tv Power Lunch CNBC February 22, 2018 1:00pm-3:00pm EST
not only electronic vehicles but aon the mou% autonomous vehicles. >> this is a longer term trade i would go with mosaic. >> there it is mos is up better than 1% today on a day where stocks are surging. dow is up 230 points power starts now. >> rising rates. are investors coming to grips with the fact that stocks and rates may both be able to move higher at the same time. the debate over guns in america dominating the national conversation and coming up we'll take a cnbc view at just how big the gun and ammunition businesses really are and who the major players are that you may not know about and sitting down with athlete and broadcaster tim tebow about his leadership lessons i'm brian sullivan and power lunch begins right now
>> brian, thank you and welcome to power lunch i'm tyler mathisen big rally. the dow soaring triple digits. it would help the nasdaq avoid the first four day losing streak since november of 2016 now brian talked about the treasuries yields pulling back just a little bit. let's see where they are right now. the 10 year note at 2.91 that's down just a bit results of a 29 billion dollar auction just moments away. could be a market mover. sometimes they are sometimes not so much. most stocks are up but these three are down seriously roku plunging, missing profit. 17%, man you don't like any part of that. you don't want any part of that. missed estimates, guidance wayfair. it says tanning. wayfair's not tanning, that would be tanking down 20% the company reporting a wider than expected loss and pandora taking a hit music streaming service also
posting a wider than expected loss despite the fact that i was listening to it this morning. >> thanks. let's get more on the trading action this hour bob has the latest. >> hello, melissa. a pretty broad advance 3-1. the bias is kind of toward cyclicals again. looks like the early part of january. take a look at the big sectors energy moving up here today. chesapeake had good earnings transports are strong. that's pulling up the transports you can see the cyclicals doing better look at the banks. they turned negative as we see yields down 3 or 4 basis points but that's all it takes for the ten year yields to move the markets. we have seen pockets of weakness out there. energy stocks have had a terrible month and we still see 52 week lows had earnings and it's not helping then down 5%. some of the consumer names sitting at new lows like
kraft hienz and hershey. look what happened yesterday from 21 on the vix to down to 17 on the concerns there and then rocket back up after the meaning for the fed to 20 again and today we have been drifting lower and again not a lot of news out there just three or four basis points in the yield seems to be moving the markets. people have to get used to that more volatility now and why do you have that? people have been talking about the structural change in investing. we had a stronger economy. we had a larger deficit now. we had the fed withdrawn liquidity and all of this amounts to higher rates and more volatility people have been talking about this for a long time and i just think now we're going to have to get used to the fact that small moves in rates have outsize effects in the stock market. guys, back to you. >> thank you very much the fear of rising rates has added to this resur gegent
volatility warning about too many rate hikes. >> the idea that we have to go 100 basis points in 2018, that seems like a lot to me that's kind of price for perfection everything would have to go just right. the economy would have to surprise on the upside a bunch of times during the year i'm not sure if that's a good way to think about 2018. >> four rate hikes he says the big question will rising rates end the bull run with us is the portfolio manager and head of equities and brad newman investment strategy gentlemen, welcome let me start with you. who is afraid of the big bad 3%? is that the tipping point? >> we don't think so we think 3 and 4% is reflective of the stronger economy. and that's all good. just a couple still talking
about the possibility of deflation. this is all reflecting stronger economics and that's good for earnings and that's good for stocks at the end of the day even 4% is not the end of the world for stocks so it's just reflecting strength in the economy. >> i'll grant you that i'll grant you that the reason rates are going up are generally positive but are those rising rates consistent with an expanding multiple in other words are people going to be willing to pay a higher price for each dollar of earnings if interest rates are moving toward 4% >> we don't think we're going to get multiple expansion the continuation of the market going up is going to be driven by strong earnings growth. you saw 13.5% in 2017. earnings were pretty much all filled in. we're looking at 26% for 18. the consensus and that's mostly made up of organics. 10% of that is made up of the tax reform
16% organic and another 10% for 19 so it's all driven. >> so ernesto says that rising earnings are going to cover a multitude of sins. i paraphrase there do you share that view >> i do share that view. if you take a step back and think about why investors fear interest rates there's two reasons. the first is that ultimately higher interest rates could slow economic growth. in our view it would have to be something on the order of maybe 100 basis point increase in rates. we're nowhere near that now. the fed own model suggested it increases in rates and slows by 40 basis points and frankly there's many times the economy is able to power through that. 2013, for instance, rates increase by 100 basis points and what the economy did shrugged it off and sbaccelerated. the second reason people are afraid of higher rates is valuation. you discount back cash flows at a higher rate and you'll have a
lower net present value but at our view stocks never priced in lower interest rates so as the rates go up valuations won't be hurt so we think the market can power through. >> this environment, you still like growth stocks that's what has been working and it will continue to work even as the environment has been changing toward rising rates. >> we invest in change and change leads us to growth and innovation so change in e-commerce for instance, taking share from brick and mortar retail i.t. shifting into cloud and those kind of things but i will say we're investing in bank stocks we're overweight relative to our benchmarks for a few reasons. one the highest interest rates and two less regulation and three a technological change where we think that people are starting to go to banks more based on mobile apps and technology rather than the proximity of the bank branch. >> you like a bank as well bank of america. >> bank of america is one of our top picks right now.
