tv Power Lunch CNBC December 15, 2016 1:00pm-3:01pm EST
probably continued to be b home runs is because business spending and consumer spending, both lifting at the same time, is a big deal. >> doc, final trade. >> bed, bath and beyond. unusual ak hit next week. >> thdoes it for us. >> starts now. >> and we will see. i'm tyler mathisen, welcome, everybody. here is what's on the "power lunch" money for thursday. closing in on 20,000. very close. 100 points away. is wall street set to put janet yellen's influence in rear-view mirror? going to dig in on that straight ahead and a hack job. yes, another one is yahoo!'s deal with verizon in jeopardy now. follow iing another massive dat breach and when pigs fly. some bacon news, ladies and gentlemen, for all you stresseded out travelers. "power lunch" begins right now.
>> welcome to "power lunch." we have three hours left in the trading session. stocks are pushing higher. as we talk u about the path to to thourk. all of this as the ur o is sinking to a roughly 14-year low. last i looked, it was 104. posting solid gains at confidence soars to its highest level since 2005. a lot because of the election. let's get more on this big news. bob pisani is live on the floor of the new york stock exchange. >> we are, indeed, michelle and we're losing steam in the middle of the day. still up. take a look at the dow. slightly different pattern than in the last week and a half. recently, the dow has tended to rise in the middle of the day after the european close suggesting there was selling pressure from europe. the opposite is happening today. too early to say this is a change in the pattern. none is less, the doup leadership is in tact, centered around financial stocks.
new highs today and jpmorgan and goldman sachs. two stocks, 52-week highs. these four stocks alone are 60 points in the dow, b so a good 60% of the move up due to these four stocks. remember, they were laggards in november, but have been strong in december. they, too, are adding to the dow. the problem is the industrials. we have had a stall in the space with ge, boeing, 3m. 3m is down three days in a row. boeing and unit eed tech are do two days in a row. it's what's holding back the dow right now. the overall market, will higher rates and the stronger dollar really hurt the rally? 14-year high. you saw michelle talking about the weakness of the oueuro.
that includes general electric and emerging markets. we see a dip in china overnight. so, a lot of uncertainty in the market, but still up for the day. wak to you. thank you very much. let eat talk about the march to dow 20,000. with us, matt mailly. he says a 10% drop could be coming. also with us, jerry casselini. jerry, i'll begin with you since you're sitting two feet from me. you don't think the dow is going to stop at 20,000 you think it could be up to 30. >> because we haven't gotten the cycle started. last eight years, anytime -- >> haven't been in one? sfwl not close. we are still finishing the financial crisis. from a risk perspective and the average investor is told to fear big market on the whereupon side. the cycles end when stocks are truly expensive, when earnings have exhausted their run, which we haven't started.
and if you look at what this thing could do over the next three or four years, market really -- >> and you see a powerful demographic. >> this is the most important. 1954, 1984 and today. the periods of time when the mid 3 30-year-olds were the largest cohurts. they have all these things you have to consider. you can't just decide you're going to go out to dinner. you have a child, a home, college education. when the populations reach those level, traditionally, big economic investment cycles begin and follow. >> so you're not saying they're going to buy more stock. you're saying just because as they get bigger, it has an economic impact on the entire economy? >> if you look at the vest nmt the stock market, the lowest of all time for 30-year-olds. we don't think that's going to stay that way because they're going to follow the same type of patterns they have in the past. it's an exciting period. >> matt, jump in here.
you see a hiccup coming. where does it come from and why? >> i think it's probably going to come from the highest interest rate situation. the reason why ai gree that the economy is going to pick up here as we move into the trump presidency, believe it or not, we could see a market decline even though the economy is going to do better. for a period of time, the economy and the markets have diverged for a little while, but since the financial crisis, we've had look at the, sideways, barely earnings growth has been mediocre and you take away the financial engineering hadn't been good and gdp has been the worst since world war ii. yet the stock market has really taken off because this central bank liquidity. that's taken the stock market above its underlying fundamentals and not just the liquidity, but the leverage. as rates move higher, i believe
that we'll see some unwinding of that leverage. so, even though we're kind of going like this and we'll meet in the mid. i think we'll have to come down at some point as we move forward. face it. >> what level of interest rate -- that concerns you? at what point, you're talking about the ten year or the fed does in the overnight rates? what's the number you think derails? >> well, it's always hard to know. but the one of the key things is, look, we only raised interest rates by a quarter of a point last year and look what that did to the market. b i believe that the unwinding of leverage played a big role in that. but leverage is played a much bigger role on the way up. everybody wants to think their great analysis took the market higher, but the central bank liquidity has taken it higher than it otherwise would have gone so as it pulls back, ipg the market will come down. >> that's healthy. >> let me throw in a question alongside that.
matt seems concerned about the level of profits. if if you get a major corporate tax cut, the level of profits is going to go up. >> profits are going to go up. you mentioned the whole point about the price of oil, which had a big, depressing effect on gdp in general. that's recovered. i think it was fascinating today that home depot said interest rate, 4% from now. not 40 basis point, but it would be 4% before we would see a change in pattern. the point is the cycle is the most important thing. it's not about what we're going to do fed meeting to fed meeting or election to election. this is a powerful underlying demographic. >> as interest rates rise, they become competition to stocks. at what point does a rise in interest rate hurt the rally? >> minimum, 3.5% on the ten-year. and possibly four. that's about a three-year cycle
to get there because there's so much buying power. >> so, we're at 2.57 right now. we've got a long way to go and reality is investors are already in bonds. the deficiency is their exposure to the equity markets in general. >> address matt's spot on point or idea, which is that the level of liquidity that has been pushed into the market, that's going to -- by individual investors. >> okay. that's the point. it's the fed, for eight years, now it's going to be pension funds. >> so, jerry says koent worry so much about that because the individual investor is going to come in and supply this liquidity. that the fed did through the quantitate easing. zblt the one thing about higher interest rates, the impact it will have on the economy's slowing growth and impact on the
market, are two different levels. it takes a much lower rise of interest rates to impact that leverage and cause the unwinding of leverage. it is powerful here, what jerry talks about. we are going to be moving from a situation where we'll with driven by a central bank liquidity by the economy. that's going to be great for the longer term. i think we'll get a pullback or correction, which are always healthy. they're normal and healthy. that will be positive. let me finish. as we make that transition, it's going to be very important i believe i think we're seeing a bottom for stock pickers. the central bank liquidity has been a big imptous to lift all boats and now, when it's going to been solely by the economy, the economic growth is going to work differently for different groups and different companies within those groups, so i think you're going to see stock pickers make a big come pback. >> sounds like you disagree with
jerry's idea of dow 30,000. >> that can happen. i think it's going to take, it's not going to happen in a straight line and i do think one thing, too, is right now, we're at a multiyear low for the cost of buying insurance and buying puts, of hedging your positions. we have almost zero risk of geo political risk. geo political risk is being priced into this marketplace, so even if jerry's right and we go up 15%, if you buy insurance, it's so inexpensive, your still going to go along with it, but you'll sleep well if we have a blow some place else. >> both agree it is going to be a good year for stock pickers next year. >> year after and year after. >> i'll take the other side and i bet we'll be sitting here and the index will have outperformed. >> and drinks on top of it.
