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tv   Power Lunch  CNBC  March 2, 2017 1:00pm-3:01pm EST

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i own it and ignore today's volatility. >> okay. >> have a sell discipline. >> your short? >> i'm short now, using options, geographic, whatever you are. >> we could get wash out in gold stocks now because they have dived pretty good today. >> looking at snap -- >> took it out. i'm done. >> that's a wrap. ♪ 50% profit, nice news feed. snap pops the hottest ipo of the year, soaring in the debut. hear from snap's first investor. the big bet on autonomous car, mobilizing red hot this year, up 21%. coming up, tyler is looiive in vancouv vancouver. one beer stock is suffering a massive hangover today. that and so much more." power lunch" starts right now.
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welcome to "power lunch ", i'm the dow off by 52 points, and nasdaq is lower by 27, as melissa said, soaring in the debut, i almost said snoring. more on that in a moment, but, first, we are following a big breaking story on caterpillar. the stock plunged in the past hour on news federal agents are searching that company's global headquarters, off nearly 5%, you see from the intra-day chart when the news broke. these photos coming into cnbc. in them, irs agents are gathered outside the headquarters. let's get to morgan with more on the developing story. morgan? >> reporter: that's right. as you mentioned, shares of caterpillar sliding now, as federal agents search three
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facilities, including in illinois. as you see from the photos, you just showed one, there's another one that has cars lined up outside of the head quarters, and those cars belong to federal agents. in this particular picture, you see agents from the irs, also fbi and commerce department participating in these searches. the company confirms law enforcement is present in executing search warrants saying it is, quote, cooperating, but not offering more detail on what this is in regards to. cat previously disclosed receiving federal subpeonas, but they reabused u.s. taxes using a swift subsidiary to prohibit sale of replacement part. the nbc affiliate said they are there for tax documents and those involved in the taxes have been asked to leave the building. all that said, we don't know for sure that this search is,
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indeed, connected to the 1990s tax reduction strategies. we'll have to see how it unfolds and what we find out. as it does, look at shares at the dow. they are falling. that is accelerating. they are contributing 30 points to the dow's move lower today. shares down 5%. back to you. >> all right, thanks for the update. joining us on the news line now is matt, one the first reporters to break the story at the journal starment thank you for joining us on the phone. you heard morgan's report, what can you add to it at this point? >> caller: well, thank you for having me, first of all, i think she hit the highlights, there is no confirmation at this time exactly what is being sought or, you know, exactly what documents are hauled out of headquarters, and a building in morton and data center in east peoria, but there's indications this is
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related to the 2009 lawsuit brought by former employee related to the tax strategy, and the swiss accounts and use of storage for parts at the facility in morton that's searched today, and how those parts were sold and distributed around the dploglobe and where profits were recorded. >> they cleared cat of closing investigations into the tax strategies saving $2.4 billion in taxes. it paid a penalty, made no further comment. what kind of officials are going in there as far as we saw from the pictures, it was irs officials and fdic officials, which would lead one to perhaps believe that this is an extension of that same investigati investigation. >> caller: absolutely, and beyond the fcc, in the 10k filing, in the last month, the
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company acknowledged an actual criminal investigation out of the federal central district of illino illinois, that they received grand jury in january of 2015 on this issue, so i suspect that's where these search warrants are coming from today. >> tell us the role caterpillar plays in the community? how is the news going to go down? >> caller: well, i think everything now is viewed through the lens of another announcement they made on the last day, january, about moving the global headquarters, you know, back in february '15, announced there would be a new campus built here in downtown, with the change to new ceo last october, to jim from doug, and there's a shift
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in strategy. the company decided to relocate to a lean headquarters in the chicago area. there's not been any further announcements about specifics of where that's going to happen, but, you know, they are talking about 300 top level officials. >> sure. >> caller: you know, moving out of here, so people are still feeling here, locally, anyway, considering the history of the company and the area, people are still feeling the sting from that. >> sure. >> caller: and, i, you know, they are going to look at this and think this more bad news. >> matt, leaving it there, thank you so much for joining us. matt, we note, obviously, caterpillar one of the top performing stocks in 12 months. >> benefitting from all the big infrastructure spending that -- >> exactly. cyclical upturn. >> the issue was settled, but the issue of transferring profits to other locales, this comes up over and over again with the border adjustment tax. it's easy to move profit.
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it's harder to move sales. >> right. >> that's why the supporters push for that. >> sure. >> so -- >> down 5% right now. snap, meantime, popping in the debut, trading on the new york stock exchange 90 minutes ago. bob is in the thick of the action down at the new york stock exchange. exciting day, bob. >> it was a lot of fun, and quiet, but exciting at the same time. orderly is the way i described it. snap, crackle, pop. take a look here. the key point, it priced at $17, indication 21-23, ultimately opened at 24. trading near highs of the day. 150 million shares changing hands. that's a lot. they floated 200 million. you trade north of the float, that's a lot of shares. we're doing that today. why the big snap pop today? three reasons, markets at a new high, a big factor, but it's not sufficient. you need more than that. you got a lack of hot ipos out there. it was a terrible year last year for ipos, only five in february,
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not enough. demand's high for a product, and snap is fulfilling that, and small float, 14% floated, that's a strategy for a number of years, float 10-15%, and demand rises on the very small float here. $35 billion, they are close to that in market capitalization, a top third of the s&p 500 here. look, norfolk southern with a $500 million, deere, travelers, in the same league. is that worth it? the market decides that. here's the key for the rest of the day, folks, $24, has to close above 24, doesn't matter it's priced at 17. if it closes at 22, that'll be disappointment. closes above 24, that's voted as a success. that simple, guys, back to you. >> thank you, bob. >> jeremy lu, first investor in april 2012, his firm invested
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$485,000 in the company. at the time, snap had fewer than 100,000 active users. today, they got 160 million. here in a first cnbc interview, jeremy, great to have you with us. >> thank you for having me. >> initial thoughts on this day seeing the huge pop in the investment? >> our job is to invest on behalf of lps and pension funds and endowments. any time we make good investments on their behalf, we feel terrific. >> the plan was to sell 4.6 million shares, pinning at $80 million. is that what happened today with light speed? >> we were asked by the underwriters to increase the size of the float. that's something we were happy to accommodate. >> what do you say to people who are shooting against this company already? pivotal research, one of the first analyst initiating coverage on the firm, hours after debut, with a sell rating and price target, and the argument against it is right now, facebook's, instagram by
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itself is larger in terms of users, usage in the age group of 18-34-year-olds in the united states, and the management team is untested in terms of making the company from a startup to a proven company. what do you say to the bears? >> you know, i can't comment on the public stock, but what i can say is when it's popular culture, whether it be a snapchat or facebook or twitter, then, you know, that's a really powerful position to be in. >> is it a facebook or a twitter? >> i think that's really the point, like, if you become so engrained, a daily habit for hundreds of millions of people and become that article of popular culture where, you know, every advertising company is going to be thinking about how to reach that audience, and there's a lot of potential in all of those companies. >> everything you said, to me, could sound like twitter, right? there are hundreds of millions of people who love it and use it every day, and yet even --
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>> the president of the united states to melissa's appointment, using it all the time. if not now for twitter, then when? how does that convince anybody when it comes to snap? >> you know, our focus is investing in early stage companies. when we met the company in 2012, it was just two founders and less than 100,000 users, and look where it is today, you know, it's 1200 employees and, you know, 158 million daily active users, you know, we get excited about the growth of the company. >> one of the partners posted a blog on medium explaining what's it like to meet the founders in the early days in the stanford dorm room, and how he came out and said, jeremy, this is a company we got to invest in. i mean, that proves to me, you got to look at what the younger generation is doing in order to find the next technology, so when you look out to that age group now, jeremy, what are you seeing? what's next? >> you know, one of the things
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we've seen as messaging broadly has exploded is the use of gifs. people are looking for, you know, call it post-verbal communication. it's way to communicate emotion as well as just information. so if you look at the explosion in gifs, we believe that that's going to be something that's really important. we funded the leader in that space, gifi, also just growing right along with that. >> jeremy, venture investing is about investing in 11, ten of them fail, and then you get the big one like snap here today. tell me about the other things you looked at in dorm rooms back then. how does snap compare to those? how many fell by the wayside and this is left standing? >> about a third of the companies we invest in don't work out at all, and so, you know, with a hit rate like that, you really need to focus on each investment that you make, and do you believe it could be worth a billion dollars or more one day.