rising interest rates is good for them higher economic growth is good for them deregulation is good for them. tax reform is going to shave off 10% off of their effective tax rate and they're tied to economic growth so very, very strong. >> everything is great, brad but you have to be worried, you're paid to worry. what's your biggest fear right now? >> well, of course, if interest rates go up too dramatically. >> define too dramatically >> well, like i said, i think 100 basis point increase in rates to something like 3.5% in relatively short order that would be a negative. you know and of course we're watching, you know, the economy and underlying fundamentals, what we spend most of our time on as long as the secular trends stay in place they'll be okay. >> not personal, just professional. >> spiders he doesn't like spiders. >> not the etfs. >> what are you talking about here >> one of the things that i'm
worried about is protectionism we're sitting in tax reform, very pro market. all the economic measures so far but the one area where i'm concerned we're not promarket is protectionism and how far they're going to take this beyond the appeasing of the bas remains to be seen and that's one of the things that keeps me up at night. >> thank you for being here. always good to have you in the studio appreciate it. thanks. >> results of the 7 year bond option are crossing right now. rick at the cme. >> i gave it a c-minus charlie minus. we had two year that was so-so we had a five year yesterday that was so-so plus today it's so-so minus. they were all some what near average. let's go through the internals shall we 29 billion one billion higher than our last package that included 7 year notes and the yield at the dutch
auction 2.839. the big side was around 283.5. you had a little tailing going on there it covers 2.5 times better than actual securities for sale a little below 2.55. ten auction average. 62.2 a little light on indirect the one bright spot, 15.6 on direct best since september of 17 dealers take 22.1% of the auction and not including some of course, 92 billion in supply this week out the door and if you look at interest rates there hasn't been much of a move in the last half hour back to you. >> all right i'll take it thanks we want to get straight to the news alert on airbnb >> hey, guys airbnb ceo and co-founder just took the stage here in san francisco and he's announcing a number of new initiatives that airbnb is rolling out that be l put it in bigger competition
with online travel companies like booking.com and expedia he's announcing a set of tools that will make it easier for hotels to list rooms on the site and a loyalty program that it will be launching later this year now airbnb has let certain, mostly boutique hotels, list on the site for years but now it's making it easier for guests to find them by introducing their own categories it's also including a new tier of listings for the website including airbnb plus. this is a brand of accommodations that will be checked for quality before guests arrive. also beyond airbnb this is launching later this spring but there's luxury rentals it's been much speculated that they would be making a bigger push into this space do not expect to find a marriott or hilton or hyatt hotel room on the site any time soon because company policy explicitly says that large corporate hotel chains are not the right fit for airbnb but at the same time,
airbnb is taking a major page from the hotel playbook by introducing tiers and categories >> all right thank you very much. deidra bosa for us airbnb co-founder will be coming up on the closing bell at 4:15 today. >> tale of two retailers, walmart taking aim at wayfair and ikea rolling out it's plan to sell more furniture online and toys "r" us closing more and more stores let's check movers in this rally. chesapeake energy, scana and an services leaving the s&p 500. power back in 2.
