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tv   Power Lunch  CNBC  March 6, 2017 1:00pm-3:01pm EST

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>> classic sell the news environment, but the price of the stock is perfect. it's smaller, more nimble, more profitable. >> airlines. i focused on one thing, delta saying no capacity coming on. >> dead right. >> he joey? >> palo alto. need security. >> great stuff. >> thanks, jim. >> i like cat. "power lunch" starts now. >> thank you very much. i'm brian sullivan. the tweeter in chief returns. 140 reasons why the market laser focused on the president. we are live at the white house ahead. plus, are we headed for a showdown with north korea? kim jong-un rattling global markets by firing off four missiles. we're tracking the fallout ahead. this one stock definitely in need of a hero. camera company getting hit hard in today's session. that and so much more coming your way as "power lunch" starts
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right now. and welcome, everybody, to "power lunch." i'm tyler mathisen. stocks are lower to kick off the week with all three major indexes sporting somewhat modest declines, massachusetts dak the biggest of the three. financials posting the biggest losses and the new kid on the block, snap, is having its first down day since going public thursday. snap down now. michelle, nearly 7%. >> big intra-day move there, tyler. yep. i'm michelle caruso-cabrera. we have a busy two-hour show once again we kick it off with news out of the white house. president trump signing a new order on immigration, following a busy week of meetings, travels and controversial tweets.
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eamon javers join us. >> reporter: we're told the president signed the executive order at the white house earlier today. the white house didn't allow reporters or cameras into the room for that. they did make a few high-ranking officials available for some comments on television about this. secretary of state rex tillerson described it this way. >> it is the president's solemn duty to protect the american people. and with this order, president trump is exercising his rightful authority to keep our people safe. as threats to our security continue to evolve and change, common sense dictates that we continually re-evaluate and reassess the systems we rely upon to protect our country. >> reporter: now, michelle, here is what we know about what's in this executive order based on what administration officials told us today, and some of the texts that have come out this afternoon. this is six of the seven countries affected by the january 27th executive order. they've taken iraq out of this.
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officials briefing reporters today, saying that the iraqi government has been very cooperative in getting the u.s. government the type of information it needs to secure people coming in from that country. they're also saying that this is effective march 16th. that gives them some time to coordinate the rollout across the entire government, make sure there are no snafus like we saw back in january. it doesn't revoke any valid visas in place right now and there's no distinction made for syrian refugees. all refugee admissions will be halted for 120 days. they're also saying this does not apply to green card holders. so, a very different executive order than the one we saw january 27th. and in the text of this executive order, michelle, it revokes the president's previous executive order even though the white house insists that one was legal and proper as well. >> over the weekend, the president got a lot of attention, eamon, for tweets he sent over the weekend, suggesting, in part, that president obama tapped his phone
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during the election. >> reporter: right. that's a real head scratcher. the white house still hasn't provided any evidence that his tweet was accurate. it blew up washington, people trying to figure out if the president is referring to new information he was briefed on by u.s. intelligence. it would be possible for a fisa court, intelligence court to issue a warrant for getting telephone communication if they had probable cause. james clapper said on "meet the press" over the weekend, no, that simply didn't happen. it's not clear what the president was talking about. we should hear from sean spicer off camera here in about half an hour's time. you can imagine he will be besieged with questions about that. >> i'll bet. thanks, eamon. >> let's talk more about the president's management style as evidenced over the weekend. and before. joining us, director for uva center of politics and ceo for
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the committee of economic development. guys, welcome. good to have you with us. >> steve, let me begin by asking you whether what we're seeing in the trump white house is, in any way, the expectable bumps you would have under any administration, particularly one led by a businessman who is probably not accustomed to having things leak and probably not accustomed to being criticized at every turn for everything she or he does. >> well, i think you've hit some important points here. first of all, this kind of transition has been tough on every new president as they come in, they try to get their bearings. second, it's no surprise that presidents bring in trusted people and try to put them in positions around them. you see president trump, having done that with family and some of the close advisers. but there are 4,000 political positions still to be appointed here. 1,200 that require senate approval. most of the people throughout the government are from the
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other party. and not necessarily consistent with the philosophy. so, you've got to get those appointees through. he has got to articulate principles, strategies and then he has to empower these groups in order to implement these things. that's what any ceo has to do, any governor or any high-level official in order to run something that is as dispersed and, you know, has as many tentacles as the u.s. government. >> larry, the president last week is pretty widely praised for a speech that sounded presidential and then later in the week down in newport news at the gerald ford, aircraft carrier. but then on saturday, the other donald trump came out in a burst of tweets. does he need simply to stay focused on being president and not on tweeting or what? how would you advise him?
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>> well, you can offer advice. he probably won't take it, especially from family members. he needs to stop tweeting. he undermines himself and violates the principle that he enunciated to congress to put aside the trivial pursuits. by nature, a tweet is trivial, especially when you attack arnold schwarzenegger, meryl streep or make outlandish charges against your predecessor, president obama. that would be number one. second of all he has to focus on the area where he has credibility. jobs, the economy. that's where, even now as his ratings are sinking in the 40s, he is still rated above 50. he is seen as credible on the economy. for god sakes, focus on the economy. >> but is there some element, some machiavellian element to
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this, steve -- i don't know if the president thinks this way or not. but there's all these articles on the front page of the "new york times", trump, russia and all this stuff. instead of talking about that, the entire weekend was spent on twitter with the media, talking about arnold schwarzenegger and his tweets. do you think there's some element to, hey, look over here. we're not talking about the big picture stuff. we're talking about his tweets. it's almost a win for the president. >> yeah. you know, some people believe that this is just a distraction. don't look at the man behind the curtain. focus on something else. maybe that is part of it. so many people are focused on trying to change donald trump and tell him he has to stop doing this and start doing this. >> people like larry. >> the guy is not going to change. yeah. the guy is not going to change. he is who he is. he displayed that pretty openly throughout the campaign. he hasn't changed one bit. and, you know, he has been
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successful in his mind up to this point. now the question then becomes, how is he going to govern going forward, when he -- you know, he doesn't have every decision coming through his office, as the head of a real estate development firm. he simply cannot be part of every decision and every implementation. and this is where he finds himself. so, this is why i come back to, he has got to get these 4,000 positions in place. he has got to get the 1,200 senate approvals through, get them appointed and then get them through in order to then work through all of these appointed officials and to begin the work of governing. >> it's an important point. right now the opposition is working for him, right? everybody in the government at the moment is the opposition, hence why you have so many leaks, et cetera. >> but larry, let me come back to something you said. larry, one of the things that explains donald trump is his success at using twitter. and going over the conventional media to reach his core constituency.
