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tv   Power Lunch  CNBC  November 29, 2016 1:00pm-3:01pm EST

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bounce. that part of it is over. i think people are looking at it and going, hey, look at the multiples. >> gives you a floor, though. >> no doubt. >> buffett bounce. >> part apple too. >> good having you. nice to see you again. >> thank you. >> we'll see you again soon. does it for us. >> "power lunch" is next. >> i didn't say anything. >> and welcome to "power lunch," everybody. your top story, crude crumbles. skepticism that the saudis and iranians will be able to make a deal. that is sending oil lower. a live report from vienna minutes away. obamacare on life support. trump's pick for hhs is a doctor with a plan to take a scalpel to the affordable care act. what it means for your medicine and your money ahead. and a pair of gamers hitting the big leagues. inside story of this year's ink magazine company of the year, incredible tale as a legendary edition of "power lunch" begins right now.
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welcome to "power lunch." i'm seema mody. stocks are trading in a narrow range, but carving out gains at the moment. the nasdaq hitting an intraday all time high. and one of the biggest winners is united health, it is adding nearly 40 points to the dow all by itself. following an upbeat 2017 forecast. >> seema, i'm tyler mathisen. here is what else is happening at this hour. i am what else is happening at this hour. number one, consumer confidence soaring this month, highest level since 2007. tesla under fire, going the other way. reports that the s.e.c. is criticizing electric carmaker for using prohibited accounting metrics and that is sending shares lower right now. and, starting next year, massachusetts will adopt the strictest background checks in the united states for uber and lyft drivers. >> let's kick things off with a plunge in oil. it is down about 4%.
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it is back to the low $45 per barrel range. now, all of this comes ahead of tomorrow's opec meeting in vienna, austria. doubts are growing that the saudis and iranians can set aside their bitter differences, and come to any kind of output cap deal. let's bring in rbc capital's haleema kroft and steve sedgwick in vienna, austria, from london. and, steve, have the saudis shown up yet? >> well, this is why we're here. we're doing things differently for you guys. a little show and tell. this is a bit of a press gathering in one of the kehoe tells here in vienna. what we're doing is we're all standing by, waiting for the saudis to arrive. we had a few false calls, nigerian oil minister came through, he had very little to say about prospects of a deal. we spoke to mr. rui, the uae oil minister. i asked him the key barriers to a deal. let's listen in. >> i could say the biggest
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barriers that some are not participating. i think opec is a consolidated organization. all decisions need to be unanimous. so the expectation that if we agree on something, we would like to agree on something sustainable and benefit everyone and also get everyone need to be participating. but don't ask me how, who, and when because we meet. >> don't ask me how, who and when. we all know this is about iran versus saudi. is that the only barrier? >> it is the iranians, the iraqis, what i think is interesting is, you know, algiers, two months ago, the iranians were exempted. now the eiranians are asked to cut production and that's a nonstarter for tomorrow. >> they want to get to 3.9, to 4, beyond ultimately as well. will that happen? >> here is the thing. iran produced 3.8 the last year
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before sanctions. they haven't done 4 million for quite a long time. so the question is, is iran digging a line in the sand for if 4 million when they're probably not going to get there in the near term? is this posturing going to kill a deal? >> brian? >> hey, haleema. you've been in the camp that the iranians and the saudis are going to set aside their differences as you call it, stick the landing. are you still in that? do you still believe this is going to happen because the rhetoric seems to have ramped up in the past 24 hours. >> yeah, the rhetoric ramped up. i'm still in the camp they work it out simply because everybody still wants a deal done. a year ago, the saudis, the rest of the gcc was saying, we don't need to come in and stabilize this market. i think everybody wants to stabilize the market, the question is how they're going to get it done. not that many barrels potentially separate us. we're potentially looking at 200 or 300,000 barrels standing in the way of an agreement now. >> what about the idea we may not need a cut at all.
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what is this all about? >> we heard this last year as well. this time last year we were told that markets rebalancing anyway. yes, we have moved away from the big overhang, but the question is, if we move below sub 40 without a deal, how is that going to feel for everybody? >> it is going that way today. we're going to hand it back to you guys in the studio. thank you very much. >> thank you very much. steve and haleema, to dominic chu for a quick market flash. >> what we're watching, shares of pracxa, this on the heels of headlines out of dow jones s saying prax air approached linda group of possibly resuming the deal talks. they did fall apart on sticking points earlier this fall. this merger would create an industrial gas giant, worth about $60 billion. and these previous talks fell apart back in september on some sticking points about possible headquarters locations, and possible job and employment situations.
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so watching praxair. >> thank you very much. the market is shrugging off oil's dip. the dow feasting on the surge in confidence from the consumer and those revised gdp numbers. it starts with the number 3. bob pisani takes us inside the data. >> bottom line, we start off on the weak side, but getting stronger throughout the day. let's look at the sectors, not surprisingly energy with the confusion over opec is the weak link. but we were weaker earlier, materials and industrials, turned positive, even bank stocks market leader for the last several weeks, positive on the day. despite all this, underneath this, some signs of slowing down on the rally. you remember the big leadership groups, banks, industrials, materials, companies that had huge runs in the last few weeks like caterpillar, emerson electric, to the downside. then material names that had big run-ups like the steel stocks, valet, free port, mcmoran, they're down today and not rallying overall. you can't blame, look at the big
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moves we had in material stocks like u.s. steel and freeport-mcmoran. this is so far this quarter, most since the election occurred. no surprise a little slowdown. the energy stocks, you know about what is going on and somewhat confusing situation you heard about it over at opec, stocks down for two days in a row in this particular group. what is going on? look at the s&p. we're slowly moving up throughout the day. despite the resistance of all the other stocks that are market leaders. the key here, guys, revisions to consumption that we saw earlier in the day from the gdp numbers. that's good for the economy. and, of course, some of the consumer confidence numbers as well helping people convincing the market that better times are ahead. maybe 3% gdp in 2017. back to you. >> bob, thank you very much. just over a month to go in 2016, the dow is up almost 10% for the year. who would have thought that when we were back in the middle of february. nobody would have thought that. shaking their heads over here. s&p around 8% higher. nasdaq a shade under 8%.
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hitting an all time high today. should investors lock in these gains or is there still more room to run in this rally. let's bring in peter maloof of creative planning a high net worth wealth manager. it seems like the stock market is baking in a lot of good news. is it too baked in and are we -- are we likely to see a pullback if things start not to turn out exactly the way they -- investors seem to be anticipating. >> i think the market calibrated everything nearly perfectly. if you to look since the election, u.s. stocks way up. if lurki ilooking at financial care, regulations being pulled back, your cost of doing business is going to go down, taxes are not going up, probably coming down substantially, all of this makes sense for the market to appreciate. and look overseas and the adjustment downward and markets -- >> is tt is not going to be smo sailing.