walmart making changes to try to invigorate it's online sales that disappointed investors in a big way earlier this week. the fix, apparently is fixing the website. courtney reagan is here with details for big online changes. >> there's still a lot to come but we're at least getting a glimpse here this is the first look at the plan to overhaul the website it can guide consumers to shop
by using one of nine decor styles style and design tips on here too. so shoppers are getting more comfortable ordering a couch without sitting on it or a book shelf they haven't seen in person this is something walmart wants to capitalize on it's not revealing what portion of the total or e-commerce sale comes from home decor. but it has been successful when it comes to grabbing sales wa wayfair is plunging on earnings. half of wiliam sinoma online so there's a lot of competition in this space. >> another big chain in the news toys "r" us. what's happening >> this is an interesting one. they're operating in bankruptcy right now so they're going through a restructuring. >> not for the first time. >> that's true and toys "r" us isn't confirming reports from
cnbc but a source familiar with the situation says that 200 store closures is at least one possible consideration at this point. so it's working to restructure through this chapter 11. the law only allows a certain amount of time to submit the final plan and it has a lot of figuring out to do and it's running operations with the help of more than $3 billion in a debtor and possession loans. it was disappointing so financial conditions we know were main strained the retailer hasn't revealed exact detail of the holiday though they have told us 180 stores were set to close so these reports that 200 more store closures could be coming and if there's still stores hurting rather than helping it makes sense that they would close them. >> could this company go the way of sports authority or radio shack? >> sure. it is really possible and this something that we need to watch in particular with hasbro and
mattel when you have e-commerce and you can go direct to consumer that makes the retail offering a little bit harder, right >> this is an old story but they got this intermediated by walmart and target and amazon and -- >> exactly if you have the same one that's something that you're going to have to fight and that's changed the game here. >> when you were a kid going to toys "r" us was a big deal. >> we all say that but then we all turn around around ordnd orr toys online. >> you're not supporting it enough to keep it open. >> this is a generation that will not have even gone to a bookstore. they don't know these tangible things.
>> it's digital. >> right >> or go outside and play. >> or talk to other people. >> overrated. >> my son got in a rental car and it had a window with a crank and he said what's this. he had never seen a window that was not electric >> just say son, you know what a crank is. >> that's me. >> he got it. >> so how could these toys "r" us closures impact the big toy makers toys "r" us accounts for 15 to 20% of sales, 11% globally represents 14% in the u.s. and canada alone >> great to have you with us you have done the calculations what are the impacts to sales at each of these companies. >> based on the 2016 numbers that you just cited we estimate about .6 and then .7 to sales
per 100 stores closed by toys "r" us i would say that 2017 was probably lighter in terms of the toys "r" us contribution given their not so great holiday so it could be less than that and i do think that both of these plan very conservatively since the bankruptcy announcement i do think that the initial 170 or 180 stores they plan on closing, they did put most of that into the 4th quarter. >> is there a chance they could sell these direct to consumers >> yes. >> it's about 20% of their total sales. however, they do have some sales through their website.
they can sell more of that online because they don't want to compete with their retailers on price. >> toys "r" us's product are doing fairly well i assume so who is selling the product then >> in terms of not toys "r" us. >> toys "r" us are struggling but the biggest supplier is doing well. >> u.s. toy sales were up 1% globally last year so there's so many more distribution points for toys versus what we have seen historically hasbro is in 150,000 stores globally and that doesn't include vendors such as amazon so now toys in drugstores and toys in best buy toys in multiple channels that we haven't seen before beyond the walmart and targets of the
world. >> so it's unfair to say that toys "r" us is being killed by amazon, they have been being killed for years by everybody. >> yes walmart is very competitive on price and that's hurt them they're buying stuff online. >> will they be around in five years? >> we'll see what happens. >> it's probably going to hurt more of the smaller players out there. probably only toys "r" us or a few select retailers as a distribution channel the bigger guys have so many different options nowadays to distribute their toys. eventually in the long run if the industry does it probably
helps them. >> all right susan, thank you >> major leadership changes and departure of a key executive of inappropriate behavior more detail ahead. and suzy welch is here she has an interview with tim tebow about his leadership lessons. and the bulls are still in charge we are off the highs but the nasdaq still doing well. tesla up nearly 3% we're back after this. at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be.
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open an account today. another big turn today as long time executive steps down for inappropriate behavior behavior the executive admitted to. >> and we're talking about the news that broke yesterday afternoon where he announced he was leaving the company. he is leaving ford immediately due to the inappropriate behavior it then raises the question what's going on with the leadership at ford now when you take a look at the leadership some are weighing in including the analyst brian leavy. he is out with a note saying that he is cutting his rating of ford to hold writing while we believe the company has a deep enough management bench to replace mr. nair with little disruption the new leader will face challenges.