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and they seem to like it. why would he give it up? i get the idea that it is unconventional presidential behavior at the very least. but this is how he communicates to the broader public. >> one, okay. don't give it up. using it sparingly. it has more effect that way. if there's one thing we learned in the last two years, his base, the trump-bots, are with him regardless. it doesn't matter what he says or does. i don't know that he needs that as much as he needs, as steve was saying, focus on the government. focus on what you do well. and i think a lot of this will take care of itself if he changes to a certain degree. he doesn't need all these appointees. he has outstanding cabinet officers, like rex tillerson, general mattis, others. he can rely on them to a much greater degree than he is,
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rather than that personal staff, some of whom are not quite on the bean. >> steve odland, larry, thank you. appreciate it. continued drama for the white house. north korea, by the way, launching ballistic missiles over the weekend. seemingly more nationalism in europe and big fed meeting that might include another rate hike. through all that have, stocks are having a great year. what are the most important things you need to be laser focused on? jeannie why at and from pnc asset. >> these are your words, you are a perma bull for stocks, which one would expect in your industry, which is fine. what makes you nervous? look at what we just outlined. what makes you nervous right now? >> the only thing that makes me nervous right now is the gap between knowing that corporate
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income taxes are the low-hanging fruit and will be reduced most likely. i think president trump has been quite consistent in that, as the tax foundation, nonpartisan group pointed out early in the campaign both clinton and trump were actually in favor of corporate tax reduction. even the obama administration. so we know corporate taxes are likely to be reduced. >> fair enough. we all spent time in d.c. lately. i know this. there are 535 men and women on capitol hill who all have a different point of view. >> who all think they should be president. >> that's right. and you should be. is corporate tax reform already baked into the dow? in order if we don't get it, what happens to stocks? >> to a certain degree, yes, it's already baked in. what is not baked in is what levels. because, again, we feel that corporate tax reduction is a
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low-hanging fruit. >> and it's going to get done. >> it's going to get done. the devil is in the details. because in order to get it done, there will likely be a reduction or an elimination of the interest deduction on debt, which affects some companies more than others and possibly a border tax. most likely a border tax. so the devil is in the details. >> bill stone, we heard from jeanie. we heard from ron insana last week. maybe the only risk to this rally is a failure when it comes to getting corporate tax reform done. do you agree or is there anything else out there? >> it certainly sits out there. i would say maybe part of the risk is just that, you know, making the sausage just takes too long and the market gets tired of waiting. i guess i still say in the end it's going to be okay, because i think i'm a lot in agreement
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here. i would say i don't know that we necessarily get reform done. i guess i would stake it in at least we get a tax cut and repatriation. it's unclear to me, because reform is really hard, whether they don't just eventually chuck it for the short run and go right to the tax cut and maybe some repatriation mixed together. i don't think that's a bad outcome for the market either. but getting there may, in fact, cause us some indigestion. >> you both like financials. jeanie, bank of america is up so much. a lot of you come on and say it doesn't matter, they're going up even more. >> right. the whole sector, the whole financial sector, when you consider how much regulation has been put in place since 2009, over 230 new regulations most of which have been on the financial sector, banks particularly. so, just a shift in that environment. even if there's no new regulation added.
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sentiment favors the stocks. we like the sector. by any means we don't want to be away from that sector. bank of montreal, upside, downside at this point is a little more interesting because it has good dividend support and a good fundamental story. >> 33% compared to 85%. thank you so much, jeanie. much appreciated. bill, you too. >> thank you. >> trying to get the president's attention, why everyone is talking about this ad today. sure you saw it on "saturday night live," right? it's coming up. and are we headed for a showdown? north korea rattling global markets by firing off another four ballistic missiles yesterday. we're tracking the fallout next.
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welcome back to "power lunch," everybody. north korea launching four more missiles yesterday, as that country aggressively moves forward with its nuclear program. but it begs the question, how does a poor country afford something as expensive as a nuclear weapons program? where does the money come from? report out of the u.n. today is providing new evidence on how the country makes a lot of money
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flouting u.n. sanctions and, michelle, what a weekend you had, reading this report. >> it's super interesting. highly recommend it. new report details how north korea is making millions by selling arms to countries in africa and the middle east and billions selling coal and iron ore to china. one example, ship seized in the suez canal was carrying rocket propelled grenades from north korea. destination unclear. underneath those tarps. also report that they sell various armaments to a company called glocom. many front companies like glocom in the report registered in malaysia or china to hide their north korean roots. north korean diplomats have been caught smuggling luxury goods, including gold bars, watches and
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even this bentley. still processing transactions from north korean banks even though some of them are supposed to be prohibited from using the global financial system. i reached tout swift and am waiting for an explanation. the biggest influx of cash, more than a billion dollars, comes from carrying coal and iron ore to china. the u.n. has asked china for an explanation. what should be done by the trump administration in the face of the missile launches and this report? joining us now is anthony ri rigiro. thanks for being here, anthony. >> thanks for having me. >> the biggest issue is what to do with china and they seem complicit. reading this rorkeport, i wasn' surprised by the china angle. what surprised me more was swift. our audience came to know because of the iran sanctions situation.
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i was startled to read they're still processing payments for north korea. were you as started by that? >> yes, definitely. it was stunning to me. i don't know how swift could even rationalize having secure financial messaging services not just for designated north korean banks but any north korean banks whatsoever. it looks like their response to the u.n. was, well, the belgian government said it was okay for us to get thousands of dollars in fees. i simply don't understand, as you said, given their experience with iran, how they could justify a country that is -- the u.s. has designated as a money laundering concern. >> who runs swift? >> international consortium. it's mostly owned by the banks. i was on their website today. you can still see some of the north korean banks on that
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website. this could also possibly be a violation of u.s. law. it is part of a larger concern, which i think most people expect or believe that north korea is isolated from the financial communi community, and they are not. whether they're using china to process dollar transactions through the united states or front companies and other countries to access the international financial system. that's what we need to be doing more of. with iran, we were on them multiple times, designated more and more front companies and we're just not doing that on north korea. >> every book on north korea, which is about three, anthony, tess a country you wonder -- every time we dig in, how do they continue to exist? i mean, every major dictatorship in the world tends to get
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toppled over time. but this family has been able to hold on for over 60 years. what's it going to take to get real change in north korea? and how have they held on so long? it's an economy from 100 years ago. >> agreed on that point. the primary issue here is that the north korean regime doesn't care about its people. all that money that we're talking about here is going to their strategic programs and to the elites. and they are able -- the report over the weekend said they were able to get significant revenue from these -- this mechanism. and how they've been able to survive is we are not closing these loopholes and these gaps to start to pressure the regime. i think people expect that we're doing that, but we're not. >> that leads me directly to a question that seems obvious here. do sanctions work? >> well, they're not working now, because they're not well enforced. >> i can't think of a case where sanctions have really achieved
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the objective. they didn't particularly work with iran. >> well, they worked with iran in terms of getting them to the negotiating table. i think that was the ultimate goal. we can have a debate of whether that's -- the deal itself is what we were looking for but the goal was to get them to the negotiating table. >> would it help if the china enforces the sanctions? i don't know if they willfully look away but they could do more, couldn't they? >> exactly. given chinese security services it's hard to believe that billions of u.s. dollar transactions are occurring and the chinese know nothing about it. they'll claim they know nothing about it, blame everybody else, but it's clear that the chinese government has to be aware of. the banks themselves, chinese banks are the ones responsible. they have to know or they should know what is going on with their transactions. and they have to do more to stop it. >> anthony, thanks so much for joining us. >> thank you. >> anthony ruggiero.
