tv Power Lunch CNBC May 23, 2017 1:00pm-3:01pm EDT
friday after the opec meeting. i can only talk about sectors or markets. today there's interesting options, buy the financials. >> what's your take on exxon? >> exxon? you know i can't do that. >> threw it out. >> don't give me any ammunition, i'm going to use it. >> "power" starts now. a boost in defense, sweeping cuts to medicaid and the promise of a balanced budget within ten years. but is president trump's budget plan already a nonstarter? one of the longest serving members of congress is here to answer that. amazon share hoeholder meeting should be a happy place. the stock is up about 40% since they last met, after all, so why is one group still upset? we'll find out. and the opioid epidemic continues to ravage american families. nearly 100 people a day die from overdoses. the one company who has an alternative. that stock is up 75% in the past year. there is hope. "power lunch" begins right now.
and welcome to "power l lunch." i'm melissa lee. mixed picture on wall street with the nasdaq in the red by about a tenth of a percent. the dow adding 30 points. the s&p up by three points itself. for the dow and the s&p, this would be their fourth day in a row of gains. that has not happened since the month of february. consumer staple hitting an all-time high on pace for its fourth straight day of gains. monster beverage, campbell leading there and it has been a volatile day for the home builders after rallying on the back of toll brothers. the sector now turning negative as new home sales fell more than 11%. much more on that story straight ahead. take a look at herbalife shares, tanking, about 6%. reports the company's china chief has abruptly left. we'll bring you more details when we have them. >> i'm which will fred frost. here is what else is happening. new clues about the economy, data that measures the amount of
freight transported by trucks showing a surprise drop. and a retirement savings regulation known as the fiduciary rule will go ahead on the 9th of june. more on the fallout on "power lunch" coming up. and the death toll rising to 22 in that suicide bombing at the concert in manchester, england, and an arrest has been made. on that note let's get straight to manchester with the latest developments at this hour. >> reporter: yes, will. the mayor leading a vigil outside the city hall not too far from where i'm standing here, not too far from manchester arena, the site of the horrific attack last night. teresa may has been up here this afternoon signing a letter of condolence, visiting some of the injured in the hospitals of the 60 or so injured being treated in eight hospitals, 22 of them we learned are children. teresa may also meeting with the police chief of greater manchester, ian hopkins. we've been talking about the
name of the suspect they believe is salman abedi. there are still some unanswered questions, though. >> our priority along with the police counterterrorism network is to continue to establish whether he was working alone or as part of a network. >> reporter: metropolitan police arrested one other man, a 23-year-old. the suspect himself was 22. they've conducteded a number of search warrants in properties a couple miles in southern manchester and are continuing to try and piece together clues about what exactly happened and why. melissa? >> thank you so much. the trump administration sending a $4.1 trillion budget to congress this morning. there you can see the books being released. the president's plan calling for sharp cuts in programs for the poor, boost to military
spending, and doesn't touch south dakoed is social security. >> reporter: those cuts total $3.6 trillion over the decade. about half of them come from changes to entitlement programs. social security disability insurance, food stamps, low-income tax credits. those are a few of the programs that could face significant changes under the president's proposal. on the flip side the administration is also suggesting that they want to include large tax cuts, as we know, and they're counting on regulatory reform as well to boost economic growth to 3% by the year 2021. earlier this morning omb direct or pushed back against critics who say those are unrealistic. >> that is a pessimistic look for what this country and this country's people is. we reject that pessimism. we probably should have gone in and assumed 3.5% or 4% growth
because that would be aggressive. 3% growth is just getting back to normal. >> reporter: the white house says its budget will balance by the year 2027. copies of the budget were sent to capitol hill this morning and mulvaney will be on the house to testify. diane black said she praised the president's budget for including greater accountability for taxpayers and for increasing funding for defense. meanwhile, john yarmouth, the ranking democrat on the committee, said the economic projections are, quote, absurd and the president's proposal should be resoundingly rejected. guys, all presidents' budgets go through the wringer once they hit capitol hill. he will need democratic support. this was just the opening salvo in a very long battle. >> ylan, thank you very much. we'll see you soon. steven mnuchin sitting down with our own john harwood.
admitting we will not get 3% economic growth this year or next. but it will phase in over time. also stating tax reform will not happen by august. here now to talk about this and the budget jared bernstein and jimmy with the american enterprise institute. i would imagine you think this budget is doa in congress. >> i do think it's doa. we've heard republicans say that. i fear there are components of the budget that are not all that different from budgets we've seen from, say, paul ryan, writing budgets when they didn't have the majority in congress. so i'm still concerned about some of the deep cuts. i'm also -- and i want to be very clear about this -- the accounting in this budget is really just crazier than i've ever seen and probably than jimmy or either folks on the other side have seen elsewhere. they do not count the cost of lost revenues in this budget yet they count these alleged growth
effects from them. >> what lost revenues? be specific. >> okay. so they're going to cut taxes by maybe as much as $5 trillion. that's a number that's been out there. they don't count that revenue loss in this budget, yet they do count growth effects. so, for example, they count revenues from the estate tax in this budget yet they say they're going to get rid of the estate tax. so nobody should believe any of this nonsense about balancing the budget in ten years. it's not going to happen. >> i think mnuchin is now saying and, again, this could change by the moment, that that tax cut will actually be revenue knneutl on a static basis not the dynamic effect. they have given no indication what tax breaks will limit, scaleback to pay for it. that's the only way that would make sense. i agree the accounting is screwy. >> to what extent does any of these plans rest on the fact 3% growth is necessary for any of the sums to start to add up?