ford ceo, he is in the mix and he became ceo in the middle of last year he's trying to reposition this company for the future while at the same time trying to appease shareholders look at your current business where you're building and selling vehicles like the f150 like the suvs. you have to raise your profit margins in north america that's why leadership is so crucial for ford at a time when the company is trying to essentially fix what's going on right now it does not need to see more that is clearly when wall street and investors say we think
mary bara and her team have a vision in the future and we don't see that before. at least not to the disease that we see it with general motors and believe me when you talk to people in detroit, this is what people are focused on. how is ford positioning itself versus how is general motors position itself. >> just how big is the gun industry statering stuff you need to hear, next mom and dad got a new car... it's not theirs. it's mine. mine. mine. and it always will be, forever and forever. the new rx 350l with three rows for seven passengers. experience amazing at your lexus dealer.
the breathless national media eager to smear the nra. >> a flood watch is in effect for parts of pennsylvania including pittsburgh where high water is already causing problems some roads remain impassable and 33% of americans say they do not have more savings than credit card debt and 12% indicating they have no savings whatsoever. >> let's get a check on the rally at this hour we're up but we are off the session highs. the dow had been high. higher by almost 360 points. you see it there now up by about 200 points s&p 500 up by 13 let's get the traders take on this session matt, great to have you with us. >> thanks for having me. >> do you think we'll see a
repeat of what happened yesterday? this is something that we'll take easierly and we're happy we got it. >> how do you determine the fade in strength. and take a look at the pocket of strength we saw in the morning that's certainly faded as we head to the close. >> it's good that you bring that up we're seeing the stocks not being sold off energy is taking up the slack today. we do have a new leadership group. we'll find if retail can keep holding traction here as well
too. especially those that are beaten down. >> president trump weighing in on the gun debate. >> that's right. the president just wrapped up host a school safety session here at the white house with a number of officials in the wake of that horrific shooting in florida last week. the president indicated that he had spoken to folks over at the national rifle association and that they may be open to some gun control regulations based on his conversation with them calling them good people here's what the president said >> the nra is ready to do things people like to blame them. they do have power but they came up with certain of the rules and regulations that we have now but i told them, we're going to have to toughen them up because
it doesn't make anybody look good. >> so not exactly clear what things the nra is willing to do but it is clear that the president has talked to them about the issue and all the political pressure applied over the last several days so we'll see what emerges from that also the president returning to the idea that he first embraced yesterday of having armed teachers inside schools. laying out ideas on how he would pay for it and how he would train the teachers. >> i want certain highly adept people people that understand weaponly and guns if they really have that aptitude because not everybody has the aptitude i think a concealed permit for teachers and letting people know there's people with the gun. in my opinion you won't have
these shootings because these people are cowards. >> so the president there very much focused on the deturrent effect you'd have by having teachers armed across the country. the white house will ask him what the president has come to terms with the nra on. if that comment portends change for guns and if this is just more of a discussion without a specific policy. >> thank you very much you can see a steady climb in the lapse. also look at the big spike
that was after sandy hook connecticut. now the nearly 11.5 million guns made just over 4 million of them were rifles. so who makes that gun. it's complicated there's so many small manufacturers however there are a few that you should know about. either publicly traded or backed by wall street for example, american outdoor brands, you know them as smith and wessen they changed their name a couple of years ago posted a sales drop from 2016 because they said so many people bought guns during the election period and then the privately held company which is backed by billionaire steven fineberg could file for bankruptcy any day now and while the gun makers get so much attention, do not forget about the other multibillion dollar side of this
industry there's many small players but also big public players as well. by far the biggest, they mostly sell to the military law enforcement and that company is being bought by the biggest of the big. they also make bike helmets and o oddly they now own the brand of ammunition there's a couple of big players out there but many small players out there as well and now that we know the size let's talk about the scope of the gun industries power
we're trying to patch together the web on the side of all the players big and small. you're in d.c., how much power, not the nra, but the gun industry and the national shooting sports foundation, how much power do they have? >> thanks for having me. the gun industry has a tremendous amount of power you ran through the numbers. it is an enormous industry that pumps out an incredible number of guns every year and as a result of the industry and it's connection to a powerful lobbying arm lead by the national rifle association they had tremendous influence over policy making in congress. i want to be clear when i talk about the nra, they proport to speak for american gun owners. the fact is they speak for the gun industry they are not on board with the agenda and it
serves to sell more guns >> there is a trade group for the gun makers that is the national shooting sports foundation. which is based in new town connecticut we want to talk about the business side of this. does the industry, maybe in order to protect itself need to step up here and we're going to argue about the constitution, does the business community have an obligation. >> i'm not sure what that means. they make it sound as if it's a drug cartel. it's a product enjoyed by millions of americans for hunting or target practice or just legitimate, genuine