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on deck, a closer look at the potential impact on airlines and travel for the president's revised immigration policy. our first big interview from the conference in houston, ceo of chesapeake energy will join us -- look at that lineup. ceo of chesapeake in the next hour. ♪ ♪ oh♪ ♪ you're unbelievab♪e ♪ you're unbelievab♪e the first stock index ♪ (musicwas createdughout) over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks.
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invest with confidence. welcome back to a great monday. let's check on the bond market and how things are trading.
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rick santelli is always at the cme just for you. rick? >> thank you, brian. before our time zone, it looked like it was going to slip a bit. it definitely started to forge ahead back to that 250 mark. week of tens, been there, done that, ha hugging the top range. now i still think it's equities. two-day s&p 500 versus tens certainly looks like if we see a bigger correction really develop and hold in the equities, fixed income is paying attention. is today even a negative territory? nasdaq seems to have given spurs to the dollar index. intra-day looks great. dollar index is having a tough time, especially trying to regain positive territory from where it closed 2016. michelle, back to you. >> got it, rick. thank you. the trump administration unveiling a new order on
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immigration. u.s. economy could see an impact. seema mody is looking at changes to h 1b visas. susan li is looking how this order could impact travel. seema, let's start with you. >> it may just be a temporary suspension on h1bs, but the impact could be significant. silicon valley is dependent on the h1b visa to recruit highly skilled foreign talent. over half of the visas given every year go to the technology industry, coders, designers, folks who work in software, hardware, from countries like india and china, outsourcing firms have been under pressure the past couple of weeks, over concerns around h1b visa reform. it's not limited to outsourcing. big tech companies, apple, alphabet, amazon, microsoft use l1b visas. any restriction or increase in salary requirements could result in big tech sending more jobs
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offshore. the suspension on those seeking the fast track h1b process goes into effect april 3rd. some say this is a temporary solution to what could be a broader overhaul of the visa program. lawmakers arguing for reform say it allows them to pass over american workers and bring in foreign talent at a lower wage. tech lobbyists say the issue is strungtu u structural and the tal ept enter -- talent needed cannot be found at home. that's why it's such a point of convention between silicon valley and the white house. >> susan li is joining us with the impact this might have on travel, travel stocks. airlines. people concerned there. >> tourism and travel industry account for roughly $ 1.5 trillion, that's what they bring to the u.s. economy. a lot of nations around the
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world promote travel and tourism. after a record year in 2016, despite the talk of a strong u.s. dollar, 2017 had actually started off positively with business travel even picking up after lagging the past 18 months on global economic concerns. but after the first executive order that was signed at the end of january, travel has dropped off significantly from bookings to searches. it's really an industry consensus that people are now less interested in traveling to the u.s. business travel is especially key for a lot of the elicit hotel operators and airlines as they fill up the front of the plane. that's down 8% since the initial travel ban with $185 million in lost bookings. it is a big deal. every % drop in business travel results in a loss of 71,000 jobs and a loss of $5 billion to the u.s. economy and u.s. gdp and the cities most affected, i'll
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even get granular here, miami, san fran, new york are the top three places that have the highest ratio of foreign travelers taking up hotel rooms in the city. and in new york's case, you've heard this, guys. the city's tourism arm is already predicting the city's first decline in eight years because of the travel ban. >> i'm confused. do we really get that many people from yemen and -- >> it's the optics and the messaging. >> so people from other countries decide those countries -- >> only represents 2%, you're right, travelers from the middle east. record year in 2016. again it's a messaging you're giving the rest of the world. >> is it possible after eight years in a row of records that there might be a decline? >> if you're coming from europe to america, you get a lot less for your money. the dollar has gone up. >> that's why so many americans are going to london. >> so i wonder how much of that is also -- >> 2016 was a record year in travel despite the strong u.s. dollar. >> coming from where? >> everywhere, middle east,
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asia, europe even we took a look at. maybe not record numbers but it was a record number of travelers to the u.s. borders. >> so you're saying there's a broad chilling effect? >> sentiment has changed. >> countries that are not touched even by the travel bans, right? >> pretty much. >> thanks, susan. overwhelmed grids, downed power lines. this is -- >> sounds like new jersey. >> oh! you're getting warmer. does america need a reboot of its energy infrastructure? we'll pose that question to the chairman and ceo of one of the oldest, biggest utility companies that does business in new jersey. that's straight ahead.
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liberty mutual insurance. what if we could bring you by having better values? at blue apron, we work directly with more than a hundred family farms. so instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most: making farmland healthier. cutting down on food waste. and bringing you higher quality, fresher ingredients for less than you pay at the store. because food is better when you start from scratch. blue apron. hi, everybody. i'm sue herera. here is your cnbc news update this hour. tens of thousands of chickens have been destroyed due to bird
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flu outbreak and others have been quarantined. tyson foods, whose shares are down 3% today. ukraine is taking russia to the u.n.'s highest court, accusing moscow from discriminating against crimeans. and also the downing of a malaysian flight in 2014. a new study shows excess brain fluid may predict autism in high-risk babies. mri on the right is from a 6-month-old later diagnosed with autism. the dark space shows a large amount of fluid. 76% of babies in that study who have excess fluid developed autism by the age of 2 years. chinese made underwater glider has broken the deep-sea world record. it dove into the world's deepest
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known sea trench. >> very cool stuff. >> it is. >> no pandas today. >> no pandas. >> tomorrow don't let us down. >> you got it, brian. stocks in the red a little bit. dow down 30 some points right now, couple tenths of one percent. gold down, too, fifth consecutive session. that would be gold's longest losing streak since all the way back in november. shares of pseg are up 7% since election day. the company holding a big investor meeting today. lots to talk about, from regulation to the new administration's relaxed stance on coal to, perhaps most importantly, tax reform. joining us exclusively now on "power lunch" is ralph izzo, chairman and ceo of pseg. thanks for joining us. >> thank you. glad to be here. >> i would like to hear you
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elaborate, but specifically put those plans in the context of what may be a major tax reform. one hand you may be able to completely expense immediately the total cost of capital outlays like that. on the other hand, you may well lose an interest deduction. how is it going to play out for you? >> yeah. so, the fact that we can expense capital is not as important for a company like ours. generally speaking, utilities don't have any difficulty attracting capital under the regular system in which we operate. while that may be important to other businesses -- and i'm not suggesting it's not something that shouldn't be done -- but it's not of tremendous interest to us and would add a lot of value. basically all of our projects are 50% debt financed and 50% equity financed would greatly increase our costs and those
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costs would be born directly by our customers. >> so let's talk about another wrinkle in a proposed tax reform. that is a border tax. on the face of it, it might not affect you very much at all. you're not exactly importing or exporting electric power but you do import nuclear fuel. how would a border tax effect you? >> that's a significant issue. as you know, right now the nation is benefiting from tremendous opportunities in shale gas, wonderful thing for consumers. however, that is putting significant economic pressure on other forms of electricity supply, in particular nuclear. the fact that over 70%, 75% of nuclear fuel is sourced from outside the country or processed outside of the country because there are no such capabilities within the country. we're not in the united states a source of tremendous amount of uranium or fuel processing, would add another burden on what is already a burden, source of