>> well, in terms of getting the sums to add up, the 7s is important. i think they have $2 trillion in ex tra revenues in this budget that are generated by hitting 3% in 2020 or 2021. that's not going to happen because despite mulvaney saying we shouldn'ting constrained by pessimism but we should be by arithmetic. so in order to try to diminish the sea of red ink they're making these phony assumptions. once the official scorers get ahold of this, the cbo and jtc, you'll see that's a dead impasse. >> given that reliance to hit 3%, are they too focused on the cuts and balancing the budget with all the changes in the last decade? >> listen, if i was going to create a pro-growth, pro-innovation budget, list en,i
don't think i would be slashing science research. google and apple will not do our basic research. it has a role. i would be spending more on that. republicans love to talk about the reagan tax cuts. we had the reagan tax cuts in the early '80s. we did not see a big productivity boost for 15 years. you can give the reagan tax cuts credit, but there's no reason to think if we get these big tax cuts we'll see a big productivity boost anytime soon. that's what they're going to need to get 3% growth much less the 4% mulvaney thinks we can do. >> jerrod, hold on. i want to push back on something you said. you said we do not have the labor force. i will say that the budget does assume that certain cuts will be made that will force some of the 95 million people not currently in the workforce that are of working age back into the workforce. don't you agree that's kind of the goal is to maybe slash disability, slash things that
have suggested people have been pushed out of the workforce and get them back in and those extra people -- >> no. >> why not? >> you agree that is the concept? >> i don't know. first of all, the $95 million number refers to a group that includes people over and people who are in college. now if you're talking about work requirements in poverty programs, those have never been shown to have anything but the most marginal effects on labor supply. so you have to really look -- the cbo tells us that the decline in the labor force or the slower growth in the labor force accounts for 70% of the slowdown in growth are from about 3% to around 2%. now if you could do some really great demand side stuff and get that 70% to 50%, then we might have a few basis points faster
growth. but to get from 2% to 3% from this stuff based on work requirements and poverty programs, it's just wishful thinking. >> listen, republicans will it continue to put forward budgets like this one as long as they think, a, we are in some sort of crisis and need to balance the budget within ten years but not cut entitlements and, b, that we're going to rely on deep tax cuts to juice up productivity growth like the day after tomorrow. those are fallacies. as long as those are the two huge constraints, you're going to end up with ones where the pieces don't ultimately fit together. >> exactly. >> we could have had the same argument. let's not forget that bill clinton's balanced budget act of 1997 made huge, sweeping cuts to medicare and basically made welfare work fair. i'm not defending the cuts of the budget. i'm saying the concept -- the '97 cuts for medicaid were the biggest since 1981. >> listen --
>> jerrod first and then jimmy respond. >> bill clinton achieved a budget surplus but it wasn't at all based on the stuff you are talk i talking about. cbo projected the budget would be in deficit. what bill clinton actually got was precisely he was talking about. faster growth and that was after raising taxes. i'm not saying that raising taxes did it any more than jimmy is saying reagan's tax cuts led to a productivity boom -- >> and it was a different demographic. i get it. but it was steep and deep, medicaid cuts, and it was a push to work. again, i'm not defending any part of the trump budget. i'm trying to figure out, jimmy, where the blueprint may have come from because it's been widely criticized as many parts of it should be but there is a historical somewhat precedent. >> i think the blueprint is based republicans think we need to balance the budget within ten years. they've been talking about it. it's a great thing to rally around. that is a political thing not based on any previous nick blueprint. and the tax cuts are base d on
reagan. it's on a deep misinterpretation which has been repeated about the impact of those reagan tax cuts, which i liked, but a misinterpretation on the impact in the '80s and '90s and these errors keep getting compounded year after year budget after budget until you end up with this. >> jerrod and jimmy, i have a feeling the budget discussion and debate is not going anywhere anytime soon. the budget itself may not either. we appreciate you coming on. >> well said. thank you. >> we want to bring your attention to shares of fiat chrysler. it crossed the tape moments ago. the department of justice officially filing a civil complaint against fiat chrysler for excess diesel emissions. you see the stock has been down most of the session. it got sent back down to session lows moments ago. 10.41. it's now down 2.9% on the news. we do have a news alert in the bond market.
two-year notes. rick santelli, two-year yields. what does that tell us? >> reporter: well, it tells us that something did move on the budget because the budget director mulvaney while he was talking, hopefully you can see two-year note yields, they popped up. when they go up, price goes down. there was built-in concession, $26 billion to be exact. $1.316 was below the market just in the last hour. if you look prior, it wasn't. we grade it up to 1:00 p.m. eastern. if you look at all the internals they were fairly strong. 2.90 bid to cover, the best since may of '16. 57.2 on indirect. if you forget the last look at 58.9, you'd have to go back to january 16 to find a better number and the best on direct. so an a-minus, tomorrow five
followed by seven. they stepped in and bought. melissa, back to you. >> rick, thanks for that. david einhorn's hedge fund stepping up its fight against general motors. leslie picker has the details of the letter gm is sending to shareholders. >> einhorn has sent a few letters since launching a fight a few months ago but the timing of his latest letter makes sense. it comes on the heels of the ford announcement yesterday where the board ousted ceo mark fields in part due to lagging price. gm's stagnant performance pushing a different plan to separate gm stock into dividend shares and capital appreciation shares to boost the price. gm's management said that would lead to a down grade in the company's credit rating and moody's suggested as such.
einhorn said in today's letter that the board wasted $15 million by, quote, misrepresenting his plan. gm told cnbc that a vote for any of green light candidates is a vote for its flawed and highly risky idea. einhorn has nominated three directors urging them to vote for him. >> einhorn increased the stake so is upping the ante not just in terms of the letter but had his stake. >> this is a uniquely activist position for einhorn who traditionally serves as passive investors taking stakes with long and short and gets in them and has obviously been a big frustration of his, but he sees that this plan could increase the value. >> it seems there is just
investing because this is how every hedge fund is operating. there's no way to make money unless you're a computer or a so-called activist. >> but, also, before it used to be they would announce a stake, a plan and the stock would go higher. we haven't seen that of late. >> it's true. and we're seeing this not just in hedge funds but family offices are getting into the t activist game. we saw with tpg last week getting into etsy. it's a very crowded space. the market is just discounting the fact that a lot of people are trying to do these things and they're really hard to do. >> etsy is one thing. gm is another. you talk about banks. you did in england and do here now as well. is it just me or the activists are trying to fell goliath. not going after these mid cap companies anymore. >> shareholders all have these votes and you could have been
critical of the investment managers for not looking at it. >> leslie, thank you. let's get a market flash. >> we're looking at shares right now halted on a report from dow jones that the big london listed mining company is potentially making a takeover approach of bunge, the trade they're would indicate the mining company is look iing to diversify its asse. we're looking at shares of bu e bunge. it was halted and now reopened. a big winner. we have reached out and will be sure to come back, melissa, with any details that we get. back to you. >> we'll go live to amazon's annual meeting where there's surely a lot of happy people considering the stock's run but
not this group. we'll explain why. a new drug helping to solve the opioid epidemic. ♪ this is a story about mail and packages. and it's also a story about people. people who rely on us every day to deliver their dreams they're handing us more than mail they're handing us their business and while we make more e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service. priority: you ♪
decorations to jewelry. amazon also announcing it will offer lifetime for the first time in europe. it will include diskocovery and itv. and the company is shaking up the banana business. i had to stick with my pronunciation. >> will, it's banana. they are offering free bananas to everyone at its headquarters. so far it's given away nearly 2 million. they call themselves banistas. >> maybe banana is much nicer, more so fphisticated. foreign. amazon also holding its annual shareholder meeting. the stock is up 40% so my guess is that the group is probably largely going ba nanas with
happiness. do we expect anybody to have significant beefs with amazon or jeff bezos? >> reporter: well, guys, i don't know if you can hear all of this around me but there are a number of groups protesting. the group in the background behind me is urging amazon to a pilot that is here representing an organization that has some complaints with amazon. i want to bring you a few headlines from inside the meeting which just wrapped up. jeff bezos took the stage and one of the shareholders asked what he thought of warren buffett's comments at that annual general meeting and he responded and said that warren was his hero and he was deeply flattered by the comments and they were very meaningful to him. another asked whether a stock split was on the cards so other people could afford to partake in those returns that we have seen from amazon. he said they're thinking about it but they don't have any plans to do so.