self-defense they are hurt badly in terms of their image. and there's an awful lot of law abiding citizens and they take advantage of these legitimate products. >> i get that point. i understand what you're saying. >> they might be forced to act they know that congress may not do something i get your point it's legal there's no reason for them to do something but if you're afraid of the government i assume you would want to get out in front of it. do you think this industry has any fear of congress at all? >> yeah, no, look i think that if they really think that something bad is going to happen
they might decide to press something that they otherwise wouldn't like in order to get out in front of the issue. but nothing gives gun owners in this industry a bad name worse than a massacre like this you look at seat belts the car industry didn't want to have seat belts. the automatic seat belts, people didn't want to wear it now we just do it. nobody even thinks about it. we don't assume that 30 years ago it was an odd concept. do you see any change that the gun industry is going to adapt and evolve or do you think they'll go through and let it
ride. >> i think if they can get through this most recent horrible mass shooting without having to accept any regulation they're going to do so one of the things i want to point out is while the gun manufacturers are a big part of the industry, another part are the businesses that sell guns. the licensed gun dealers that's the group that has a huge responsibility and a huge opportunity to step up and voluntarily -- >> but a lot of guns are not sold through traditional retailers, is that correct >> that's true we have under federal law private sales that don't need to go through a gun dealer or a back ground check. but one of the other things to go through the gun stores at the moment is that we have a huge problem in this country right now of gun theft and particularly burglaries and
robberies, gun stores. atf sounded the alarm over the past 18 months that thefts at gun stores are up dramatically and part of the problem is atf under current law does not have any authority to mandate that gun dealers implemented any specific security measures so you have stores that get hit repeatedly by people just breaking the glass on the front door and then they do nothing to prevent that from happening again. >> and that's an important point. 90% of gun crime is by guns that are not purchased legally. the mass killings tend to be the one where we do it it was a civil debate and a good discussion we both appreciate it. just a quick note on background checks because we have been working on this story. according to the fbi, they call it nics. their background check data. 253 million transactions as they
call them have been processed since the nics data base began in 1998. 1.4 million of those have been denied so there's a denial rate and i'm not saying that it's good or bad of 1-half of 1%. >> wow, that's it. >> that's it >> all right >> obviously we'll continue. she has a one-on-one interview with tim tebow he talks about the game, leadership, setting goals and his options with the new york mets as we head out, the rally losing a little bit of steam as you see right there. but still up 175 points. it's about half as much as it was earlier. that has d asq vi up it's gain and dipping ever so slightly negative we'll be right back.
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about leadership, setting goals, and his options with the new york mets. the 2007 heisman winner currently in spring training hoping for a september call-up in pro baseball after his football career sort of faded out. great to have you with us. the general manager of the met said he wouldn't bet against him. >> even went further than that he said i think he will play in major league baseball. that was his 1st love for tim tebow. he's the master of resilience and perseveres and picking yourself up and trying again, and he talked about all those things plus more in the package when we spoke. >> why do we have to be defined by what other people want us to do i think that's one of the silliest things that people get in their brain, is that they let the rest of the world tell us what we can and can't do >> you have been a leader and you have been described as a leader from an early age, because you were leading teams
and high school and so forth talk to us, how do you define leadership >> a leader is someone other people will follow plain and simple now, i think some people are born with more leadership traits i think other people learn how to continue to build those traits that other people will follow you know, i learned this from my dad when i was 8 years old that when you truly love something, when you're passionate about something, and you're willing to sacrifice for it, it's amazing how many people will be drawn to you because those qualities are so contagious and people want to be around it. >> one of the keys of being a stronger leader and growing as a leader is knowing who you're trying to lead, is understanding what makes them tick, is getting to believe in the bigger mission, and getting them to buy in to you and how much you care and how much you're willing to sacrifice for them and for the goal >> you like to say, normal is not the goal
>> you know what normal makes you? >> what? >> average why would you wake up and say, yes, today, i can't wait to be average? i would rather be an outlier and fail because when you're an outlier, when you don't do what everybody else is doing exactly how everybody else is doing it, you at least have a chance to be special. >> i just say a word and you give me your first one or two-word reaction to it. and if you want to say a little more than that, you can, for sure okay your favorite game >> mafia >> no, no, no. >> i thought it was like a game you play >> your favorite game. >> fsu, my senior year >> the ncaa paying players >> i think we need to help them. i don't think we need to pay them >> what do you think about the putscher of football the future of the nfl? >> i think they're going to have to try to get a lot of these concussion things figured out. >> colin kaepernick. >> highly debated. >> whole new spin on kneeling,
right? with the tebow, it was sort of a different thing. the mets >> a lot of fun. >> is there a point where you say, let's talk about pro football there was a moment where you said, okay, it's not going to happen for me in pro football. i'm going to baseball, yeah? >> no, it wasn't like that i still have offers to go play other positions in football. but for me, it was doing more of my dream, because i love playing quarterback, but i love hitting a baseball, too. so i'm going to go live out my dream. not just what other people want me to do >> what if it doesn't work out with baseball? >> what if it doesn't. most people already think it's not going to what does that matter? you have a goal. if there's something placed on your heart, strive for it. what's the worst that's going to happen you don't make it. oh, well, but at least you get to say i tried for me, i get to look back in peace because i went all out all the time >> how old is he >> 30 years old. >> 30 years old. >> i know.
