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tv   Power Lunch  CNBC  March 9, 2017 1:00pm-3:01pm EST

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in the video game space, blizzard, electronic parts. >> activision is great. what i saw was 46. we're at 49. >> yeah. both stocks from 93, all time high today. all for us. good seeing you. thank you for watching. power starts now. i'm melissa lee. here's the menu. crude, new reality. oil below $50 for the first time this year. are we headed lower from here? hear from the jcpenney ceo as well, details on the turn around plan for the struggling retailer. one of james bond's yacht up for sale. wait until you hear the price tag. break out the martini glasses, "power lunch" starts right now. ♪ and i'm tyler, welcome to
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power lunch, i'm shaken, not stirred. slightly higher on this eighth anniversary of the bull market, but right now, the dow -- you cannot get really a smaller gain than that, ladies and gentlemen, s&p and nasdaq with modest gains as well. very close eye, of course, on oil at this hour. crude hitting new lows for the year. explore why, adding to yesterday's big losses, wti is blow $49. we are all over it. the guy leading the charge on it, my friend and fellow victor last night in the acc tournament, virginia tech, brian sullivan. >> thank you. yeah, listen, we lost 7% of the price of crude oil in the last two days, so what better place to be still. there's a new restaurant, ceo of
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royal dutch shell, a minute away, comments from here, ceo of dow chemical as well, and president of the university of houston. a big lineup over the next couple hours as crude continues to slide you are known as the billion dollar buyer on cnbc. this is one of your restaurants you own of the we spoke about the price of oil. how important it is, not juto m when they fill up, the thing they touch the most from a pocketbook perspective. how much an impact would you see on your business when oil does what it's doing? >> when oil immediately dropped, gasoline came down, and, of course, the consumer has more money in the pocket, a couple thousand more a year. in houston, of course, it hurts us the most because we've laid off so many different employees in the city of houston, but it never happened -- we talked two
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years ago, if oil's in the 30s, housen will come apart. it did not. housing prices stayed okay. did the restaurant business, we're at 70 restaurants in the ar area, hotels, yes, but not for that long. >> the last question is, do you see it, though, when the price of oil drops, do you see it at your restaurant tickets? the at the golden nugget, your hotels? do you feel it? >> absolutely you do. the casinos in the area definitely dropped, and that's workers not having the paycheck, and, also, we didn't get all the oil. when oil was at $100, we had everybody meeting in houston. you lost the high ticket expensive -- >> lighting cigars with a monica
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and $$20. >> when oil a good, money is everywhere. >> this is the biggest company in the world, joining us in a restaurant. one of the more interesting interviews, and we appreciate it. >> if you want the salami, grab it. it's on the house. >> huge announcement divesting assets in canada. that in a moment. you're not a day-to-day price guy, ben, but how much harder is it to run a company like shell, 230 billion plus in annual revenue with the kind of volatility in pricing seen over the last couple years? >> well, first of all, the short term, brian, can be our friend as well, you know, we have one of the most competent trading businesses in the world. they actually make money on volatility, and it's the sort of volatility we're seeing at the moment is, of course, very hard to understand, and it's very hard for the americans to directly see what's happening on the supply side. you think of it opec supply, short cycle supply from shale,
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long side supply from large deep water projects, for instance, each have their own logic, and they don't continue together in a way to give a a clear pricing, so it is very difficult to figure out what's going to happen next month, next year, but, ultimately, we're in the long run business, and we have to have a portfolio that's resilient at any oil price level. >> explain to the audience, though, how we got from $140 a barrel six, seven years ago, to $30 a barrel, back up to $50, who knows where we go ahead. how do you have massive price swings in a commodity where supply and demand seems to be somewhat stable, somewhat stable. >> it is. that is one of the hardest parts of our industry, and in the short term, if you think of it, oh, this price ranges mentioned are ranges that are brought about a 1-2% up and down in supply and demand, so, indeed,
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which commodity has that volatility in the near term? ultimately, again, taking investments like we do for 30 year life, you see through it and build the portfolio that can thrive also in low oil price environments like we are seeing. that's the strategy. >> oversupply now. i mean, with producing so much in america, how is the price going to go up? what are we going to do? >> well, i guess the the honest answer to that is we don't know if there's oversupply at the moment, because, again, transparency of the market is not what it would need to be to make assertions. we don't measure exactly what's supply and demand or measure, we know the cushion, but, therefore, it's the lack of information, the lack of tra transparaphernalia si and different response times of the supply chain that gives this somewhat ridiculous volatility we have seen over the last few
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years. >> what's your relationship with opec at shell? >> well, we operate in some of their countries. we have no commercial relationship. >> does it bother you, they say, cutting production by 1.2 billion barrels a day. they are less price makers than they used to be. they are not price takers. you are. they are a maker at some point. do they have the influence they once had? >> of course, the share slunk a little bit, a smaller influence, but they are a long way off from being irrelevant. they are a relevant force and could have stabilizing effect on markets if played the role left, which is what they are trying to do, but we have no feelings for them yet. >> you're overseeing a massive transition at royal dutch shell. you bought bg, british gas, you sook heat for it, lookings tok paying off now. this morning you announced
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you're selling all canadian sands assets. why the sale now? where are you taking shell? what is shell going to look like in three, five, ten years? >> well, you're right. it's an important deal, it was not without criticism at the time and everyone now agrees this was the right deem to do at the right price, as to the right time. now, what we are thinking of completing the deal was how this transforms the company from a portfolio perspective to world class investment case. that means we focus on those businesses that we have scale and we are fundamentally advantaged. think of things like integrated gas, deep water, et cetera. in the middle of the deal completion, we came to the conclusion that oil sands didn't fit that strategy. high quality asset, but benter
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owned by somebody else. from that day on, we've tried to understand how to exit it, and today is the moment we got out. >> we have to let you go, but you're building a plant in pennsylvania. how many jobs you bringing to the united states? >> well, i think in the construction phase, think of directly on the project, 6,000 jobs and many more associated with it. longer term, 600 high quality paying jobs, and i think, gemag, the united states is the number one investment destination, in terms of contribution, so we see ourselves very much in the united states and bringing energy and jobs to the country. >> making jobs, taking money in the restaurants, perfectly vertically integrated. >> and smoking cigars. >> you forgot the monicle. >> thank you for joining us. >> thank you. >> 30 year bonds up for auction.
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rick santelli is tracking the sale, rick. a high yield on the 30 year. >> absolutely. nothing slips past melissa lee. that's why we love her. 3.17. 317 yield the auction. when was the last time we had a yield that high in auction? she's right. it's been a while. september of 2014, since we had a higher yield than a dutch auction. demand i gave it at 1:00 eastern, b minus. above average, not as good as yesterday's ten, 317 is the issue of trading, and, if you look at the bid to cover, 3 .24, better than auction average, less than ten auction average, and 13.1 is a big bright spot that's really significantly higher, 8% ten auction average, and like yesterday, we see that, it's strong. strongest since october of 2015. primary dealers take a whisker less than 26 practice, 56
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billion in coupons, supply, out the door, why did the options go well? maybe because many think tomorrow's number is very important for cha side of 260, maybe 3% we go to, and how quickly, but it most likely does not affect the fed, but it's big. concession, or you buy in a hornet spot. tomorrow at 8:30 will tell. back to you. >> thank you, rick, very much. just getting started here on a busy "power lunch," and still ahead, exclusive interview with marvin ellison, department stores struggling. how will they turn around? find out. happy birthday to the bull market. it has been eight years since that famous bull. who led the rally? we'll look at the winners as well as losers of the bull market next.