>> a lot of the focus was on where amazon is investing. its prime membership program, alexa, the virtual assistant, india and logistics. amazon is building up its airplane delivery system but we have here with me one of the pilots that is working on that push, now you are here and i know our audience, behind are 50 pilots. >> the airline industry as a whole is suffering from a historic pilot shortage which is trickling down to the vendor carriers. we got about 65 from various airlines to the family and we're out here trying to picket to help the shareholders and the press understand the problems.
>> reporter: now why do shareholders need to understand -- what is the risk to amazon? >> the risk is when jeff bezos has stated the goals for prime air. those goals will hardly be achieved if they can't retain pilots that operate for prime air and deliver everyone's packages. >> reporter: thank you very much. amazon build out its logistics business. back to you. >> thank you. as the stock continues to hit all-time highs, wall street analysts remain bullish. there's not a single sell on the street. jason ware is the ceo who owns amazon stock for clients. great to have you with us. >> a lot will say the valuation is crazy. what metrics are you using to get your arms around investing in amazon? >> sure. so we look at price to sales is a good metric to look at.
here is a company doing $143 billion in trailing revenues. and then upwards of $200 billion. one of the reasons we know amazon profits and cash flow are there if we were to cease the investment spending. we want them to continue with the innovation. the price of sales is at a five-year high. does that warrant it at the time. amazon is investing so level in everything and becoming an air carrier basically and becoming a warehouse operator and an ai company and a bigger force in web services in an area that is getting commoditized because of price wars. >> sure. and despite the price -- actually the price cuts that
they've recently had, they're still growing the cloud computing business at 40% to 50% and there's a huge runway there. if you look at aggregate sales growth we're still talking 20% to 30% sales growth. they've had 20 years of unbroken double digit sales growth, so to pay something around three times revenue and, again, looking out further on the order of two times revenue, despite the fact that it is somewhere near these five-year highs on valuation, they're still growing at an impressive clip and this is a huge company, talking $140 billion, $460 billion market cap. and the fact they can dominate the two high-growth, important businesses, e-commerce and cloud computing, it's impressive and we're believers. >> you love amazon so does that mean you think retail or certain retailers are shorts? >> i think you could make the argument. they've laid waste to traditional retail. there's no question they continue to dismantle companies and apparel, et cetera, but there are some companies out there that are doing fine and
that some people, quote, are un-amazon-able. if you're picking in those spaces, it makes sense. we're long only at albion. i'm not the right guest to talk about where investors might want to uncover short opportunities but they exist because amazon is up ending traditional retail. >> jason, good to talk to you. >> thank you. >> on deck more insight into two huge themes. first, automation and why goldman sachs thinks one industry could lose 300,000 jobs per year. plus, the one company working on a solution to the opioid epidemic that is ravaging american families, that story and much more coming up on "power lunch." ♪ ♪
self-driving vehicles may be cold to american jobs. trucking could lose 300,000 jobs to automation. it will be a lot further off than many think. morgan? >> recently released report from goldman sachs economic research that shows while we're decades away from driverless cars and vehicles that when it comes -- and it is coming -- we could see major job losses, 25,000 per month they estimate or 300,000 jobs per year just to put in perspective is devastating if we were to see that happening because in 29 states truck
drivers is the most common job. >> they say they are more susceptible than normal cars or it's another factor to look for? >> yes. and when you think how many trucks are on the road and professional drivers, it's three-quarters of professional drivers are truck drivers. the productivity increase that could come from driverless technology, what it could mean for the cost of freight and shipping costs to come down is where this translates. >> how does this impact the trucking companies? there are companies that actually own their assets. how does this come down? i was trying to work this out in my head. i could see it going either way how it benefits or hurts. >> i think you have to take a report like this with a grain of salt. potentially decades out and technology can change. we're already seeing this it technology come into the cabs of vehicles, things like collision mitigation and platooning. so it's already taking place. if you talk to the trucking companies, it's like pilots
flying planes that you're never going to have a fully driverless truck. there will be a person there. that being said if we were to ever see these trucks come on the road with no drivers, certainly you're going to see the asset like companies becoming even more important in this industry. >> we'll leave it there. morgan brennan, thank you. i know jim cramer has the ceo snyder on "mad money" tonight. if they think there will be nobody in the cabs within a decade. what is that? >> what is the fastest growing business, freight business, within truck iing right now? it's e-commerce. you're always going to need somebody in the car to bring that package out to the residence. >> it's not set routes. stop at brian's house and will's house -- >> he has an apartment. do you see the tap on the shoulder i got, too? hey, one more thing. >> something i've always wanted to do. >> thanks, morgan. >> not a tap. >> meantime, the market is gaining back all of the losses from wednesday's big drop.
since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.
hi, everybody. i'm sue herera. here is your cnbc news update this hour. british police say the man who killed 22 people and injured 59 more in a suicide bomb attack at a concert in manchester was 22-year-old salman abedi. police raided an apartment as they continue to investigate whether he was acting alone or working as part of a wider network. back here at home one person is dead and at least ten others injured after apparently eating processed cheese contaminated with botulism toxin. it was sold at a walnut grove gas station in california outside of sacramento. convicted murdererer dylann roof has petitioned a court for
mercy in a racist attack in june in 2015. astronauts peggy woodson and jack fisher made an emergency space walk. they're trying to fix a critical relay box that operates the station's solar panels, radiators and also the robotic gear. woodson now ties the record for the most space walks by an american. ten. good for her. that's the news update this hour. back to you guys. brian? sue, thank you very much. back to business now, new home sales falling more than 11% last month. this, though, after hitting a nearly ten-year high. diane joins us with the big draw -- is this a one-off thing, diana? are we doomed? are we going to sell any more homes ever? >> a few calf yats, first. yes, huge april drops. if you smooth it all out so far new home sales up 11% year to
date compared to the same period a year ago. that said it was not a pretty april. sales down over 11% but, more important, inventories of new home sales jumped to a 5.7 month supply of existing homes for sale near record lows. so where is this split? it is affordability. today's demand is growing from younger buyers and they cannot afford the price premium for new. builders are slowly trying to lower prices or offer stripped down versions but higher prices for land, labor, materials make that all very difficult. there was a big drop in the number of sales of homes price ed about half a million dollars and above. that said, how did luxury home build builder tolle brothers have sales and profits up? they called it the best spring in a decade. for one that was the whole quarter not just april and toll has little competition in the
luxury segment. it saw the biggest jump in the west where prices are high already and job growth is strongest. tomorrow we get the sales of existing homes in april and some are predicting a big miss due to the lack of supply and the warm start to the year which may have pulled some sales forward. if you missed any numbers, they're all online, cnbc.com. >> diana, thank you very much for that. meantime back at markets, of course we've had a terror attack in the united kingdom. daily political drama here at home and yet wall street shrugging it off and moving higher. is there anything that could derail this steady march higher over the last three or four days at least. bruce biddles and brian jacobson at wells fargo funds. bruce, i wonder whether one of the possible ends of this rally could be the simple fact of earnings season ending given, of course, corporate earnings have been a great support to the market in face of macro threats that we just mentioned.