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electricity and nuclear power. that is something that i hope to be able to have a dialogue with tax reform advocates over unintended consequences. >> let's turn to coal. i gather you have been moving away from coal as a generating source. correct? >> that is correct. >> are you doing that because coal is less economical than natural gas right now? is that the primary driver here? second question, is -- will changes in regulations pertaining to coal, as pushed by the trump administration, will that change your thinking or equation at all? >> no, that won't change it for us. there are some traditional pollutants that impose some significant costs on coal, whether it's mercury, acid rain gases or particulates. they've been on the books for quite some time n some cases a few years, and in some cases a few decades. those improvements combine with a low cost of natural gas make
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for very tough headwinds. >> so what ultimately leads the company to grow? we talked about all these potential regulations, et cetera. for years whenever we did the utility sector we would say the dow jones, intra-sensitive dow jones utility sector. the thing is, you bought them when interest rates were low and sold them when interest rates were high. has anything changed? >> no. well, yeah, one thing that's changed is that in light of the fact that gas prices are low and, therefore, power prices are coming down. and in light of reasonable interest rates, low interest rates, this seems to be a perfect time to make much-needed improvements in the nation's electric grid infrastructure. that's what has been generating our growth. we've enjoyed double-digit growth rates in our earnings per share, and utility for that very reason, being able to take advantage of gas prices and low interest rates. >> one of the things driving growth in your industry are the interconnected devices we have, all of which drain power one way
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or the other. we spoke with the former head of the cia, james woolsey, who painted a picture of threat, disruption to the electric grid coming. he hypothesized from north korea, if they explode some sort of electric impulse device over north america. how concerned are you over a cyber or unconventional threat to the electric grid, how are you prepared for it? how worried should we be? >> more on the cyber front than the electromagnetic pulse. the consequences of a larger electromagnetic pulse would be much more significant for human heal health, you're talking about a nuclear detonation i wouldn't worry if the lights are on at that point in time. cyber threats are real. interconnection of these internet devices is not just driving higher demand for electricity as much as it's driving higher reliance on electricity. that's what's driving the need for major infrastructure
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investment to make it much more reliable and robust in the face of cyber threats. all that costs money, even while demand is not growing in terms of volume. it's growing in terms of value and quality. >> your biggest concern in terms of security is cyber? >> cyber and physical security. what i was saying, it's not electromagnetic pulses. >> thank you so much. >> my pleasure. >> ralph izzo, pseg ceo. biggest event in the world for energy. cnbc is there with some of the biggest names in oil and gas. take a look at this lineup over the next couple of days. opec. starts today. goes through thursday. cnbc, the worldwide leader in business news. we are back after this. 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.
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welcome back. we'll speak to some of the biggest names in oil and industry. jackie deangelis, always ahead of the curve, she walked there this weekend. you got some great interviews lined up. >> good afternoon to you, brian. as you know, this is the super bowl of the energy industry. everybody is here. big oil players in the u.s., producers internationally. you've got international energy ministers as well. they're all talking about what's to come for the rest of the year. remember, prices have seemed to stabilize, but at the same time there's some caution in the marketplace that we could see volatility. right now that seems to be the big theme as the sessions are starting to get under way. the sideline conversations, those are always very interesting, what's happening by the coffee pots. they're talking about politics, trump. his pro-energy policies, more infrastructure, rolling back regulations, all very positive for the industry. of course, there's some concern there that you'll see more
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production. it could put us back in the same place we were. a lot of ceos i've spoken to have actually said -- and this was surprising. no, demand will be there to meet the increased supply. saudis are here and iran ipo is in focus and ceo of opec, who we'll be speaking to tomorrow, also said that the monetary committee will be meeting in march to talk about whether opec will be extending those cuts. that's what's supporting prices right now. later on in "lunch" we're speaking with doug lawler, technology, how that's made them more competitive and efficient. brian, you better get down here. >> i will do it, if the airlines cooperate. newark is so great. thank you. thank you. see you soon, literally. speaking of the oil market, crude oil trading a little lower today. get this, crude oil up 18% since the election. the question is, not where it's been. it's where it's going.
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let's bring in cnbc contributor. the theme, as jackie laid out, you have opec, which in the first time forever seems to be agreeing, listening to each other and adhering to these quotas. >> thanks to the overachieving saudi arabia. >> we heard russia has been in the news lately in this country. but for other different reasons. do you think russia is going to get on board? do you believe that they're really on board with opec? >> it trades between themselves, saudi arabia and us, the united states, depending on the month. it doesn't appear that the russians are rushing, pardon the pun, to live up to the obligations they signed on for. >> do you think they will trump opec, pardon the pun? >> i think they will go their own way ultimately, yes. i don't see them sticking to the program. >> do you think oil prices will be headed down then? >> i do. >> how much? >> i think it will probably get back to the november lows, which was $42 a barrel. a lot of the themes that jackie is going to be hearing about and
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you will be talking about -- and i'm looking forward to hearing those interviews myself -- ring hollow to me, brian, in that the saudi aramco ipo, incentive for saudis to keep the oil price up to get that to market. they've been bitterly disappointed with the valuation they're getting from wall street. they had wanted up wards of $2 trillion if not more. they're getting about half that. they're not too happy about it and may be having sellers' remorse. >> maybe the iramco deal doesn't go forward? >> exactly. and then what will hold up prices in the short term when they can break the back of the high producers again? >> you have to have demand to force prices hooir higher. >> that's right. >> demand means growth. ju china just said it's going to be as -- >> china has thrown in the towel in trying to soup up their economy, trying to right size it partly because of the air pollution problems that have been so manifest there.
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they are dialing it back, small independent refiner sector. and that's going to cause a drop, quote, unquote, in chinese oil demand. now that demand, to me, was already artificially inflated because they were producing probably double what the internal fuel needs were with that oil they were using. they were exporting massive amounts of it to the world market. that glutted the world market. >> chinese were? >> yes. >> so exporting less so they could reduce supply? >> you'll hear refine product levels go down but the big headline will be chinese oil demand, big negative in my opinion for prices. four stock calls you need to hear about today. daily dose of street talk is straight ahead. the future of business in new york state is already in motion.
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all right. time for street talk. analyst recommendation on the stocks that we think you need to know about. >> we do. >> we're going to tell you. >> the first one is dow dupont. jeffries has upgraded. analysts explain iing growth is less chained to the cycle. they bumped it to 96 bucks a share. more than 20% increase. >> second stock is gopro. goldman sachs says you've got to sell gopro. they cut the target to $6. that's about 25% more down side than the stock is already seeing right now. the company faces significant challenge. they call it entry to the drone business disappointing and goldman sees negative free cash flow at gopro until at least the fourth quarter. the stock is down 9% right now. >> wish they had told us 17.