he's lived - >> ancient >> he's lived a lot of life in those scant 30 years there was a movie made about tim tebow called "the one" when he was in eighth grade. his life, he sort of had a lot of attention on him, eyes on him, and a lot of hope put on him when he was really young and he has lived -- i mean, in his autobiography, he tells stories about people calling him before big games in college trash talking him. he had incredible experiences and actually, he has very interesting things to say about careers and life and just how you seize the day. >> why was he as polarizing a college -- look, the s.e.c. football is serious. they have seriously rabid fans he was a polarizing player partly, i think, because he wore his faith on his sleeve, among other things >> i think that's the reason he presents himself not as a regular guy but as a person who is trying to set himself apart and you know, either that really
turns your crank and he's got a huge number of fans who just love that about him. then there are people who think he should get off his high horse, right nobody is neutral on tim tebow that's what you find out when you say to people, oh, i'm interviewing tim tebow, they'll either say i love that guy, or they'll say, oh, that guy. it's amazing the emotion he sparks in people >> and he throws a ball for a living >> yes, he does. athletes, all of our athletes are celebrities. >> i thought he was like 25. trying to start a new sport at 30 >> he's been poking around babel for the last few years >> he thought he was going to play baseball when he was younger. he loves it. >> back to your previous profile we aired about a month ago, bill belichick. have you spoken to him since the super bowl >> we have spoken to him, both jack and i have spoken to bill since the super bowl i'll quote, actually, his girlfriend, linda, afterwards said to me there's no soft landing. you know, the thing about bill
belichick that came out in that interview was that he holds the coach responsible. so he holds himself responsible. >> and he did. and he did >> yeah. >> suzy, great to see you. >> thank you very much >> rising rates, rising prices, and low inventory, what these major head winds mean for the housing market the second hour of "power lunch" begins right afterhibrk. ts ea see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that.
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hi, everybody. tyler mathisen here. welcome back to the second hour of "power lunch. let's tell you what's on the menu recession on the horizon a hedge fund legend sees a 70% chance the economy will stumble into a recession before 2020 is he right? >> plus, the health of housing the industry facing now three big head winds that could spell trouble for the business we'll tell you what it all means for buyers and sellers, as the spring selling season gets into full swing and the king of cars, consumer reports names its top picks in the auto industry, and one brand dominated. and i do mean dominated the top ten list we'll break down which, who,
what took the top spot and speak with the head of research at consumer reports rev your engines "power lunch" hour number two starts right now and welcome to "power lunch. i'm melissa lee. stocks are higher right now. the dow is up more than 200 points 228, to be exact we had been up by almost 360 at one point in the session if the dow and s&p close higher, it would be the first up day in three. all 11 s&p sectors in the green. meantime, led by energy and real estate as for the dow leaders, united technologies, ge, caterpillar, and exxon. and am of the top movers roku sinking, and a good day for restaurant stocks. blooming brands, jack-in-the-box all in the green, and all in the green strongly blooming brands the biggest winner on strong results for more on today's action, let's head to bob pisauna on the
floor of the new york stock exchange >> middle of the day, market tends to drift lower take a look at the s&p 500, and who knows where this is going to end. not a lot of news in the middle of the day, not a lot of guidance to give anybody why we're moving around, but you see the highs moving to the down side you can't blame the ten-year yield or anything like that. 2.91, 2.92, not a lot of dramatic volatility. don't blame them for this. vix, a little less volatility we have seen in the vix so 18 to 20, we have seen much bigger ranges in the last couple of weeks so you can't even blame that one right now. sectors, all of them were higher a little while ago cyclicals were higher. energy, tech doing better. banks have been drifting lower as the yields, ten-year, going nowhere. take a look at the fang stocks netflix has been consistently
lower throughout the day so has alphabet. amazon has been in a slightly tighter range. facebook is fairly stable, around $180. can't blame the fangs right now. we have to keep an eye on the last hour of trading back to you. >> all right, bob, thank you very much. well, it is a strong day on wall street. the major averages, as bob noted, hitting session highs in the midday volatility still a little in play one headline making news the head of the world's biggest hedge fund saying he sees a 70% chance of a recession in the next two years especially with the prospect of rising rates so is he right how will this all play out in the market let's bring in tony, chief investment officer with bloomington trust, and john trayn traynor. john, a, do you agree with dalio, and b, if you do or don't, why or why not? >> it sounds like we're looking at a lot of the same economic indicators and if you look at the few that we really highlight, a lot of them tell us in two to three years, probably closer to three,