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however, i'm going to step out on a limb here, i -- >> this is -- >> i think we're in the bottom, i really do. the s&p surged 250%, and the dou also is more than tripling gains, and nasdaq outperforming both up 360%. morgan has a closer look at the
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winners and losers since that bottom. >> that's right. so incredible call by the late mar cane, great run. tech and health care. loser? energy. the discretionary sector is up 450%. look at the top performer in the s&p, it's ulta salon up 6300%. the beauty products retailer reporting earnings after the bell today, i should add. some of the dow components, home depot and walt disney, top performers there as well 780% for home depot, and disney up 650%. health care winner? incite, more than 6500%. regeneron. dow component, united health soring almost 900%, as you can see right there, and apple, up over 1,000%. biggest winner in the dow industrials, joined in 2015.
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on the flip side, some of the biggest lags are energy stocks thanks for crude's fall to $100 to $50 today. top losers? southwestern energy down over 70%. transocean, which is down nearly 60%, and 50%, and in the dow, ee exxon mobil, it's down. another fun fact. one of the biggest companies in the world, facebook, gaining more than 200%, wasn't public yet. that only happened in 2012, just to put this all in perspective. back to you. >> morgan, thank you very much. most stocks have gone up -- we don't have stocks, funds, up 6,000 percent. yours have. >> oh, yeah. >> does the market have room to run? let's bring in head of funds and managed accounts at northern trust asset management and michael bell, global market
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strategist at jp morgan asset management. let me start with you, you say now after this run, not just the eight year run, but i assume the run since the election, that it's time to look at your portfolio to consider reambulancing, which i would assume means move money from stocks as they expanded as a percentage of the portfolio and move into credit? >> i want to clarify the view. first of all, we're very constructive on stocks. we like the u.s. market, but one of the things that we always preach is discipline around the portfolio, and so if you think about, for example, the kind of outperformance we've seen with the u.s., if you were at a point your target exceeded what's in the port foal your for u.s., there's attractive parts of the emerging market stocks, look at natural resources, even look at high yield if you're looking to move some of the risk away from equities into something that assimilates equities but gives income and not as much equity risk. >> not so much a call on which
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way the market may go as it is on just smart portfolio management. maybe you want to take a look at moving the other way. michael, turning to you. i know that you are also generally constructive on stocks, but especially on european stocks, which you see as a value, and i want to ask you specifically about why you are so bullish on france where the elections certainly could be a hairball in the food. >> well, if you look at the latest polling data from france, it looks like pro-reformists, pro-euroo pro-eurolikely to get 65% of the vote in the second round and confidently win. look at the best companies in europe, they are listed in the french market, although sales come from outside of france, so we end up from a bottom-up perspective with quite a lot of french stocks and high european
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portfolios. european equities in general relative to the u.s. on price metric and cyclicly adjusted pe, they are closest to the levels they've been in 40 years. >> worth taking the risk on? >> a couple things. if we look at the overall weightings in portfolios, we are underweight relative to european economies, so i say we have a preference for emerging markets. we have a preference because look at the long-term view, we're not only constructive on markets, but inflation is a risk, and what you get for emerging markets is not just exposure, but a risk, a bias in that direction. >> because of the elections? >> well, i think the underweight's not so much the political risk, although we call out the political risks seen there. it's more reflection of what we see in the underlying economic trend, and what we see in terms of the balance relative risk se their eos. >> michael, coming back to you
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to push a little bit on your french call here. i mean, if it was any less sob of the past year, the polls were wrong. >> the margin of of error in po over the years is much smaller. looks like 5% in the second round, 35% to lapen. compare that with the u.s. election or with the brexit r referendum here in the u.k., the night before both events, polling was quite tight. >> tight. >> particularly in key swing states in the u.s. >> i take the point. >> polling tends to be wrong, but not that quick a a margin. >> quickly on the u.k. where you see consumer confidence eroding. you bakically seen a pretty stable deterioration in consumer confidence since the referendum. it fell, rebounded, and since then headed south. we think that's caused by
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inflation picking up as the pound comes down. that's lightly to weigh on u.k. growth, leaving us cautious on the u.k. economy, but we think that u.k. investors should therefore not really be taking big active positions trying to get relatively low tracking in the area, yes. >> thank you very much. great to sue you. appreciate it. household booming, but before going to home depot or lowe's, we have the warning for you. we'll explain when "power lunch" returns. returns.
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welcome back, everybody, house flipping is booming, but we have a warning for those thinking of buying a flip home. we are live in washington with that story. diana, i was once. what are the dangers here? >> okay. well, you're looking at it. if you're like me, you walked into this historic d.c. row house and see gorgeous, right? the granite, new appliances, a beautiful fireplace, hardwood floors, exactly what empty nesters were looking for when moving to d.c. six months in, though, they get a call from a d.c. inspector saying he's investigating the company that flipped this home, the inspector comes in, a litany of code violations. you want to hear the worst? come with me. this originally was a one bedroom unit. the developer put this addition on to the back adding this
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bedroom, another bath, another and bed and bath below. never pulled any perms. the d.c. inspector says d.c. has the right to rip this entire addition off the back of the house. they had a home inspection. they had no way of knowing this. >> just the glamorous counters, effective with the high end appliances and pieces and thought it was a dream, but it's a nightmare. >> reporter: and if you are about to flip, some notes, get full permits pulled on the property. get all disclosures, ask for warranties and receipts on all items, and make sure all the work was fully inspected. more on this story on cnbc.com. these folks are not alone, guys. >> wow! that is a definite disaster. thank you very much. let's go to brian for thoughts about this. i guess a buyer beware there,
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but who knew that you ought to go in and get all the permits for work that was done on a house that you've just bought. >> you know, tyler, it's a perfect tease. her story is on the mark. last night, actually, we were talking about another new cnbc show, "the deed," you like the show, it's a good show, and we got into the conversation, literally, last night, about how i said, everybody thinks everything is easier than it is. easier to make money flipping homes. easy to run a restaurant. if people overestimate or underestimate how difficult things are -- >> everybody underestimates anything. first off, when you remodel, whatever you think you spend, you add 30%, okay? so many people that get caught, and there's always somebody at the end who gets stuck with that house or condo. i tell people, do not invest in real estate to flip. you make money in real estate by
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holding. the rest of the business, you do not want to go in the restaurant business. go to the casino and put it on red or black at the table. you have a 50% shot. >> why do you say that? >> you're not going to make money flipping houses long terment you'll get caught in a bad market. there's over 600,000 restaurants in the united states. one of the most independently owned business types out there, also got some of the highest failure rates. you, obviously, have not failed much, but when restaurants do not do as well as you hoped, one or two things you point to to what happened? you have an audience that are not just traders. they could own a restaurant. what's your advice? >> number one, biggest problem is neighborhoods move. there's always a new center. there's always a new area of town. a lot of times, people move away from you, and besides today, it's the competition. everyone wants a restaurant business. rates go through the roof where we have health care issues.