>> well, i think the market shrugs off these events, the terrorist events because these events have become numerous, unfortunately, and their shock has been greatly diminished. with that said the market does have a strong earnings momentum as a tail wind. the u.s. economy is doing better and perhaps more importantly the global economy is doing a whole lot better and that could lift all boats. i think the market has a lot of good things going for it here, and that's one reason you don't see a whole lot of selling. >> we've seen dollar strength and equity market strength at the back end of last year after the election this side of 2017, of course, a lot of dollar weakness but not the same equity market strength. is that something you think can hold throughout the rest of the year or is it a warning sign for equity markets? >> i don't think it's necessarily a warning sign. i think it's reflecting the type
of environment that we're in. anytime you have an inflex point when it comes to politics or the economy you get a lot of churning, changing of the leadership. we went from high hopes coming out of the election to maybe low expectations coming into the first part of this year here and that's one of the reasons why some of the political noise we hear isn't having a major adverse effect on the markets. maybe it just reflects and investors don't have high expectations. i think that actually for the balance of the year we're going to see an environment where you have these periods where what's leading for one month becomes the laggard the next month. >> and in your view, brian, what is likely to be the leading sector moving forward for the rest of the year? >> well, for the rest of the year i still like information technology and i like health care. those are probably my two favorite areas mainly because i think there's a lot of opportunities when you look at the possibility of an upgrade cycle for businesses.
now i have to warn you, i've been waiting for businesses with capital expenditures for, i don't know, probably the last four years here. but who is to say that over the next four months it's going to be the time where chief executive officers and financial officers decide to put that money to work. i do think that a lot of the ism surveys and various cfo surveys are indicating they have the appetite to actually put some money to work for capital expenditures so that's what i'd be looking for. i would urge people to be patient with it. i think trying to time it at this point is a fool's errand. >> we get fed minutes tomorrow, of course. what are you expecting in the june meeting for them? >> i think it's wildly anticipate that had will raise rates by 25 basis points. the dollar has behaved this year and by that i mean has gone done down, lost ground as to what the consensus estimates were. i think that gives the fed some additional daylight to raise rates in june. the big question is whether they're going to raise rates
aggressively in the second half of the year and that, i think, is the big unknown. >> bruce, thank you very much for joining us. brian, also thank you very much. >> we have just gotten an official response from fiat regarding the civil complaint against the company regarding excess emissions. fiat saying that it has been working with the epa and the california air resources board to resolve the test iing of vehicles to clarify issues related to the emissions controls. they are reviewing the complaint right now but are disappointed by the outcome that the doj has come to bring a civil complaint against the company. the stock, there you have it, close to session lows. it has been holding steady down by 3.1% right now. all right, coming up, lu lululemon's website crashing. what that might mean for the company's bottom line. also, autopart stocks hitting the skids today. what the big moves might be telling us about the state of the auto industry and maybe the
consumer. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?
you've no doubt heard of the opioid epidemic but do you know how bad it really is. over 650,000 opioid prescriptions every day. 580 people per day start using heroin and four in five of those began by abusing prescription painkillers. 78 people every single day die from opioid-related overdoses. things don't seem to be getting any better, so how do we fix this crisis? your next guest may have an answer with a new opioid alternative drug. the co-founder and ceo of flexion therapeutics joins us now. doctor, thank you for joining us. before getting into your solution, how did we get here? the number of prescription painkillers preskrcribed is up 400% in just over a decade.
millions of people are addicted. how did we get to this crisis level so quietly? >> it's a tough question, a very important one. you probably know that we're 5% of the world's population consume 80% of the world's opioids so the threshold for prescribing is lower here for sure. it comes from the desire to relieve pain for patients. frankly a war on pain that took place over the past few decades at the time thought to be appropriate. >> i read a book called american pain and it was about a pill mill in florida. we had the author on. i would urge you to read the book. there are truly people in pain but it's impossible to know if they're telling the truth. also, listen, it's a drug industry. i don't mean that in a good way. this is -- these are borderline criminal enterprises. some of them. >> everyone knows --
>> they shut it down, just referencing that situation. >> let me talk about what we're trying to do, if i could. we think we can contribute to patients' well-being with a new medicine that has the potential to be opioid bearing. we're developing an injectable for the treatment of osteoarthritis that affects 30 million americans in the u.s. this is a sustained release steroid. so you take a steroid medicat n medication, cortisone is commonly used term, those are injected now in millions of patients with knee pain. unfortunately, those steroids are not formulated to pay out in the joint for a long period of time. they leave rapidly and relief is a matter of weeks. they slowly dissolve in the joint over three months and it turns out we see in the clinical
data we have so far, and i need to stress this is an investigational medicine. we look forward to the fda's decision in october, but we've seen pain relief so far that's better and longer than the ex t existing therapies. it turns out that 50% of trans. we've seen patients described opioids and we see that as a decoration of great concern for the patients' well-being in an team to relieve pain that is ultimately progressive. 50% of patients with os owe arthritis knee pain will go on and get the knee replaced. >> pain relief pills of course have some form of offset or side effects. >> yep. >> so what's the difference here? >> i can say definitively it won't be addictive because this class of medicine is not an addictive class of medicine.