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that's what we believed about all investment, and snapchat has panned out to be true. >> some say you bagged a dragon with snapchat. what is it like now for lightspeed in terms of capital flow into the funds and expectations that you got another one up your sleeve? >> yeah, we've had a good run recently. we were the first and largest investors, going public in september, traded really well, first and largest investors in dynamics, which cisco bought just earlier in this year, and so, you know, with this snap out comes, i think, we're feeling good about ourselves. >> you should. such little smile for bringing in more than a billion dollars. >> feeling good. >> yeah, you do. >> we should note, cnbc parent and universal and snapchat are in a business relationship. >> out to tyler live at a the
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wpo global summit in beautiful vancouver where thousands of young executives and technology innovators are gathered to talk about the future of business. tyler, what's coming up? >> couldn't have said it better myself, michelle. here at ypo, formally known as the young president's organization. 24 members globally, about 3,000 of them are here, and 7 trillion in app newel revenues, about 15 million employees represented by the business leaders here. we will talk to a gentleman who has thoughts about snap, thoughts about digital culture, and where we're going, john chambers, executive chairman of cisco, when we return on "power lunch." you're watching "power lunch" on cnbc. hey garywhat'd you got here? this b b is a mobile trading desk so that i catake my trg platform wherever i go.
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welcome back to ypo edge here in vancouver on the day snap went public in a successful ipo. we are joined by john chambers, an observer of what happens in the world of technology, and this is a movie, john chambers, seen before. >> i really have, first,
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congratulations to the snap team. it's the first uber of many others, the first of what will occur over the next two decades, but i have seen the movie beforement this is like 1990-2010. the internet era. during the '90s, using cisco, and you got to capture transitions, and they run for a long time. some companies do well. some have setbacks. >> you see snap as emblematic of the transition you say is taking place right now from the interpret era to the digital era, but one of the things you decry is the idea that we have not had enough, a, startups, and, b, initial public offerings. you think we have to replicate snap a hundred times more? >> i really do. >> why? >> if you think about it, the goal is to grow gdp at 4% in the u.s. over this next decade per year, if our goal is 25-30 million jobs, we only took 90 companies public on nasdaq last year. we normally run 200. only took 35 companies public on
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the new york stock exchain. normally 80. >> why? >> not enough pipeline. we need to change the approach to this. if you watch the digital era, it needs to be three to five times the number. use an example that shocks you. guess what the number one venture capital investment in all of europe? which country? >> which country? germany. >> germany normally has been. france moved from not being in the top five list to number of one. in the last year on high-tech investments alone, they were 489 companies funded. a year ago, 226 companies, year before that, 135. the key take away is there's no entit entitle. . you are seeing country digitalization and startups go hand in hand, and countries that may not have led in the last change are now leading. >> you think, surprisingly, france is getting is right on digitalization, but your sleeper bet, what you told me, not a
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sleeper, but bet on one country, it would be? >> india. >> why? >> normally we would have answered israel, the startup nation, but what you're seeing is india's doing what france did, except with the prime minister, he's 3.1 million people, making the people digital, interestingly enough, we are working closely with him personally, how they digitalization their whole country. the gdp growth target is not 5%, but 7-10%. even with the changes made in what occurred, gdp came back remarkably quickly. they need to create 1.1 million jobs a moat in india, modi bets the future of his country on this, and he'll grow house per capita income double seven to eight years, maybe five to seven. >> you have follow-up with startups. you're a rare bird in silicon
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valley, you are a moderate republican. there's three of you. >> and endangered species. >> you said trump will be good for startups, why, and do you think that america is behind the curve on digitalization? ahead of it? where we should be? why do you think the trump administration gets it on startups? >> well, we realized we used to be the startup nation, and we have fallen behind versus numbers i said. it's tremendous to have snap, but we need five snaps at the regularity that's occurring. i think both the administration, but also the congress, the republicans and the democrats, know that we have to change. i think there's a willingness to change in this country, and we need to move fast. where are we? >> regulatory change, tax change, what? >> combination of all the above. you got to get access to fubd funding, get regulatory changes occurring, make it easy for businesses to grow, and you got to encourage it. do what israel, germany, france, india's doing.
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there's no entitlements that lead in the next transition. we're the only country in the world without a digital plan. i've met with almost every major leader in the world, all of them have plans for the country, where to go, and we just saw from the startups here and young president's organization, they know they have to go digital. we have to do the same thing as a country. >> john chambers, thank you very much, appreciate it. >> nice to see you as always. >> reporter: many from the ypo annual age conference here in vancouver later on this hour and next. we'll hear from the former cia director and the ceo of mobile among us. back to you. >> looking forward to it. trouble brewing in anheuser busch? what's behind the drop in the stock today? latest on how much card holders pay to keep platinum cards straight ahead. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every
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so with our ally cashback credit card, you get rewarded for buying stuff. like what? like a second bee helmet with protective netting. or like a balm? you know?
