that there will be more >> it also speaks to why there is so much investor demand in the market to buy and rent out >> yeah, the dominican republic's pr problem continues, they canceled flights, and a new report says their bookings have dropped by 74% >> i believe another death was
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reported yesterday but it has certainly gotten attention. this is not helping. >> forget plant-based protein. one fast food chain has meat based plants this is a turkey based carrot -- there is no artificial coloring there, no. it has 30 grams of protein and 30% of the daily vitamin a the chain previously stated that the chance of adding plant-based meat to it's menu was absolutel impossible, but they will have meat based vegetables >> you want to seat a plant
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that's meat. >> all right, time now for power house. we are taking you inside the cabin of an academy award winner >> today's power house is kevin and kristine costner's secluded mountain estate. it has their own baseball field. they rent it out by the week take a look. >> this is the home of academy award winner kevin costner and wife kristine who got married here in 2004 the colorado compound is designed for entertaining with three homes that sleep 346 guests the main resident has room for 16 we are getting the vip tour.
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first stop, kevin's master suite with a subterranean surprise >> it's a trap door hidden to get you to a special part of the house. let me show you where it leads to and here you have a jacuzzi. with a touch of a button you have a water fall. >> next stop, the lake house with room for 12 more friends and plenty of water sports to entertain them year round. >> there are two lakes on the property stocked with trophy trout, canoes, paddle boards, and you can ice fish in the winter >> plus this cottage for eight sits on the edge of the roaring ft. river. >> this is the river house, their favorite part of the property, a perfect place to
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hangout. >> but costner fans may prefer to hang out here at the personal field of dreams. >> if you build it, he will come >> they love to play baseball and they built this with lights and music. if you rent the property you can play day or night. >> if you dream about running the bases yourself, the entire estate is available for rent at $250,000 per week. >> you have to see it for yourself it is so special >> per week? >> in general aspen real estate prices are down in the first quarter, the average sales price for a single home in aspen, the average sale price is $7 million. we will feature this house and other megahomes on "secret lives of the super rich. i love this program, it's so vicarious. >> that is $13 million a year.
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$250,000 a week. >> but they can only rent it three times a year and it works out to about $1,000 per night per person because it sleeps -- >> who is bringing 34 people >> family members. >> it's a single booking >> a big destination wedding it is a lot but $1,000 a night to be on kevin costner's baseball field and play baseball love it. he keeps topping himself >> yeah, it is so much fun can these stocks stay? or will they turn to iced mocha lattes power lunch will be right back i assembled it myself last night. i think i did an ok job. just ok? what if something bad happens? we just move to the next town. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network
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caution. these coffee stocks are piping hot. do not spill starbucks and dunkin' up 30% so far this year and let's not forgot the recent ipo of this coffee up 7% since its debut in may. what is behind the job of jolt nick stien is an analyst at redbrush securities. why is coffee hot? ha ha ha.
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>> first and foremost, both dunkin' and starbucks have done an amazing job of being on trend with respect to to a lot of technology and showing loyalty apps, et cetera. so -- >> mobile is helping >> mobile is absolutely helping in the price points, they are right. they have got the right level of pricing in terms of both the low and the high end the attach rates have been through the roof which is helping dunkin' and after rough expectations a lot of things have been going right across the board. >> which do you think is the better grower over the next, let's say, five years? my sense is that dunkin' has more room to expand maybe in the west particularly than others? >> well, optically dunkin' should outperform but their ultimately their growth is 2 1/2% and don't have the -- than starbucks
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starbucks 50% of their growth is expected to come from china going forward. and so china should be the reason why starbucks outperforms relative to dunkin'. >> you're not worried that if relations between the united states and china go south, that chinese consumers will sort of pull back from patronizing an american company >> i am worried about that in the immediate term in the near term we are not seeing that happen as of yet it sounds like at least on the conference in june, they were pretty positive about their expectation in china they just had a third-party deal with and helping in the near term and interesting to see when that anniversary is. if is there a discussion in span, it's starbucks. >> you said earlier this week you i think they are undergoing a deflection in same sales
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growth what do you see? what is driving that >> the level of french is the optimism the step up into optimism the last couple of quarters is hard to gone. i've had an initial rating initialized four years ago and it's driven by optimism by dunkin''s franchisees. >> when you talk to the franchisees they are telling the traffic is strong and ticket is strong or their particular categories driving this? >> two main drivers that are consistently coming up are, number one, through put. dunkin' had many simplification initiatives start early last year. >> simplification of their menu. >> yes. >> fewer choices >> fewer choices focusing on the ones on the products that are selling most so there is products that aren't selling much, they shouldn't be on there simplified operations. that is basically driving increased transactions at peak
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morning hours. number two is afternoon day part growth driven by an increased focus on the latte and expresso line so 2017 went from 6% of mix in terms of sales that were expresso beverages to 8% in 2019 now and then 2018 and 2019 expected to make another step up to 9% to 10% that is driving another, you know, nice contribution to the comp. and it's really in that afternoon -- >> better margin there >> there is. and to go to two, for example, the value, you know, offerings they are bringing people into the store and only buying that sandwich, the value sandwich and also getting latte as an attachment. >> makes meal want a latte right now! >> you don't drink iced coffee either place, i'll take them. >> my siblings think i'm insane. i'll drink hot coffee in the
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summer on day like this. >> you ever get beverages? >> i always get the grande dark. >> you're a simple soul. >> right thank you. >> thanks for having me. aftethber e ll today, the real deal on the real real is next
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welcome back quite a busy ipo market the last couple of months and tomorrow it gets more real
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leslie picard is hepicker is hee with more. >> its site could be valid around 1.5 billion in its debut tomorrow and they are bringing in more than 200 million dollars in revenue a year by taking a cut who people used their watches and rings. it was faunound by julie wainwrt and shopping and saw somebody selling consignment and thought that would be able to. how these companies will be able to prevent fakes or counterfeit products from being passed through their sites. the real real says they have more than 100 highly trained gemologists and brand experts and art curators that review the items before they are posted for sale recent commerce ipos have done
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incredibly well. online has more than doubled earlier this month and chewy.com is up by 50%. >> how can they tell the difference if they don't have it and look at it >> they are not producing it or manufacturing it and goes back to the whole run person staff in their warehouses. >> that a herologies. >> what is that? >> i thought it was a horticulturists when first read it but a hurologist is an expert on clocks and watches and can detect whether they are, in fact, authentic. >> chewy was not the new pets.com the real real. >> yes. >> interesting concept. >> it is. >> fascinating it's really real interesting >> leslie, thanks very much. >> thank you. quick time for a check, please we got the numbers in. the figures of viewership for last night's democratic debate 300 million people watched
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across nbc and they say it's up in line with the first democratic debate of the 2016 cycle. >> we will see tonight's debate at 9:00 p.m. it may be higher with biden, buttigieg and sanders and kamala harris closing bell is right now. >> welcome to "the closing bell." morgan stanley is up as we await the second round of the fed desk and a preview of that to come. an exclusive interview with the morgan stanley ceo james gorman is moments away. >> welcome, everyone another big event we are waiting for. nike earnings due to hit after today's close. a full preview straight ahead. let's see what is driving the market action. wall street is anxiously awaiting the meeting of the g-20 boeing a big drag th

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