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we have wage issues. the biggest thing of it all, competition. >> yeah. all right. we got more time coming up throughout the rest of the show. after the break, though, switching gears, another ceo, dew chemical, close to the president, leading his manufacturing jobs counsel to join us as well. we are putting the lunch back in "power lunch" downtown in houston, and we're back right after this. and the wolf huffed and puffed... like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler
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hi, everybody. i'm sue, and here's your cnbc news update at this hour. u.s. forces arrived in syria and a preparing for an offensive against isis in raqqa. military vehicles bearing the american flag drove through a syria village and u.s. top official said yesterday a small group of marines entered the country. wikileaks founder assange says they work with technology companies to defend them against cia hacking tools. this was in an online press conference from the ecuador
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embassy in london this morning. >> we had decided to work with them to give them some exclusive access to tech until call additional details we have so fixes can be developed and pushed out. radioshack filed for bankruptcy for the second time in just over two years. the company says it'll close about 200 of the 1500 store, and also e evaluate options for the others that remain. it close 400 stores when they filed for bankruptcy back in 2015. that's the news update. you are up to date at this hour. let's go back to houston and brian. >> sue, thank you very much. we are pleased to be joined now by andrew, ceo of dow chemical, a deal going on to merge with dupont, but more importantly, welcome. >> thank you, brian. >> number two, i would say -- fair to say you're as close to the president as any ceo is? >> too much a stretch.
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there's 30-50 ceos with him already. this initiative that he asked me to lead has meant that we've had quite a lot of interaction, and as a result of those interactions, his campaign promise on jobs, manufacturie i jobs in the united states, in the midwest, in the parts of the country that have been ravaged by global trade, i think that puts me into a unique spot. >> and you've become the spokesman for the manufacturing counsel and took the lead on that. >> yeah. >> okay. as someone interactive with the president a number of times -- >> yes? >> we had an analyst on last week who said there's twitter trump, the inflammatory things on social media, and there's teleprompter trump. great speech, much different behind the scenes than behind the tweets. what's he like in person? who is the real president trump? >> the one i got to know and interact with and enjoying is businessman trump, and businessman trump, as we know,
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comes from business, and, obviously; his type of business is different than my type of business, but the rules of business are the rules of business, and he speaks business language in our meetings, in our interactions, and he pretty well -- i will tell you this, every time we've had a discussion that is generic, he goes to the specifics. he goes to, well, in my business, i saw this. does that relate to you? >> okay. does he ask questions? is it athis is what we do, or what do we need to do? >> interaction. interaction. he's got views. he's got ways of thinking of frameworks on regulatory, on tax, on infrastructure, on work force training. he's influenceable on those views and listens. my greatest surprise is compared to the other trump you talked about earlier is listening skills, which is really
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important in the business style we're having. i said to you we've managed to move the ball in 45 days on regulatory form than in the previous eight years. >> have they? there's executive issues ordered, but nearly through the first 100 days. now, a lot is congress, by the way, not the president -- >> well, yeah. >> nothing change. the laws -- there's executive orders issued. when do we get real policy action from the 535 men and women on capitol hill. >> the legislative side is its own agenda, but the con fluns of interest are regulatory reform, tax reform, and infrastructure and work force trainings is high. republican congress, obviously, so, now, what's in front of us is what he's talked about and what we heard. of course, aca, the repeal and replacement, and tax reform, and those two are paralleled, and at the same time, we the manufacturing group gave 100 different rates. did you know in the
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manufacturing sector, the average regulatory cost for employee is $20,000 -- >> what's that mean? >> $20,000 per employee per year. >> explain that. >> in terms of burden of regulatory -- >> the people you need to hire to hire regulatory side of everybody? >> no, no, a measure. all other industry, average cost is $10,000. we complain about financial regulation, all the other things, but in the manufacturing sector, we're carrying, per employee, double the cost of regulations. so that meanings there's too many regulations. >> bringing that down? >> absolutely. >> here's the thing, we have to let you go, but here the thing. people say it doesn't matter what you do or what the president does, but robots, automation, and technology are going to take away more jobs than any slight change to the regulatory agenda can bring. >> the digitalization of industrial america means a new industrial policy, and the
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answer to the question is reskill workers and change way we supply capability to our school system. >> yeah. >> stem. that is on the presidential agenda as well. in fact, there's a lot of action on that in the coming weeks. >> okay. andrew, ceo of dow chemical, appreciate the time today, andrew. >> great to be with you. >> great insignificant. >> interesting he mentioned cools is. in a few minutes, we have the president of university of houston. all you parents out there look ag the the cost of college and wondering how the heck will i pay for this? we'll find out where college cost inflation is headed. more to do here from downtown in houston, texas. we are back on the set with melis melissa, sorry, guys, jumped the gun on the tease there. exciting here. got ahead of myself. >> that's okay, brian. thank you so much. president trump meeting with community bankers today at the white house. the president called them the backbone of small business in america. >> playing a role in creating jobs, providing approximately
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half of all loans, and that's been dwindling because community banks are in big -- workers are employed by small businesses. we must ensure access to capital, small businesses and small businesses need growth. community banks, backbone of small business in america. >> camden fine, president and ceo of the independent community bangers bankers. great to see you. >> good to see you, melissa, thank you. >> do you feel you have an ally in the white house? >> oh, definitely. it was a terrific meeting, really. i've been in several of these meetings over the years, and this was by far the best meeting i've been in with my bankers from around the country, my community bankers. the independent community bankers of america could not be more pleased with how that meeting went today. >> you know, you -- excuse me for jumping in there.
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i heard a similar comment from other ceos not in the banking business, but what made it so good and so different from other meetings you've been in? >> the president was very interactive. he was very knowledgeable about the issues and problems facing community banks, but it was a free flow discussion. it was not scripted. it was back and forth. e engaged. he asked questions. he drilled down. he was very animated, but very approachable, and i have not seen that kind of discussion in the white house before, and it was -- the big treat was at the very end of the meeting, he invited all of us to go into the oval office and he gave us a little tour of the oval office. i've never had that happen before. >> yeah. a lot of ceos came out of the meeting and came out of tours of the oval office feeling the exact same way, cam, but back to the specifics of the meeting. were there certain things you felt, certain issues on which
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you really felt you were heard by the president, or are there things that you want dope that you feel like, you know what, president trump is going to be on board with this deregulatory change. >> absolutely. he was very focused on small business lending and getting various regulations out of the way between the banker and the borrower. he was very focused on mortgage lending an the regular rations that came out. he talked about changes that need to be made at the efpb, consumer financial protection bureau. he talked about changes at the regulatory agency, all to clear out the regulatory underbrush to allow community bankers to do what they do best, and that is to serve their customers. >> so what one or two examples could you give our viewers of regulations that you have found to be burdensome or, perhaps, unfair, in other words, that were intended to target big
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banks that may have bad behavior in the financial crisis, but have come to bear on you and your constituency? >> well, for example, the qualified mortgage rule and regulations surrounding what counts as a qualified mortgage opposed to a nonqualified mortgage was problematic for small banks because they are not volume lingerers, and that regulation was really promulgated to take care of volume lenders, like the old country wide and so for. that situation is problematic for community banks. another one are the servicing regulations. community bankers service their own loans, but once you go over a certain threshold of just 5,000 loans, the servicing is out of your hands, and you -- the customer can't walk into your bank and you're not allowed to service that customer on that loan because of that regulation.