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or a cooling ointment for the skin. how about a motorcycle? or some bee repellant. i'm just spit-balling here. nothing stops us from doing right by our customers. ally. do it right. told you not to swat 'em. zplmplg welcome back, anheuser busch suffering a fall, the stock off 4%. the culprit? brazil. the company's second largest market, the recession depressing sales more than expected and weak layout driving up costs. shares down nearly 4% right now. it's also bad day for shares of amex, american express beefed up perks and fees for platinum card holders. r r
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>> pay attention, for the first time in more than a decade, american express is upping the annual fee by $100 to $550, the highest annual fee for a credit card in this platinum category. you get $200 in uber ride credit, expanded rewards for bookings, increased access to airport lounges and events, and the new platinum card is going to be made of metal, like jp morgan's sapphire reserve card introduced last year to much fanfare because there's perks like $300 in travel credit, $1500 signup bonus. that has a $450 annual fee. that matched what american express was offering at the time. that cost jp mori gap $300 million to offer a card with those rewards, but the demand actually far exceeded expectations, so it at least shows there's market for the high fee reward cards if perks are offered in return. jp morgan is the not the only company offering a similar card
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to the platinum, but that's a good example. >> increase in annual fee, though, that's at a bad time. american express lost out because of the end of the cost koeco partnership, the source of the problem right now. >> for certain. costco had an exclusive relationship, but shifted to using citi and visa, and american compress would impact earnings for two years, in the most recent results, we got, at least did not hit as badly as some had feared, but it was not good. certainly far from good. i don't know it's worth it. perhaps they are trying to get a millennial customer interested in the platinum card that likes using uber? you have to make sure the perks are worth it. >> thank you. president trump declared war on big pharma, especially drug pricing. hear from the man who used the run the biggest pharmacy company of them all, pfizer. that's next when "power lunch" returns. you do all this research
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angela merkel in cairo today meeting with the egyptian president to discuss steps to limit migrant flows into europe and tighten border controls. since 2015, germany took in more than 1 million migrants in. meanwhile, 77 were rescued from a boat 15 miles off the coast of libya. those rescued are being brought to italy. california's snow pack in the mountain range is nearly double the normal level. welcomed news for a state that's suffered five years of drought. this winter is also been california's wettest in 20 years causing damage from flooding in various parts of the state. and dunkin' donuts and baskin robins are going natural. they are removing artificial colors and replacing it with naturally sourced coal alreadying. that's the updecade. back to you. >> thank you so much. >> sure. >> you know therapeutic's down after the company announced they are stopping development of an
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exteerperimental leukemia drug. we are getting analyst commentary on the stock as well. that's coming up in "street talk," a huge interview tomorrow, heather bresch is live in studio with a lot of to talk about, drug pricing, potential changes to the fda, makers of the epi pen, always in the news. catch that tomorrow at 1:00 p.m. eastern time here on "power lunch." >> in the meantime, we have two guests in the pharmacy industry, an exclusive now with the retired ceo of foopfizer, and c of uray. welcome to you both to "power lunch," starting with the device. this is absolutely fascinating. this is one where you can actually look for the cancer and treat it on the spot? >> that's right. we're giving radiation oncologists the tool surgeons
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have, see what you're treating at the time you treat it, and therefore, adjust to make adjustments in realtime. >> what cancer is it suitable for in. >> any cancer that you can see. if you can see it with your mri, we can treat it. you are getting great early results on breast cancer, things of the abdomen, liver, kidney, pancre pancreas. >> how much does the machine cost for a hospital to buy? >> yeah, so the good news is this nerxt generation machine i going to be in $6-$7 million. >> compared to? >> so the previous one, which was maybe a half million to a million less, this can do a lot more than the other one can. >> lots of orders? >> we are doing well on the order taking, and that's because it can really help patients. we're seeing exciting early results, and you can treat patients faster. one of the ideas you can see this clearly, turn up the volume of the treatment to get people through rather than coming in six to eight weeks, do it in
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five days. >> in the older days, do the mri, think you know where it is, you go back for treatment and hope to get it right based on what you saw, and now it's instantaneous? >> that's right. there's no behind surgeons and now there's no blind radiation oncologists. >> got it. you're a board member, hank, at what stage are you involved in the company, and is it hard these days to have a company like this develop a product? >> i joined the company a year ago as an investor and board member, and fascinated by the people, the technology involved, and when you can produce technology, which improves patient outcomes and reduces cost to payers and insurers, it's a very exciting company to be with. >> what would you think running pfizer today and seeing the hillary clinton tweet that punish the biotech sector. i'm not sure it's recovered since, bernie sanders, and now president trump who is more pro-capitalist and
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pro-competition, but complaining about the pricing of drugs. >> there's an education job to be done with the new administration. i think what the president will come to understand is the pharmaceutical industry and medical technology industry and innovators like viewray lead the world. 90% or more of medical technology and pharmaceutical products come from the united states. this is not an industry we need to make great again, it is great already. >> but people who need the drugs say, why are they so expensive? something that saved lives should not be so costly, right? you run up against those moral arguments. how do you fight back against that? >> well, there's two things people need to understand. one is how long it takes to get drugs to market. 12-15 years. there's patients dying waiting for new therapy, and they are, obviously, upset, and prices are expensive. prices are expensive because research is expensive, and $2-4
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billion over 12-15 year period. one thing i advocated for a while, what the administration should take a hard look at, spend $2 billion to $4 billion, the product is approved, such as this technology, and then you have maybe ten years left on the patent life, so you have to recover that expense over ten years. if the patent ran from the date of approval, two things would happen. we'd see an explosion in medical technology like we've never seen before, and prices would come down. >> prices could come down? >> absolutely. because you have -- >> longer time to recoop the cost. >> 20 years to recover the cost and make a profit. >> opposed to ten, whatever it is. >> it's a difficult business when you have ten years. >> 10-12 years for approval, for a drug or device, do you think the problem is in the -- the administration seems to think the fda is the holdup, and if you sped up the process of approval, that would greatly
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facilitate things. >> well, of the-15 years, maybe three is the fda review period. in fact, their review for medical devices is 90 days, and for most pharmaceuticals, it's less than a year. one thing we should do is we clearly have more government than we need or we can afford, and so the -- the reduction of the size of the government is important, but we should make sure the fda has the resources they need to do their job. >> president trump said something very interesting, when it comes to drug pricing. he says other countries treat us very poorly, and i think he's referencing the fact that in many advanced economies, they get discount jodrugs. they have price controls. we, the united states, are left as the only country paying for research and development. are we aggressive enough with the wto, et cetera, to say that's not fair? >> well, it's not fair. i've long said that countries or other countries treat us badly. they are basically free riding
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on american research. you know, the headline is one thing. the facts are another. the facts in the pharmaceutical industry is we have a three competitive markets so some pairs pay high prices, some payers pay low prices. in the united states all the way down to 0, where is in some of the compassionate use and some of the veterans administration pricing, for example. other countries, the price is set by government and it's one price. if you look at just the manufacturers top price, sure, it's margely different country to country and marginally different in the united states as well. >> good luck with the company and mri we hope solves a lot of issues with cancer patients. thank you for joining us. >> thank you. bond market, rick santelli is tracking it all. rick? >> well, even though the markets seem to reverse, the trend of
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higher rates continues, albeit not fast, but at critical junctions. june 1st, two year, in 2009, last time at these levels, close to 135, intra-day of ten, yes, up a handful of basis point. year to date chart, yes, down on the year, price up in yield, 245, but here's something fascinating. five weeks to the day, five thursdays ago, last we settled at 250 wabecause because we jus touch 50 again. finally, a week of the dollar index, not only elevated in coming back, making since, but as it sits right now, it's pretty much exactly unchanged on the year. michelle, back to you. >> extraordinary. okay. thank you, rick. they make millions of dollars, and all too often we hear about nfl players going broke in retirement. what the miami dolphins are doing to change that. we have dolphins' owner and pro-bowler joining us live in studio.
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welcome back, making millions of dollars, yet all too often, we hear about nfl players going broke in retirements. the miami dolphins looking to change that, offering players the first of the kind program designed to teach them about business and prepare them for life after football. here's morgan with more. >> reporter: life after football. miami dolphins are getting schooled in winning off the field. this week, 16 players traveled to new york for business combine that the real estate billionaire arranged for his team. >> we're giving a tour to the dolphins to show them exactly how the buildings are built. >> from the 25 hudson yards project, the related company is developing, to a lunchtime q&a.