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>> that's right. you know that as well as i do. >> if you look at the u.s. market, it is priced to perfection, 17 to over 20, and it is counting on trump to deliver on everything he should. >> should i be worried that other markets, emerging markets, bond markets, haven't really played along? >> these moved the whole opposite direction. they're priced for disaster. the bond market saying this is going to cost more. if you're a long-term very patient investor and start to look at the valuations overseas versus the united states, dividend yields about 50% higher. if you're patient, you can start to look at markets like emerging markets and hold on for longer. they're still up 9% year to date, still having a good year. they have given back half their gains. >> let's bring in david saurpie. where do you stand on the price to perfection idea that peter just mentioned in u.s. stocks? >> i worry about price to perfection perennially. but i think if you look at
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valuations, less on a price to earnings basis, i'm going to make money on a price to cash flow or free cash flow basis. and from that regard, it suggests that over the next couple of years we can see stock returns compounding at 8% or better, and it is well better than i'm going to see in most other asset classes. in portfolios, even after a good year in 2016, i'm tilted offensively and stocks and don't forget about credit on the bond side, where the yields are still, i think, quite attractive relative to treasuries. >> aside from tax reform, and deregulation, david, president-elect's tweets have been a topic of discussion for investors, especially those among trading desks. is this a sign of how donald trump will handle his temperament around foreign policy when he gets into the white house? is that a concern for you? >> i have a very favorite client who likes to say there is doing and there's talk ing. so if you heard enough of the
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talking, let's see the doing. when you do cut taxes, it leads to better than average stock market returns and large caps, but even better in small cap stocks. so let's see some of the doing part, i think that will be quite favorable in this tug of war between lower taxes, less regulation, concerns on trade, with pulling on the other side will be monetary policy, which will be less stimulative, but still not, i think, debilitating to the stock market and i think we'll see pretty respectable returns going forward in a lower tax environment. >> peter, i'll pull the brake on the train in a little bit. we talked on this network about this rally. we had a rally in stocks. you briefly touched on it. if you're older and a bond investor, or a reit, real estate investor, you're wondering when you watch cnbc, what rally are they talking about because you haven't been wiped out. but you've been hit. if you're in those asset classes, do you take your losses, if you have them, sell and buy into stocks right now or hang on and hope?
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>> i think, no, i think you hang on. the reason you hang on is if you're that investor, you don't have bonds because lurking for maximum return. i don't think anybody is buying the ten-year treasury or municipal bonds thinking they're going to outperform the stock market. the dividend yield is higher than bonds. you'll be better off. you have those things because you got to get through the short run from the great depression to today. >> sorry to cut you off. every commercial on this network for a financial firm will say in a well die veeversified portfol that isn't working. do we dediversify? >> diversification has worked better. >> not in the last 30 days. short-term, but if this trend continues, david, you get my point, you're not going to have the run. you're going to have 30% stocks, 30% bonds, 30% cash, whatever. you're flat. maybe. >> portfolios up in where they
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credit than treasuries, it still has been a better than average year and maybe one of the last good years for the bond market, combined with the stock market, balanced portfolios have done well. where clients have gotten sideways is in some alts, in hedge funds, which have time and time again not proven to be what people have been buying. and back to that good old 60/40 portfolio with some credit bias, has done quite well in 2016 and i think perhaps will continue to surprise investors on the upside. >> all right, david, peter, thank you for being with us. >> my pleasure. thank you. >> good to be with you. donald trump continuing to fill out his administration. some key appointments have been made, but we have the latest live from trump tower on what may be next. plus, the likely winners and losers if obamacare gets repealed and replaced. that's straight ahead.
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welcome back. transition talks continue inside trump tower as the president elect fills out his administration. john harwood is at trump tower with the latest. >> we have a steady stream of visitor all day long in to see the president-elect and his top aides at trump tower. among them, gary cone, the coo of goldman sachs, going to visit the president-elect who campaigned against wall street. we'll see if we get a read on that later. two cabinet picks confirmed so
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far today. both of them strengthened donald trump's ties to the republican establishment in washington. one, tom price, the congressman from georgia, he an orthopedic surgeon, a staunch foe of obamacare and now donald trump's partner in repealing and replacing obamacare. secondly, elaine chao, who previously served as labor secretary under president george w. bush, is donald trump's choice to be transportation secretary. that will make her his partner in trying to push through his big infrastructure program, $1 trillion of spending. he hopes to make a deal with congress on it. helping that deal, of course, is the fact that elaine chao is married to mitch mcconnell, the senate republican leader. no word on when we get choices for three departments for which we have clear front-runners. first of all, steve mnuchin for treasury, he's a former goldman sachs partner. james mattis, retired general for the pentagon, wilbur ross, the billionaire investor for the
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commerce department. and, of course, no word whatsoever on secretary of state. at least two candidates are meeting with donald trump here today. bob corker, the chair of the senate foreign relations committee, mitt romney donnell tonigdonald trump tonight. and word that rudy giuliani is also seeing donald trump at trump tower today. and finally, we have gotten word that donald trump is going tomorrow to commence his victory lap visiting states that backed him crucially in the campaign, first stop, cincinnati tomorrow night. >> thank you very much, john harwood, reporting from outside trump tower. if the new administration does go through with repealing and replacing obamacare, what does it mean for some of the biggest players in the health care area? shares of united health up 3.5%. all time high today, after an upbeat 2017 forecast. let's check in with bertha
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coombs at the nasdaq with some likely winners and losers if obamacare is heavily altered. >> the devil is in the details. tom price, an orthopedic surgeon, very much in tune with what is going on with doctors, he would like to repeal some of those regulations that doctors have to deal with. senior member of the house, certainly going to be a strong liaison to congress to push through. fixed tax credits for individuals, caps on the tax exemption for employer plan benefits and secretary who will have broad authority to ease back on certain regulations. analysts say one thing he's not in favor of is drug pricing negotiation for medicare. >> he's probably a good pick from biopharma's perspective as he doesn't believe in part d negotiation. and he also is a fan of value-based payments. >> value-based payments is the system that a lot of ensurers have moved to, working with hospitals on paying more for the
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value of care and better care rather than fee for service. so for insurers and hospitals, how well will they be able to maintain the market stability, that's the key questions. analysts from the rand corporation estimate when it comes to enrollment and insurance, replacement proposals between 10 or 18 million of those ensured now lose coverage. price supports, the switch to medicaid, block grants, giving more control to states, which president-elect trump also supports. that could see hospitals in some states perhaps get less funding than they do now. but, again, this is going to be something people are going to be watching for, tyler. and an awful lot of uncertainty until we get some of these details nailed down. >> bertha, thank you very much. >> i was going to point out, despite the rally in the dow, up 4% since the election outcome, health is up 1% since the election, but seen as a positive if trump were to win, clinton was supposed to bring in more
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regulation, but we haven't seen that rally. >> until today. >> until today. we'll see if it continues. on to autos, rv sales going into overdrive. what is behind the biggest surge the industry has seen in four decades? plus, delta bans a disruptive trump supporter for life and refunds all fellow flyers. good idea or is delta opening a political pandora box. that's straight ahead. will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order
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welcome back. americans are hitting the road, giving rv sales a boost they have not seen in decades. phil lebeau is live in chicago with that story. >> the numbers are really stunning when you look at how much success and growth the rv industry has seen. look at the latest numbers, the projection for 2016 is deliveries of almost 420,000 rvs, that's up 13.5% so far this year. best year since 1976. and, oh, by the way, they believe it will get even better next year, the projection is for 2017 deliveries coming close to 440,000. what is behind this? and why is it good in places like forest city, iowa, where they build winnebagos. strong economy, low gas prices, fuel is great for people who want to do a lot of rv'ing. and low interest rates, all of those factors combined are driving rv sales higher. look at this chart. this shows how far the industry has gone since 2009. we did stories where we went to
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the winnebago industry's facility in iowa and talked about how lean the times were and they were going through layoffs. well, complete change since then. and if you look at the earnings of thor industries, no comparison at all over the last several years. by the way, thor's ceo will be joining mad money exclusively tonight. they did much better than expected. he'll talk about thor's earning and what we're seeing in the industry that is on a roll now, not just thor, all of the rv related stocks. >> phil, before we let you go, delta making news today, banning a disruptive passenger, trump supporter, who apparently went on a rant on one of the flights, refunding the fellow passengers the ticket price on that flight. did the company go overboard in doing this? is this -- i don't know, you want to do well by your customers, but, i don't know. >> i don't think so i don't think so. have you seen what this guy was
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doing? >> no, i haven't. i heard that he went off. >> and tyler this is not about whether you are pro or for or against donald trump, this is about civility. when you get on a plane, you can have some conversation with people, this was not conversation. this was an out and out rant that went on for a while, and probably made people uncomfortable. i think delta is basically saying what the ceo said in his note to employees yesterday, this is about civility. when you are on a plane, we're going to treat you with civility, you treat others including fellow passengers the same way. that's the message they're sending here. >> if it is about being uncomfortable, they should refund all passengers every flight all the time. but i'm talking about physical, that's a different issue. i get your point. but, listen, we have seen videos of people acting badly on planes, i think to tyler's point, if every time -- was it because this was political, right, that they gave the refunds? because we have seen people act far worse than this guy.