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those are two very problematic loans or regulations that we face, and the president promised he would do something about that. >> got another meeting set up already, cam? >> we hope to. we got meetings with secretary mnuchin and mr. cohen. >> all right, thank you. appreciate the time. >> sure. love it, guys. >> answering questions with specifics, just like that. that was great. >> much more ahead -- just saying -- much more ahead here on "power lunch" including the interview with the jcpenney ceo, and, plus, one of james bond's yachts can be yours if you have the money. stick around. we'll be right back. s interested in building a career. i came to ibm to manage global clients and big data. but i found so much more. ( ♪ ) it's really a melting pot of activities and people.
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welcome back, and who is this sitting next to us? the president and chancellor of the university of houston, 1.7 billion operating budget. you are literally, you are an educator, but you are running a major business, but you are also on the counsel of foreign relations, immigration issues, and federal reserve. before getting to higher educationing okay, and why it costs so much -- >> okay. >> the economy. you guys see it as well with people coming to school, your former fed, and how is the u.s. economy right now? we got a jobs number tomorrow. >> right. >> so jobs number are one thing we look at, and at the federal reserve bank, but there's many other indexes that we look at, and based on a lot of things, jobs is one, placement, other things, that's the way recommendations are made, whether we raise interest rates
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or not, but it is a very carefully thought out, very methodical process. >> i'm going to say something that might not get me back to cnbc tomorrow. we treat the jobs number -- i joke, we talk about the all important jobs number like that's the name of it. you say it's important, but maybe not thee most important thing? >> i would say unemployment and inflation are the two major things, but we look at, how things unfold like utilities, where they are going, i mean, there's a ton of economists who very carefully look at every single index number before bringing it to the board for a conversation about it. >> how strong is the economy then? >> well, from the measure i'm looking -- i'm not inside the fed right now, but everything that i read and continue to read, so i'm an outsider right now, but it's picking up, no doubt about that. >> are we right then? making the right decisions?
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>> i hope so, certainly hope so. >> you know, it's interesting, every ceo we get that comes on, not every one, but a lot, they come to the show and drive audiences insane. i get e e-mails and tweets about it, i can't find skilled workers, and politely, the viewers say that's horse pucky. why can't i get a job? what's the real story in the skills gap in the united states? >> well, we do have a huge skill gap. no doubt about it, particularly, that gap exists in stem areas. it's very interesting paradox because you have companies looking for people that qualify, and people are looking forward for a connection between the two. the advantage for us is they are height here, and fourth largest in the united states, global city, and we can directly connect with the industry and
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schedule all programs in such a rate so students have the skills and get the job. >> you have five campuses and 71,000 students in the ua system. >> yes. >> i'm always building something big. zb rig >> right. >> we lack those workers, electricians, plumbers. do people need a four-year degree? >> okay. >> or is the two-year vocational degree the best thing? >> that's a great question. for some people, two-year vocational degree is really good. i think it serves the purpose. there's a road for it, but i think a four-year college degree also is important. very important for variety of different jobs. the fact is that the future jobs require some kind of secondary education, and not with vocational degrees. you're not going to make america competitive in the global marketplace. >> how do we contain costs? we have to go, but especially as a father of 2-year-old, doing the math, i have to take a loan from him to sends the kid to
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college. >> okay. i empathize for the college costs. public university. no doubt that the contribution that's coming from the state has been declining, but the bottom line is this, try to google it. for me, just for fun. google average cost and google average cost of college degrees from a public university, and the chances are you're going to find a college degree less exceptive. i want people to know that they should always aspire to go to college, do not look at a single price and be confused because we do give out so much financially. >> that's not what they are going to pay. >> wait a minute, we don't charge houston if anybody's family makes $45,000 or less. >> in the state of texas? >> in the state of texas, you can come here. >> leave it on that note. thank you very much. >> okay. >> president, chancellor, university of houston, your football team was close. >> i know. >> not quite there. i won't say anything. he'll get angry.
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>> thank you. we have a news alert, steve? >> thanks. the new treasury secretary sent a letter to house speaker paul ryan saying the treasury is embarking on taking what it calls extraordinary measures in order to avoid the debt ceiling which is going to be reach on march 16th, among those mentioned here in the letter from the reuters headline reading now, suspending sales of state and local government securities, saying the full face and credit of u.s. debt is a critical commitment. melissa, i'm more concerned about these if we had not been here before several times. this is a dance we've done a bunch of times, nearing the debt ceiling, and the treasury prepares for it, taking measures to shift around money so we don't hit the debt ceiling, wait for the hi jinx of the congress waiting last minute in order to raise the debt ceiling, but here we are going through the motions, steve saying he's
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taking extraordinary measures in order to avoid hitting the debt ceiling, and now we have to wait for, obviously, congress to act. >> yeah, steve, thank you. one of the most memorable bond girls n. 007 films "sky fall", and now she's up for sale. we're talking about a yacht. wait until you hear the price tag straight ahead. g straight a. i joined the army in july of '98. i did active duty 11 years. g straight a. and two in the reserves. our 18 year old was in an accident. when i call usaa it was that voice asking me, "is your daughter ok?"
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welcome back, if it's thursday, it's time for the secret lives of the super rich. it's a bond beauty. that's james bond. >> you're looking at the only super yacht bad ass enough to star a role alongside daniel craig, 007 in skyfall. in real life, the 183 foot boat is owned by a turkish tycoon selling her for $9.4. the ship's mahogany soup structure conceals the captain's cockpit, a grand living room, a former dining table seating 12, and a professional kitchen worthy of a top chef. down below, a mahogany covered
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hall, brass bedrooms, and all six baths are covered in glowing onyx marble little up by led lights. >> you can always charter her for $130,000 a week. she's down in st. martin right now where we shot her for the rest of the season before going back to europe. sailing yachts are a great amount of boat for the money because you get 180 foot yacht for half the price or less than you would have in a motor yacht. >> at the same size. >> and that's just because they are not as popular among the super rich? >> that's right. they require a crew, but, again, with this boat, you get a crew of nine people when you charter her. as long as you have a crew, charters are great. they don't go as fast. they are finnicy in terms of the stuff you worry about, but gorgeous goat. famous scene in the movie, more
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famous for the shower scene involving bond and there we go. >> we have to have the shower scene. >> there's the shower. >> wow. >> was there a premium on the boat because it was in the james bond movie? >> initially there was when first listed after the movie came out, now down to 9. not a bond premium, but good value for money. there's a lot of boats right now for sale, especially sailboats. >> down from what? >> i think it was 13, 14 when it came out. >> a lot of boats, is that a sign of the times? sign of trouble for the billionaires in any way? >> there's a glut of boats in the mid-tier space in sailboats. at 250 plus, there's a shortage. at the very top of the market, very strong middle of the market, but 150 feet, tons right now, and sailboats. >> let's go shopping. >> why not. >> a relative bargain. >> it is. robert, thank you. catch the season's finale
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tonight at 10:00 eastern and pacific time. still ahead, mixed messages, go long on stocks, and phil says it's time to get concerned. who is right? that's ahead in the second hour of "power lunch." of "power lunc" so beautiful. what shall we call you? tom! name it tom! studies show that toms have