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wall street may be underestimating growth. lacking the potential for 3d printing. hp up to $17. >> investors will 3d print some money. that was terrible. tudor, from a buy to a hold. they've always been fans of the company, they said, but valuation kept them on the sidelines. valuation now looks more attractive to wells fargo and eog resources. $133 a share. >> that would be a 30% increase. >> big increase in the eog. >> tyler? >> all righty. hoping to get the president's attention, there is always twitter. national retail federation took it a step further. they produced a tv ad to get their message across.
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it aired on "saturday night live." i thought it was a skit. it wasn't. it's an ad. is it working? that's coming up in the second hour.
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welcome to the second hour of "power lunch." i'm michelle caruso-cabrera with tyler and brian. two hours till the closing bell. stocks are down right now. one of the reasons? north korea weighing on investors. but there's a lot. four biggest risks to this record-breaking rally we've had. president trump's top trade adviser making cutting trade deficits a top priority. >> plus, how much do trade deficits really matter when it comes to growing the economy? he thinks it's a big deal. is he right? number of human cases of the deadly bird flu surging. tyson foods getting slammed. we'll have the fallout ahead. market movers today, snap chat shares down for the first time since its ipo. shares down 7 prs. another bearish call on wall street? barron's is out saying snap shows look, quote, ridiculously valued and could be cut in half.
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general motors down 1%. automaker lay iing off $1100 motors because of production shift to tennessee. deutsche bank planning to raise $8 billion in capital after reporting another huge loss. the bank also saying it will restructure its core business. here is the big question. do deficits matter when it comes to gdp growth? white house trade adviser peter navarro making that case, that trade deficits are undermining u.s. security. speaking at a major gathering of economists in washington, d.c. steve liesman joining us now with more. >> reporter: a stark and stern warning from the president's top trade adviser, peter navarro about the dangers of trade deficits, that they sap economic growth as well as investment in
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this country. with trade deficits, they get big stockpiles of u.s. dollars and u.s. treasuries that they can then return and purchase. defense industry as well as technologie technologies. >> if these market values continue, in the long term, we are all likely to be owned by foreigner foreigners. >> peter navarro disputes that they want tariff -- what they want is a tax and tariff level playing field. trump administration wants free, fair and reciprocal trade. >> one of the major goals of the trump administration is to reclaim the supply chain that would otherwise exist if the playing field were level. >> reporter: a lot of economists here at the national association
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dispute these ideas and these fears. they say trade deficits help the u.s. be productive, lower costs and inflation as well as simply a cost of doing business and they note that when u.s. growth goes up, so do trade deficits, because we import more stuff. tyler? >> i'll take it, steve. larry kudlow has made that point a lot. stay with us. from barclay's, good to have you here. >> thank you. >> if the playing field were level, peter navarro says, we would reclaim lost manufacturing. is he right? >> it's a simple argument. the goal is to bring back domestic manufacturing jobs, they should think bed kags, growth, not restrictions on trade and immigration. >> how about the food supply chain being owned by foreigners? smithfield, jokes about bacon being owned by the chinese and all this. but ultimately is it worrisome
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if our food supply here is owned by a foreign company. >> the way you just said it, yes, it's very worrisome. the government does have a process for this. you have ways of going about thinking about foreign asset control. there are other ways to reform that. i think the idea of focusing on trade deficits for national security like that, and as presented that way, is a little too simplistic. >> stopped by the u.s. government because they're worried about technology going to china, hurting our national defense but the pigs didn't go to china. ultimately, we could control it if we wanted to, right? >> as far as i know. it wouldn't make much sense to export the kids to china and reimport them as cuts of smoked ham. here is the story i get.
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individual aspects of trade where the u.s. may not be on a level playing field where our competitors are taking advantage of free trade agreements. for many decades, the u.s. has been part of the engine behind rise in global free trade that has brought many people out of poverty around the world and really helped out the u.s. the question becomes, is the focus of a trump administration on just these small transgressions or is it on a broader decline or shrinking of free trade in the united states? >> steve brings up a very good point. i listen to the things that wilbur ross and peter navarro talk about, all the things that happen, that the japanese do, all these other countries do that are outside these trade agreements, when stuff sits in port way too long because
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customs officials are just doing that. this is one of those nontariff barriers. chinese are famous for these things. how do we stop those things which are justifiably wrong? >> absolutely right. there are a lot of things we should do to change it. >> here is the thing, guys. steve, you have a couple of options if you're donald trump. this is what you campaigned on, what you said you're going to do. you can't just say to the american people, everything we campaigned on, well, it's not really going to work and therefore -- there are people -- i think you went to college in buffalo, right? people up there have watched their city get decimated for 30, 40 years. >> i watched it, too, yeah. >> this may not work. the for the men women up there in cleveland, youngstown, they have to do something, try something.
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that's what they campaigned on. >> you have to be careful, brian, not to overstate the problem. in the town where the carrier plant is located where donald trump went to save all those jobs, unemployment rate there is 3.5% and falling. per capital capita incomes are . i think he should fix all these things that are out there. what worries me is he says we need manufacturing jobs. he's very much talking about a government directive. a government directed jobs program, which is troubling to me. >> definitely not in the conservative camp for sure. steve, i do remember data points when phil lebeau was live there, brian, you were live there, that wages in places like indiana hadn't budged for 20 years. >> per capita incomes were
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rising. what's interesting to me is the u.s. economy finds a way to adjust. we talked about it here at the economics meeting are things like job retraining but not getting in the way of market forces that essentially let a company in the u.s. get the cheapest possible product from overseas, sell it here more cheaply, take that income that an american was spending on something and put it somewhere els else. >> the goal of the trump trags is to return all the manufacturing capabilities, ie, jobs, that would would existed but for unfair trade practices. how do you do that? is that an achievable goal? what is nike going to do? >> right. >> there aren't shoe factories in this country able to make the shoe. >> compelling data i got from the board and elsewhere. you look at cost for compensation, well north of $35 in the u.s. it's about $6 or $4 for mexico
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and china. you're going to close that gap just by immigration and trade policy? that's hard to do. retail sector or financials, to close these sort of problems by restrictive practices is not always a great way to do it. you often reduce the trade deficit by export competitiveness, find ways to increase growth not by trade restriction. >> steve liesman, i want to issue a challenge to our political ruling class. i want somebody in politics to come out and say the truth about manufacturing in two ways. number one, the only reason we had a middle class base is because we decimated china, japan and had pricing power and wage power, short period in american history, even though we manifest it in the '60s and '70s. also, steve, would you like your politician to say we probably can't solve the problem, america, but you can. you said the right word twice in one sentence, steve liesman. cheap.