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gerard depardieu peed on someone on a plane apparently. bad things happen. >> the only thing i would say is i don't have the exact numbers in terms of every single incident have we gone back and talked to the passengers about whether or not they had their money refunded? i guarantee you, if you're on a plane and there is a physical altercation and you feel threatened in some fashion, and you go and complain to the airline, odds are you're probably going to get your money back. they don't want to sit there and deal with the bad public relations image. i understand what you're saying about the politics involved here. i think that's getting -- covering up the broader issue, which is civility on the plane needs to be number one in the eyes of those who are in the industry, and passengers. and i think what delta is saying today is we're not going to put up with this. i don't care who you are, what your beliefs are, if you're that way toward other passengers there is consequences. >> i don't think anybody is questioning the banning of the
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guy. >> brian, what's wrong with them giving the money back? what is the problem there? >> well, i just, to tyler's point, i think it opens up -- it was a question, first off, does it open up a pandora's box of all bad behavior on an airplane, thus enables 300, 400 people to get their money back because their feelings were hurt? how about a couple of dudes like me standing up and going, hey, dude, sit down and shut up? >> well, i like your idea. look, at end of the day, i've got no problem with delta giving the money back. i don't think it is a political issue. i think that their feeling was we want to get this taken care of for everybody involved and that's what we did. >> did this happen in flight or on a taxi way. >> before they took off. before they took off. and the reason that they came out, tyler, is because some of the passengers said, look, they should have removed this guy from the flight originally and there were some complaints and delta went back and looked and said, you know what, if we had to do it again, we probably would have removed this person from the plane and not allowed them to continue on the flight because it made people
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uncomfortable. but they didn't -- they went back and said, we probably could have handled it a little better in flight. as a result, we're going to refund the money. >> this feels like the airlines can never win. usually known for poor customer service, this time they step up to the plate and getting criticism. >> i think to be fair to phil's point, the guy -- they're giving the money back because they didn't remove the guy. not because he was just yelling obscenities and talking about, you know -- the guy was rude, crude. that's where -- >> you draw the line? >> some bigger dudes in the back of the bus need to get up and say sit down and shut up. >> more brians in the air. >> i would have been cowering behind the seat. some other dudes my size should have gotten up. >> phil, thanks a lot. >> you bet. more bad news for lab testing startup theranos and could have a big impact on the company's biggest investors. details coming up next. an appl, they put everything they know into it. but once it's sold, there usually isn't a way to keep improving that product.
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hi, everybody. i'm sue her erera. new information emerging in the ohio state university attack. a law enforcement official saying 18-year-old attacker
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abdul razak ali artan had posted comments on facebook denouncing u.s. actions in muslim countries. authorities say artan, a student at the college, drove a car into a crowd yesterday and then started stabbing people. 11 people were injured and a police officer killed artan. the red cross reporting about 20,000 syrians fled intensified attacks on rebel held eastern aleppo in the past two days. yesterday hundreds of people from aleppo arrived in a humanitarian camp on the outskirts of the city. the white house saying president obama will not send a u.s. delegation to cuba to attend fidel castro's funeral. instead, the u.s. will be represented by a security adviser and the u.s. ambassador to cuba. castro's funeral is on sunday. and the second tallest evacuate know in mexico is spewing ash into the sky again today. a mexican agency reporting the volcano has exploded five times in the last 24 hours. and it is less than an hour away from mexico city.
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that is the cnbc news update this hour. i will send it back to you, brian. >> thank you very much. i will send it to dominic chu with a market flash. >> the nasdaq hitting a fresh all time record, high today. microsoft comcast, the parent company of this network, facebook, alphabet, having the most positive impact so far. apple was a drag earlier. a big month for retail stocks. the spider up 10% this month on pace for the best monthly performance since october of 2011. office depot, children's place and stopples among leaders there, all up more than 30%. just this month alone. about half of the components are more than 10% higher this month. and for the first time this year, the industrial sector and the s&p 500 now the best performing sector year to date, two names powering the gains,
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qantas services and cummins up. >> s business taking a wait and see approach. small businesses too. index unchanged in november, dipping 0.2%. unemployment growth remains consistent with the same period a year ago. joining us to discuss more is martin moosy, president and ceo of pay chex. great to see you this afternoon. trying to understand the health of the business owner in america. this is the first report compiled since the election outcome. what did you find? >> well, i think it looks pretty cautious right now. i think with the election coming out, it tends to bode well for small business in the fact that you hear less regulation will come out, lower taxes, all of that good for small business. the index this month, you mentioned, didn't change much year over year. we're seeing the tale of two different sides of the country,
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the southeast doing very well, much stronger growth year over year, florida, north carolina, georgia, those areas doing well. and on the pacific side, down about a percent from a growth rate, and at the lowest point since 2012. they got their growth early and that's kind of died out a little bit. >> trump's win has created a lot of uncertainty around trade and tariffs and whether retailers like walmart can still get a lot of manufacturing done overseas and offer their customer here in america that lower price point. is that a concern for small businesses as well? >> depends on the business, of course, and where they're building. more small businesses, less are impacted by that. they're certainly impacted by things like overtime regulations that have been held up in and are not going to go into effect and other changes like the affordable care act. these things are -- if there is less regulation, good for small business, and as you mentioned
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earlier, you saw the consumer confidence up, great deal in the month of november. that's a good sign that consumers might be spending more, which will be good for job growth. >> so what is your outlook for next year in terms of the gdp? we had a nice number today, 3%, do you think that's an achievable number next year overall? >> well, all the signs look positive now. it is hard to predict obviously. but there seems to be some real momentum when you look at the consumer confidence piece, there is new momentum we have seen this month. the market continued to be very strong. it seems like people are spending more, that will be good for small business an we would expect for production, manufacturing jobs still seem to be down a bit. but where there is good news also with wages are up about 3.5% based on our information. >> what do you see on incomes? if anybody knows what is happening in the real world with incomes, it is you guys.
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>> we're seeing, you know, we're seeing a 3.5% wage increase, which is the best we have seen in years. absolutely. and now a big percentage of that coming in jobs like leisure and hospitality. so minimum wage increases have had an impact on that. and they're seeing leisure and hospitality seeing a 5% increase in wages, that's all coming from minimum wage increases in many states, and some localities as well. >> interesting to see the next report if we see the same level of confidence even after that potential rate hike that is coming in december. martin, we'll leave the discussion there, thank you. martin moosy with pay chex. from small business to big investors now. some high profile private investors taking a big hit on their theranos investments. the wall street journal reporting that much of theranos' backing in its most recent and biggest round of funding came from wealthy families and individuals and not just from the typical venture capitalist
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and private equity firms. let's bring in chris weaver, reporter for the wall street journal. great reporting, great story. who are some of these bold faced names and how much have they lost? >> we reported this for some time. wanted to know who the investors in this company who we have been covering for more than a year now were. and, you know, just in today's paper we were able to report that cox enterprises had invested $100 million in theranos in 2014 and 2015 funded round, and also that the chairman of news corp., the wall street journal's parent company, rupert murdoch, had invested $100 million during that same funding round. also among the big names are riley bechtel, a board member at theranos and a number of more typical investors have come to light. >> are they wiped out? >> it is hard to say right now. the company faces a vast array of very public challenges.