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hi, everybody, welcome to "power lunch," two hours until the closing bell, and here's what we are watching this hour. eight years, eight years since marquane declared a bottom in stock prices. up 200% since then, but one says it's time to get concerned. oil following up yesterday's big loss with a more modest one, but continuing to lose traction there. down almost 3%. we're covering it from houston where the business owner who really feels it when oil declines, and jcpenney is going to close more than a hundred stores. what's the company's turn around plan? we have an exclusive with that company's ceo. melis melissa? >> sears is moving higher, even though same-store sales fell 10%, the loss is smaller than
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last year, and they took steps to control inventory and cut costs. beverage corp. making sparkling water and said they were on pace for a record setting year. elf beauty with strong sales in earnings. they report after the bell today. >> thank you very much. bill gross out with a big warning for investors today. gross telling his clients don't be allured by the trump rally, and investors should be concerned about return of their money rather than return on their capital this year. gross managing the global unconstrained bond fund, and according to morning star, it's up half a percent this year and over 5% in the past year, and since inception of return about 1.4%. joining us now in a first cnbc interview, bill gross. good to see you. >> thank you. >> in the most recent letter, always amusingly written, you are concerned about the level of
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leverage in the system. give us some highlights. >> well, i think, tyler, that leverage always presents problems for the economy, and usually, you know, is the starting gun for the decline, either in terms of recession or decline in the market, too much leverage with a cover or interest rate carry that's too high presents problems. for example, the sub primes in 2004, 2005, 2006, 2007 as the fed was raising interest rates from 1% to 5.25% became most up bearable in terms of the interest cover or payment necessary by those who took out the mortgages, and you have the sub prime mortgage indicative of leverage on a global basis, it was, and so the economy came down, and we had a great recession, so leverage, which has been increasing, tyler, not just in the united states on the corporate level, but in euroland
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and china. it's becoming a problem for the future growth of the economy. >> when leads, naturally, to the question, compare now with then, and where now are the pockets of leverage most concerning to you? >> well, i think it's relatively well off. you know, household leverage has come down because of the sub prime mortgage situation and because they delevered their debt. corporations are levering up, but not significantly so, and, of course, you know, the u.s. treasury probably levered at 100%, which is at an all-time high, but certainly not significant relative to other countries, but this is the leverage really exists in the emerging market countries, and china, as i mentioned, brazil, and other countries, which is, you know, basically took on dollar deno, ma'am naeted debt,
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and if the dollar strengthens, that debt is hard earn and harder to play no matter what the interest rate is that is imposed by the feds so you have a globalized economy, problem in china, brazil, or problem elsewhere creates a problem just like the sub primes did not united states in 2007 and 2008. >> you worked all your life to be unconstrained, bill, so give me the unconstrained money advice given your thesis here about the level of leverage in debt. what should i do with my capital now? >> well, unconstrained basically says, tyler, you don't have to match the duration or the mat e maturity of a bond index. you know, the barclay's index is a five and a half year duration, seven to eight year maturity, so return managers are geared to that particular duration. unconstrained said durations should be zero and you can go up a little or down a little bit, but that rising interest rate
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should not be a problem going forward for an unconstrained bond manager, and so, you know, that's the way we've approached it. there are examples in terms of making money that present themselves, basically, we've been selling volatility opposed to buying it, and earning premiums based upon that, and so a number of ways, but duration in the minimization of duration is perhaps the most productive way in a bear market. >> that's what i want to turn you to, so keep duration minimal in this kind of environment. we're at 2.6% on the ten-year note. that's a level that concerns you that you say really sort of signals a bond bear market. explain. >> i think so. i've said not predicting that did would exceed 2.6%, but it would be single long term bear market. you know, for 30 years, interest rates have been coming down
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higher, lower highs and lower lows. we're at a point in and out in nerms in long term term line where 2.6% represents the point of where an interest rate reversal should take place. if not, if 2.6 is broken and moves to 3%, that says interest rates are headed higher on a longer term basis. >> game, set match. bill gross, great to see you, thanks. >> thank you, tyler. >> melissa? >> you heard bill gross is cautious on the markets, but david tepper is long u.s. stocks, especially begin the quote-on-quote drugs begin to central banks around the world and promise of deregulation. who is right? let's debate it. the balance fund, cautious in the long time, and jerry, president and ceo of castle ark management, more in tepper's camps, and bullish on the market. sandy, i will start with you.
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why are you cautious when we have, not just david tepper talking about the bullishness, but we heard jamie dimon today with bloomberg talking about animal spirits, and confident it's an all-time high. >> yeah. when you look at the jobs numbers that we've had, and i think next week, it's almost a fore gone conclusion that interest rates are going up. when you look at specifically small caps stocks and look at higher interest rates, they outperform larger cap stocks because of being more dmesicily focused, more expensive to export good and services with a higher dollarment look over the last six tightening cycles, small caps went well, going from the last months forward, you're looking at about a 15% annualized return for small cap stocks when the first rate hike began, december of 2016. actually, a very good 2017
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specifically for small cap stocks, and we can taper off after that point. >> jerry, why are you bullish? promise of deregulation r o bill gross call it the mirage of 3-4% growth out there. >> yeah. i think, i mean, who is going to argue with bill gross and his track record. >> not david tepper either, but there's no commonground between the two. >> i think why david's right is he's bringing in the very risk that bill speaks about. he's actually using, as i would, as a great force of growth globally, and if bill's pointing out there's more ambulance sheet risk outside the united states, well, that's where all the growth is likely to come from. that's where you are going to tee the 3-m% growth, and this mitigates, quickly, in a respectly growing environment, and if you just use that, i think you tap down that risk, particularly over the near term. what's more interesting, though, and i would go beyond some of david's points, which is
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investors globally just are not exposed to equities, and we are in a big demographic cycle here that's going to attract more and more savers into equity-like investments, and if that happens, you're going to have that whole generation of investors now start to become part of a global -- >> you say there's cash on want sidelines to propel the market further? >> yes. it's trillions, tens of trillions globally, and there's no reason to participate until now. the point on the cyclical side is that point that unleashing all investing power. >> sandy, you're clearly bullish short term, but longer term, what concerns you? what is -- is it the agenda won't get done by the trump administration? i mean, do you look, for instance, at this proposal, the gop plan for health care and say, you know, it's hitting some stumbling blocks so far with oppositions from not only trade groups representing various sub sec sores of the health care industry, but conservative groups. say, you know what, maybe that
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means tax reform is harder to accomplish. >> yeah. i mean, there's going to be a lot going on with deregulation and lower corporate tax rates and all the infrastructure buildout and there's a lot to come, right? there's -- you know, any way you look at it, looks like deficits are increasing, and that makes me skeptical over the long run. we're very company-specific, though, and we still see some value in more our smaller and big tap securities, what we are focused on, finding diamonds in the rough and picking them up to hold for the long run, but more nervous on the market as a whole looking autoto 12-18 months from now. >> gentlemen, thank you. sandy, jeer re. let's get to brian. >> thank you. >> yeah, thank you. we're beginning to continue the discussion here from houston about two things, really, obviously, the price of energy, oil and gas, 100, down to 30, back up to 50, got a great story of a small businessman going
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from a $68,000 loan to $300 million in business. he's directly tied to oils recovery, joining us as well, and wii 8 we'll continue to chat about regulation and how to get small business working again in america. hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom?