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they have been meeting entrepreneurs in scheduled events to learn about business and investing. >> it's shadowing, you know, these business, you know, millionaires, billionaires, it's an amazing opportunity. >> football's a short career, so, that being said, you have to plan for the next chapter. >> players chose to participate, paying thousands of dollars out of pocket for the trip. the goal? make connections that will last long beyond their playing years. >> i do think it's a great way of giving back, but i think that as a brand, you know, fitness is core. we speak a common language, and a lot of the athletes will be great. >> with so many athletes broke after the nfl careers, he's determined to make sure his players don't become just another statistic. we confirmed with the nfl, this business combine is truly the first of its kind to be offer by an individual team. many of the players we spoke to,
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we shadowed them for the better part of tuesday e expressed hope this concept will be adapted by other teams across the league. >> a great story. don't move, we're bring in the dolphins owner, and we're joined by dolphins pro-bowler, cameron wake. you put up your own money. why did you do it? was it worth it? >> beyond worth it. think about the opportunity to, you know, sit down and speak one-on-one with so many tremendous business minds and being a sponge in the environment, different than what we are used to on a day-to-day basis, take pieces of wisdom from their experiences and implement it in your life. >> how worried are you about life after football? >> worried is not the word, but just preparing. same way we prepare for football or whether it's a game or, you know, maybe a technique we are ensuring on sunday we'll be able to be well at, as far as your
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life and preparing, you know, from a business stand appointment, whatever situation you want to go into, prepare before you get there. you can't wait until it's right upon you. >> what's the lesson you wanted to teach the players? we hear all the time players are not prepared, and at any moment, injury could spell the end of the career. >> sure. i spent a lot of time around the players, and you know them, see how dedicated they are and passionate they are and the amount of work put it many. it's that way when they were in college. they have not really had a business world to fully understand it. they were coddled their whole careers, you know, and so what i saw was that i think as an owner, i have a responsibility to make sure they develop this great football players, prolong the career, but also the fact that i think it's a responsibility to make sure they are developed when their careers are over, and i think that's how i saw it. it's great for the team. it brings them closer together. great for the organization.
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we're trying to be the best in class. >> just thinking of that more, is there a wrong game here for you? is it good for business? >> i mean, i think it's great, obviously, the brand, but you want the players to really come together and really be part of that organization because we looked at it like a family. it's how you treat people. i think -- i know from like business career, the better you treat people in the organizations, the better organization you'll have. you'll attract the best. i think that's all part of it. you know? everybody has to really win in a situation like that. >> how do you think your fellow real estate developer's doing so far? >> oh, look at the stock market, looks good, doesn't it? >> give it a grade. >> well, right now, there's a lot of unknowns. it's a little too early to tell. >> disapoint you so far? >> things are going well. i mean, straight up, you can't agree with some of the things,
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but they are getting people to think differently, and hopefully we can see the returns there. >> how's your business life changed after donald trump? i mean, have you invested more? have you seen more interest in investments? >> i think that we are, and most people, you know, first of all, it's a very short period of time he's been president. >> sure. >> people are waiting to see what really happens. we know there's going to be change. when there's change, you really sit back and digest things and see where they are going. i think that's happening at this point, you know, obviously, the target, you see how, you know, we're going to hit, what, 21 for the first time ever. that was something the public and investing public expects good things. >> corporate tax reform. we talked about it, specifically because of the border adjustment tax, however, what we hardly talk about, nearly just as important, saying, you know what? no more deductability on
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interest. instead, full expensing. sounds like terror to real estate, doesn't it? how do you feel about that? >> right now, real estate is a great e quikwiquill lib bree yu. people don't like to pay taxes. they'll go out of their way to make investments so that they pay lesser in taxes. when that motivates investments, you sometimes it has nothing to do with supply and demand, and that's how we got into trouble. i think right now, you know, when you look at that, and you see what will happen, the ramifications of it, you know, i really question it. i think -- >> about getting rid of deducting interest? >> right. >> you'll see people building buildings just to get the writeoffs not to pay taxes when there's no demand for that, you know, or buying buildings for the same way. what's it done with the banking system? i mean, when you look back and see what the ramifications were of the '86 tax act, which dealt
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with those things, we have to be careful and understand what we're going to do and to have such great change. >> certainly, a discussion. i want to show everybody your cuffs, cameron. i love what you've done with them. we'll bring the camera in. they say "dream," hold still, right there. >> the other side say big? >> are you thinking about -- would you work for related, invester in the stock market? >> actually, you know, i've been this whole week, mentioning a lot of things, before i came up here, what i was interested in, honestly, you know, venture capital oichl is another thing about the dream, being able to, maybe help facilitate someone else's dream the same way i'm living the dream, playing nfl, help another person achieve that is of interest to me. >> great, lovely. >> thank you. >> thank you. >> thanks to morgan also.
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back to tyler with what's ahead, tyler? >> thank you very much. when we come back, i'll be talking baht ceo and cofounder of mobileye, on the fore front of driving technology. convincing me, a skeptic, why those autonomous cars are on the road in four years. that and more after this.
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if you want exposure to autonomous driving, buy google, get the area for free. right now mobileye is bringing a knife to a gunfight. >> that was andrew left on halftime report last week, the stock 3% following the announ announcement. let's go back to vancouver with the ceo, tyler? >> what a nice way to make our next guest feel comfortable here. we quote a short saler, tim, the ceo and cofounder of mobileye, welcome. your stock, since that day, basically unchanged, he doesn't think you have the right weaponry in the arsenal.
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i assume you disagree with him? >> our business never been better than today, so i don't really understand, and we don't follow the shirt too much. >> you don't pay attention to the stock. >> not too much. this is privilege of cofounders running the company. we look at it long term and don't bother ourselves with the change. >> one of the things he mentioned is the level of insider selling. has it been higher than normal? >> the same since the ipo, nothing changed. >> nothing changed. >> all right. >> let's talk about, a skeptic, i'm on autonomous vehicles, why am i wrong? you believe there will be mostly or 4.5 out of 5 autonomous vehicles on the road by 2021. >> autonomous vehicle is the wave that is so big, so big nobody can stop it anymore. it's created because there's a strategic engagement of the
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regulators to reduce car accidents combined with the acceptance of the auto makers. like last week, agreements with bmw to prepare the first 1,000 truly autonomous commercial vehicles that will be on the road. probably owned by bmw. >> you think they are first to market? >> yes. 2021. in our field, it's tomorrow. >> they're big, volkswagen, you work with all of them. >> the majority of the auto makers in the world. we are the leading supply of vision and spending of the scene, but if you are talking about autonomous vehicle, the challenge here is much, much bigger. we can talk about what the challenges to build the vehicle. >> seems to me one of the challenges is changing road conditions. in other words, a road may suddenly be closed. a road may be detoured in a way, and your technology uses crowd
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sourcing, right? >> right. >> to, in realtime, remap the roads for the autonomous vehicle. >> right. >> that is a trick that has to be surmounted perfectly. >> as i said, autonomous vehicle is a very big challenge, but if you analyze for a moment, there's three pillars, the major infrastructure to enable the future of autonomous driving. first, what is the sensors on the vehicle? took us 18 years to get the con figure ration. it's sufficient, redundancy, performance for autonomous driving. this is worked perfectly. the second challenge is exactly what you described. it's how to build redundancy for the roads, especially the lanes. there's no other -- >> lanes change. >> right. >> construction. >> i'm getting there, yeah. there's no other sense, rather than vision, it's this picture
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in the high resolution, so we came up with an elegant idea how to build redundancy to understand the lane, what you described. we built a map of all the drivable parts in the world, using crowd sourcing and crowd wisdom, and for that, we need cooperation, and two weeks ago, we announced, first agreement we signed with volkswagen, the biggest auto maker in the world, that during the conconsortium, auto makers joining with us to build the future map. >> faz nascinating technology, , i'll be waiting for it. i'll take a ride in one of the cars. back with more from ypo including an interview with a former director of the kri taci talking about global threats after this.
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♪ say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 per trade? uhhh. d i was wondering ifour brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.