it will be a "power lunch." thank you guy, appreciate it. >> thank you. >> news alert on facebook. how it's tackling fake news. right to the julia boorstin. >> facebook is targeting hoaxes spread by spamers. the company's making it much easier to report hoaxes and mark news at fake. facebook's working with third party fact checking organizations to flag stories and explain why flagged. dr they can't be made as and promoded. they've working on these to minimize stories that seem misleading and to shut down the financial benefit of fake news. it's eliminating the ability to spoof domains. with shares down about 3%, bucking the market's rise, we'll see if these steps critics as well as investors. >> thank you very much. from los angeles. look who's come to the table. you made it. >> hi. >> from the new york stock
exchange. >> i love the green. we're coordinated. where's your green? i know you have one. >> i do. 20 thourk. >> good to have you. >> we have 20 thourk, i',000, i on. yahoo!'s hacking headaches could be turning into a giant migraine. the fbi launching an investigation and now, report that is verizon may scrap its deal with yahoo! all together. very latest on this story coming up and the other hacking story that everyobody is talking abou today. was vladimir putin personally involved in hacking the u.s. election? don't go anywhere. "power lunch" back in two minutes. and can you explain to me why you recommend synthetic over cedar? "super food"? is that a real thing? it's a great school, but is it e right the one for her? is this really any better than the one you got last year? if we consolidate suppliers what's the savings there?
the white house saying within the past hour, the fbi is now investigating the data breach at yahoo!. follows reports that verizon could back out of its deal all together because of the breach. john fort joins us now with more. good to see you. been so long. >> so long. this is an important story, not just about the password, it's about the personal information, the password question. a lot of people tell the truth, what was your first car, favorite pet, use those at cross sites, now, that information is out there. so for folks at home, not only do you need unique passwords,
you need to lie on the questions in order to keep them secure. this having an impact on yahoo! stock. fears that the verizon deal could fall apart. talk that verizon is trying to protect themselves from legal issues. of course, yahoo! has been under some criticism here for not investing more over the past years google and facebook and others have done. marissa maier has been focused on trying to get the products up to snuff. now they're being hit on security as well and who knows. who other hacks resulted from this hack. because once you get one bit, you can get others and e-mail
hacks seem to have been the story of 2016. >> this is to yahoo! as bad burritos are as to chipolt their security is better. they've got more resource, more money. some of the best people focused on these things. difference is chip ooltle was a high flying company. >> it is a real brand risk. >> they just didn't feel like going anywhere else. not using two factor authentication. maybe they'll start now. >> is it possible this is just verizon trying to get a better
price? is there a lower price they can pay to off set the potential liability? probably impossible to know at this point, but this could be just a, an m&a tool as they say to get a better price. >> you have the first half a billion hack and they say well, we'd like a lower price. you get this billion hack, how can you not ask for a lower price. the brand risk alone, saying we're going to buy this thing and spend billions of dollars and oh, by the way, you're associating it with with being a risk to your digital safety. >> he still has an outperform on the stock. managing editor at rico. answer michelle's question. does this put bir deal at risk or another blunt instrument? >> i think it's the latter. this is you know, a way to reduce the price. at the end of the day, yahoo! verizon wants its property. they want to put it together with aol. they want to invest in
technology across both brands. they want to build an ad stack to try to be competitive with google and facebook, which is a very lofty goal and so, ultimately, you know, you leverage this. if you look at some of the data out there, you know, if you look at the download ranks, yahoo! app bottomed out in july of '16 and had come back, so, as it was yesterday, the level was somewhere there. so clearly, this will have an impact, but i think what's interesting is you know u, a billion right and if you, the last cited number was about 225 million active mail users suggesting that a lot of this is inactive accounts. >> i hear you. let's hope it's inactive, but it to tyler's point, brand damage. what is yahoo!. talked about the keywords there, ad technoloxt message.