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sanctioned by a federal regulator, they face federal civil and criminal investigations now, lawsuits by shareholders, you know, challenging some of the sanctions, fighting the suits. but for now, it would seem to be very difficult situation for the company. >> these were people you would typically describe as smart money. how did they get sucked in and how did they act so dumb? >> we love to know more about that. i think some of the investors who have come forward, not these families, but professional money managers, who, you know, one case now sued the company, you know, feel like they were misled and some of statements that theranos' founder elizabeth holmes made before and after their investments were, in fact, shown not to be true as the company's challenges have mounted. >> we look at this now and say, boy, these guys got snookered. but on the cover of forbes, a
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couple of times, if the technology worked and maybe it still does, but if it worked, you could have made three or 400 times or a percent your initial investment. that was the thinking, correct? nobody came into this with their eyes closed. >> the promise of the technology was giant. >> was not life changing, but medically it was life changing in some respects because of the -- because it wiped out one industry and created an entirely new one. >> right. they claimed they would be able to do dozens of tests on just a few drops of blood for, like, half the price of regular labs. that would be a transformative thing if it were in fact something that could be realized. >> so the people presumably were just, you know, bought into the narrative there. and obviously if it turns out it was fraudulent, as you have been sort of sniffing around, we'll see. but it is very difficult to detect fraud.
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>> there is a sort of split between the investors now, where some of the earlier people who got in, venture capitalists and in one case a san francisco based hedge fund called partner fund management now sued theranos is starting to throw around some allegations or raise concerns where as the big giant investors who came in with these $100 million investments in this latest round, you know, have so far remained silent and they may have less reason than a hedge u fund to take their concerns if they have them public. >> all right, chris, thank you for joining us. we'll see you soon. >> you bet. get this. india pulling almost 90% of its currency out of circulation. this is one of the top stories on cnbc.com. you study the currency markets, emerging markets. what is going on in india with their currencys? >> three weeks ago, the prime minister of india unveiled a shocking currency reform, eliminating the 500 and 1,000
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rupee doe nominated note and resulted in this backlash from citizens around the country, many people are saying we don't have cash to pay our bills, to buy medicine for our kids. the overarching goal of eliminating the higher denominated notes was so kick back on corruption, and black money, which is a rampant concern in india. this is also a country that is not a cashless driven economy, but that's one of mody's goals, just taking a long time to get there. >> we have seen the lines, seen videos of lines, hundreds of people long waiting, is there a concern some people are hoarding these notes? >> absolutely. a lot of people say, i was speaking to family friend, he was saying his friend's wife, who usually keep at least three, about -- a lot of money, $5,000 or more, inside the house and her husband didn't even know about it. now you have individuals -- >> a thousand rupee note. would that be $100 bill
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effectively? >> basically. sorry 500 rupee note is about $12. >> so my currency conversion is not well on in the ruppy to doll -- >> so 25 bucks. that's high denomination. >> for them it is. >> if we scale it up, the u.s. government, i would assume pulled 100s out of circulation. >> exactly. >> the equivalent. >> that's why there is such a large response. >> black money usually in the hundreds. >> that's the goal. take out the big notes, corruption will come down, still have to see. >> i asked for change for a thousand the other day. you pulled out 10 hundreds. >> you bet. >> only one sided, though, very odd. >> full story on cnbc. it is the number one story at this moment online. on deck, some opportunity just for you. the big wall street calls you need to hear about it. called street talk. we're doing it. first, rick santelli at the cme for the bond report. >> you want to pay attention
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today. it isn't just because of r 10s. today would be the 9 session between 230 and 236. we'll get down to the lows. see the intraday? look at 10s minus bunds. it is widening. coming back down. the culprit, one week of italian 10s. see the yields plummeting? mar y mario draghi, he promised if asked to he'll buy securities, investors are buying them first. what they're selling, selling bunds and even to some extent coming in and buying some bonds. look at one week -- excuse me, intraday bunds versus the italian. you see the way that spread is coming down? that's also something to pay attention to. and finally, how does all this play in with the dollar index, rates are giving it up. mid-november chart of the dollar index, the 8 session, we closed 101 or higher. we're flight right now. these are all key levels you need to watch them and pay attention to draghi in italy and guess, what, "power lunch," of course, will return in two minutes.
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that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. time for street talk. analyst recommendations on the stocks you need to know about. seema, kick it off. >> pfizer, brian. barclays upgrading pfizer to overweight from equal weight, raising the price target to 38 from 37. sees certain drugs capable of driving durable growth in oncology. pfizer bought motivation for $14 billion which specializes in prostate cancer. we don't know how that will be integrated but analysts are bullish. >> six buck pop. beleaguered pfizer investors would like to see 36 again. your second stock is two stocks in one. neighbors and precision
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drilling, he said, buy from a hold. they can't tell folks the land driller stocks look dirt cheap on a few different metrics, but they add they have seen enough cycles to know that coming off a cyclical trough land drillers like two companies tend to trade on a combo of asset values and rate of change on that basis, tph, oil based research firm sees land drillers like neighbors and precision drilling moving higher over the next 12 months, neither stock getting a bump today, probably because oil is down 4%. >> and tack, apple on the move, ubs report by analyst steve milanovich says there is downside risk to current estimates for iphone sales but they see moderate growth sales in the long-term. analyst see the china concern, satch rati saturati saturation, being a head wind for apple. >> fourth, aleexeon, they
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re-evaluate the group. they like the fact that saliris is coming back. they don't think the delay and any whistle block activity will carry huge risk for the company. $100 upside, $155 target, about 25% upside. i go on vacation for a couple of days and now i can't talk. stock is up to 125 bucks. >> still down 30% over the past one year. this was supposed to be seen as a credible takeover target. >> some issues. >> had some issues. and that's perhaps why the stock is down. >> thank you. magazine named its company of the year and it is the company that makes this popular video game. league of legends. our exclusive interview with the co-founders of riot games next.
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and just now, former vice president dan quayle going into trump tower with kellyanne
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conway, a day where president-elect is interviewing several people for his executive team. his cabinet. and one wonders if mr. quayle is among them. switching gears, league of legends, one of the most popular video games out there, played by more than 100 million players every month. it is raking in billions in revenue. riot games is the company behind it. and today the company is front and center on the cover of inc. magazine which just named it the company of the year. joining us now for a cnbc "power lunch" exclusive of riot gape co-founders brian and mark merrill. one of the great delicious ironies here, either one of you can pick up on this, neither of your parents were all that thrilled at the amount of time you spent gaming as young guys. what do they say now? how do you like me now?
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>> yeah, exactly. actually my first nintendo was something i won at my first grade school raffle. we think about it, it was fate, couldn't keep us away. >> what is interesting here is in part your business model. you -- i used to think lol, shows you how square i am, i thought it meant laugh out laou, but league of legends is the game. you give away the game. how do you make money? >> you can play the game online for free. but there is stuff, you know, in the game that you can purchase if you want to. and generally it is sort of aesthetic customization. some folks have, like, have a hard time wrapping their head around this, but if you want to look cool or different in the game there are costumes and things like that that you can buy that are a fun way of expressing yourself. >> the cool thing about the business model -- >> i can't buy additional weaponry to give me more powers
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over somebody else, just cosmetic. >> got keep it fair. otherwise you can -- this is the tournament game, right? people are packing -- >> e sports. >> used to be about world of war craft. that was everything. how do you keep it cool for the next five or ten years. can you? >> world of war craft is still a great game. we're still active players of world of war craft. but a game can live for a long time. for a game like league of legends, it is a competition. it is -- it is akin to sports where you refinvest a lot of ti mastering and trying to master skills in the game and ultimately you get to express that with a bunch of, you know, real teammates against real opponents. there is an infinite mastery curve in every sport and it is similar in certain types of games. >> we update the game frequently, balancing the game to keep it relevant. it is a living, breathing game
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that evolves over time. congratulations on the honor of being inc. magazine's company of the year. we appreciate your time, brandon and marc. thanks to seema for spending first hour of power -- >> go play some league of legends. >> great. good to be with you. >> thank you. next up, are donald trump's tweets a threat to the market? what about a threat to national security? will the secret service take away his twitter account once he becomes president? all of that, and your markets, your money and new segment powerhouse. johnny depp's penthouse, we're going to go inside. one of them, coming up. why pause a spontaneous moment? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain,
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welcome to the second hour of "power lunch." i'm tyler mathisen. here's what's happening right now. protests across the country taking place, pushing for a higher minimum wage. it is the so-called fight for 15. donald trump says he will nominate elaine chao for transportation secretary. chao a former labor secretary, is married to the senate majority leader mitch mcconnell. and i'm kayla tashi. stocks higher across the board. we had the nasdaq hitting an all time high earlier on during the session. the dow is up 42 points.