it's steroids, and steroids don't have an addiction. the drug works at the site of the pain and you get very little into the bloodstream as a result. >> this is oh ret that? >> yes. >> and you recently released a hypothetical cost survey and a hypothetical cost of $500 how does that compare and is it per injection? >> it is. >> how is that going to go over in the eyes of people complaining about high drug prices? >> $500 for a single injection will last on average three months. we have to advertise thcost ove that period of time. if you look at the ratio the values for zoe red are a fraction of the threshold values that are used to determine that a medicine is or is not cost
effective. that threshold typically is 25 to $50,000 for quality adjusted life. in a proprose l we were at $300,000 for a quality of life here. >> are you more optimistic of getting approval? >> i was always on misk and has proceeded with great confidence. rob cay life has opioids very much as a priority and i think this continues under scott's leadership. >> we need to go, but the trump budget getting a lot of credittism for healthcare but it had $280 million for control -- dr. mike, i'll try to get the name right. >> we'll give you a pass. >> thank you. >> thank so much. >> coming up the street love for
apple continues. a big struck stop and one analyst on cloud nine. that's ahead in our "street talk." if you have medicare parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a great time to shop for an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. medicare doesn't cover everything. and like all standardized medicare supplement insurance plans, these help cover some of what medicare doesn't pay.
so don't wait. call now to request your free decision guide. it could help you find the aarp medicare supplement plan that works for you. these types of plans have no networks, so you get to choose any doctor who accepts medicare patients. rates are competitive, and they're the only plans of their kind endorsed by aarp. remember - these plans let you apply all year round. so call today. because now's the perfect time to learn more. go long.
are you watching morgan brennan here we go. first stock. >> apple. creditors getting bullish on apple, raising summations for calender years, '17, '18, and '19. he see it is eight super cycle with only pent up demands driving shipment to 270 million units in 2017. >> second stop is we talked about trucking earlier, jb hundred. jb starting mortgage of a company with the buy rate of 170 million target. they believe the multiple compression relieves the tract upon. >> decline in the stock. >> they say that jb hundred has a unique instructor recall advantage.
>> last stock a recent ipo rating 23 price target, it's data management meeting big data. the disposition to disrupt and gain market share and data pace market system -- an internet of theme of two quarter percent here. that's it for "street talk." >> still to come, more than 60%. next we speak to the ceo. i'
what's on the menu, investors hitting the brakes on the auto stocks. the foreign stock of s&p 500 this year is up 60%. the ceo joins us with the prescription for profits. it may have delayed one of biggest video games, the stock rallying right now and on fire this year. should you get in on the action? the second hour of "power lunch" starts right now.
let's take a look where we stand in the markets, we are gaining for a fourth day in the roe. you can see the dow and s&p just blow floor. naazdaq and jp morgan has a turn. the rest of the financials outside of banks doing less well. on the flip size, disney, home depot united, health seeing the best losses. disney down, tech in the red, utilities leading the way. risk off nature off today. it's the fourth day of gains in the row for them. >> getting you caution up on the deadly suicide bombing in england. this death count risen to 22, 59 people counted as wounded some relife threatening injuries, others remaining missing.
isis claimed the bombing. police arrested another 23-year-old male in connection with the attack. the s rt retailing fall more than 20% today. phil lebeau looking at the auto part sector. phil we'll kick it off with you. >> melissa, let's take a look at what happened with auto zone this morning. this was a company that missed the quarterly earnings report and missed by a wide margin. there you see the final results coming in at 1144 well below the $12 estimate. as for rev, lower than expected. what's going on with autoson, the company said delayed tack return hurt sales in the quarter. spring sales were considered challenging. when you look at what's happening with the auto parts retailers, a lot of people are saying well aren't we noticing record high sales for used cars.
didn't that mean people will be buying air filters and breaks whatever they'd buy at an auto zone and o'riley. yes, and no. we are seeing used vehicle sales but the vehicle's angle remain at an all-time high. >> the vehicles coming into the uses lot, they were leased and pre-owned vehicles that were in good shape by the auto makers. if you take a look at the auto parts retailers this is been an ugly year. you had amazon selling auto parts that put pressure on these retailers and people will not want to be going out to the stores. >> phil, there are a lot of concerns about auto sales in general and the decline, the sharp decline we've seen in these vehicle prices, i would think that used vehicle prices and these stocks would be in
versely correlated. you would think that if there are so many used vehicles out on the market that you'd need to buy more parts, et cetera. >> right. that is the theory that is out there. but at the same time what i've heard from a few dealers is that you look at the latest supply that's coming into the market, these are certified pre-owned vehicles, lot of them with leasing programs that are still in pretty good shape. you'll have people that say if i bought a 4-year-old vehicle i may not be in communitied to go as often to an auto parts retailer to buy a part for a vehicle. that is part of what i'm hearing out there. >> the stock did go from $140 to 900 and whatever it was in six years phil, so thai had a huge run. >> and that was definitely related to the growth and the economy and the growth in auto sales. >> phil thanks. two others on the -- today,
courtney with the details. >> lulu website back up and running. if you went to the website shoppers saw message that said we're usually awesome at this please don't refresh your browser we'll be back in the flow shortly. it took almost 24 hours. i'm told with the source familiar with the matter there was an power outage and a issue with the company's server. whatever the issue, estimates lulu lemon could have lost around $1 million in growth sales during the site was off line, or the day the site is down it takes the daily total comps down digits. it's -- that came of some lackluster ecommerce sales. zparp was a one line review
lights so the company hasn't addressed it. moving on to sears, a company that is higher -- that are due, essentially it's given itself a bit of breathing room and time but still many still forecast an eventually bankruptcy for sears. the stock has now moved lower because i think we realize the inevitably is coming at some point. maybe it's a little later. melissa. >> you know, just to tie it together, auto zone along with the retailers you cover, auto zone cited a delay in retail checks. i remember many many retailers citing this along with the eastern shift in the calendar. >> there were a number of retailers that cited it but walmart didn't hang its head on that too much. they have talked about it in the
past, this time they didn't. you might remember the results were pretty good. i'm not saying it wasn't an impact because folks did not get that return they were counting on until later so perhaps they held on and delayed sales but i don't know that it impacted everyone equally across the bourd. >> courtney reagan. thanks. president trump releasing its bungt this morning. steve liesman joins us with the detail. >> not very recent for the economy. a lot of concept as much as that it could achieve the growth in the first quarter. growth in 2015 and 2016 just blow 2% you could see that. if you're watching on the left side of your screen there that's 2%. the budget wall street and economist think the decade will
be much of the same. not the trump economy it's projected 3% growth. >> that is a pessimistic look at what the potential for this country and what this country's people is. we reject that pessimism and say you know what, we probably should have done in and assumed 3.5 or 4% growth because that would be aggressive. 3% growth is just getting back to normal. >> many economist see the long-term growth rate -- there are plenty of people on the sidelines who can come back to work and work more. if that's the case 3% probably still on the high side but maybe within reach, if it's wrong the president's tax cuts without growth could mean bigger deficits. >> steve, listened to that earlier there was a line where he said if -- growth is 9%
you'll never balance the budget so we're going for 3%. that's sort of suggesting that forecast is based on necessity as oppose to having any confidence of reaching it. >> let me acknowledge the essence of what he's saying, which is, he's saying growth solves a lot of the problems and allows you not to confront the other side of the equation. when he said never balance budge, yes, it will probably never balance if you don't touch entitlements and maintain the current course you're going on. if you base it on a rosier forecast you can end up with bigger deficits if you assume that. >> if a salesman made 5 or 10% more every year for six or seven years prudewouldn't it be prune him or her when they did their family budgets, in five years