if the deal is is b about the back end of ad technology, does u this breach? >> damage anything other than the fact we're talking about it. >> so, again, what is verizon looking to buy? yahoo! finance, sports. there's media properties. they're looking to get all of the data with those billion people. the 230 active. and the rest of all those people, who are inactive, but still have a lot of data with that. then make the right investment. look, it's clear. yahoo! underinvested in both security and we don't even argue in ad technology. and verizon ultimately sees value there. so, let's go over the math for a second. say they take a billion dollars away from purchase price and after tax basis, that's 62 cents a share. look at what wr the stock is down today. >> i might argue that inactive accounts are worse in this case because if your account is active, perhaps you're more likely to be updating the password, changing it, not using it with the g mail account you
switched to instead. if it's inactive accounts, those are the people who aren't paying attention, right? >> and also, as you pointed out earlier, the challenge questions like you forgot your password, updated yahoo! with your favorite car, where did you live and grow up, that could be used for other accounts. so i think that was the big state. this is the big state for verizon, which is what is the liable ility in the future they want the ad tech because they want to sell over the top television on their mobile devices. they need ad tech to sell adderer sizing, that's why they want yahoo! so badly. >> i don't know if you remember when we launched the cnbc iq 100 index. yahoo! was in it. google was not. yahoo! was in it because the originator said yahoo!'s got a lot of intellect yul property that is undervalued. they've been suspicious that
verizon doesn't want all these thing, but there are these valuable patents. remember we saw with aol for example, so maybe there's some other reason that maybe pushes this deal forward. >> that is true. there is some value there, but you've got to be careful about that value because that was the story about blackberry and those patents, how valuable they are. the iphone and the success of that pretty much obliterated the you know, relative value of those, so i'm not sure which types were being valued there, but the cloud and mobile have really changed the game in terms of what weem are interested in and a even the methods of doing certain things online. apps that people were looking to do. in this case, those patents magt not be as valuable. >> okay. thanks, guys. jason and john, xwood discussion. speaking of yahoo! cnbc and business alliance have a -- now
to the other hacking story. he joins us with the latest. >> that's right. nbc news reported last night this u.s. intelligence officials have high confidence that vladimir putin himself was involved in the russian hacking. they're reporting that putin personally directed how the hacked material was used that was stolen from inside the united states. they're reporting that the cia assesses, a term of art in intelligence, assesses that russia wanted trump to be elected. the russian government responded to that story today. putin spokesman said nbc's report is laughable nonsense. unquote and donald trump also reacting to some of that in a tweet say russia or another entity was acting, why did the white house wait so long to act, why did they complain after
hillary lost. josh earnest pushed back intently saying that in fact, the u.s. intelligence community did put out a public statement in october and a lot of people were protesting be before the election, so this one is gaining traction as a news story, as an intelligence issue, the question here is what difference does it make was wha the motive was and how can the u.s. intelligence community respond and prevent this from happening again. >> the effect is being intensely debated. on one side, the argument is oh, the election would have gone otherwise. if not for this. but of course, the republicans say keep dreaming, the election was going to go the way that it went regardless. >> this reporting is about vladimir putin's motive here. why did he do this? to just sew confusion in the u.s. democratic system, so disgrace the united states bf the world? is or did he do it with a specific intent of trying to push donald trump into power. there's no analysis here of whether or not putin's
intervention here alleged as it is was affected that result. had the result that -- >> two questions. when was the first u.s. government allegation that russian intelligence or russians may have been involved in hacking into the dnc and when was the president's first mention of it? i believe it was in the summer. that's number one. number two, of all things that were out there and published through the wikileaks, was any of it all that damaging? >> there were a lot of reports in the media going back to the summer and i can remember sitting in philadelphia during the convention and i believe it was at that time, around that time, that donald trump came out and said russia, if you're listening, go ahead and go get those hkdsillary clinton e-mail. that was on his mind as far back as the summer. the u.s. intelligence community as an official body and i'm
going to have to go back and double check my timing on this, they didn't put out an official statement naming russia until i believe it was october that official statement from the intelligence community came out and had everybody on it except the fbi signing that document. that's part of why you're seeing this dispute between the cia and fbi. the leaks seem to indicate there's some discord between those two. >> but interestingly, it was the fbi that was first on to the intrusion dating back to 2015. i believe this came up at aur cybersecurity conference in boston. by the way. >> we talked about it extensively. "the new york times" had an incredible anecdote in their reporting this week in which they said that the dnc staffer who got a phone call from the fbi wouldn't figure out what whether the official was a fbi
official or a prank call. he wasn't confident he was being given real information. >> still ahead, why this little piggy went to the air pit. airport. bacon bits on the "power lunch" air pit. that's more appropriate. and we're just. >> newark. laguardia. air pits. just about 90 points away from dow 20,000. will we hit it? we've been asking that for oobt three and a half days. "power lunch", not an air pit. we're back after this.
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i'm sue herera. syrian president assad says history is being made with the defeat of the insurgents in aleppo. in a video message posted on his telegram channel, he said what is happen is bigger than just congratlaces. a portland schoolbus lost control on a snow covered hill, crashing into several cars at the bottom. it started snowing in portland after noon on wednesday causing trechous conditions all over the city. luckily, no one was seriously hurt in that accident. beginning tomorrow, t mobile is offering one year of directv to at&t wireless customers who switch, but to qualify, at&t
customers will need to switch from at&t and add two lines to t-mobile's one. aaa says more than 103 million americans are expected to travel for the holidays this year. about a million and a half more than last year. most will drive and pay the second cheapest holiday gas prices in nearly a decade. ty, back to you. >> thank you very much. if you are uneasy about flying, bacon bits may be the answer. not the tasty treats, but this little piggy, which goes by the same name. there it is. >> how nice. >> not a good name for a pet. it's the latest edition to the animal ambassador program at the albany airport. the only pig in a crew of 30 canines helping travelers, this is breaking the glass ceiling right here. this pig is doing it. breaking into a world owned by dogs.
people have flying anxioeties. >> that is so charming. >> a, it snows nine months a year. you're fly ng a blizzard in march. >> or delayed for hours. >> smaller, regional jets. >> with with camera ems. >> dressed for the holidays. here's my new pet cow. steak. >> dollar marching close to parody with the euro. is it going to get there and should that change your investment strategy? right now, 1:04. plus, we're hitting the energy market as oil posts with big turn around. "power lunch" will be right back. happy anniversary dinner, darlin'
we are in dow 20,000 watch and had a run about two hours ago. kind of p pulled back. still, the dow hire. up 1178 points. 19,910. your high was yesterday just before the fed, we got about 34 points way from that. 19,966. couple hour os trading left, the trend continues with the banks and financials, your two best
performer, right now, jpmorgan chase and goldman sachs continuing the dwolden run. >> so, rising interest rate heers kauing dramatic impact overseas. the euro now falling to 1 pn 03 almost government bonds plunged today, prompting the central market to step in. the chinese currency to an eight month low. should investors see this as opportunity or a big cell signal. bring in tim see more. i want to start with europe because it's much easier for an -- which is still so walled off to investors. >> i think europe loves this. when they're startding to make
noise to have the currency stay weak. if they were tapering, we might have a situation where i think the euro would have been rallying against the dollar. so, european exporters trade better. look at the breaking out. the rates higher. the move higher in rates is actually higher than that in the u.s. and that's been a relief for the banks. so better valuations in europe. export economies. this is good for europe. >> so, an individual home. should they worry about the risk they might face as they buy an exporter and the euro gets weaker and weaker? >> right, so look, there are hedged etfs you can play. it's the hewg. you can hedge out the currency risk. 105 break last night is a very important level on euro.