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microsoft, alphabet, facebook and comcast helping lift the nasdaq. comcast, our parent company, hitting $70 a share for the first time ever. we're keeping an eye on oil as a big drop with a less luke ikely outcome that opec can cut its output. we'll be watching that. wti down. >> i wondered why tyler rolled up in a new bentley today. >> the comcast stock. >> champagne color. three pieces of economic news. gdp came in above 3% for the third quarter. next, housing stays pretty hot, case-shiller index indicating home prices rose 5.5% last month. finally, retail. adobe digital reporting that internet sales totaled $3.5 billion yesterday. that's 10% higher than last year. back to the stock market and your money. the dow is not doing a lot today, it posted a nice run since the election. up a little more than 4%.
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some some are caare calling it rally. is this more about trump or signs the economy is improving? michael santoli joining us on that. what say you? is this all trump or just, hey, things are good, and then maybe we have trump also? >> i think it is safe to say can't be all trump. the markets, we're told, taking into account everything going on in the economy in the world. that would include trump's election three weeks ago. but not limited to that. i do think if you look at character of the rally, since then, there is some evidence that right after election day, certain things change. some sectors that were leading like deep cyclicals, all that stuff seemed to capture a bit of this story line that it was about trump. also, the jolt higher in bond yields also was a relatively sudden effect that people saying, wow, going to be a big swing in the fiscal deficit into next year for a lot of policies get put into place. and, of course, that all prodded investors to move a fair amount of money out of bonds into
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stocks. that was at least a psychological shift pegged to the election. also, as you mentioned, a lot of economic data and trends have been working in this direction for a while. for example, yields rising for five months before election day. ten-year yield from 136 in early july to 185 on election day. that was in place also. the offensive cyclical sectors like industrials, transportation, semiconductors had also been taking the lead, more suddenly, into the election. and you had 3.2% gdp revision for the third quarter, fourth quarter tracking at 3.6 and earnings recession ending as you get top and bottom line growth. i don't think you need to pin all or most of the 3% to 4% rally since election day strictly on expectations of a trump administration stance. >> so says santoli. let's bring in jimmy pete, economic policy analyst for the american enterprise institute, cnbc contributor, and alan gail.
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as an investor, you heard mike and what he had to say. how much of this 4%, 5% run, it has been 20 some days, how much of that is the election and how much of that is let's buy ahead of an expected growth in the economy? >> well, mike did a great job of outlining what is going on. we have been overweight equities prior to the election in the allocation strategies that i manage, and the reason for that is that the macro environment has been improving. job growth has been good, we saw the case-shiller numbers come out, shows that consumer balance sheets are strengthening. another number that came out this morning, consumer confidence, was also higher. again, it is very important to point out that turn in corporate profits. i think that means we'll get better cap x pending into 2017. so you've got a favorable macro climate to begin with, so we were overweight stocks, and then you throw in the rotation after
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the election, and the fact that we could get some legitimate fiscal stimulus that a lot of people on the street have been calling for some time. and it looks like the u.s. is going to take the lead on that. >> jimmy, what do you think? is this the trump rally? >> we probably maybe don't need it anymore. if we're going to be growing it at 3% or 2.5%. there are lots of things republicans are talking about. talking about tax cuts, infrastructure, obama care reform, dodd frank reform, ivanka's paid leave plan, immigration reform. that's a lot of things to do. something is not going to get done. i'm not sure the exact order, all those things can happen, but each one of those things that people in washington are very excited about, they are full of land mines, things that can go wrong, i would be very hesitant while making big bets based on
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anybody's forecast of what is going to happen exactly with obamacare, or the infrastructure spending plan, or tax reform. >> mike, the rally might not necessarily be because of trump or because of any new stimulus that is forth coming, but it is worth noting that the confidence number that hit an eight year high this morning was largely taken before the election. so what is the psychology of consumers after the election, with the market hitting these new highs, if that was the read before? >> exactly. i think you had a lot of data showing the consumer was in pretty decent shape going through october, even if it didn't feel that way. it seemed as if all the indicators are pointing in the direction that they were pretty sturdy going into year end. so i do think if you had -- what is being said with the two gentlemen, the economy was in decent shape. if we're going to add some fuel to it, within the form of perhaps tax cuts, or some more aggressive domestic figure cat spending, what does that get you some it gets you probably higher inflation, an economy running a little hotter.
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and i do think post election, when consumers basically see you had what we now know to be a conclusive result of the election, it is in the rear view mirror, and essentially we now have the markets responding the way they have, we can kind of rerun a narrative that says i guess it turned out the way that we can be happy with at least for the moment. all that fits into an economy running hotter going into next year, but not really because any of the policies enacted or will be. >> what -- what are you hearing on the ground there about the willingness of the gop and congress to go along with expensive stimulus programs of the sort that gop opposed back at the depth of the great recession in 2009? >> it is an amazing turn around in attitudes now that the republicans control the white house and congress. not so worried about small government anymore. listen, this is sort of, like, as good as it gets as far as
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deficits. look at the baseline, deficits start picking up. that's before you do any of this fiscal stimulus. big money losing tax cuts, the infrastructure spending, so will these tea party republicans at some point, you know, show their claws and push back? i'm guessing given how well donald trump did in many of these districts that they're not going to. everyone is going to go along with t they'll scoit. the dynamic scoring, the revenue losses don't look so bad and they'll move on to the next day. i think the age of republican, like, belief in austerity and cut to grow is over. >> i want to switch gears here. i'm sorry, i know you can roll with it. you're looped into d.c. is anybody talking about the recount? has that gained any real traction? >> before the election, all these forecasts, what would has been if this was a disputed election, how bad that would be for the markets.