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what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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one of the factors miss is regulatory authority, the health
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care sector, energy sector not knowing what's expected of them, or as rules are passed, changed midstream after infrastructure investment took place, so one of the things we have to focus on at the epa is maintaining commitment to process, making sure that we hear comments from industry, to hear how rules are going to impact them, citizens, health concerns, environmental concerns, and adopt rules to ensure they are enforced appropriately, fairly, equitabye across the board. >> talking regulation and trying to deregulate, a little bit, get growth going, joined -- here t thing on regulation, we talk to business owners, and everybody says, we have to deregulate, deregulate, deregulate. audience says, oh, big business whining again about necessary rules. what is a good line between enough regulation to protect things we need to protect, food safety, effort, and crushing
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business. >> you have to have regulation. that makes america great. you can overregulate, and that's been the last eight years. what happened was is that the last administration gave every secretary and cabinet member the right to make up rules, and when you put rules in place and you're in the courthouse, the judge thinks, well, if the labor department says it, that must be law. it was just a rule. it's the way an administration pushes what they feel down to business and the public regulation. >> when you open up, you have a hotel built, own restaurants, and since you've been in the hospitality business, how much is regulation grown? what's it take to open a restaurant today? >> it's crazy. that's why everybody that opens up a restaurant, they end up spending 20-25% more. you know, regulation is to have to have a far right and handicap bathroom in a bizarre point inch, you can be sued.
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that's regulation. there's too much regulation in every aspect of the business. before you open, and then, of course, when you are open. >> come on, it's job stimulus for attorneys. >> yeah, right, right. >> let's bring in a story, if you remember, folks, a year and a half, two years ago, came to texas as oil turned down, and we told you the great story about a guy named max, who owned a oil tubing company, over a thousand employees, laid off a bunch as the price of oil kracollapsed. we welcome him back in, max, good to see you again. thank you very much for joining us. the last time we spoke, you had gone from 300 million in sales and 1100 employees down to 500 employees. oil has come back, where do you stand now in business? >> 2016 with a price of oil down to $26, and the rate count down to 400, so 102016 was a lot tougher than '15.
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>> how many employees do you have now? >> 350. >> you went down, 1100 to 350? >> absolutely. now it is picking up. we are rebuilding it. your prior segment of the conversation, it's not only federal, but to get a permit to build anything in houston is also very, very cumbersome. >> are you actively hiring or are you just staying steady right now? >> oh, no, no, no. we are trying to come up with new volume we're looking at. that's definitely what we're trying to keep up in the market. >> do you feel we're back in '17? >> yes and no. i think the oil price situation is pretty fragile. the more we can do, the more supply, the more demand,
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inquiry, prices dropped in the last few days. >> we are producing more today than we ever have in history. >> we are exporting, which is good, but let me go over one example that drives the deal to the top of the table, which, what is the real price of the domestic oil and gas? okay? they both have the same value. it doesn't matter what quantity you use. dollars per barrel, dollars per million, whatever it mean to you. whether you think is it is the cause of domestic oil. >> no idea. >> i'm assuming you're going to say it's zero. >> zero. >> it's zero. >> everything it economic activity. >> the oil is free in the ground, you just got to get it. >> economic activity. the landowner gets a lease, there's royalties, somebody comes in, gets it prepared. they get paid. they employ people.
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pay taxes. drilling rigs come in. drill the well. everything is economic activity compared to foreign oil, and then it goes to -- >> that's why -- >> no economic activity. >> that's why the producers and we were tracing the globe because the story's important. so many people are employed. you make pipes that go down in the dprouground. >> it's miles of facility. you could get loss. president wants everything with domestic appeal. can we do it? enough capacity to do what the president wants to do? >> not really. we son consume 140 tons of steel, we make about 90. we don't have a position to put everybody to work and build the capacity we need. it won't happen. we would go backwards. you got to be -- he took many, many years to come down. you can't do it overnight. you go to the have a
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well-planned precision, but market forces would take care of it, but we need fair trade. okay? we got nafta. it is impossible for an american company to sell one tube in mexico. >> why? >> because basically they got a monopoly over there, and it's impossible for an american company to compete in mexico, although there's a free trade agreement. >> a great story, i don't know that you know this, dominican born, 68,000 dollar -- borrowed 68,000 dollars for his son's college fund, business was $300 million a year. now has 350 employees. that's a heck of a story. keep us informed how you do. >> we'll do. >> thank you very much, brian. let's look at today's mystery charts. a hint, it is the best performing major etf so far this year. we have the answer coming up. and the struggling malls with a
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big impact on jcpenney. what can be done to turn around the company? the ceo is in an exclusive. in . okay, so what's our latest data say? our customer is a 21-year-old female. in . heavily into basketball. wait. data just changed... now she's into disc sports. ah, no she's not. since when? since now. she's into tai chi. she found disc sports too stressful. hold on. let me ask you this... what's she gonna like six months from now? who do we have on aerial karate? steve. steve. steve. and alexis. uh, no. just steve. just steve. just steve. live business, powered by sap.
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welcome back. press secretary sean spicer finished up the daily briefing minutes ago, asked about drug prices, and a democrat of maryland here at the white house yesterday said the president was enthusiastic about his plan to drop a bill dined to bring down prescription drug pricesment i asked scene spicer how much pain drug companies should expect from this effort. here's what he said. >> the president, as you know, one of the reasons he reached out to elijah cummings, initially, they share that and other areas they have commonground to work on issues. i know that drug prices is something that he understands near and dear is helping many people get the care that they need. >> reporter: so no specific endorsement there from this white house of the democratic bill up on capitol hill on drug prices, but it's clear the president does want to do something on that subjectment
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scene spicer, tyler, also talking here about obamacare and the president's efforts to roll back that legislation. they say here at the white house, tyler, they are still very confident that this bill is introduced on the hill is going to pass and the president will sign it. back over to you. >> thank you very much. >> reporter: you bet. oil with another down day after a 5% loss yesterday, below $50 now. back above $49, lowest level of the year, or thereabouts now. jcpenney, the stock struggling as well as other retailers as online shopping digs into the mall. closing more than 130 stores. what's the turn around plan? the company's ceo will joins for a a power lunch exclusive shortly. shortly. ho! ( ♪ ) it's off to work we go! woman: on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. and each job created by the energy industry supports two others in the community. altogether, the industry supports over 9 million jobs nationwide.
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hi, everybody, here's your cnbc news update this hour. nancy pelosi speaking out against the newly proposed republican health care plan during her weekly briefing. she described the plan as a gift to the rich. >> the republican bill is one of the largest transfers of wealth from working families to the richest people in the country, robin hood in reverse. the rich is 400 family in
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america get a $7 million tax break each year. to tune of $2.8 billion break every year. >> ocean cruise ship arrives in havana this morning with 50 guests on board, first call to cuba by a major north american brand. the stock is up half a percent or so so far this day. mark zuckerberg announced he and his wife are expecting another baby girl. he said the first hope was that the child would be healthy, and the next hope would be a girl. congratulations to them. we await the birth. that's it. the cnbc news update. back to you. >> all right, congratulations to them. >> i know. >> 90 minutes from the closing bell, stocks, on pace to close high e -- well, lower now, right around flat line, now down poo points on the dow industrial.