ultimately, the weakness is the dollar strength and ultimately, that's a major problem in this country. we're not there yet, but the plaza accord in '85 was the biggest dollar intervention under the backdrop of a similar apech by the administration to raise the dollar. >> they can have a lot of internal turmoil. how much direct exposure does anybody have. >> and the chinese bond market was halted after the move down. have been very painful for most over the few years and i would argue that the move in chinese ten-year, went from about 265 to 338, 340. been less than the move in the u.s. tenure. i think ultimately, china has bubbles in their economy, but to
say last night, it's more than moving sideways over the last two years. there's a pick up in industrial activity. >> thanks so much. >> oil prices down b about a half a per spent since monday. the tighter oil market in 2017 because of those anticipated output cuts. let's bring in helena croft. we can talk about the dollar, oil price i but i want to ask you because it just came up, what people in your world are saying about rex tillerson. >> he knows about the most dangerous parts of the world. yemen. look at exxon's op races. chad, venezuela, indonesia, so, she has a good read on what is going on. also a company like exxon. they have good department. if you have to have the read,
they talk about the oil companies. >> you could take the country's intelligence service and oil company, lay them on top of each other and they were virtually the same. they have a lot of knowledge about the darkest parts of the world. for their own internal intelligence unit. >> so, it looks like a curious choice to a lot of people on the outside. never worked anywhere but an oil company. has no experience in diplomacy. >> but i think he has experience. >> with some of the most flamboyant and difficult leaders in the world, so i think if you are a realist on foreign policy, rex tillerson is your guy. why james baker pushed for him. sfl and he will know the players saudi arabia.
>> qatar. yemen. nigeria. he knows how to do business there. >> if you've negotiated a deal with putin, are you a friend? marco rubio said a friend of vladimir. are they friends? >> you could say look at everywhere he has done deals. i think obviously as a good working relationship with with putin and igor. >> it's somebody who's outcome is determtive. he wanted something for exxon. will burr ross wanted something in his deals. looks like trump is doing something, instead of diplomacy being talk, he's going to put the beale diehl in it. >> when people talk about the trump foreign policy, if he brings sb in there, can you bring -- >> do you think let's take their
oil comment about the middle east is quoipg to come back to bite him? >> they can be pragmatic as well. if you're saudi arabia, do you think they're not going to be b pressured as much on human rights, be tougher on iran. can saudi arabia get something out of the the trump administration? >> i've seen rex tillerson speak and his view of what energy policy should be. isn't energy independence, easily accessible, good prices. does that run counter to if you decide to put sanctions on russia because of something they've done, that runs counter. what have you thought energy policy should be. >> well, what's interesting is with the trump presidency, one of the places you could see sanctions coming off would be on russia. we thought this would be a place u.s. oil companies were at a disadvantage in terms of operating there because the
stapgss. we've looked to the trump policy changing. iran will be interesting. can't go back any way. >> we thought we were going to talk about. this, i hope the viewer agrees. the rising dollar, your forecast for oil next year, give us what it is and the stronger dollar if it continues to strengthen, affects that changes that how? >> we have a slow grind higher. what we think the opec cut did was firming the case for 50. slow grind higher to the 60s by q4 of next year. dollar strength is a macro head wind but because the fundamentals are improve, we don't think it changes the story. we have to say the dollar goes higher, but i think it's more of a macro trading story.
you're paying all the structural ke cline. does this really hurt in the demand for oil? chinese demand for oil. u.s. demand. we don't think so. we are more worried about what if libya comes back in a big way. what if we don't get full opec compliance. >> thanks. >> appreciate it. >> some opportunity just for you. the big wall street calls you need the hear about today. street talk, it's next, but first, rick santelli at the cme for today's bond report. what's move something. >> yield curves moving pretty much every market's moving. conventional wisdom. flattening yesterday, true, but there's a recalculation. we moved down to 126, but let's open this chart up, shall we? if we go back, we're at the steepest we've been in a year. 133 was friday's one year high. we're at 132 now.
this is the price you pay for being behind the curve as the fed. the long end has to wake up more. in terms of foreign exchange, big topic. these 2,000 chart, see the left side sh that's 120. can we get up to 107 or 108? many think why, because of the five year chart t 105 violation is significant. if you think parody's pob, so is 107, 108 in the dollar index. don't touch that channel remote because power will return in two minutes.
to the bad. newmont mining. it's down two and a third percent. ugly day for pbh. worst performing stock. all right, thank you. now time for street talk. daily calls on the wall street stocks. >> first is caterpillar. clsa, $105 price target. 94.30. they say end markets look to be approaching a trough in early next year. in other words, start buying more after that. they note that the recent big restructuring they did should reap benefits not just next year, but in 2018. analysts does acknowledge the valuation appears lofty. but they think investors should benefit from the cyclical upturn, especially if we get big infrastructure spending under president-elect donald trump. >> it was a stock that was let,
a company left for dead a couple of years ago. all right, the next stock is two. lalaska air and et jett blue. part of a big sector initiation. the analyst says we should shed old cliches. outperforms focused on the last two, alaska air, price target implies 40% upside. says no, yeah, this is not a small regional carrier anymore after that virgin america deal and should be able to cut cost. jet blue, a $33 target implies about 50% upside. likes the growth prospects. >> everybody's more optimistic about the economy since the election. third stock is valiant. not so optimistic. morgan stanley downgrading. in august, they had upgraded the stock. expected their business to
stabilize. also thought they'd sell a bunch of stuff. helping hand iing value. since then, hasn't happened, so they say okay, they no longer believe that shares can outperform. suggest moves the shrines while they wait for future corporate updates. they've lowered the target from 17 to 25, which would be upside from here. 13.53. ceo coming up today, p 3-:00 p.m. eastern. >> i did math, we're down to 87% a year. if the stock went up 10 to 15% for a decade, every year. you'd still be well down. yeah. wow. last stock, clcd. your under the radar name today. bio tech working on a treatment for migraines. it's a big deal. barclays starting coverage of the buy rating and a $45 target. about 25% upside.
they see the possibility for 700 million in sales from last minute to end, their migraine drug. that is $40 for the currently orally delivered version. another 5 bucks a share if the company can can create an iv. i'm sure you know people, i know people. >> i get them. >> you do. >> yep. i'd love it. yes. >> got to get it to work. that's your call of the day. >> thank you. still ahead as the dow closes in on 20,000, we're shy right now. but close. why one strategist says stocks are hitting much higher. plus, today's power house, we'll take you inside one of christie brinkley's hampton homes. she has more than one. "power lunch" will be right back.