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markets don't seem to be worried about it. i don't sense anybody is worried about the recounts other than the fact that it shows donald trump and pushed them to do more on twitter, which may disturb people, if you're waiting for trump to pivot, to being more of a traditional president-elect, more traditional president, his response to this recount showed that the candidate trump might be a lot like president trump. >> alan, last question to you. what is the lowest hanging fruit for the president-elect and how is that driving where you would be investing right now? >> well, i think one of the -- some of the early things that trump could do would be related to regulations. i think that probably cutting taxes will be an easy sell on both sides of the aisle. as you start to get into the spending programs and you have to structure something that is going to require 60 votes in the senate, then that starts to get to be a little bit more difficult, which is why we think that at the margin we're going to get some better fiscal stimulus. i think there is a chance that
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is a bug that could catch overseas. but at the margin, look for lower regulatory costs, that could have the potential to improve profit margins. >> all right, jim, alan, mike, guys, great discussion, a lot covered there. we appreciate it. we'll see you all soon. >> one threat that markets may be worried about, the potential that at any moment donald trump might well fire off a tweet. he's been known to do that. once he becomes president, will the secret service take away his twitter? eamon javers joins us now. >> it is an interesting question, right, because you remember barack obama was so interested in keeping access to his blackberry back in 2009. he had some difficulty with that. look at one stat here, which shows you just how important donald trump's twitter account is to him as a method of communication. his twitter account has 16.3 million followers, he's not even president of the united states yet. when he is president, he'll
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inherit the @potus account. that gives you an sense of how active and widely followed he is on twitter. whether he continues that on the white house, using the device in the mornings or the evenings is it anybody's guess. but you get a description of what the secret service allowed him to use in terms of his own phone in the white house. here is what obama told jimmy fallon in an interview this year. said that his phone, his device, doesn't take pictures, doesn't text, doesn't have a phone on it. and he can't play his music on it. he described it, he said, does your 3-year-old have one of those play phones? that's basically the phone i've got. so donald trump might have to get used to that level of security and paranoia in the white house because there is all sorts of metadwrat thata that ct with a tweet, use of a
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smartphone, that could be useful to america's adversaries. >> could they give him a stripped down phone? >> they could. if you look at what obama said about his phone, and we don't know all the specs, but his own description of it, doesn't sound like it has the twitter app on there. if he wants that, they'll have to figure out a way to make sure there is no geolocation ability, for example. >> there is @poetus. does he do those tweets or done by the white house press office, through a central computer? >> they are done through staff largely. but go see the president putting out individual wheat tweets on account as well. you can walk over to a staffer's computer and tweet from there. you can tweet from a computer in the oval office, for example. or the president's private office. but in terms of the device that goes with him, which appears to be what donald trump uses, there have been analyses done of when
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donald trump's account is tweeting from an android phone, when it is tweeting from an iphone, you can tell the difference in those on tweet deck and other ways, donald trump seems to use his own personal device in his apartment, where he's traveling, wherever he is. the geolocation concerns around that are significant. >> donald trump made his conditions and his feelings about the media very well known. and this is part of his strategy for going around the media, right? i want to send out my own message and -- but i guarantee you, there is one organization that is hoping that mr. trump keeps his twitter account open for a long, long time. you know who that is, right? >> twitter. >> twitter. >> how many people are on twitter, merely because donald trump continues to tweet. >> absolutely. it is fascinating to watch. as you saw, 16.3 million people are following along in real time. that is a powerful communications device. i think teddy roosevelt was the one who called the white house
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the bully pulpit. this is the bully twitter account. donald trump is going to use it. his way of pushing public debate in the way he wants it to go, distracting from stories he doesn't like, emphasizing stories he does like, hammering home points he wants to make. that's an incredibly powerful thing. it is the most powerful piece of the presidency is the power to convince people by using all that attention you get and that's what donald trump is doing on twitter. >> i'll ask a question. is there any sense of irony that the president-elect is apparently using a personal device to tweet and to communicate when he and people in his party were so critical of mrs. clinton for using a personal device on the job. >> well, we'll have to see what he does as a government official. right now he's a private citizen, as a government official, everything he does on that device will be subject to the presidential records act, for example, that's one of the reasons that when obama got his
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blam be blackberry, they limited the number of people that could e-mail him to a small handful of aides. all of the records are kept and must be disclosed to the national archives over time. whether donald trump wants to be subjected to that or not, that's coming. and based on his criticism of hillary clinton, he has to abide by all those rules that he accused her of ducking on the campaign trail. >> other members of the administration i'm thinking of general flynn, and also mike pompeo, have gotten in their own hot water things they have tweeted or retweeted. and then general petraeus, the president-elect said he was impressed with when he met, and that general has had his own issues with classified information. so do you think we are in for a new ball game when it comes to privacy? and record keeping? and what is actually going to be aired from this administration? >> by using twitter in real time, the president of the united states will be operating without a safety net. traditionally there say lot of layers of rigmarole that a president has to go through to
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get his message out. here it is unfiltered. what is on his mind at the time. the president-elect and the vice president elect have been getting the daily intelligence briefings routinely now since elected. i believe they said they got one this morning. so the danger is in an impulsive moment, does the president blurt out something that he's not supposed to blurt out. with twitter, no real way to recall that. if you are in the old mode and issuing a press release or walking to the white house podium to make a statement, there might be time to rethink that moment before you go public with it . on twitter, the danger is there that the president will say something that he instantly regrets and can't get it back. >> a lot of precedence being challenged right now. thank you. coming up on "power lunch," why all the talk about fake news has been a good thing for real news. and we're continuing to watch today's big move in oil prices. right now down more than 3%. "power lunch" will be right back. ♪
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it's been over 100 years since the first stock index was created, as a benchmark for average. ♪ yet a lot of people still build portfolios with strategies that just track the benchmarks. ♪ but investing isn't about achieving average. it's about achieving goals. ♪ and invesco believes doing that today requires the art and expertise of high-conviction investing. ♪ translation? why invest in average?
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welcome back to "power lunch." since the election, we heard the talk about fake news on social media and that may have been the best thing that ever happened to real news. julia boorstin joins us with a look at that story. julia? >> news organizations have seen a surge in subscriptions and big bump in their stock prices. the new york times stock is up around 16% since election day,
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shares of both usa today parent gannett and trunk, they're both up by double digit percentage points. and though donald trump repeatedly called the new york times failing in a number of tweets, new york times ceo mark thompson tells us the paper has added 132,000 net subscriptions since the election. >> subscriptions have been up ten times on the same period last year. we're seeing a ten x net increase in subscriptions. so, you know, far from failing, we're seeing a remarkable response by new subscribers who like the kind of journalism, independent without fear or favored journalism that times represents. >> thompson contrasts the new york times journalism with the spread of fake news. many saying the spread of fake news on social media influenced voters this campaign season. >> social media benefits
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legitimate professional fact check journalism as well. we're very, very present on facebook and twitter and other social platforms. but clearly it is true that these new platforms, these relatively new platforms, make it possible for almost anyone to publish almost anything they want. >> as for mr. trump's repeated threat that he's going to sue the new york libel laws, he said he doesn't think there is anything to worry about. >> has the relationship between that company and the social network changed at all in the wake of all of these revelations about how many fake news sites are proliferating on that platform? >> i don't think so. i think that what thompson said was that they very much treat facebook as a partner and a great platform for them to share their articles and to get other people to share their articles
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and they publish quite a bit to facebook. but in the meantime, zuckerberg has been working very hard on cracking down on that fake news problem. so i think from the new york times perspective, they see, you know, social media is a great platform for them and issuing fake news is not up to the new york times to solve, it is when facebook and the other social media net works have to learn how to fix and having various people filter the articles. >> thank you. coming up, how small businesses are helping to bring back jobs to new orleans. and the big jump on home prices. also coming up, stock picks to help you make money off the housing trend and sticking with housing, we're going to take you inside johnny depp's l.a. penthouse, part of a new series called powerhouse. look at that baby. we're going to give you more on the house that edward sizi scis hands built.
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devastation of new orleans after hurricane katrina hit made it a fertile ground for many startups because the city is working hard to rebuild. kate rogers caught up with one man helping bring the city back, one beer at a time. kate? >> hey, brian. that's right. like so many people, new orleans native kirk coco watched the damage from hurricane katrina unfold from afar. he was in the navy in 2005. as the levees broke, he promised he would find a way to get back home and create jobs in his community. >> new orleans itself is kind of like a family member to people who live here. and it was in this -- it was like if your mom or your dad needed help and so i felt like i had to come home and help do whatever i could to help bring the city back to where it was. >> after a few beers, it came to him, he would start a brewery. he was a local home brewer, a novice one, not a very good one at that, but went out to 29 different banks before securing
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a loan to open nola brewing company. last year they hit $4 million in sales and they since expanded to a second location, the nola distilling company, making sweet potato vodka. since 2009, he created some 50 local jobs. >> if you came to new orleans after katrina, you were a daring person who was taking a big chance. that's what an entrepreneur is. a daring person who takes big chances. and so this community just fit perfectly with what we needed. these entrepreneurs, who are willing to take a chance. they came down here, and filled the gap perfectly. >> now what kirk says he needs to see more of in the city is more investment in education to help usher in the next group of entrepreneurs to make new orleans even stronger and better than it was before. back over to you. >> kate, thank you very much. and just now, wilbur ross going into trump tower, a cnbc regular guest. he's one of the names being mentioned as a potential commerce secretary. an early supporter of mr. trump
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and a very, very successful investor, industrialist, entrepreneur. big drop for oil today, down 4%. we'll get the closing prices live from the nymex when "power lunch" returns. come on! why doesn't verizon offer unlimited data like t-mobile? is it because their lte network was built six years ago? six years ago? that's like a hundred... in phone years! their lte network is older, slower and they limit you. switch to t-mobile, the newer, faster and unlimited network. we cover 99% of the americans verizon covers. switch your family of four to t-mobile and we'll give you $800 to spend anywhere you want. [ that's a good thing, eligible for medicare? but it doesn't cover everything. only about 80% of your part b medical expenses.