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> > welcome to the second hour of "power lunch," i'm michelle caruso-cabrera here with melissa, the young president's organization, the ypo edge conference, two hours until the closing bell, and this is what we are watching at this hour.
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snap soaring on the first day of trading, now up more than 50% after the open. the bearish calls already coming in. we're going to speak with one animal ialyst who released the . caterpillar slammed, stock down 4% contributing to half the losses in the dow jones industrial average because irs and law enforcement officials are searching three facilities including cat's headquarters in illinois. president trump is set to speak this hour. he's newport talking about rebuilding the militariment we'll carry that live when it happens. >> meantime, other movers, barnes & noble down 6%, posting 13% drop in profit, missing estimates, revenue beat, but the stock falls. abercrombie falls, but hollister with surprising growth.
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kroger missed examinations, down 3.3% now. snap is soaring in the first day of trading, and markets failing sioux so far to build on the gain yesterday. bob pasani, tracking the action, and, bob, snap is pushing higher and higher. >> $26 for the first time. here it is. here's the guys who put it to us, all the guys here who brought snap public here, remember the story, priced at 17, opened at 24, trading off the highs, did they underprice it? maybe you could argue. 40% above price, that's good, and not many ipos had that pop. look, it's good news. it'll help revive the ipo market, finally, seven months we did revival stories. we'll get a big ipo calendar in april. i'm sure of that. at this point, i'm sticking my neck out, but i'm sure of it. snap, though, plenty of chances to sell stocks down the road at higher prices.
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floated 200 million shares. that's a big one. when you float, you sell more than the float, that's a big number. well north of $200 -- 200 million shares today. caterpillar, quickly, did it last hour, agents from the irs, department of commerce, all converging on their headquarters in illinois. discussion here, nbc affiliate saying they are seeking tax documentation, we'll keep an eye on that. finally, just about snap, in case you wanted to know, the key is close above 24. no one cares it priced at 17, opened at 24. retail guy? buy at 24, closed at 22, not successful day. you want it above 24, we are well above that number right now. guys, back to you. >> got it. talk more about snap, in fact, bob, the bearish calls on snap are already coming in on the street. joining us now is anthony, analyst with nemora, and also, dana, co-founder of venture
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firm, and anthony, good to see you. >> thanks for having me. >> the beard is new, but we will not discuss that. >> i'm in the -- it's a snap chat lens. >> i see. >> it's not on me, unless you're the producer. >> i have an allocation today, sell right into this. >> sell. insane multiple. user growth e slowing, and modernization is slowing. fierce competition in the likes of facebook, instagram, and the valuation, i mean, multiples are higher now than where facebook and twitter trade at the time of the ipo, and -- >> here's what i don't understand, you have not told me anything i don't already know, and yet, look at the thing today. i mean -- >> yeah. >> i'm skeptical too. are we missing something? >> i think that you can't really judge this investment by trading. in the research and checks with ad buyers, those who talk about the platform, that the messaging
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platform does not lend itself well to high return on investment for marketers. it does not have the targeting facebook has, great targeting capabilities that boosts our advertisers, and, you know, snapchat, it really is geared towards branded advertisers, not necessarily good for small and medium sized businesses, which have made facebook and google businesses so great and stable. there are some really, you know, specific things to point to in terms of advertising trajectory. >> what do you say to a bear, anthony, and he's not the only one. pivotal research had a sell rating on the stock and $10 price target, so, anthony outlined a bunch of skeptical arguments there, add to that, already a slowdown in daily active users, slowing momentum, average revenue per user, a lot of competition. what are we missing here? >> i have a different perspective, a great day for l.a. tech, you know, i think over the long term, this is
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terrific for the overall technology environment in los angeles. investing community. but in general, also, snap's still an early company, and they are a huge growth opportunity there, and i think that, you know, facebook, when it went public, there was a lot of questions, and look at where it's gone. i think when you're investing in a company that has at this, you know, still very early stage, they are just huge opportunities, and snap represents the completely new media platform. >> tell me more about that because i don't get it. i'm old. tell me why it is a new media platform, and it is so very different from facebook and twitter, which i both use. >> well, again, it's the use cases you're seeing, you know, sort of the millennial youth market using snap. i think the youth e evolved. that's where it goes from, being just brand advertising base to, you know, being things that make sense for all kinds of advertisers, but it's early in
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evolution. i think it's a terrific team, bold team. >> anthony? >> yeah, no, i appreciate and i hear dana's point about the early days. from a investor's perspective, that's fine, but, you know, given that it's early i think adds to the risk. >> what kind of multiple -- >> higher risk, i wouldn't necessarily demand the higher multiple than facebook. facebook's well more mature -- >> should a trade out of facebook multiples, and i mean, on every met trick, looking forwards, looking at, you know, lagging pes, right now, trading higher than facebook or twitter at ipos. >> it is trading higher. one thing i add, first of all, should trade at discount to facebook and twitter at the time too, but people were expecting was, you know, the book runners and what consensus as across the board is expecting, is a
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quintupleting of revenue. estimates we heard for 2018 is five times that in the two-year period. my view is that expectation, if you compare that, the expectation to facebook and twitter at the time of their ipos, it's a much, much heroic and hurdle for snap chat and for growth, and juxtapose that growth is slowing, capping the long term revenue potential. it's a great app. it's not the ecosystem that facebook, google, amazon, or apple has, but i would pay lower multiple. that's all. >> we have to go, guys, thank you so much. we have to note cnbc and nbc universal has a business relationship with snap chat. yesterday's historic rally, caterpillar weighing on the dow now. where are you hunting for value? what can you buy here? bringing in eric freedman, chief investment office of wells management, and reese, global head of equity strategy jp
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morgan private banks. is there still value? >> there's a couple areas interesting. one is in the sbesh national equity side. it's been the long laggard, if you will, in the global picture, so whether it's developed, international, or emerging, there's opportunity. >> implicit in that is your thought that u.s. markets are fully valued or close to full valuation? >> we don't. there's still upside in the u.s. market as well. >> okay. >> if we put a mul9 times call, does not reflect any tax cuts or repatriation. there's upset. >> why international when all the action is here in the united states? >> so great question. my daughters are both -- two of my kids are golfers, and so i always say, what's the next shot, not what's the last shot. the next shot, of course, is where have there been more of a lagging market environment, and that's the case international.
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y you're seeing a thrust in economics as well as a thrust in data, not just in the u.s., but across the pond, so we're enthusiastic there as well. >> what do you think? buy into the u.s. market or look for another place that has not moved as much in. >> we're comfortable holing the u.s. exposure. more selective where we want to add today. telecom and energy is interesting, including small cap, lagging to date, but for new money there's a great opportunity outside the u.s. in europe, earnings to recovering, value waegss are attractive, and economies in a first time in a long time look better. yes, political risk. >> i was going to ask. have you seen the poll numbers? they want france to leave the euro. may be to the point all the things so scary in the markets for so many years, once they happen, they are honors. maybe that's the case. >> we don't want to down play the polls, or politics in general, but we can't wait for everything to be clear.