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earlier on. bank of america, merrill lynch upxwraded to buy from neutral, crying lower tax, and higher spending to come under president-elect donald trump. these stocks were among the names to help lift the foonl etf. tracking for its best days guys, since december 1st. >> thank you very much. dow moving away from the 20,000 mark. take a look if we might. off those session highs. we were above 19,900. still higher on the day by about 50 points. about a quarter of 11%, so we'll see wa wr it goes from here. often we've sparked a rally in recent weeks. time for our pour house. it gives a look at the inside of the homes of celebrities, sports figure, ceos. today, we take you into the home that christie brinkley has lived in for 18 years.
>> this 19th century home with old world home has been meticulously updated by a supermodel owner who's lived in it for almost two decades. tower hill was named for the hill top compound's five story tower. >> from the tower, you can see the ocean and you can see all the way to connecticut. the 8,000 square foot main house is overflowing with her personality and the hand crafted details reveal her love affair with seashells! her work is throughout the whole house. it really carries her character. she has her detail on everything. >> above the fireplace dated 1891 is the uptown girl's award for her music video with billy joel. steps away with is a four bedroom guest house and large barn which housing an art
studio, where she creates much of the a artwork in her home. meanwhile, the bathroom has a lot of classic close ups. it features a 75 foot pool and tennis court. >> this house is the e pitmy of the hamptons. >> now, this is not the only home that christie brinkley has on the market. she's looking to sell her beach front property in sag harbor. looking to downsize because her kids are grown and only one still at home. the other home for 25 million. she bought that for 7 million in 2004, so she's a great entrepreneur and probably a great real estate investor. >> not yet. >> uptown girl. >> if you're watching, there's still time. thank you. >> still ahead, why what happens in vegas may no longer stay in vegas, at least not if you're staying at one particular hotel. and it's the most important time of the trading day.
welcome back. thanks for joining us. here's what we are watching this hour. the rally back on track, but losing steam, yes. dow 20,000 remains in our sights. yesterday's rate hike fueleded losses, wiped out what we had. we're trying to get it back. build or boom. homebuilder confidence soaring to its highest level in more than a decade. housing stocks losing steam. is this the best time to buy in and goldust. all i can think object is goldust woman. in danger of losing its gains. t. >> two hours until the closing bell and we remain on dow 20 thourk watch even though we've lost a little traction in that direction. the dow at 19,844. up about a quarter percent. above 19.9 about 90 minutes ago.
dollar index soaring to a 14-year high. up again today and yields on the ten-year, topping 2.6% off just a little bit now. that's the highest level since september of 2014. check out the big movers now. financials are leading this rally. airline stocks flying high. led by alaska air. those stocks are up to 4 and 5%. interdigital, flowers foods by 5%. >> there's been a trend when rates rise, stocks tend to get hurt sometimes and while yesterday may haven the trend, our next guests are here with great news. let' bring in jonathan, paul
hickey. there have been times in history where stocks and rates have gone up. how do you see this environment because you can frame it ways. there's a lot of good things happens with the economy. >> this is what i wanted to hear from janet yellen yesterday. because ratd rs going up, people will be able to save for retirement more carefully. their businesses will take higher rates as a signal that they're getting better. araising pushing into rates up, which is a sign of success as opposed to what she said was you know, consumers can probably handle 25 basis points as if higher rate rs the enemy. >> in 1994, the fed raised rates
and all 1995 brought was a 3% jump for the dow. are we freaking out too much? going from a d minus to a d in rates. we're still at three quarters of 1%. >> go on a limb here. if rates aren't another 50 or 75 points higher in a year or 18 months, the market will not keep pushing higher. >> and i think that the trade in financials has longer to go. the key here is long as interest rates and the reflation trade is mooving ahead. >> we sate over and over. >> it means inflations are hawaiiing. that's pushing rates up. making the banks healthier. that's what it is. everything else is just a play
on that theme. >> paul, is there a point at this john than's hypothesis that rates suggest good things in the economy and we ought to be happy about that? a little bit of inflation helps corporate profits and so forth? is there a point which rates get in the way of stock market progress? >> yeah, i mean, obviously, there's a point, be pu i think it's far from here. during this bull market, 100% of the gains in the stock market have come during periods when interest rates were rising and during this bull market, it's ranged from 1% to 4%. so we're still in bunker mentality rates here and i think you could see further upside here into the three percentage range until investors spook out about higher interest rates. the field curve steepening, that's good signal going forward and it's a sign that things are going to be better down the road. >> what about overseas. should you keep your money here
do midwestically? once again, mexico has had to raise rates. so many people made so much money over the last ten, 15 years by going to the emerging markets. is it time to bring the money home to the united states? >> weather been pro u.s. first. froms looking over to european equities, the first pmis were all positive in the -- their exports are going to pick up with with the euro being weak here, so i think if you look to europe, emerging markets, they had a long run. you know, this year, they had some big gains, so i think it may be a little too early there, but you know, looging over to other developmented markets in europe or japan had been positive. >> most people have diversified
portfolios. says do that. that means bonds. over the next year or so. i need to be ready for that. what should i do? >> if you're asking me a question, stocks or bonds, i think that for last frankly since the early 1980s, if u you bet that rates were going to raise, you've been wrong, but i think this time is different and with this this expectation, i think you're going to get hurt. for most people, i think about retiree, they hold it to maturi maturity, they're able to roll it over at a higher interest rate. they don't feel the loss in their capital. >> if your comfort level for bonds was pau 30 to 50%, the rest in stocks, you would say now is the time to be 30.
if you're my mother and you have u not donnell you care, when that bond matures, you get to roll it over into something at a higher rate, so it depends. if you are a fund holder in a bond fund, take down the weight. absolutely. >> thank you. >> thank you as well. see you soon. >> democratic fcc chairman tom wheeler planning to resign on inauguration day. could this be the first sign that telecom and able companies are going to have any easier time under a president trump? let's bring in craig moffatt and's julia boorstin. take that thought and run with it.