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until we stop our obsession with cheap goods we're not going to have high wages and low-value goods, are we? we're not going to have crap and have high salaries. that's not the way it works. >> very quickly, the key is to let market forces work. the market ends up sorting things out the best way. the government can be there to help people pick up the pieces. i worry about a government that wants to get in the way of market forces. i just want to underscore, peter navarro and donald trump should go out there and hit all that patent and illegal unfairness as hard as they can. you look at the decline in poverty there's massive benefit to trade to billions of people in the world. >> got it. thanks, guys. thank you, shawn, for coming in. thank you, steve. geopolitical risks. we just talked about trade risks. geopolitical, north korea,
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weighing on markets after they launched four missiles. the trump agenda and how quickly or whether it will get through or if will impact a trade war. federal reserve interest rate hikes, which one should you, as an investor, focus on? gentlemen, welcome. good to have you with us. obviously, there's a tremendous amount of optimism in the market these days. blowing off steam or froth today. is the market, chad, building in too much good stuff is going to happen quickly? that seems, to me, to be one of the underlying pillars here that might be most at risk. >> i happen to agree with you. the market is building in expectation for revenue growth for the s&p 500, earnings growth and economic acceleration not
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only on a domestic front but global front. that will happen but not to such a degree. market cap to gdp, some really elevated. you look at price to sales for the s&p 500, elevated. investors should take more of a cashes viewpoint. when you look at the long term forecasted viewpoint, s&p 500, we're coming in more along the lines of 4% to 6% annual total return for the next several years. >> we identified four risks. there are obviously more, the trump agenda not moving through as quickly or intact as some think. and federal reserve that may be more aggressive than we thought on raising interest rates. which of those four worries you the most and what would you suggest that i, as an investor, do to hedge against those risks? what are you doing? >> sure.
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tyler, for me, it's the trump agen agenda. north korea i think, at the moment, is a red herring. after that, it will be much dependent on how economic activity unfolds and the market won't be worried about it if the fed is hiking rates into faster economic growth. the real key is to take us out of this scenario in which we see economic growth advancing in this 2% area, last word from the atlanta federal reserve. it's got to be some kind of legislation on the trump agenda, mainly built around corporate tax reform and deregulation. the longer that continues to get pushed out into the year, such that it may not even have an impact in 2017 because worrisome for me as an investor, as i think about it, on the market. >> either it's going to happen on a timetable or slower timetable or parts we think are going to happen aren't because we don't know the details.
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how do i hedge against that? >> cyclicals that basically put a huge down payment that all of this will come to fruition. things like utilities, things like consumer staples and health care, which was last year's laggard and this year's leader are quite ripe for -- >> chad, your thoughts? >> you want to own bonds as well as some gold. with the expectation that if you don't get that economic vitality, the yield kurnsh curve will go lower and you'll get a flattening of that yield curve, nonconsensus theory there. we would look at staples, health care companies and think they're consistently grown, consistently
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profitable and could do quite well in 2017. >> gentlemen, thanks to both of you. chad, mark, appreciate it. all right. here's what's coming up on the remainder of "power lunch." malls falling out of favor, retail is hitting back over a new threat, approximaborder adj tax. we'll show you a commercial, rather confusing commercial rolled out over the weekend. we'll go there live to speak to the ceo of chesapeake energy. and ivanka's push that could have an impact on your family. all that and much more coming up on "power lunch." ♪ why do so many businesses rely on the u.s. postal service? because when they ship with us,
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too much dough got you feeling low? too much cash breaking your back? you need the new b.a.t. tax, designed to make your disposable income disappear. >> if you caught "saturday night live" this weekend, you might have seen that. a commercial. it was produced by the national retail federation. meant to fit in with "saturday night live's" story-telling humor. >> i thought it was part of "saturday night live." i was absolutely -- now this is after a little wine but i was not -- >> even sober, i think you could
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have been confused. thinking it was an snl skit. >> the ad gets a negative one because of what you just said. you are a very, very smart man, tyler mathisen. if you were confused because you thought it was a joke or part of "saturday night live," so was everybody else. >> do you know why they picked to advertise on "saturday night live" -- >> i almost called you. >> they picked it because who watches "saturday night live" besides you, tyler? >> a gentleman who lives at 1600 p.a. >> that's right. they know president trump watches. >> ineffective, weird and just -- it was awful. terrible. >> okay. >> don't move on. we're talking about this. >> sticking with retail. >> yeah. moodies out with a new report showing the number of retailers at their highest level since the great recession. those 19 names on our giant wall there, j. crew, rue 21 and others are nearing junk territory. charles -- charlie.
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excuse me. you said call you charlie. lead analyst at moody's. here is the thing. we were obsessed with the oil story for three years. it wasn't an oil story. it was a debt story. how severe is the debt story? >> it's pretty severe. >> it doesn't sound that unmanageabl unmanageable. >> don't forget the declining revenue part. >> glass is halfful. >> here is the thing, real basic when it comes to investing. if the bond is falling and you're worried about the bond getting paid back, the stock is probably worth zero, right? >> i'll take the bond side.
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>> those are names that we're paying a lot of attention to as well. those companies are highly distressed. in this type of retail environment, pressure on them is far more acute. >> caa and ca, is one junk and the other junk? >> spec rate ratings start at caa. >> bottom of the ratings scale. >> does it mean you're worried they might go bankrupt? >> the probability of default is much higher, much more acute at the end of the ratings scale, ye
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yes. >> obviously every mall in america you go to, you know these names. >> for now. >> what happened -- is it to michelle's point that these companies have just had a revenue issue, they're not selling anything, it's terrible or did a lot of them -- >> a lot of them are lbos. >> leverage buyout? >> yes. j. crew is a lbo. >> somebody bought them using their debt? >> then borrowed a lot on top of it. >> pay themselves fees. >> that's one characteristic. with the debt from the lbo, things have to go pretty well for things to get better n this type of retail environment where we're seeing the transition online, amazon, walmart getting aggressive on price, the deck is stacked heavily without a lot of flexibility.
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it almost becomes a perfect storm. >> is there any other sector in the market that's this bad? or what's closest? >> i focused on retail for this report. i really don't know that. >> can you say fairway markets? >> you don't with an to go to claire's for the barrette's? >> i don't know charming charlie's. >> it's a tough period of time for these guys right now. >> these stores go under, then you've got an empty store and clauses that let other people out of contracts. >> moody's, they never laugh at the jokes. >> charlie, thank you. >> thanks, guys. >> we'll stick with retail. macy's is down today. the good, bad and ugly are next 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
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sure we could travel, take it easy... but we've never been the type to just sit back... not when we've got so much more to give when you have the right financial advisor, life can be brilliant. ameriprise welcome back to "power lunch." time for the good, the bad and the ugly in today's trade. tg therapeutics, up 89% after announcing positive results in
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its trial drug for treatment of leukemia. csra downgraded from positive to neutral. csra is an i.t. company, lower by 4% today. ugly day for macy's, stock is falling on reports that canada's hudson bay has yet to line up financing to make a back-to-back to buy macy's. it's lower by more than 4%. tyler? >> michelle, thank you. chesapeake, in particular, getting hurt. now 25%. coming up, we'll talk to the company's ceo live from the big energy conference in houston. and the thing ivanka trump wants her father to do that could have a big impact on your family. "power lunch" returns in just a moment.