horhe or she would be making more based on past trends. the government don't have that necessarily but they'd assume the plan would work. >> to assume that -- >> you wouldn't be optimistic about your plan. >> i -- >> you're going to get a death threat somewhere in here. >> good catch. here's the deal, we've been asking this questions of economist for a long time, since probably october or november when the president was elected, how much additional growth will you add if the president gets everything. they have a hard time getting the 2.5 brian, that's the problem. when they add it up you get .1 for that, .2 for that. they have a hard time getting three. three is a big number, they have to change the productivetivity
cent trajectory. here's the thing if you're going to reduce immigration to the country you're going to hamper yourself, tie you hands behind your back on this critical labor force story. >> but the idea is that trump believes or his budget team believes more people will enter the work force because they're going to reduce the incentive in the work force. >> that's the idea. but they also are rejessicaing the notion which i hope their right about. we're at or near full employment. there's not that much slack left in the labor market and they point out the u-6 remain high and i'll point out it's not to relative. >> really quickly steve, on the
flip side, the mnuchin identify with -- >> what i know it's baked in the graphic. you call the graphic again, it ratchet up and get there in two or three years. i think think they they could get there this year if they got the proposal up, but a lot of the pushing back thing proposals wouldn't take effect until 2018. we've talked to most men ask women on the street they do not see this thing happening this year. >> steve thank you very much. >>. >> my pleasure. >> we'll talk more about the budge in a few minutes time. coming up it is the line up, the biggest winner in the s&p 500 this year. 60% and the ceo joins us. go goldman sachs out with a shocking knew view.
twitter with a major plan. that and more here r here on "power lunch." hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.
surge at the end of march. cf is a rare genetic disease affecting 40,000 people. it's causes lunge defect and trouble breathing. vertex got its first -- to treat a disease in 2012. in 2015 vertex's second drug was approved drawing almost $1 billion a year. today the drug addresses 40 million patient with cystic fibrosis. here to tell us a lot more about that -- >> thanks for invitation. >> so i think everybody is looking forward to seeing this triple combo data later this year. tell us when to expect that and what that means for patients.
>> well, meg you said it well. we been with a six-year vortex. we're committed to actually getting every patient a drug that can treat the underlying cause of the disease amodify th disease. the next big step is going to be the triple combinations that's going to take us over to 90% of patients and raise the effects of this drug and slow the disease. we're going to see data from a number of those, and that will give us a clear picture of how quickly we can get to those patients. >> i want to ask you about politics you were at the summit on may 8th, now today we see trump's project with a proposed $6 billion budget cut to the gia do you feel like they were listening to you? >> i've been in this industry
for years and i've had a chance to see it as a scientist, interventionalist and now executive, and the purpose of the meeting of the white house is they askedtous come and tell them about how the ecosystem works. this is something where we led the world in creating jobs. their question was simple. how do we make sure we maintain that ecosystem. what i was asked to talk about is the bio tech industry itself, what it does. bio tech is where the basic science discovers that are fundfund get turned into the breakthrough therapies. when we make the drugs we bend the cost curve for total u.s. healthcare. these drugs decrease total healthcare cost and finally we create millions of jobs and they're the kind of jobs we want to keep in america, they're
high-paying jobs. they were definitely in listening mode so i came away encountered. >> today the fdc asked for the second time for more information about your effort to require a drug which would effectively ex pan your cf portfolio, does that delay the acquisition of this drug at all? should investors be concerned? >> let me give you some context again, our goal is eventually to have a medicine for all patients and we'd love for that to be one bill a day. right now our medicines are couple times a day. while these patients are willing to take a couple pills a day that has this effect we'd like to have that one pill a day. two of those is one pill a day. we still want to do that and we're confident we'll get that done. >> to meg's point doctor, with cuts in nih do you think the private sector can make it up?
i'm going to take the other side today, i understand we need research, i don't know if anybody wants to destroy research. to get cuts in the government if the budget is passed in its current form will the private sector be able to cover that gap in. >> those were some of the points we made. these companies do den things and they are not interchangeable. we need the continued nih funding, it's the secret of our success. >> well we almost got to go but one last question, drug pricing. you guys are in this orphan drug space where it's priced at $100,000 petitioner year each patient. what do you think about price something. >> what we think about pricing is three key elements, one, what's the value that drug brings to patient. these drugs we have for cystic
fibrosis, very valuable. the drugs are costing hundreds of millions ofs. and three you can't talk about price without talking about access. we have a firm commitment at vertex to make sure every patient who's eligible for our drugs will have access regardless of our able to pay. we put them in a lot of programs to get that done. >> thanks for joining us. the white house unveiling that budget proposal, democrats attacking the cuts and nih, something president's budget director nick mulvaney defended. >> we haven't spent nearly enough time focusing our attention on the people who pay the taxes. i got a couple questions yesterday, i know i will today is about compassion. compassion needs to be on both sides, you have to have compassion for focus receiving
the zwunds and for the folks who are paying it. >> let's get more on the budge process with hoyer. it's good to see you thank you for joining us. >> thank you good to be with you. >> what were your first thoughts when you saw the budge released? >> it's not real. and frankly my first thoughts were secured by every republican who made a comment on the budget, this is not a real document, it is not a real offer it's not a starting point. it's a budget that mike from idaho, a former speaker of the house says he couldn't vote for it it's dead on arrival. so it's not a real document, maybe mr. as a rule main any on president trump's idea on how they're going to form their tax cuts but it's not a real
document in terms of our capability. it's about judgment of how america invest in making it a great country and maybe its people. health educated and -- do we need to have a balanced budget sir? >> need to have a balanced budge, we haven't had a balanced budget in a long time. so need to have may not be the kris.. should we have, it certainly should be -- our kids and grand kids because they're going to have their needs in their time, we ought to be paying for what we buy t richest country on the face of earth can afford to do that. we need po to the make sure we're investing in thing that will make our country greater, healthcare, educated, safer both on the defense side and on the
nondefense side. this budge is an unreal lisk offer or suggestion, it is not i think possible. we talk about nih fresno, cutting $5.5 billion out of nih, i think anybody that believes we ought to reduce our efforts to solve the issue of cancer or heart disease or diabetes, alzheimer's or any other diseases that kon front us. as a matter of fact nih and i know a lot about it because i served on the subcommittee for three years, pay lines, that is the number of research proposals that we found are now down to 10 to 15%, that's called a pay line. a third of the suggestions are good science that may result in better health and better life spans for our people and better results for our economy. >> i don't think anybody, sir would want to cut medical
spending, nobody wants their family -- >> well you say that but the president's just proposed a $5.5 billion cut which is about a 15% cut. >> is that a cut or decrease in foreign spending over time? >> well it's a decrease -- it's a decrease if forward spending, you're correct on that but it's a decrease in terms of effort. because as inflation occurs obviously a dollar doesn't buy tomorrow or the nueces year or five years from now. so, yes, okay -- if you have an increase of 5 cent and the product cost you another 15 cents you have a decrease. >> i guess what i'm getting at sir, nobody wants to cut -- forget nobody, you understand what i'm saying, your constituents don't want to cut medical spending. >> i agree with that.