a republican chairman, i would assume lore taxes help. i would assume less regulation does as well. i think you're right. the theme is going to be less regulation. a lot of those regulations aren't just going to be in health care and finance. a lot are going to be in telecom and you're going to see a much more deregulatory environment now for the next four years. what does it mean for net neutrality and explain it in freshman terms for me if you wouldn't mind. what does it mean? how much of that goes away and which stocks would benefit and lose? >> there's two separate items
here. net neutrality as a concept, which is to say no blocking, no discrimination and no paidtizati paidtization, then the mechanism that the last fcc eused to enforce those. i don't think there's that much risk to net neutrality per se, but there is risk to the title two framework and title two was important. that's almost certain to be rolled back either by the fcc or more likely, by congress. if that is rolled back, that's good news for cable operator, telephone companies and not so good news for gook l and netflix and the companies that would otherwise have to pay for transport. >> just what that means, if something falls under hit 2, that means it's regulated like
utility. it means a broad band provider could charge a company like netflix or youtube or facebook with this new focus on video to make sure it's prioritized. no one wants to see it buffering. so there could be interconnection fees. that are charged. we could see more charge baseded on how much broad band you're ruse using, so this gives the companie companies. >> if i'm readying you correctly, you're less concerned about it. >> cable companies are not media companies.
>> the important is both a distribution company and media company. >> i'm talking about the cable part of the business. when you talk about cord cutting, you're still using the infrastructure, so the real question is what are the mechanisms for the cable operator to charge for that infrastructure in a video over the top world. the reality is the mechanisms are still pretty good. it's like saying we're on this evolution of electric cars and we're not going to need roads anymore. we're going to need roads erat
way, so what julia was talking about, what are the mechanisms to charge for the roads. turns out they're pretty good. they'll charge more for broad band everyone, for people who choose not to take the product by unwinding bundled diskoupts. the cord cutting numbers have not been as fast. if you're going to be stream ago lot of video from netflix or hulo or amazon, you need high speed broad band to do that. the cable companies, that's who's selling that. >> the cord cuts has been a drip, not a torrent. thanks to both of you. >> to dominic. >> the russell 2,000 small kp cap index performing the best overall.
getting a boost from period one. forecast fourth quarter earnings above estimates. also raised. the company has about a $750 million market cap, but still, shares were up about 75%, so far year to date, a big gainer. >> sure is. wow. okay, thanks. the march to dow 20,000. right now, we are more than 140 points away. losing steam as we head to the closing bell. up next, get some steamy coffee with the ceeo of dunkin' brands. it's up more than 10% since the election. "power lunch" will be right back.
let's get to bob pisani. >> hello, tyler, we have two problems. first, the stronger dollar. it's been washingtoning on the market and then the weakness in the industrials. exporters. people who would be hit. general electric, for example, it's been slowly descending throughout most of the afternoon. there, you see what i'm talking about and this is through all of those big industrial names. united technologies is another one and see the same. boeing. the other ones are out there. 3m as well. in addition, another thing has emerged. there's been a sort of sell
program in stocks. apple. see the move to the downside. microsoft, then intel and you'll see the same thing here. somebody came through and sold tech stocks. back to you. >> thank you so much. some of the country's top executives are gathering today for the yale ceo summit. t okay. kelly evans is there now. joined my dunkin' brands ceo nigel travis, not homer simpson. thanks, kelly. welcome, first of all. the last time when we heard from you in late october before the election. you described the consumer as being in faung. how is the consumer today? zbling they've got more optim m optimism. the consumer based on consumer confidence has improved.
we can't tell you that. have to wait until the end of that. i have to be careful. you know that. >> obviously, the fed increased in rates, they are showing confidence. and i think what's interesting is they're talking about a fairly anemic growth rate like 1.8. we'd love to see the forecasted percent that the new administration is talking about. that's what we really want. it's great for small business. >> let me ask you and andy, a colleague of yours. he's been named the potential labor secretary. what kind of policies would you like to see him adopt? >> i think the policies are clear. one is we'd like to see what's right for small business. we're a business of franchises. 2,000. we need policies that will help
them. cut down on regulation. we need to see a stimulus to the economy. i think tax reform is helpful. infrastructure. the one thing we've worked on is how can we give our industry a better name. >> he's also talking about how he need to automate and innovate and how he'd be happy to see technology replace workers in his restaurants. >> i've not read it like that. i think andy thinks all rest yaunts should be efficient efficient, but what we need, the opportunity to get the 11.5% of young people whoent whoa don't have a job into our restaurants, that gets them on the rohde to ibm. we could have a simple certification.
they've learned skills, i really think this is important. it's important for our industry. most people don't realize that in our industry, it's easy to progress to a district manager. the opportunities are great. michelle? >> hey, good to talk to you again. a lot of fran chy sees are immigrants. you're worried about a donald trump presidency and what it might mean for immigration? >> on my way here, i was talking about this with an indian driver. we have a lot of indians, a lot of people from portugal. i'd say we need sense bable policies. i think having talked to both sides of the aisle in current
administration, i think there would be common sense agreement on immigration. one thing that's important, has been unbelievably successful. has to be built around that. i think we have to find way to help our franchiseees. what i said earlier about the lack of franchise, but i think we need a sense bable discussion on immigrationer than going one way or the other way. >> we're going to have a plom innocent voice in washington. >> the chairman and ceo and plenty more coming up on closing bell. >> look forward to that. thank you both very much. coming up, you might have heard about this dow 20,000 thing. we are on dow 20,000 watch. still up about 140 points away. we've lost a little steam as we
head toward the close. and what happens in vegas may no longer stay in vegas. what wynn resorts is putting in your room that may cause a loud echo across the industry. stick around. guys, what's happening here? hey nicole, this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade.
welcome back. president-elect donald trump has named some key leadership appointments for the national security counsel. he's just announced that right now, retired lieutenant general keith kellogg will be the chief of staff and executive secretary of the national security counsel and dr. monica prowly will be the senior director of strategic communications for the national security counsel. the general has been in active duty for quite some time. he is now retire. dr. crowley has a ph.d. in relations from columbia university. best known as contributor to fox news. so, those are the two latest appointments. back to you.