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if it falls threes days in a row, looking to avoid a four-day losing streak, and that would be the first since january 19th, so long ago that president obama was in the white house. oil down again today after yesterday's big loss. let's go find out where they stand now and why. >> good afternoon, tyler. well, another 2% slide after yesterday 5% slide. you see we are closing around $29 pbt 2 pennsylvania, but session low of $40.59. momentum downside here, but i spoke to many traders here today who told me they are buying this dip. they feel like they have the specks in the trade. they -- the boat tipped to one side, and now to the other side, perhaps moving a little bit too fast. what'll be interesting to see tomorrow, we're going to get the recount numbers, did they go up again here in the united states? that's the big problem. is the united states producing more oil, and eclipsing what the russian oil producers are
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cutting? that's where we have to see the balance cap off. when you see these moves, the market gets ahead of itself. watching closely, but for now, back to you. >> all right, thank you. department stores have been struggling, especially jcpenney,s stock down more than 20% this year. the company announced 140 store closings in the coming year. how do they plan to recover? let's bring in courtney reagan, joined by ellison, the ceo. >> thank you very much, melissa. i'm sitting with marvin ellison in the home department here in one of the stores in queens, new york, sitting among the appliances. you are already selling these, but now you are going to potentially offer to remodel my bathroom. what are you doing? why in the world are you doing it? >> well, it's great to be here. it's about understanding the needs of the customer. roughly 70% of the customer are female, and 70% of those customers own homes, and so what
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they said to us, we'll buy appliances them from you, if you sell them. we set up a 500 showroom, exceeded expectations so far, so we are pleased, but now they are saying, there's other things we'll buy if you can put those services in your home because we trust the brand. we're putting in services like a five-day blind install program, with a set price per window, putting in things like hvac with a partnership with train, the largest provider in the country. we're looking at smart home, a partnership with samsung, specifically on safety and security, which is really important to our female customers, and we're looking at things like simple bath remodels, not the gut and plumbing, but just a simple one-two day refresh, which is a really interesting program for the middle moderate income consumer. these are the kinds of things they said they'll purchase from us if we put the services in place, and, by the way, we have a competitor that's over 13 billion, and that's giving away market share, and we believe it's a great opportunity for us to take advantage of the market
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share. >> you won't say it, but i will that competitor is sears, but this feels a little bit more like you are trying to take a home depot customer, your old colleague, their customers, rather than a macy's shopper. is this your recognition traditional department stores are dead? >> no. it's a recognition that the customers' desires are part of our strategy. so, specifically, we're trying to do a couple things, a, try to find ways to grow, two, de-emphasize dependence on apparel and, also, to find ways to serve our customers in a different jaded way. of course, we want to do something uniquely different from our competitors, and, of course, we want to find businesses that are difficult to replicate as a pure play e-commerce company. if we can do those things while taking available market share, we believe they are advantageous things for us to do. based on my background and understanding this segment of business very well, we're not
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trying to be anything we're not. we a predominantly female driven business. we have a female demographic. our demographic has really two really distinct age groups. the really young and millennial female multiculture, and the more mature customer that both serve needs that jcpenneyments to try to process. it's a really good opportunity to serve the customers in a ewe week way. >> analysts look at what you and the management team are doing here saying you're doing a pretty good job in the environment you're working with. you are doing what you can to control factors that you can. department stores in general are struggling. mall traffic is down. are you up against an insurmountable task, growing jcpenney in an environment like this? >> we don't think so. go back to as recently as 2013, we lost $1.3 billion, $5 billion
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in debt with a negative $600 million in eve dau. in 2016, we made a net profit for the first time in 2010. positive earnings, over a billion dollars in eva draw, and we think part of that is because of the great partnerships in beauty with companies and brands like sephora, part is the focus on the home with new product launches like appliances, part of it is the great private brands we have in areas like liz clayborne and st. john's bay. we have a balanced strategy of brands that deprive value, beauty that drives experience in traffic, as well as making sure we're focused on the home area, which a large percent of the consumers' disposable incomes go into. it's a market we believe we have significant market share. >> my colleague has a question. jump on it. >> thank you.
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i have a question. it's an interesting strategy to go into services chlgts i'm curious, is there a point in which you say we're going beyond our core competency. this is not what we're known for, and that just because our core female shopper wants it, doesn't mean we have to add it. >> well, that's a good question. i spent 12 years of my life running a business that looks a lot like the services space that we're going into, and if you go back on the timeline, jcpenney served these products and services at one time in our history. a lot of people said the exact same thing about the appliance business. we were able to roll out 500 showrooms, one of the strongest categories for 2016. there's power in listening to the customers, but we also understand what we can and cannot do. we have the systems infrastructure with the talent we brought on board and the product and service knowledge we think we can do it exceptionally
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well. >> you know -- >> tyler, go ahead. >> i if might. i see the appliance giving you a new revenue stream, a growing area, but i wonder what you think jcpenney can do differently in the product category than some of the kpe tors, whether it's home depot, lowe's, sears, best buy, and others because a refrigerator is a refrigerator, after all. >> definitely. good point. innovation is really important. we have brand like samsung and lg that lead the way in innovation. in addition, let e me give you a data point. over 100,000 appliances break every day in the 100,000. there's always a natural demand. we may never be no. 1 in market share, but we think social security a category significant for us and serves the need for a customer. if you own a house, you have an appliance, and if you own the home and you shop at jcpenney, there's the ability to buy an
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appliance where you shop on a more convenient basis and numbers reflect the strategy's working. >> i have to wrap it up here, but i want to ask about business so far in march. have you seen the trend of turn around from february? >> if i could classify the biggest issue we had in 2016 in two words, it's women's apparel, so we launched a new spring goods, and i mentioned this on the earnings call, and we're seeing a really nice response from the customer, so we feel great about our apparel business. if we get our business back on track and combine that with the initiative of beauty, home with appliances, some new service officerings, weevil have a good 2017. >> things might be changing. >> we hope so. >> okay, great, thank you so much, marvin ellison, ceo of jcpenney. thank you. back to you at "power lunch." >> thank you very much. that "power lunch" exclusive. let's get instant reaction to the interview. dana, always good to see you.
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is jcpenney going through an identity crisis of sorts? i don't think about, oh, i want to have shades installed, and so i'm going to go to jcpenney. >> thank you for having me. overall, look at the retail land scrape overall, every single company has to try new things. if you just going to sit there, be an apparel company the entire time, you're not capturing the new customers. being able to change thing is a good thing, and jcpenney, whether it's trying home, innovating on apparel, i think they and all the other department stores need to work together to figure out how to capture new consumers and reinvent themselves. this is without reinvention. >> are you concerned about ellison has in terms of strength in 2016 was in large part because of the scaling competitor, sears, as well as a smaller, regional competitor, hh greg, that filed for bankruptcy. >> i think one of the things, yes, that's certainly a benefit
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if you're going to have players weaken, you can gain market share, but, also, when you think about the core customer buying it, typically, it's women who are making the decisions, and if they are going to a jcpenney already, you're going to be able to increase the average transaction. especially in this land scape where you're having more competitors continues to have trouble continuing to have more goods that appeal to them, i think, is a good thing, not a bad thing, i think so -- >> i think -- >> oh, go ahead. >> no, no, finish, go ahead. >> i was just going to say as you're able to capture a wilder customer base because you over ie femmes in more categories, department stores reinvent themselves to be a little bit like the model of other department stores, whether it's food halls, consumer electronics, or gym equipment. it's not just the same old apparel retailer. >> this is a stock selling at 6.25, you have $11 target on it. you are enthusiastic here. what persuades you? it's going to work? >> what persuades me is i've
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seen the balance sheet improve. i've seen a change. i see them taking action to enhance the operation. whether it's closing stores, investing in systems, taking a look at the national brands and private brands, staying the same doesn't move you forward, change does. that's why i see the clarify that way. >> great, great to have you. >> thank you, thank you so much. >> you bet. let's bring in brian. you know retail as well as anyone. what's the take on what's happening in retail right now? >> well, the problem is there's just too much square footage out there. that's not just in retail but in restaurants. so what we need to do is get rid of some of it. the problem with retail has more than -- at least it's entertainment in a restaurant. it's not entertainment when you go to a department store. >> we talk about this. you're 25 years old, $200 to
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spend. right? we always hear the millennials, they want to come here, have a couple cocktails or go to the golden nugget. they don't want it buy stuff. do you think that's a real trend change? >> definitely. they don't want stuff. they want entertainment dollar. the only edge we have are the retail. we got over capacity too. it is entertainment. okay. nobody enjoys going to the department store anymore. >> i wonder if they ever did, though. interesting you say that, though, tyler, melissa, jump in. you hear a restaurant guy say there's too many restaurants. >> there is. >> trying to read into that, though. >> there is. >> you're still growing. brand new, this has been around a month. >> it's location, location. if you're not there, we don't do it. >> i agree with you, and we've had a conversation like this on the set, maybe you have been here for some of it, my argument has been that unless stores, whether it's nordstrom or macy's or jcpenney get into the idea
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they are an entertainment destination, read that, serve alcohol, do events, make it a social destination -- >> he's asking for a friend -- >> asking for a friend. you know, young men and women are not going to go. if you make it an entertainment destination, you know, give me a reason to come into the shoe department at nordstrom because you're throwing a social event, maybe they'll show up. >> you know, it's interesting you say that because if you go back to the old department stores years ago, you had so many different restaurants in them. you had the entertainment areas in each one. it was, like, the big ones in london, but today, a department store to streamline costs got rid of that, but they might have to go back. >> can they go back? urban outfitters took heat for buying a pizza chain for $100 million. let me ask you this, would you
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put a restaurant in a nordstrom if they came to you? >> if it's a big enough restaurant in the right location. >> would you get tyler a cocktail in the shoe department, yes or no? >> i would if it's brought in to buy shoes. >> tyler, you're set. >> okay, good. >> coming up after the break, the president of the houston rockets joins us as well. that's going to be very cool. we're talking all kinds of business of basketball and whether the rockets need to buff up their defense. ir defense. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.