>> that's about 80% of the budget right there, you can't raise taxes on the milk class, the poordown have any money, the rich claim to be overtaxed. how do you raise the money, there's nowhere to raise nevada knew, there's nowhere to cut? >> the thing is to have a -- that sounds like fancy verbiage but what that means is the richest country on the face of the earth can buy what we need to buy whether it's defense, healthcare, protecting the environment, educating our kids, we can afford to do that the richest country on the face of the earth. but we also need to have the discipline of paying what we buy, again the richest country the face of the earth we can do that. but we can't do it by partisan proposals to cut tax on the wealthy very deeply. the we'll is doing great in this country. >> maryland has more percentage
of millionaires in the state. >> which is why i'm saying i'm not begrudging them for that. what i do say is frankly, none of the people that i know that are doing very well are not going to do very well unless we pass this tax cut. that's not correct it's in correct. but we need to invest both in our defense side of our budge to keep us save in a dangerous world and we need to invest in educating our kids and keeping them healthy in our infrastructure or we're not going to be a excepticompetitiv country. it can be done. i think if we would sit down and agree on how to get that done we can do it rkts rather than simply offering proposals her rejected out of hands by both parties. >> okay. they say the budge is doa any
welcome back to "power lunch." that's right, h po scoring a big wind, the bernie madoff movie, "the wizard of lies." include streaming viewing on hbo go and hbo now, the viewing incurred $2.8 million over the week. a 68% credit tick score on rotten tomatoes. i haven't seen any yet but i'm curious. back over to you. >> juli thank you very much. jackie at the commodity desk. >> prices seeing a bump today, prices 50, 57. two things to think about today,
part of the president's budge plan is to sell half of the company's -- $16.5 billion. that pressure prices because it also would add over 300 million barrels of oil to an oversupplied mark. the second half is carril-- theg to give the mark a deeper cut. so we'll see what happened thursday. back to you. >> all right thank you jackie. now sue herrera. here's what's happening, during this house intelligence hearing this morning former cia director john brennan says he was aware of contacts and interactions between russian officials and trump presidential campaign but he does not know if collusion took place. >> it should be clear to everyone that russia interfered in our 2016 presidential election process and they jurn took these activities despite our strong protest and warning that they not do so. snls target has reached a
settlement to pay $18.5 million to 47 states to resolve the state's probe into the massive pre-christmas data breach of 2013. it offered free credit report to customers potentially affected by that breach. british actor has died after a short battle of cancer. he was the third actor to play james bond in seven feature films between 1978 and '85. the last image you saw was when he played in the saint which was a british series and then came to the united states. >> definitely most famous to of course -- >> absolutely. which was your favorite movie? >> my favorite richard more movie, "live and let die" he
wouldn't quite -- my favorite one of all times was shaun kone konery. brian your choice? >> "roger moore." the movies for your eyes only, the man with the golding gun. >> he did the exact same amount or number of bond movies. >> sue, he actually did one more because one of shawn connorrys was twaebl and came back. shawn did six official ones, roger did seven. overall -- >> so hold ton, wilford frost told me off the air timothy dot ton was his favorite. >> no it was a good movie but overall though highest gross in absolute terms was rog r moore
but inflation suggested shawn connorry -- >> taking the magic out. >> fond a double o7 knowledge. who knew. thanks sue. >> thanks guys. welcome to "power lunch." a controversial rule for advisories going into effect. what that means for you and your money, we're back after this. ♪ ♪ i'm dr. kelsey mcneely and some day you might be calling me an energy farmer. ♪ energy lives here.
thanks for tnorfolk!around and i just wanted to say, geico is proud to have served the military for over 75 years! roger that. captain's waiting to give you a tour of the wisconsin now. could've parked a little bit closer... it's gonna be dark by the time i get there. geico®. proudly serving the military for over 75 years.
controversial new rule for retirement advisers are set to take effect next month chlk fiduciary rule. here to weigh in on what it could mean for you, david. it's always good to see you. this is nice to see you too melissa. >> what do you think the impact would be for an average investor? >> well i, there's tremendous competition in the wealthy advisory and asset management business. i think the notion that cost are going to rise for small investors is just nonsense.
you have traditional firms trying to protect their conflicted ways of doing business where they charge a fee for wealth management then they charge fees for assets under management and they're double dipping, those kind of practices wills go away and i think it will all be terrific for ultimate investor. >> we've seen the management industry pretty much underseas thanks to guys like kyle and t.v. metro trait. what is the flip said to that? it's grate for investor but the impact on the industry if we are seeing it is raised to the bottom of fees, not just the pressure from the online brokerage firms but perhaps the fiduciary rule as you're saying this will make this resolve the cost. i don't want to put words in your mouth. >> i think what's going to happen is you're going to have more and more competition. fees are beginning to go down
which is going to be to the advantage of the investors, they'll see returns getting better with fewer fees eating up their assets and the -- to use technology, that use technology to improve their efficiency, they use technology to dentaltize the way they deal with their customers, firms that love to do that and do that well are going to be the winners. >> david in terms of the shift we've seen do you think that's a structural shift or cyclical shift and different yen shasht between the bond in equities? >> sure. i think it's a permanent shift. i don't think it's cyclical i think it's structural. especially the rise of not only passive investing but also using technology today investing is getting to be more and more
prevalent where you have fact-related investing and other types of investing where the computer is making the decision on how to tilt toward any segment of the market where investors want to go. i think those are structural shifts that come from technology from the enablement that technology provide. i don't think these are going to go away. i think that it's probably going to be more prevalent in the equity side of the world because the bond side of the world is sort of the last opec market. i don't think you have as much data, as much information upon which to make your selections and to be more of a passive manager in the bond world. >> david, i want to ask you about markets and whether they're overpriced. particularly the financial sector that you know so much about, and given that run up on
the sector we saw, do you think the -- overrun or overvalue at the moment? >> well i would say things are expensive. it's hard to say their overvalued but nothing the cheap, certainly nothing the cheap. stocks are well-valued, fully priced and therefore when stocked are fully priced, future expectations are built in. and so i think at this point, there's probably more downside risks than upside opportunity, but i think it's very hard to time markets. all the research suggests that nobody can do that effectively and i think you need to ride it out and stay fully invested. >> david thank you so much joining us. >> my pleasure. business own else across the country are waiting for washington to do something on healthcare, and very much more. contessa brewer is live in louisville kentucky.