>> she useded to have a show on msnbc. >> coast to coast. all right. >> thank you. we'll be right back. don't move. "power lunch" will be back after this break. ♪ 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?
it is now up to the jurors to decide -- deliberation rs underway. he faces 33 federal charge inclueing hate crimes and he has confessed. in london, ash carter expressing confidence that under the trump administration, the u.s. will remain a key partner this fighting isis. >> i can't give assurances. i can't speak for the administration, david. however, i do have confidence in the future of the coalition campaign. it's logical. it makes sense. >> meantime, on a lighter note,
starbucks has whipped up a new holiday drink. the fruitcake frappuccino. available today through sunday. you're up to date. back to you, michelle. >> lot of work, a lot of calories. >> it's a lot of calories. that will not be under my christmas tree. >> thanks. >> one day pause for the fed. then the rally is back on. the dow is up 60 points right now. well off the session highs, but still close to 20 thourk. the s&p 500 and nasdaq also moving higher. now higher by 80 points. oil closing now, down slightly by 21 cents. >> gold big, nearly 3%. a big one-day move in the met dahl. more on that coming up in trading nation. plus, the dollar continuing to get stronger. the buck up yet again.
the yield on the ten-notarizing. it is a smidge below that. rising spres interest rates do not seem to be worrying the home builders yet. a widely watched number jumping to its highest level in more than a decade. diana olick, this rally has been fueleded with low rates and now, we're getting up in a neighborhood where some of the steam could come off. >> yeah, the worry may be rising with the rates. but yes, monthly sentiment took an epic jump in december. this is all about optimism for trum trumpenomics. the survey is weighted toward custom builders. they are back down again, despite the broader rally. that's likely due to rising mortgage rates. up seven points to 70 on the
builder index. that's the highest level, t the first read since the election and largest gain in 20 years. last december, it was 10 points lower. of the three component, current sales concerns up to 76. expectations nine points to 78 and buyer traffic rose to 53 and that's the first time traffic topped 50, which is the crossover to posztive territory since 2005. the lowest in the at 53 15i. some say this month could an out lier. confidence measures the direction of change, not necessarily the degree and mortgage rates again could throw water on this. one note, this survey used to track housing starts very closely. not anymore. confidence is way up u, but single family home construction is still well below historical
norms. more on cnbc.com. >> thanks very much. i believe you're going to stick around to join us in the next part here. despite the big jump in builder sentiment, the homebuilder stocks are falling. homebuilder index, down nearly 1%. let' bring in keith, he's a homebuilder analyst with key bank capital markets. welcome chblt quood to have you with us. >> thank you. >> do you see this as a one time event, this amazing spike in homebuilder confidence? have they gotten ahead of themselves? how do we process it? >> i think she had it right. it is confidence tied to optimism and makes sense it happens now. fundament fundamentally, the builders have slow demand. real cost issues. as it relates to higher margins on the coast. i think fundamentally, that ends our cautious view on the home billers. we prefer the product names more. >> i see that. overweight rating on one of the
billers, but you liked some of the building supply companies like whirlpool, pool corp. armstrong i believe. why is that? >> well, because the homebuilders have cost issues effectively stagflation, where price is not able to off set their price. we think the growth is not as attractive and in some cases, expand margins. we like whirlpool. we think people misunderstand the head winds it's facing next year as well as samsung's impact on the structure, which we think is better than it is. >> we talk b about home builders with homes. right in which we should. that's what they do. but there's a huge amount of value in the that these companies own. taz economies turn around, what companies may have the best assets, not some of the best home, but just sitting on the
goal. >> well, i think you're right there, land is always the most volatile piece. however, for builders to get that land to cash, they're getting squeezed on the labor. so the longer dated builders, what toll brothers would be the longest data. the time value of money, takes too long to get it out in our opinion. >> let's talk about two things that might be topical. one is interest rates. on the one hand as diana points out, it raises the monthly cost. you get the 4.5%, moving towards 5%. it could slow activity on the other hand, as rates start moving, all lot of people i tal to say i better get in now because i want to get away from them. >> true. we've seen a real bifurcation in our research. really over the last 12, 18 months where we've seen strength in the midwest. down into the southeast, tennessee and florida, not withstanding miami's problems today, but the coasts have been slowing. and the coast, it's really about
price, so i don't think interest rates will help. in california where i'm based, people are driving 20, 30 minutes farther. that's the issue. i don't think rates will be as impactful in the interior parts of the country, where homes are quite affordable. >> you talked about labor. what might a tougher immigration policy mean for the price of labor and the availability of it? >>. >> seems told in the be a tail independent. i think it feeds into the high concern for those builders that have coastal exposure in terms of additional pressure on march ps. we'll have to see if that type of pressure extends from the builders to the product companies, if we see a fiscal expansion in '17 and '18. thanks very much. >> thank you. >> let's continue the housing discussion with the chief economist with real estate
company red fin. we have you on because you say there is a big red flag for homebuilder, despite the confidence numbers. once trump takes office and it's not rising spres rates. what is it? >> immigration policy. nearly one in four construction workers are foreign born. and if you look at the last labor employment study, it was construction wages that were outpacing all other average hourly earnings. there's a shortage of construction labor in this country. any policy any closed door immigration policy that shuts off the souse of that simply of the labor will lead to higher new home prices in the long run. >> so, buyers would face a head wind of not only high interest rate, but higher prices. gl right. >> and regulation. that is why builders are rallying so much. they would like to see lower regulation. not just at the federal level, it's really at the local level that regulation has the biggest bite and that's what they're
hoping for. that's what they're rallying around now. that promise of reduced regulation that would low r costs. >> reduced regulation on builders or banks so that it's easier for individuals to get a mortgage. >> first, reduced regulation on builders when it comes to zoning land for new construction on the residential side, but yi, your point is well taken. regulation has been a part of the issue in terms credit availability. while the cost have been low until recently, the availability is still really hard for most people to get a mortgage. unless you have sue per yor frk ico scores. sxwl back to the immigration issue. you said one in four workers. i did a story about immigration several years ago and they estimated 50% of all dry wallers in the united states were from another country. i think mexico and poland, eastern europe. >> that's right and it's important to note we're 40% down in terms of krug labor than we were in 2006 when construction
was at its peak. so this is a significant decline in -- for us to look for foreign sources of labor where there are shortages. makes sense not only in new construction, but also in the tech world. we saw those ceos meeting this weekend as well. >> thank you so much. red fin's chief economist. as stocks and the dollar rise, the dollar has been as tyler said earlier, up. gold is getting left behind today. down another 3%. look at the gold miner's etf. gdx down 21% since the election. does that make it the time to buy gold and miners? we'll find out in trading nation, coming up next.