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we advise to leg in, down it with protection, stay hedged, take advantage of a region that people right now don't like. everyone's talking about the u.s., and that's great. we like the u.s. position the well for that, but europe could surprise the upside at some point this year. >> what do you think stops the rally? >> so, a couple things, one would be an increase in borrowing costs. the fed is probably on cue for two weeks from now, but if inflation picks up more quickly than expected, that's, obviously, a negative. the other thing, of course, could be as michelle hinted at, the potential for political risk. if things go the wrong way, it's a good indication, actually, in holland in two weeks, followed by france and the end of april, and, of course, we're waiting for germany and then shaw that, so a couple significant events that could sway the other way. >> thanks, guys, we have breaking news related to jeff sessions. great to have you on. president trump making comments on attorney general jeff sessions. let's get to the white house. >> reporter: yeah, hi, michelle. that's right. the president is in virginia at
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an event talking about military spending. he just talked to the pool that's traveling with him. reports now from the press pool, that the president said he has total confidence in attorney general jeff sessions, and, of course, that comes in the wake of this washington post reporting last night. sessions apparently met with the ambassador from russia twice last year, including one meeting in september that took place in his office. the white house has sort of poo-pooed the story throughout the day saying it's democrats stirring up trouble here, and there's nothing inappropriate about the meeting, but, of course, jeff sessions did say in a hearing for his confirmation he had not had contact with the russians. democrats have called for his resignation today, and i can tell you, michelle, that in talk ing to just one source today, the word i'm getting is that both democrats and republicans are quietly making calls town to see who might serve on an independent commission to investigate russia if such a commission were to be created.
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no indication that's where we are headed, backup one source familiar with this says that both sides want to be prepared if anything like that should come down the pipe. back do you. >> while you were speaking, a news flash came across from reuters saying trump says he does not think sessions should rescue himself from russia investigations, so in addition to what you said when he said he had total confidence in jeff sessions as attorney general, so we are hoping for tape playback of the events, where you mentioned, president trump is in virginia, see if we hear him on camera for those things. thank you. >> you bet. >> quick other flash from washington, senate confirmed former texas governor pearly as energy secretary, so rick perry is confirmed. >> what's amazing about that, clearly, not that controversial, right? >> huge margin. >> forced it to take so long. >> so long. ridiculous. here's what's coming up on "power lunch," visiting virginia
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today, showing you live pictures. we expect remarks and we'll bring them live. what do business leaders what from president trump? we'll ask. another big guest with tyler at the ypo summit. hi. >> thank you very much. when we return, we'll talk bo a former cia director, james woolsey, and former member of the trump transition team about the defense budget, about russia and threats from north korea, iran, and many. be prepared to get scared when we return to vancouver. you're watching power lunch with melissa lee, michelle caruso-cabrera, brian sullivan, and tyler matteson on cnbc. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly
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welcome back to the ypo edge summit out in vancouver. there you're looking live at a shot in newport news, virginia where president trump will be christening, i guess, or commissioning the aircraft carrier that gerald r. ford, and we're joined by the former cia director to talk about our defense posture and various threats around the globe. welcome. >> good to be with you with us.
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>> talk about defense spending. the president said he wants to boost it measurably. do you think we need to do that? >> i think we definitely need to do that. during the obama administration, a lot of things deteriorated that should not have, including parts of the nuclear deterrent, and we need to get back into the business of having the world's best military that is not only as good, but function smoothly and is innovative, and all of that needs added resources. the administration just added, i think, $54 billion to next year's defense budget, which i would consider to be a good start, but i've always been inclined to teddy roosevelt's formulation to speak softly and carry a big stick. the stick was shrinking in size and needed added oomph. speaking softly is something
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that the president wasn't doing up until yesterday, but he did professionally and softly, in a sense, in his speech to the congress, and so i think the president is the patriot, and you can see it from the people he's selected for senior jobs, see it from the defense budget, his intention he pays to the military, and i am -- i think that's good. i think it's good for the american president. >> obviously, they are a fast moving development today in the story about russian and potential russian involvement in the american electoral system. we can set aside some of the sort of political chatter of the day, but i have to assume that you are concerned about the possibility that russian intelligence in a measurable demonstrable way tried to affect the election. does it surprise you that they would? >> oh, absolutely does not surprise me. the russians have been doing this for decades in one way or
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another. they call it disinformation, otherwise known as lying. they reconstruct photographs. they rewrite prefaces of books. there's a lot of people involved in it, and they normally are going after religious organizations. they go after the jewish groups. they go after the roman catholic church, and the russians proceeded by the soviets have been doing this since the '30s, so that is -- and, including going after elections. now, what's new is to use cyber in going after, trying to influence their neighbor's elections, including us, and that's -- >> what do we need to do to combat it? what do we need to do in terms of investigation into it? >> well, we can have an investigation, but they are going to find that these russian
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kgb and gru headquarter organizations that do cyber are, in fact, responsible. i think what they ought to do is something that will be -- make a lot bigger difference to the russians. they ought to make it be the case that cars sold in the united states, have canada join us, have to be able to use more than one fuel. so they can use, let's say, gasoline and, they also need to use methal, so you can pull into a pump in a filling station and decide what fuel you're going to use. that, in turn, makes it possible to drive on something other than petroleum based fuel. >> hurting the russian economy? >> that would make the russians very unhappy and probably a lot more willing. >> two more questions, if i might. one on the relationship of the trump administration, the trump white house with the intelligence services in the
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united states. there's been harsh and skeptical things to say about it, and you have to say the relationship is not maybe where you'd like it. what are your thoughts? >> well, there were some tough exchanges and former cia director -- link to naziism was a tough hilt. >> terrible comment. >> the former cia director is taking the lead in the never trump group. i think that's a bad idea too. i think that everybody ought to take it easy and work on doing the best job we can in collecting and using intelligence. i think the intelligence community will come around on working with the president quite readily. that may come around more readily than the never trump people. >> let's talk a little bit about global threats to harsh ones you see. north korea, iran, russia, and why? >> it's -- it'll be iran before
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too long because they'll have a nuclear reabefore too long, bas on the agreement signed with other countries. i think right now, although russia has a lot more capability, of course, north korea is the biggest problem because the leadership is so -- >> renegade, rogue, and weird. >> that's going to be a serious problem for us given the fact they can both orbit a satellite and they have nuclear weapon, giving them the ability to use a detonation in lower earth orbit to knock out the electric grid. >> you wrote passionately about this earlier this week, the threat of electromagnetic pulse or radiation that would devastate our technology infrastructure. looking right now at newport, virginia, where the president is preparing to have some comments as the gerald r. ford naval
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vessel is commissioned. there he is wearing a kind of bomber jacket, i guess you'd say. so we'll keep one eye on that as we continue to talk, if you don't mind? sure you don't. tell us about that piece you wrote in the "wall street journal" on monday about the danger of an electromagnetic pulse, something that's released in low orbit that could actually devastate the grid, cell phone service, and much, much more. >> my co-author and i have been working on the issues for some time. basically, the earth has been being bombarded by mag anitized radio waves from the sun for 4 billion years, so in one sense, this is not a new issue. in fact, waves from the sup could knock out the electric grid now if they hit exactly where it would create the serious problem. the real difficulty is that whether you do it by hacking or you do it by detonation of a
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nuclear detonation in lower earth orbit, 50, 150 miles over the center of the united states, either way, you can knock out transformers and transformers, the transmission lines don't do any good if they are not transformers to make the system work. >> right. go, michelle. >> i wanted to ask more about that. there's a book out there called "ghost fleet" which i understand many people in the pentagon have read, and it's about this idea where what happens, and we had guests on talking about that maybe we have to retain some really old technology that cannot be hacked in the moment when things like that occur. thoughts on that? >> i think the danger is real. the technology that needs to be utilized is to repair the existing structures of the grid in such a way they can get by.