we could be in a recession so we wouldn't agree with what he is saying, but we think this is a very unusual economic recovery it's been very slow, so we think it's very long so we're actually taking a look at those same indicators and saying, you know what. in this cycle, it could be a little further out, a little longer in the tooth. so we're not saying 2020, but you know, we wouldn't disagree that let's say four years out, we could be looking at a recession. >> okay, john. so i buy stocks today for earnings tomorrow. so if we agree things will slow down at some point, when does the stock rally in because if you believe the recession is coming, you don't wait until it hits to sell stocks or to change your portfolio. at least i hope not. don't do that. >> our best single indicator, unfortunately, i think it's a lot of people's best single indicator, is the ten-two yield curve. when that goes negative, generally 12 months later, you've got a recession
the yield curve is what we're watching we want to be a little more defensive. i'm very nervous that you have a lot of people with their finger on the sell trigger once that goes negative. so we want to be preparing for that but the yield curve is our best indicator, and right now, that's actually steepened a little bit in the last several weeks. >> tony, it sounds like you're a little more optimistic about what is happening in the economy and the markets. you say the markets are getting things wrong >> yeah, melissa, we would tend to agree more with john than ray. our view is that the market is struggling right now with what's a pretty important inflection in the underlying economy we're moving from a period if you look at the surface, where we had very low inflation for many, many years to an environment where we have normal inflation and so if we look, for example, at what happened a couple days in the market when the earnings came out from walmart, we had a classic response where the markets interpreted it as a bellwether for the economy, and
because the results were so poor, the market sold off. in fact, walmart, in our view, the walmart results were positive for the overall environment because we don't believe inflation is going to get away from us here as there continues to be strong structural forces that push down on the prices of goods and services and so walmart is struggling because they're fighting against the forces of technology, e-commerce, but not just retail and e-commerce it's also health care, travel and leisure, and many other industries where technology is having a very significant downward force on prices and that's going to let the economic cycle continue for longer than i would say ray thinks it's going to continue because we're not going to see a ten-year that's probably above 3.75 during this entire economic cycle. even if we move to a 3.25 or 3.50 later this year, it will be a slow and gradual move and there's a lot of opportunity for equities to continue to do well in that environment because bond yields are still pretty low. >> john, what would do -- you
told me what the tell tale would be, an inverted yield curve. but what could the trigger be? is it a garden variety fed mistake of rising -- raising rates too much too fast? or is it something else? the 2007-2009 recession was caused by something that was really not all that anticipatable. >> well, you know, it's interesting. we have been going back, doing a history lesson for a lot of our clients. we have been talking to them about 1983 and if you remember, you know, volcker had done a fantastic job of bringing down inflation you had the reagan tax cuts passed in '82, and there was a fear, i believe in the fed and market participants that that was going to reignite inflation. the fed sent rates back up inflation did not reaccelerate, so they brought rates right back down, but the fed was spooked back then. if there's a oncern, if there is that trigger event, as you said, it would be a spooked fed. a fed that does something like 1983
>> okay. >> if i could say a word and this is where we might disagree with john, because my view is that the biggest risk right now is that the fed allows itself to effectively be controlled or bullied by the stock market and falls behind the curve. so as long as we continue to see the kind of information that we saw in yesterday's fed minutes where we have a more hawkish fed on the margin where they're continue to raise a few times a year, we believe they'll stay ahead of the inflation cycle, but it is very important they stay ahead of the cycle and not allow concern around the equity market or the wealth effect to dominate to the fed and its behavior >> tony and john, good discussion we'll see you again. thank you. the hits keep coming for ge. the "wall street journal" out with a scathing article targeting former ceo jeff emlt, claiming the company had been plagued with problems for years under his leadership the stock is down 41% since he stepped down, but stock is up