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>> a big reason in biotech. best performing etf of its size. manufactu more gains ahead? max, starting with you. in terms of fundamental picture, of course, you know, valuations look attractive, but it's caught in the cross hairs of the drug pricing issue. >> yes. so we very much agree with you there. i mean, i think our fear here is that rumors of the demise of risk might have been greatly exaggerated. true across the board and where we see right in the center sight, trump, new health care proposal, it's not clear, so we like it's run.
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we think there's a good long term story here, short term, this looks a little bit out over the skis, and when you move fast over the skis, sometimes you don't stick the dismount. >> a lot of metaphors there. aaron, do you see the same picture in terms of the short term? >> no. we would disagree with that short term. here's an industry we liked for some time, and we continue to like it. if we look at the ibb, they fit in a yearlong base pinned below $300, and we think it's setting up for a breakout to new highs here, and that gives us confidence in saying that because it's higher lows issue and you see the 200 day starting to turn higher as well. building momentum, terms improve on the breakout, upside to 350. this is just getting going. this is one of the favorite rotation ideas. buy biotech, melissa. >> got it, thank you. for more trading nation, go to
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houston rockets, a bit of a tough night last night. they're still a very good team. they're the eighth most valuable nba franchise according to "forbes." we're here with chad brown. >> good to see you. >> the knicks, as troubled as they are, are valued at more than $3 billion. golden state is 2.2 i think it is. are we seeing peak valuations or nba team valuations going to continue to go up? >> i think they're going to continue to go up. i think because of the ownership, it starts with ownership. lester alexander has owned the houston rockets for ten years now. he's built an infrastructure and put resources in place where the
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business is always going to drive the resources and the ability of the team to continue to get better. and you're seeing i think better owners, if you will, and different types of owners come into the nba over the years and just very economics and the metrics of the league. the explosion of the nba globally and the market. the new markets that we're able to reach. the product that we provide from a television perspective, it's only going to continue to make the organizations more valuable skbl what's amazing, unless it's on the team for 25 years. >> 24. >> 24 years and if i remember, les bought the team for $80 million because i went to the old ownership and i had an opportunity to come into the new ownership because i was an id t idiot. >> you're doing okay. >> i'm going to make it, but i wish i would have done that again. and it's just amazing because when you sit and you look at the forbes 400, it's almost like if you've owned a sports team for
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five years or ten years now, you're automatically on the list. >> because of the valuations? >> because of the valuations. leslie, of course as you know, is very shrewd and very smart in the way that he's built the organization and put the infrastructure in place. it's also if you were in that front end, if you will, of being able to develop and build these organizations, and even as recently as a few years ago i think we had a team trade for about 900 and before that you had golden state trading in the fives. >> milwaukee bucks. >> tyler mathisen, he has a question. >> ted, you sort of hit it just a moment ago. i'm curious how from a team perspective and a league perspective, how are you going to drive revenue growth? what are going to be the big revenue drivers? is it rising ticket prices? have you hit a ceiling. is it raising television costs?
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ultimately there has to be a loser for every winner. the records level out. >> his question, i know you didn't hear it. how do you drive revenue going forward? ticket fees, tv? >> combination of everything, right? the network tv deals that the league has recently done have kicked in this year. you've seen a significant explosion in salary cap. you've seen a lot more revenues coming into the system. teams that are really putting in the infrastructure to monetize their local markets are able to capitalize on local tv revenues and the league itself has a product that is very hot so you've got to be able to put the resources in locally and drive the future. so there are teams who are i would say substandard relative to their record. >> do we need the new orleans pelicans? no offense to the pelicans or new orleans teams?
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>> i think everybody contributes to the 30 team league. those are ultimately decisions that the board will discuss with the commissioner about markets going forward. there is a robust revenue sharing plan in place to help teams that may need a little bit more support and then it's a matter of driving your own business. >> got to leave it there. i hope we get a team in seattle. bring back the super son nicks because they were a great watch. tad brown, thank you. back with more "power lunch" right after this. ( ♪ ) it just feels like anything is possible here in upstate new york. ( ♪ ) at corning, i test smart glass
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all right. had an awesome show. two things. you've got a special greeting
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for somebody, one of your employees. but also, your show, the billion dollar buyer, those benches -- >> those benches. >> were made for somebody. >> a new jersey company. >> yes, new jersey. >> and everybody that you've seen us do a deal with on the show, it is 100% happened. >> we can sit, put our hineys, that's the word of the week. >> right there. >> what's your greeting? >> carly ann. >> dell: pratt was born this morning to two of my key executives, to jerry and to chris, and while she was holding the baby 30 minutes later she was tweeting about our show. >> wow. congratulations to her and her husband welcoming another baby. thank you. it's been a great -- thanks for having us here downtown. new restaurant. tyler, we've been struggling for a couple of days in houston. >> you've been having too much fun, brian. what is your big take away from the week for you? i mean, you were at sera earlier
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and today with tillman? >> well, we've lost 7% of the price of crude oil. extremely volatile. thanks to all of my team. they bust their butt. take away is oil still matters a lot. how about that. >> it certainly does. >> good stuff. safe travels, guys. thanks for watching "power lunch." >> "closing bell" right now. hi, everybody. welcome"closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. financials have been one of the leading sectors. president trump meets with ceos and find out what they discussed today. >> here's a name you may not have heard in a while. jon corzine taking the stand in a trial over who is responsible for the firm's 2011 bankruptcy. we'll take you live to the courthouse. but first investors have been waiti

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