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in the meantime, i say modernized by solar plus batteries located all over the place, in different buildings, different homes, and one can move a lot more quickly, i think, to be a distributor of energy rather than relying completely on older systems, but the older systems do need to be modified to some extent as quickly as possible so that we don't lose everything we got in terms of electricity, but with some sort of an attack by north korea or in a few years iran. >> do you think that north korea wants to do something like that to the united states because it would result, presumably, in their annihilation. we're not going to sit there and let them do that. >> deterrence doesn't work nearly as well with electromagnetic pulse as it does with detonations of nuclear
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weapons. in part, because you may not know where the electromagnetic pulse is coming from. the russians have unfortunately taught the chinese and north koreans how to launch to the south around the southern hemisphere rather than over the north pole, and if you launch towards the south and the satellite that has a nuclear weapon in it comes up from the south and detonates over the united states, you may never see it before it detonates because we don't have sensors and satellites and electro -- infrared detectors and so forth facing south. we have them all facing north, and that may not be where the russians come at us or the north koreans. >> back to the question, do you think that this is the kind of thing that north korea wants to do or you worry about it because the leader is so unpredictable?
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>> the leader is extraordinarily unpredictable, incoluding the murder of the potential rival, half brother for the presidency. >> let me interrupt you, if i might, as the president is about to speak. >> okay. [ cheers and applause ] >> thank you. thank you. thank you very much. what an honor. they just gave me this beautiful jacket. they said here, mr. president, please, take this home. i said, let me wear it. then they gave me the beautiful hat, and i said, you know, maybe i'll do that. we have a great make america great again hat, but i said, this is a special day. we're wearing this, right? [ cheers and applause ] i have no idea how it looks, but i think it looks good. it's a great looking hat. just like this is a great looking ship. thank you. i'm privileged to stand here
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today with the incredible men and women of the united states navy. [ cheers and applause ] american sailors are the best war fighting sailors anywhere in the world, and it's not even close, and susan, i am so glad you could be with us. i know how hard you work, 17 visits, and she wanted things done right. i will tell you. they told me. she wanted this one done right in honor of both of her parents who were great, great people, and we wanted to introduce this beautiful vessel to the american people, and i wanted to be here. i wanted to be with you, so, susan, and to your family, unbelievable job. unbelievable. [ cheers and applause ] the soon-to-be commissioned gerald r. ford uss, what a place. really feels like a place. you stand on that deck, and you
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feel like you're standing on a very big piece of land, but this is better than land. it'll not only be a great symbol of american strength, but a great legacy for your father, and our former president, gerald ford. president ford was a navy man. by the way, he was also a great athlete for those of you who didn't know. he saw action in the south pacific during world war ii. he served this country with honor, in the military, in congress, and in the white house. the proud dignity of this ship is a fitting tribute to gerald ford, the man and the president. congratulations to all of the men and women who helped build it. this is american craftsmanship at its biggest, at its best, at its finest. american workers are the greatest anywhere in the world. this warship and all who serve
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on it should be a source of shared pride for our nation. we are joined today, better believe it, right? [ cheers and applause ] better believe it. better believe it. by the way, we're going to soon have more coming. [ cheers and applause ] we are joined today by general mattis, now secretary mattis -- [ cheers and applause ] where is he? who will be charged with overseeing this great rebuilding of our military might. we will give the men and women of america's armed services, the resources you need to keep us safe. we will have the finest
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equipment in the world, planes, ships, and everything else. we are going to have very soon the findest equipment in the world. [ cheers and applause ] we will give our military the tools they need to prevent war, and if required, to fight war and only do one thing, you know what that is? win! win! [ cheers and applause ] we're going to start winning again. admiral john richardson, chief of naval operations, is with us today as well. great gentleman. admiral, we're going to ensure our navy has the resources, personnel training, and equipment, the kind of equipment that you need, so congratulations, admiral, and a lot more is coming. [ cheers and applause ]
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let me congratulate captain mccormick, commanding officer of gerald r. ford. this ship will make an extraordinary addition to the fleet, like no other, not anything in the world is like this. it remipresents the future of naval aviation. i have no greater privilege than to serve as your commander in chief and the commander in chief of the men and women of the united states military. great people. great, great people. [ cheers and applause ] i salute you, and i salute our sailors. i will always support you and your mission. i will never, ever let you down. i also have to recognize mike patters, president and ceo of
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huntington industries, along with matt mulharen, president of newport news shipbuilding. they won't let you done either. they are not going to let you down either. [ applause ] to those who serve our nation in uniform, and to those who build the instruments of our defense, i thank you on behalf of our nation. >> usa! >> i agree. i agree. [ applause ] our carriers are the center piece of american military might overseas. we are standing today on 4.5 acres of combat power and sovereign u.s. territory. the likes of which there is nothing to compete. there is no competition to this ship. it is a monument to american might that will provide the strength necessary to ensure
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peace. this ship will carry 4,500 personnel, and 70 aircraft, and will be a vital component of our defense. this carrier and the new ships in the ford class will expand ability of our nation to carry out vital missions on the oceans to project american power in distant lands. hopefully it's power we don't have to use. but if we do, they are in big, big trouble. [ cheers and applause ] this great aircraft carrier provides essential capabilities to keep us safe from terrorism and takes the fight to the enemy for many years in the future. the great admiral who commanded the u.s. pacific fleet through
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the second world war once said, it is the function of the navy to carry the war to the enemy, so that will not be fought on u.s. soil. true. [ applause ] it was under admiral's command 75 years ago this june that the navy did just that. at the battle of midway, you've all known about the battle of midway, where the sailors of the u.s. navy fought with the bravely that will be remembered throughout the ages. historic bravely throughout the ages. the backbone of the american fleet at midway was three beautiful aircraft carriers, the yorktown, the enterprise, and the hornet. all three were built with american hands right here at the
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newport news shipyard. [ cheers and applause ] at midway, america was greatly outnumbered by, i mean, a lot. and the fleet badly damaged, but the heroic deeds changed the course of history. many brave americans died that day, and through their sacrifice, they turned the tide of the pacific war. it was a a tough tide. it was a big tide. it was a vicious tide. they turned it. countless other americans in that war, some of them parents and grandparents to people in this room today came home thanks to their very heroic deeds. the sailors at midway are part of a long line of american
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heros, and unbroken chain of patriots from each generation to the next, who rose to defend our flag and freedom. that legacy continues today as american warriors protect our people from the threat of terrorism. on tuesday, in my address to a joint session of congress, i asked congress to e eliminate the defense sequester and to support my request for a great rebuilding of the united states military and the united states navy. [ cheers and applause ] at the end of year's budget cuts, preparing defense, i am calling for one of the largest defense spending increases in history.
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by eliminating the sequester and the uncertainty it creates, it will make it easier for the navy to plan for the future, and, thus, to control costs an get the best deals for the taxpayer, which, of course, is very important. right? got to get a good deal. we don't make a good deal, we're not doing our job. the same boat for less money. the same ship for less money. the same airplanes for less money. that's what we are doing. that's what we're doing. we'll get more of them, and we could use them. our military sustained stable funding to meet growing needs placed in our defense. right now, our ageing front lines strike and strike fighters, the whole aircraft, many, many aircraft, are often more likely to be down for maintenance than they are to be up in the sky. our navy is now the smallest
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it's been since, believe it or not, world war i, don't worry, it's soon going to be the largest it's been. don't worry. think of that. think of that. these troubled times, our navy is the smallest it's been since world war i. that's a long time ago. in fact, i just spoke with navy and industry leaders, and discussed my plans to undertake a major expansion of the entire navy fleet including having the carrier navy we need. [ cheers and applause ] we also need more aircraft, modernized capabilities, and greater force levels. additionally, we must vastly improve our cyber capabilities. this great rebilling effort will create many jobs in virginia, and all across america, and
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it'll also spur new technology and new innovation. america's always been the country that boldly leads the world into the future, and my bujd ensures we e do so and continue to do exactly that. the american ships will sail the ships. american planes will sore the skies. american workers will build our fleets. [ cheers and applause ] and america's military will ensure that even though the darkest nights and throughout are bright and glowing sun will always shine on our nation and on our people. our navy is great. our navy is great. our people are great.