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hi, everybody. i'm sue herrera. here is your cnbc news update at this hour, president trump signing a new version of his controversial travel ban. it leaves iraq off the list of banned countries. secretary of state rex tillerson former lly unveiling the new eo
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>> exercising his rightful authority to keep our people safe. as threats to our security continue to evolve and change, common sense dictates we continually re-evaluate and reassess the systems we rely upon to protect our country. >> a huge water main break in maryland soaking a neighborhood t looks more like a geyser. shooting water up into the air, strong enough to create that hole in the road. we end with a mascot dance-off occurring over the weekend at the metro athletic contest. fans enthusiastically taking it all in and rooting for both sides. that's the news update. ty, back to you. >> get ready for march madness. >> that's right. starts soon. 90 minutes to the closing
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bell. it is a down day on wall street. s&p, nasdaq and dow all down across the board. a little less for the dow. snap pulling back -- could say they're snapping back after euphoria surrounding its ipo. oil trading just wrapping up for the day and oil closing ever so slightly lower. let's get to seema mody. >> erasing those gains. not helping the financials after gains of about 2% last week, s&p financial sector, worst performing sector and down nearly three-fourths a percent. bank of america, morgan stanley down about 1%. deutsche bank also weighing on the secter after the german bank
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confirmed it will raise around $8.5 billion in capital from shareholders. tyler? >> thank you so much. seema, big energy conference in houston this week, where energy leaders gather to discuss the future of energy industry. brian will head there before the show ends, actually. about quarter to 3:00 -- >> volume will come down by 75%. >> jackie deangelis is there now, joined by doug lawler, president and ceo of chesapeake energy. jackie? >> good afternoon to you, tyler. doug thank you so much for being with us. i want to get your view on the industry right now. a lot of people are wondering if this support range of $50 to $55 a barrel for oil prices is real or a head fake. >> great to be with you, jackie. thank you. we do believe it is real. we've seen a lot of progress around stability and pricing the last few months and our confidence is good going forward in that respect. what is very, very important,
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particularly for the u.s. producers, company like chesapeake, that the strength of the company, the cost of improvements were very well positioned in this 50 to $55 a barrel window to continue to invest and provide the energy that our country and the world needs. >> technology has been so important to bring your costs down. but at a certain point, those efficiencies have become less powerful, right? there's not that much more you can do? >> that's a conventional thought, jackie. continued improvements in technology have been remarkable the past several years. one of the comments i like to say is don't under estimate the ingenuity. we continue to make great progress, opportunities to reduce cash cost as well as capital efficiency to make the u.s. more competitive. >> so as prices go up, margins increase as well? >> as prices go up, margins absolutely will increase as
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well. the key is the strength of our portfolio, strength of chesapeake energy is that we have great control of our costs, that we manage that in our capital efficiencies to drive greater value for all our shareholders. >> the election and the new administration certainly part of this story as well. bullish on pipelines. how does that help you? >> it helps us a lot. we look forward to working with the new administration and excited about the pro-business environment. we're going to do our very best to provide the most efficiency and environmentally safe and sound way of delivering oil and gas to the u.s. as we can. >> you sort of turned the company around, working on that balance sheet. tell us what we can expect, going forward. >> chesapeake is a great transformation story. we paid a lot of attention the past few years to improving our operations, balance sheet and financial strength. chesapeake is stronger than it's ever been. we look back today and in the
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future we'll look back and say this lower commodity price environment is one of the best things that's happened to the company. it gave us an opportunity to focus on our costs, gave us an opportunity to focus on our portfolio and optimize in how we derive the greatest value from it. >> i'm going to send it to brian. >> you told us you were still considering asset sales. what's for sale? are you close to selling more assets? >> hey, brian, it's good to see you. we're continuing to look for opportunities to sell assets. what's important to chesapeake today is that we continue to improve our balance sheet, strengthen that portfolio. asset sales and looking for a way to further reduce our debt and leverage is one of those things we have to do. we reduced our debt and leverage by 50% the past few years and need to continue to focus on that. >> quickly also, pipelines. you're not a pipeline company. however, your products go through pipelines.
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can we make all the pipelines in america with u.s.-made steel, do you think that's possible? >> i'm sorry, brian? >> he was asking if we could make all the pipelines with u.s.-made steel as the president has ordered. >> i certainly hope so. we're certainly supportive of that and believe that the strength of the u.s.,uation products in the u.s. is something we absolutely need to do to the best of our ability. >> final question, doug. some of the challenges moving forward, how you are nimble in an industry that can be so volatile. you told me you expect more volatility this year. what are your top priorities and how do you get through the rest of 2017? >> absolutely, jackie. financial discipline, continuing to improve and restore our balance sheet. the second is the most efficient operations in every base in which we operate and the third is the use of technology. the success and strength is driven on technology improvements. we'll take what we learned and share that across our portfolio
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and drive for better results. >> ceo of chesapeake energy. we've got doug lawler, thank you so much for joining us today. guys, i'll send it back to you in engelwood. i'll see you in houston. >> see you in person tomorrow, jackie. president trump is working on travel bans. his daughter, ivanka, is pushing for a tax credit for working families. ylan mui has that story. >> signature issues, child care and paid family leave. she invited those executives to a dinner party recently. care.com ceo was there, her company connects babysitters. if you have young kids you definitely heard of it. >> i'm inspired as a first daughter she's speaking up about these issues. >> ivanka's plan would allow families to deduct cost of child care from their income and
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provides refundable tax credits for low-income households and the tax account dedicated for child care but there is pushback, however, to some of the details of her proposal. tax policy center found most of the benefits go to wealthy households and sheila marcella pointed out that many poor families won't get anything at all. >> the policy doesn't actually necessarily impact 45% of americans because 45% don't have a tax liability or they have negative income. so, a deduction isn't helping them. >> marcelo does support ivanka's call for paid maternity leave. she said she hopes the dinner with ivanka was just the beginning of the discussion between the business community and with the white house. more on this at cnbc.com. back to you guys. >> how possible do you think this is? republicans are in charge of tax reform in general and there's a
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belief you should go to a much simpler tax code and remove the nanny statism that's been put in place over the years and this would fall right within that kind of thinking. does it have any chance? >> just the fact that there's a pac agenda on capitol hill alone will make this issue tough to break through. it's got a really important advocate and that is ivanka trump. you heard president trump mention this issue, affordable child care, paid family leave in his conversation, in his speech to congress last week. she definitely has the ear of the president. >> one way to redress the fact that most of the benefit go to the upper middle income people who, a, itemize on their tax returns and, b, have enough income where they have deductions to take, doesn't a refundable tax credit go a long way to addressing that? >> if you xand the amount of the affordable tax credit, expand who can qualify for that, that's one way to ensure that lower income families do receive more
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of this benefit. sheila marcelo said it should be monthly. many families pay for child care out of pocket every week or every month. giving them a tax deduction that they get at the end of the year doesn't help them make ends meet. >> she wants the irs to write checks monthly? >> that's one of the plans under the house gop obamacare plan, refundable tax credits for age base versus income based. this is something that does have precedent. >> but monthly checks? >> potentially. potentially monthly checks. >> wow! >> you have to beef up the irs in order to do that, right? >> thanks ylan. >> it is really nanny stating if you think about it. >> providing a nanny. state paying for the nanny. >> financial stocks pulling back today but have had a great run under president trump with an interest rate hike possible next week. will the rally in financials resume? trading nation is next.