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i'm sue herera. here is your cnbc news update at this hour. u.s. intelligence officials tell nbc news that there are no known contacts between abdul artan and isis or any other foreign terrorist group. though one of his facebook posts does mention isis. authorities say the somali refugee struck a crowd yesterday with his car and then started stabbing people. a police officer killed that attacker. music icon dolly parton says she is heart broken over the wildfires tearing through some of tennessee's most popular resort towns. it is where her dolly wood theme park is located. about 15,000 people have been evacuated from the area and at least 30 homes and businesses have been destroyed. police believe arson is the cause of those fires.
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protests under way in cities and airports across the country today over the minimum wage. activists are fighting to increase the federal minimum wage to $15 an hour from $7.25. and she lived through three centuries, two world wars and more than 90 italian governments. and now italian emma morano is celebrating her 117th birthday today. she is believed to be the last living person born in the 1800s. one of her secrets for a long life, eat a lot of eggs. that's what she does every single day. that's the news update at this hour. back to you. can you imagine? >> well, i guess we're going to all have to start eating more eggs, that's for sure. >> she eats the same thing every day. that's it. >> good for her. it is working. sue, thank you. we're 90 minutes from the closing bell. stocks higher across the board. the big move is in oil, down more than 3% and has been throughout the day. let's get to jackie deangelis at the nymex for the closing
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trades. >> good afternoon to you, kayla. in case you haven't heard, there is a little opec meeting tomorrow that is what sent these prices down today. about a $2 drop, but we'll close over $45 a barrel. remember, you got the iranians coming out being very vocal that they don't necessarily want to participate, the iraqis are not into this deal either. the russians are saying we don't want anything to do with it. and the saudis are the only ones who are backing it, but they don't want to take the brunt of it because they'll lose market share. so at the end of the day, the scenario that we get no deal tomorrow, that probability is increasing, i will say this, something to consider, according to ken show since 1998 we have seen 15 cuts from opec. a week later, wti is up 60% of the time depending on how steep the cut is. so that's probably what you can expect if there is a deal. if there is not, more red. back to you, tyler. >> jackie, thank you very much. big jump in home prices in the latest report. diana olick has that story. diana? >> tyler, home price gains are
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gaining. and by one measure just hit a new record. the much watched s&p case-shiller national home price index surpassed the last peak, in 2006, at the height of the housing boom. low supply and high demand are fueling competition. which in turn fuels prices. home prices in september jumped 5.5% annually, that's bigger than the 5.1% gain in august, and that is a national record. we all note real estate is local, so let's dig into it. the 20 largest markets were up 5.1%, which was unchanged from august. top gainers continue to be seattle, portland and denver, which are all taking the runoff from people moving out of san francisco. all and all, seven cities reached new peaks adding to those three are boston, charlotte, dallas, and san francisco. markets hardest hit by the housing crash, we're talking miami, tampa, phoenix and las vegas. they have seen big price gains but still well below p
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pre-recession peaks. all the price gains were recorded before mortgage rates shot up in november, the average rate on the 30-year fixed jumps from 3.5% to around 4.25% today. we're already seeing a drop off in the number of people searching for homes and requesting showings, that's according to red fin, prices always lag sales, but no question, higher rates give buyers less buying power. tyler? >> thank you very much, diana. let's take a closer look at how president-elect trump's administration will impact the housing stock. bob wettenhall with rbc capital markets. always good to see you. good to have you here. what do you see for 2017 overall and do you like the builders or do you like some of the suppliers better? >> just taking on diane's comments, bullish about home prices. look for 5% growth. better to buy than rent. rents are too expensive. creating strong demand, high level affordability. right? >> not worried about interest
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rates? >> well, here is the deal. the fundamentals are very attractive. on the margin, stocks exposed to interest rates are going to encounter head winds. if you keep seeing the ten-year in mortgage rates rising. we want to be cautious and need to know more to see how this plays out. we're neutral on the builders, group right now, we like building products. if your home price is rising, you're going to invest back in your house, new kitchens, new faucets, repair, remodel, the sweet spot into 2017. >> you say things are affordable. a lot of millennials would disagree. visiting the market for the first time, looking at how much -- >> are you thinking of anybody in particular? >> i know a lot of people in that age group. >> if you can't make the transition, you go buy a new washing machine and one of the big ben fieficiaries of president-elect trump is whirlpool with sanctions against other manufacturers in foreign companies that are dumping.
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we're dealing with the changing landscape with a lot of byproducts between what is happening in the housing market, which we like the fundamentals, as well as new policy and legislation which could change the commercial environment. so we really like the setup for whirlpool into next year. we like companies like bmch, a small cap building products distributor in atlanta. they got a new product ready frame. and you're talking about some of the head winds with cost. these guys make it more affordable to build. they keep home prices under control. >> i'm just thinking about the national association of realtors, 61% of perspective buyers under the age of 35. i'm wondering if the formula is right for that sector. they have been out of the market for so long. >> right on. the pivot from the home builders is to cater to the return of the first time home buyer. we saw that trend start 2015, accelerate this year, and continue into 2017. the best player in the game, deere horn. they understand how to do that better than anybody, biggest
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builder in dallas and texas and biggest national builder. >> of the builders, which is your favorite? it is that one? >> we think the risk reward is very favorable for deere horn. probably can beat -- >> it was lenore. now dr horton? >> we think they got a great asset base but a lot of things in the back like multiple family. and we think the investors are less excited about the potential for multifamily, the rental market, much more excited about single family detached, and potential to capture the entry level buyer. that's the -- >> and masonite. >> masonite, still one of your favorites. >> these guys are smoking hot. excellent valuation, very attractive. and the best growth prospects of any companies leveraged to repair an remodel spending. top flight management, 40% market share in the united states, the number one position in the uk. execution is consistent. grade cap allocation, this isn't a name we bring up to investors
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all the time, nobody ever knows it. that makes me more excited. stocks at $65 can go to $80. bmch, 18, can go to 22 or 25. whirlpool at 165. we see a lot of upside to a lot of names going into next year. especially as circumstances change. >> a lot of good information there. thank you very much. >> thanks again. appreciate it. it is time now for powerhouse. this is a very cool new weekly series that gives you an inside look at the homes of celebrities, sports figures, and ceos, the homes you want to see inside of. today we're taking you inside johnny depp's penthouse, which is currently on the market in downtown l.a. perched on top of the famed art deco eastern columbia building is a $12.8 million pad which is owned by actor johnny depp. the 11,500 square foot apartment
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is a collection of five separate penthouses. the comprised digs -- >> each one is lived in like rooms in a home. one is the main master, den, living area. another is a large open space for entertaining. another one was used for dinner parties. it has a really unique dining table in the middle. and a mural painted on panels of the wall by brazilian street artist. >> every corner of the actor's nine bedroom, 14 bathroom home showcases depp's eclectic style. there is a diverse art collection. several private terraces reveal stunning views of downtown los angeles. and it is all just steps away from the building's rooftop pool. >> beyond the fact that there is a lot of attention because it is johnny depp that owns these, it is an opportunity for somebody to own seasonally an entire wing in one of the most architecturally significant buildings in los angeles.