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[ applause ] our republic will meet any challenge, defeat any danger, face any threat, and always seek true and lasting peace. may god bless our military. may god bless our navy. may god bless the wonderful gerald ford family, and my god continue to bless the united states of america. thank you very much. [ cheers and applause ] ♪ >> president trump rounding out the comments to thousands of sailors and shipbuilders who are in the hanger bay for the uss
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gerald ford. >> uss gerald ford, a super carrier, most technologically warship built at $13 billion, overbudget, no surprise, expected to be commissioned this summer, first new class of aircraft carrier we've had designed 1975, but we heard him refer to, the introduction, the enterprise and kennedy, and, of course, why he's there? he wants to spend more on the nation's defense, and he highlighted how he wants to have even more ships, get up to 350, and currently, we have just 270 ships. >> rebuilding is the theme of the president, but, of course, it's about costs, right? he said more ships at a lower price, and he emphasized that, you know, of course, that's his -- that was his boeing and lockheed, apparently, continuing to plan that with the rebuilding of the aircraft carriers in the u.s. navy.
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huntington is a publicly traded company, up 67% over 12 months. >> listening in, once again, we have been hearing this week how the priority of the this administration are going to be about spending more on defense, and he reiterated that today. >> this is an emotional pitch to back up the numbers that the white house put out earlier in the week, talking about 54 billion in additional spending on the united states military from this president. they are going to match that, they say, with 54 billion dollars in cuts in nondefense discretionary spending. this is the president making the case of what they are going to spend that money on. aircraft carriers, like the gerald ford, and all sorts of other equipment as he used the term, describing the military as being sort of hallowed out in recent year, saying we have to get back to a big, robust united states military. this is a visual that the white house wanted today. this is absolutely the key point
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that the white house put out today, being a little distracted from the white house's perspective about the news with jeff sessions, but they will be pleased with the images from the event today. >> you hear the cheers happen when he said, we're going to have more of them. the room exploded. >> that's right. remember, newport news is the center of american shipbuilding for a century or more. this is very, very important economically to the community as well. >> good point. >> thank you. president trump, as we mentioned, speaking about rebuilding the military, does that mean you have to run out and buy defense stocks? that's next. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t.
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welcome back, stock stories today, first, snap, first day traded as public traded company, a gain of 9 points. at the same time, caterpillar is lower by 5%. dow component, that's because we know irs agents descended on the company's headquarters. we're waiting to see what that's about, but it's negative on the stock today. >> president trump talked about increasing military spending. does that mean it's time to buy defense stocks? let's ask the trading nation team. great to have you both. i'll start with you, mark.
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you know, these are stocks with nice runs over 12 months, is now the time? >> i do think now's the time. these stocks have grown into what was previously extended valuations. while being far from cheap, rapid earnings growth in the future has really brought down the forward multiples to an acceptable level so we think there's great potential. you heard president trump talking. he's very committed to increasing defense spending when you look at the department of defense. they've recently increased staffing, which is a great leading indicator in defense spending, and beyond that, this is just -- there's just so much future potential for growth out of this sector. >> dennis, are there a lot of option trades in defense? >> the one thing, you know, people argue back and forth about the stocks being expensive if they don't get earnings growth. it may come from europe if nato spends more on defense, but the only thing that's inexpensive or cheap in this sector are the options that are trading on the
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stocks, so my view is these stocks, there could be growth and great volatility. that's a place where you buy puts to protect your position or sell out of the position. >> stock replacementstrategy. >> the president made clear underscoring once again that he will not overpay for defense though. are you concerned about margins in the margin pressure these against contractors could face? >> and that is certainly a huge issue, a huge concern. however, based on the research we've seen, we're actually expecting some margin expansion over the course of the next few years. and we do expect the positive momentum for the defense stocks will continue to follow that margin extensiopansion. >> we'll leave it there. thank you both. now the latest from trading nation and a word from our
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spondylolistheske sponsor.
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this is videotape from moments ago, president trump touring the uss gerald ford. we will listen because we believe he was asked questions about jeff sessions and the reports that have come to light that suggest that perhaps attorney general sessions lied when he was under oath in front of congress about whether or not he's had any meetings with the russians. let's listen to the tape. >> when were you aware that he spoke to the russian ambassador? >> i wasn't aware at all. >> so we understand he was thrown a question about jeff sessions. and his response was totally. >> meaningful confidence in jeff sessions. >> once again, president trump on the uss gerald ford. eamon javers joining us from the white house as he tries to make
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the point about his priorities but constantly dogged by these issues with russia. >> reporter: yeah, we have a transcript here of what the president said. a little hard to hear. he was asked if sessions should recuse position. he said i don't think so. he was asked did you know sessions spoke to the russian ambassador. he said i wasn't aware at all. and he was asked good sessions truthful testify truthfully to the senate and he said i think i probably did. and that scares with what the white house has been saying. they dismiss it simply democra s s actsing out for attention. they say sessions did coming in wrong. but we are seeing calls from a few republicans saying that sessions should recuse himself from any potential investigation going forward. so a lot of this still sorting out but there the statement from the president himself. >> and i'm glad you had a transcript because i struggled to hear anything.
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and more video of him as he's touring the uss gerald forde. weebl right back. the future of business in new york state is already in motion. companies across the state are growing the economy, with the help of the lowest taxes in decades, a talented workforce, and world-class innovations. like in plattsburgh, where the most advanced transportation is already en route. and in corning, where the future is materializing. let us help grow your company's tomorrow - today at
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my check please is snap debuting, up 47%. i can't wait. five, ten years from now, to know the answer whether or not this is a facebook or twitter. >> might know in one year. but it was amazing to hear
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lights one of the first founders, $1.2 billion overnight. >> snap is emblematic of one 69 things that i was talking about earlier with john chambers and that is the digitization of the planet as he pointed out. his view, may be conservative, may be over the top. 500 billion device connected, some will be automobiles as we talked to the ceo of moesbile e earlier today. and then the digital side and that is the threat that is posed by either manmade or natural disasters that could really bring the whole grid, our connect differenc connectivity coming down as we have come to rely on that digitally connected world for the things that we do. two sides of digitization, that's what i've been thinking about. >> yeah, he scared me. >> it was frightening.
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>> all right. and we're also of course watching dow component caterpillar, one of the best performing dow components, up 35%. federal officials raiding three locations in illinois. that is the story we'll be watching into the close. thanks for watching "power lunch." "closing bell" starts right now. this will. welcome to the closing bell here. what are you doing? i've always wanted a rainbow tongue. let's try something else here. there we go. what did you say about this picture? >> you look like you did 20 years ago. >> and this is what you will look like in 20 years. all right. let's try another one here. oh, that's nice. that's nice. there you go. >> this is as close as i'll ever get to using snapchat by the way. you look lovely, bill. >> what have we done hooer? where have we gone? all right. let me save that


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