contessa. >> hi there. when obamacare kicked in kentucky's uninsured rate went from 20% to 6%. this morning we talked to a couple young women who started a bourbon tourism company and they say the aca was crucial to their intention to launch the company. flynn brothers contracting paves roads, lays water and suer line, construct buildings. and to compete for workers, one of brothers says he has to offer healthy and benefits. premium deductibles have doubled in the last decades and dealing with those changes have sbrer feared with his business. >> it takes time what we really do for a living, it's a lot of work, it's steady and year round. we're looking at it all the time because it means so much to our competency to have it and have
the security of having it. >> in this employee-owned company the 200 plus workers are now exploring self-insurance. jesse says he voted for donald trump on the promise of repealing obama care, now he's not sure that's going to happen. >> if we don't bring afford ability back to the mark for small business we're not going to be able to grow those jobs and the economy. >> the nfibs says 20% of small businesses had to drop their plans because ark ca made them unaffordable. and in kentucky, you only have the option of buying if the federal exchange which has far fewer choices for them. you walk down the street here and meet people who are concerned about this. one of those is this artist, she said she and her husband, self-employed artist rely on the
obamacare for their health coverage. they have a baby on the way. this is an important issue across kentucky. >> we'll be talking much more about the issues that are having an impact on businesses at inc madrig magazine at cnbc iconic conference. that's coming up in june. the bottom end for many of these big retailers, is it time for you to buy them? on "trading nation" coming up. tired of paying hundreds more a year in taxes and fees for your unlimited plan? only t-mobile gives you unlimited data with taxes and fees included. that'll save you hundreds. get two lines for a hundred dollars. that's right. two lines of unlimited data. a hundred bucks. all in. and right now, we're giving you even more. for a limited time, get a free samsung galaxy s8 when you buy one. that's two galaxy s8s for the price one!
you could have just told me a bump was coming. we know the future. because we're building it. check me if you're heard this before, another tough day for retail stocks. let's talk about whether or not the retail bottom. stacey what do you think? every time we say this what's your thought? >> i will say one thing, the volatility is still on the mark, it's still seeing -- it's going to be more volatile. add the 12 month for pe, the s&p
500, 17.5 compared to the ten-year four times. what i would say here is undoubtedly the sentiment in retail is negative. this is usually great for stock pickers and active managers. if we were to look at this mark we are starting to see investors pick name that they like, that they think are oversold. an example would be foot locker. our footwear analyst sam posey, cover with a rating. they're not having traffic problems it's just not over done at this point. we like owning the stock and owning the -- which i think is the best way to play retail. find the names you like, don't buy the basket. >> positive commentary. matt would you agree with that? >> i agree that there could be
some opportunities on a trading basis here and there but i'm more concerned on a long-term basis the group has a lot of big trouble. to be honest with you i think -- this may sound crazy but we're going to have to have to invite the stores while they are on the couch at home. they do that, maybe they move away from amazon again, but the one thing, you know, somebody looking at the market, the key to note, of course, because the retailers go down, it's no longer a good measure of consumer sentiment or consumer spending anymore. look at the xlyetf versus srt, traded tiff for tip for many years. you want to know what the consumer does, watch the xly. >> xly. okay. matt, okay, we'll on "trading nation" sure, thank you very much. for more, go to our website. we don't sell anything,
leslie picker with breaking news. >> we're hearing that constellation brands made app approach to acquire jack daniels owner brown forman. this is according to several people with knowledge of the matter. while constellation brands said they were interested in purchasing them, forman said they were not interested in selling, but patss the idea to
the board. constellation brand is still interested, sources say. the family owns the voting power and historically said they want the company to remain independe independent. shares of brown forman gained 12% over the week as rumors bled into the market. a representative for brown forman declined to comment, and constellation did not immediately respond to a request seeking comment. it was a market cap of $22 million and owns jack daniels and constellation owns corona. >> stocks are telling in terms of what investors think about this potential combination. any idea on whether or not, i mean, based on the balance sheet, constellation's stock or cash? >> it's unclear exactly what they are thinking at this time in terms of the currency by which they would pay for this. it's certainly something they are thinking about. the market caps are not too
dissimilar. i presume they have some combination, but unclear exactly what they are thinking at this time. >> by the way, hey, leslie, amazing reporting, great job. forman halted in trading. brown-forman, jack daniel's parent, halted in current trading. moments ago reporting according to the sources, constellation brands, xtz, a serial acquirer, but active in m&a over the past decade, approached brown-forman. >> a new 52-week high hit on the back of the news again as we understand it, halted to respond or news pending here. we're going to take a break now. leslie, thank you very much for that. again, if case you are just joining us, spf brown-forman, constellation brands, we'll be right back after this.
looking at shares of brown-forman spiking p around leslie picker reporting constellation brands made a bid for brown-forman. that stock is higherment we should note the stock that's been halted, it was a five minute halt because of volatility as we understand it. we just hasn't lted. 52-week high. constellation brands went higher on reports of this, but now trading lower by 1.2%. >> great reporting by our lestly picker. another stock to watch is deo,
biggest beverage company in the world, not in leslie's reporting, guys, but talking about big mergers, the market looks to the biggest player to see what they may or may not do. >> this sector already seen so much consolidation in recent years. >> absolutely. thank you for watching "power lunch." >> "closing bell" starts now. ♪ hi, everybody. welcome to the "closing bell" today, i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. we have more on the word from leslie picker from a bid on constellation brands, but another warning for the a automotive industry. shares hit hard on the back of weak earnings, huge decline for the stock, down more than 10% today. we have more details on that coming up here. >> also, go pro getting hit after speangt