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>> and we do have some updates on all those depp duplexes. two of depp's five penthouses have already sold for more than $5.5 million combined. he was asking $12 million for the five, he sold two for $5.5 million. if he gets the other three, for their asking price, he will be above $12 million. very smart of him not just to buy this for $7 million, in 2008, and then eight years later get $12 million for it if he does, but to split it up. what is weird about this -- >> what is weird about it? >> he bought all five, and he lived in all five at once. this was his main residence, but never put them together. so he would sort of use one set of apartments for his -- >> what? like run down the hall to his bedroom? >> exactly. one apartment was his dining area where he would throw parties and dinner parties, another area was his artist room where he would hang out and people would paint and dance,
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and the other area was for the family living. so it was this warren of duplex penthouses. >> another one where he would go in the doghouse? >> yes, exactly. exactly. which he clearly was toward the end. what is also interesting about him, he's a smart real estate investor with this one, but has an entire village for sale in france. >> i remember that. where is he going? >> he has other places -- he has pads. he'll be okay. he'll be okay. >> all right. >> what else are we going to see in the new series? a little tease? >> we have great pop stars, we have actors, we have big ceos, just really interesting and not just sort of $1 million homes by the co-writer of some hbo series, but really big homes that no one else has ever gotten into. it is going to be fun. >> thank you. >> cool. >> let's go to a news alert with dom chu. >> you know who has the money now, it appears to buy some of the great big penthouses, mets
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outfielder sespidis. the mets have agreed to a 4-year, $110 million deal. average annual salary, $27.5 million. a guy who was a very, very hot commodity given the free agent market now. 280 hitter last year, 86 rbis. a big deal. back over to you. >> i just did the math on that, though i thought it was 22.5 million, not 22.7, i know he was hurt last year, 86 rbis, 27 million bucks, if he plays a full season, call it 500 at bats, only done that twice, that's $45,000 every time he steps up to the plate. >> that's a pretty -- >> strike out, walk, whatever. 45 ,000 bucks. 270,000 for every rbi last year. >> means he can afford some crazy penthouses that robert frank was talking about. >> he can buy johnny depp's place. >> aren't the mets still paying
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bobby bonilla, who retired? >> they are. >> yes. >> resident mets fan. >> all right, dom, thank you very much. energy, the best performing sector so far this year. but with oil's big drop today, and opec possibly unlikely maybe to cut production, we'll see, if they can make a deal, can you still make money in the oil space? trading nation team will tackle just that next. ♪ ♪ is it a force of nature? or a sales event? the season of audi sales event is here. audi will cover your first month's lease payment on select models during the season of audi sales event. (bing)
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the majority of the energy and oil stocks are following cro crude oil prices lower today. we have rich ross, dennis dabbot. dennis, oil is down. most names are down. do you view it as a buying opportunity or wait and see? >> i mean, jackie was just on talking about there might be a deal next week or tomorrow. the one thing i want to be sure to see is experts after the brexit election. who knows if there will be a deal tomorrow. one thing that stands out to me is every one of the oil stocks, explorers, drillers, pipeline people, are moving linked together, joined at the hip.
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what we call 100% correlation to each other. the opportunity there is to figure out the best in breed within the xle and then just sell some options in the xle against it. do your homework, do your due diligence, figure out what are the best stocks and take advantage of this movement back and forth in mass around the xle. >> okay. so let's go ahead and look at the xle from a technical perspective. how does it look on the charts? >> clearly opec presents a binary inflexion point. if we remove that from the equation, the technicals of the xle have a lot going for them. i would be a buyer in here on a purely technical basis. when you look at that shorter term one year chart, you can see today, the gap down to the 50 day moving average around the big round number at the 70 level, nice bullish reversal, even with wti down 4%. i think that bodes well going forward. when we zoom out, i think this is where it gets really interesting for the xle. look at this, up 40% off the lows, still the best performing sector on a year to date basis in the s&p.
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and this is against the backdrop of a stronger dollar, higher yields and a eroding deal if you will. bear in mind, brian, look at this breakout here, last week pushed out to a new 52 week high, got to the pullback to the neck line or that break point, which is sort of textbook pattern, that creates a nice buying opportunity here and i would be a buyer of the xle, 40% chevron, you're getting the big boys here. i like what i see. >> likes what he sees. rich ross, david davitt, thank you very much. "power lunch" will be right back. and now, the latest from trading nation .cnbc.com and a word from our sponsor. >> sometimes going with the crowd makes sense. following an established trend while carefully managing downside risk is favored by many well known traders. an old adage on the floor is, the trend is your friend.
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a new survey out on ultrihigh networth investors. we are talking about the $25 million plus crowd.
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the president of spectrum group put out the report. george, what are the ultrahigh net individuals asking financial advisers? >> after the election they are getting guidance from what to do the next months. these were very optestic investors relative to the u.s. economy. very interested in u.s. equities. this is the very wealthy americans. they tend to be big drivers of the market. so equities specifically or real estate or other hard assets. >> they have been invested in real estate. they are entrepreneurs, business owners but very high percentage were u.s. equities and international equities are another favorite. >> looks like they own a little bit of everything. >> they need help in terms of diversifying assets. international equities have become popular. >> with all due respect to the
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president-elect everyone is optimistic. people were getting more optimistic months ago. >> they tend to take long term views about investing just because they can. this is an interesting group because they are youngest investor group that we researched. younger folks have a different view about the outlook of the economy than someone who is 65 and 70 and 80. >> how do they get their money? >> hard work is one. the younger folks are starting to see inheritants become a major factor and then stock options. these are folks who are executives, doctors, professionals, lawyers and business owners. >> these are people who are trying to sustain welt. what about for people who want to create wealth? >> these folks say it is about investing. it is about being cautious from an expense standpoint but they
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do like folks to be very diversified in what they do. international investing doesn't scare them. >> i know this report came out or at least was surveyed in the summer. tax outlook? >> they are always worried about taxes. they also realize that they have to pay taxes given how wealthy they are. >> do they feel taxes will be raised on their bracket? >> i think they suspect they will be. we didn't ask but i'm sure they do think they will be. >> good to see you and a very fascinating survey. check please is up next.
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what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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only at td ameritrade. check please. >> time now for check please. hamilton with gross of $3.3 million. the top ticket price reached nearly 1,000 bucks. we talked about how trump's tweeting can effect national security. in this case a negative tweet made this a record-breaki ing show. >> most of the original cast has left. i'm a hamilton freak. he was aaron burr in the or original. >> i'm not throwing away my shot to comment on the mets latest deal. cespedes. i wonder if sports salaries are the next thing that people talk about. they have gone under the radar. it is getting so expensive to go
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to ball games of any kind with kids. and the salaries relatively mediocre players. i'm not knocking cespedes. you get a pitcher with 4.2 e.r.a. and making 15 million a year. i wonder if this is the next thing that people talk about or if i am just an old man venting. >> get off my lawn. >> there are a lot in every sport. let's take another look at that lovely lady. 118 years old. 117 years old. emma morano. think of all the things she has seen in her lifetime. >> we are excited about instagram. a new app. she saw the birth of flight. what's that? >> that was the ultimate new app. happy birthday emma who eats
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eggs and cookies apparently. >> good for her. >> as we all should do. >> right now? >> there are eggs in cookies. >> thank you for joining us. >> thank you for watching power lunch. "closing bell" starts in two seconds. >> and welcome to "closing bell" yes we match again. i don't know how this happens. oil prices down again today. crude falling on doubts here we go again over a potential production cut agreement during tomorrow's opec meeting. we are live in vienna with details. the trump rally back in action. nasdaq hitting all day intraday high. we have money managers saying there is still a lot of room to run. they

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