election. gold is down today more than 14% since the election. dig in more with the team. aaron gibbs with s&p global and aaron, i know you guys tend to look at equity, earnings, so let's focus on the miners. maybe the gdx. as has gone down, have prospects followed? >> it has. looking at how geting more efficient or acquiring different mines, but gold is really priced at according to investor sentiment, the dollar and interest rates and right now, sentiment, interest rates and everything else is going up. there's no reason to have that safety bet or that insurance with gold. so, we see them to be in this down trend and no big turn around anytime soon. >> okay, ari, when you look at the chart, do you see any turn
around for gold or miners. >> no, not just yet. in the market, i think that will continue. the price -- you see a lot of similarities to how gold traded now. in the chart i'm bringing, look back at the prior period. there was a big spike in the medal in 1999 purks after that, the gold ultimately settled back into its base and it really required another two years of basing until it tarted to break higher again. we think we're in a similar basing period. where it's probably at best, dead money here, even if it is coming into some sport. the prior low is the important
level here, but by the time gold starts to work again, brian, you're going to forget i recommended to buy in the first place, so we would look elsewhere for opportunities. >> there you go. thank you both very much. bearish view on gold and miners. for more, go to our website, trading nation.cnbc.com. the march to 20,000 continues after the break. a man not only with perhaps the best beard at the new york stock exchange, but with some of the best insight as to where stocks are going as well. coming up next.
how are you? >> great. how are you? >> stay thirsty, my friend. what is going on? what's going on down there? >> considering the news we got yesterday and of the angst that it created today is a very quiet day. the market is marching back. it had every reason to keep going lower and it has not. you have seen market action. you have seen it once again trying to attempt dow 20,000 unsuccessfully i will say. it has done it twice so the third time is going to be a charm whether it is today or one day next week. it is a relatively quiet day with most sectors rebounding after yesterday's move. >> if you look at the history that the market has done pretty well in the three, six months, maybe a year after the first interest rate hikes. it's not until later on where there has been sort of a
succession that the market has stumbled. >> i think the market really priced in two. the fact she said three caught it a little off guard. if the economy is going to be as strong as it is or expected to be and trump gets what he wants then that is a good thing. the economy will do better and people should want interest rates to normalize. it should be a positive thing. we shall see. >> why do some people act like higher interest rates are the end of the stock market? history says they are not. >> i'm with you. i don't understand it quite honestly. interest rates are still low by all standards. we are not near normalization yet. i don't get that argument. i understand if we were talking about rates being seven, eight or nine percent that is a different story. we are at sub1% interest rates and maybe going to 1.25 by the end of next year if everything
clicks. i don't really buy into that argument. i'm not sure why they are screaming about the end of the stock market because we are talking about two or three increases. >> do you buy the argument that you should be getting out of companies that export that have international exposure and be more domestically focussed? >> i think the stronger dollar and rising yields will create implications for investors as we move into 2017. the multinationals will be most effected by the stronger dollar. this isn't the first rodeo. this isn't the first time multinationals have dealt with the strong dollar. that being said u.s. centered names, the russell really outperformed. small and mid cap names will do very well in this environment. >> there is a lot of anticipation being into stock prices, lower tax rates, et cetera. but when push comes to shove it
is really the level of profits. what if after the first of the year as we get into earnings season do you think the economy is strong enough when we start to look at the real numbers that come in? is the corporate performance strong enough to justify these price snz. >> i think yes but i doent thigwe will see that in the january numbers. i think you have to give it time. you have to be fair. you can't just look at january. if they disappoint a little bit. this is still pre. you have to look at what happens in the second quarter and third quarter of next year when i think you will see the turn around. if profits come in and if companies are doing well it will absolutely justify valuation. right now it is ahead of itself. it is all about expectation. >> the market is discounting future earnings. your message is don't be too concerned if the backwards view isn't all that good.
>> can you recall you have been there a while. can you recall a time of this much optimism and confidence in the last eight to ten years? >> not in the last eight or ten years. last time i think there was confidence the way we see it now is certainly during the kickoff of the bull market with ronald reagan. i was here when that bull market began and the enthusiasm that we felt then was just incrediblism then it was different because there were so many more people that you could feel and almost taste it. today it is different because of the automation. yet the enthusiasm is very much the same. >> eight shares of zenith. thank you. >> thanks, kenny. why what happens in vegas may not stay in vegas. what wynn resorts is putting in your hotel room there next.
they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful. listen to this story. wynn las vegas is putting the amazon echo by all rooms by next summer to let guests control various things using their voice. they can say alexa, turn off the lights, alexa, turn on the tv. ceo saying i have never seen anything more intuitively dead on to making a guest experience seamlessly delicious.
effortlessly convenient in the ability to talk to your room. that means alexa is always listening for her name. and when you talk to alexa what you say is recorded and sent to the i cloud. there is a microphone alexa and hears you all the time in your las vegas room and when you haven't -- >> she knows when you have been counting cards so don't cheat for goodness sake. >> pull the plug. >> i love alexa. she tells me how many points carmelo anthony had. >> i think the most common question is how do i win at blackjack. i think people go to vegas often. their whole marketing campaign is about being loose. >> i'm sure people in vegas have
talked to their rooms many times befo before. >> now it will talk back. it is time for check please. my is new battle donald trump versus "vanity fair." you remember guy who opened a restaurant in times square. the "vanity fair" review of trump grill in trump tower called it trump slop. donald trump tweeted about "vanity fair." the new battle is trump v "vanity fair." i never heard of the restaurant. >> the editor of "vanity fair" was one guy way back in the era of spy magazine who coined the
term short fing er for donald trump. >> i have brought my 10,000 rat. send us rally cap pictures to twitter. is this good luck or bad luck? i don't know. thanks for watching power lunch. "closing bell" starts right now. hi everybody and welcome to "closing bell." i'm kelly evans. i'm at the summit today. >> i'm in for bill griffith. we are watching dow 20,000 today. came close within 48 points earlier. some late day weakness in industrials and tech sector weighing on the dow. we will look at potential buying opportunities in the tech space coming up. over here at the ceo summit we have exclusive intervie