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financials biggest lagging sector today. eddie, first to you. short-term pull back here or is the trump bump now down? >> just a short-term pullback. the financial stocks have had an amazing run since the election. also last wednesday, they had a tremendous gap. financials have been very strong. and with an interest rate hike almost certainly coming next week. also, there could be another one within another six months. i think this is a minor pullback for the financials. they look very strong right here. >> very bullish fundamentally. technically, rich ross, how do the banks look? >> the bedrock of the post election reflationary rally.
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a textbook pattern form here, brian. sure we pulled back in response to wednesday's explosive move in the broader market. but what really gets us excited is that bullish flag formation, projecting upside as high as 27, 28 on the xlf etf. you see the ten-year yield. very similar flag, not surprisingly. 250 has been somewhat stubborn resistance. we see a break above that 250 and extension of the move in ten-year yields up to 270. that's your first step. ultimately, you're going north of 3%, brian, somewhere around 310, 312. that will continue to drive the reflationary narrative. >> folks, go to tradingnation.cnbc.com. if rich ross is right, ten-year above 3%, we might have ourselves a real estate story on our hands at some point.
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we love to pay higher rates for everything. >> we do. >> if he's right, mortgage rates will creep up as well. did if you haven't bought a house, folks, buy one today, sight unseen, 100% equity financing. >> lock in your home equity, too. why tyson food shares are falling today. that's next on "power lunch."
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tyson food shares falling today because a flock containing 70,000 birds was impacted by bird flu. morgan brennan joins us now. >> that's right. tyson is one of the worst performing stocks in the s&p today. that's after government officials confirmed over the weekend that a tennessee chicken farm supplying the poultry and pork producer tested positive for a strain of avian influenza
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that's lethal and contagious to birds. the first case of bird flu in over a year. the 73,000-plus flock of chickens is already being culled. no affected birds are entering the food system and roughly 30 farms in a six-mile radius are currently under quarantine. tyson saying it is responding aggressively to help contain the virus. it has tight biosecurity measures adding based on the limited scope known to us at this time we don't expect disruptions to business and plan to meet customers' needs. still, south korea imposing a ban on u.s. poultry exports today. that country has been importing american products amid its own worst ever bird flu outbreak. the u.s. has been little affected since 2015 when 50 million chickens and turkeys were destroyed in the worst ever outbreak in this country. this is a single case for now. the u.s. is the world's top producer of poultry.
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16% of that is exports. so if we see more cases, heaven forbid, or more countries putting bans in place that could dent company earnings. that's the reason you see shares of tyson down more than 2% as well as sanderson farms and pilgrim's pride, top poultry producers in this country. that's why they are falling today. back to you. >> thank you, morgan. joining us is robert moscow, food analyst with credit suisse. a brand new note out today on tyson. how much are they going to be impacted by the bird flu? are you worried about it? >> i'm not. i don't think it will have a material impact on tyson's operations. i don't think it will have a material impact on domestic demand. i guess it's possible that more countries might apply restrictions on u.s. exports as a result of this breakout. historically, these issues kind of just blow over. we look back at the last two
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outbreaks that were publically a big deal in 2004, 2015. we found really not much of a material impact on chicken prices and we found that tyson's stock bounces back pretty quickly. >> any kind of scare like this, i think back to asian stocks when you had the issue with sars. any time something like this or when airlines were worried about people getting on planes. they have turned out to be a buying opportunity because the companies recover quickly. that reiterates what you are telling us now. >> that's right. i think the chicken industry has done a good job assuring the public that you are not going to get sick as a result of these avian flu breakouts. you can't get it transmitted to you from the food supply even if it were in the food supply. it only affect it is birds. you have you would have to be working at a chicken operation
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to get sick. that's why this is a bigger deal in asia. there are more people working in agriculture there. >> peter navara and his concern about the u.s. food supply chain being controlled by foreigners at some point? would that take anything out of the stocks? have you worried about the smithfield food deal? >> no. i don't think so. i don't think anyone is quite sure what the trump administration is going to do with respect to just about anything. i think a deal like smithfield might have more trouble getting through today in that type of environment. as far as how it affects domestic supply, i don't think so, no. >> what does it cost if they have to destroy 73,000 chickens that are, i gather, breeding stock as opposed to the stock that would show up in grocery
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stores? what does it cost them? >> less than you think to destroy 70,000 birds. it's immaterial to them. >> a buck a bird? 50 cents a bird? any idea? >> i'm not in the business of destroying birds. in the context of tyson's market cap this is a very small financial impact. the bigger risk is they find more facilities where the outbreak occurred and that might snowball into something. the biosecurity of these places are really, really strong. i think the probability of that is very low. >> thank you, robert. tyler, i thought the birds had been culled, not destroyed. >> culled. that was an artful term. >> is that what that means? >> let's get a market flash. >> tyler, we have eyes on go pro, near the lows of the day. you hit this call in street talk. goldman sachs setting the price
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target for the stock at $6 citing significant challenges including saturation in the core market. more than 8.5 million go pro shares exchanged hands today. that's more than three times the average volume other the past ten days. tyler? >> thank you very much. check, please is next. whether it's bringing cutting-edge wifi to 35,000 fans...
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or keeping a hotel's guests connected. businesses count on communication, and communication counts on centurylink. 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? 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.
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night live," the national retail federation spending big bucks to run an anti-border adjustment tax commercial. >> too much dough got you feeling low? too much cash breaking your back? then you need the bat tax especially designed to make your disposable income disappear. >> that's my check, please. they advertised on snl because they know trump watches it. >> he's a big fan of snl as we know. >> lately. >> they are debating in parliament in britain a regulation that an employer put in place that mandated that women wear high-heeled shoes at work. it started in 2015 when a woman who was a receptionist at pwc in london was sent home without pay for wearing flats. apparently she was employed by a contractor doing business with pwc and the rules say two to four inches minimum. >> you and i talked about this in break. what a waste for parliament to debate high heels.
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>> waste of time. >> i am of latin extraction. >> yeah. >> i wish i emerged from the wombs wearing high heels. they are my uniform. they are mandatory. i can't imagine life without them, tyler. >> there's the regulation. >> mandating it? probably too much. >> all righty. thanks for watching, everybody. >> "closing bell" starts now with kelly in her high heels. >> the irony -- >> boy, they are high today. >> they are the lowest ones, a kitten heel, so to speak. >> they are. for the record, we are the same height. it is only the shoes that make the difference here. >> you are free to participate in the heels. >> in the '70s i sold shoes in college. i sold the platform tennis shoes that guys would come in and claim they were buying for girlfriends. >> uh-huh. i would like to

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