today. during the conference, they claimed the company has come up with a list of assets to sell. and also commenting on baker hughes saying they do not plan to sell as quickly their stake as had been rumored. joining us is an analyst at deutsche bank. he has a sell rating on ge in place since may of 2017. that's been a good call. john, great to have you with us. >> good to be with you >> was there a reason for optimism out of what jamie miller said at the conference? >> well, i guess you could infer that if they decided to defer the ipo or sale of baker hughes that maybe they don't need the money just as quickly as perhaps some might have anticipated. but really, i only think they're doing that because baker hughes stock had gone from $35 to $25, so now is not really the right time there are points, i suppose, that you could say, look, maybe things are starting to bottom a little bit but the big picture, ge is juggling a tremendous amount of
balls here, and it's not clear that the management has a handle on all the moving parts. they seem to be fighting fires as they uncover things i don't think you should take a ton of optimism away from her commentary or presentations. it's really just the same narrative they have been espousing for the better part of several months >> united technologies ceo said he's now thinking of breaking up the company. does that open any new possibilities in terms of what ge could sell or how businesses might be combined if there's a breakup on the united technologies side and assets that could be combined with ge >> utx really has nothing to do with ge. ge and this whole notion that maybe they separate was put out there, we think, as a deflection from the company's fairly serious challenges the reality is ge cannot separate it's on the hook to back 100% of ge capital's bonds it has over $30 billion of underfunded liability. the s.e.c. is investigating their accounting the department of justice is investigating their ownership of a subprime mortgage company they
owned prior to the financial crisis you can't just separate the company. you would have to refnls $150 billion of bonds plus untold liability. it's not going to work it's a nice narrative. it's just not possible >> i believe the "wall street journal" used the term rot in its article. is that what you saw there >> well, ge has been brushing things under the rug and leveraging aggressive accounting for the better part of several decades. and one could insperthat the prior management did this to drive the eps up as much as possible to pay themselves as much as possible sure, in that context, you know, that's just not great. it didn't serve the interest of shareholders since the cash flow has collapsed, the dividend has been cut in half. we think it gets cut again and you know, the profit outlook has been severely curtailed. we could be facing a multi-year power downturn when just less than a year ago, the company was going full throttle talking about how great everything was now today, the world looks completely different >> john, you were cited in the article. you said essentially that ge for
years has been selectively disclosing the information they want to give out to the analysts coming into the wall street community. the article itself calls it a success theater. when i was reading through the article, the term that came to my mind, this is going to be pretty damning, is conman. this notion that you're putting forth this facade of something that doesn't quite exist what is your take looking back on what happened and what jeff immelt did was he lying to wall street? >> i think in the big picture, i can't say for sure that he was lying. i think there's a lot of parties that are culpable here, including the board of directors. what have they been doing for several years? i would say to you that overall, what the company was propagating was simply all of the positive narrative without balancing with the risks associated with a company like this. as we know, the stock market is risky, every company is risky. nothing just goes up in a straight line and has the
positive narrative that ge has been espousing sure, the information they provided was one-sided they made it overtly complicated to dissect the financials. they compounded the complexity on purpose so people wouldn't look at the details and now unfortunately, they're pay agprice in terms of wall street not acquiescing to their story, their party line, and saying great, well now everything is fine and dandy the way they seem to be suggesting it's not fine and dandy. there are several challenges, and they have to really, i think, come clean, both in accounting and several other factors. and thus far, we remain to sort of see what the upside is going to look like >> all right, john, thanks so much for joining us. >> my plerths. thank you. here is what's coming up on "power lunch." housing facing some head winds that could spell trouble for this all important spring selling season what you need to know if you are looking to buy, sell, or rent. plus, like many things, the death of golf has been greatly exaggerated. could golf be america's big comeba srtckpos story of the year
facing a slew of head winds that could put a damper on the all important spring buying season diana olick joins us with more diana. >> yeah, it's a perfect storm. and not in a good way. three factors are hitting potential home buyers hard just as the spring market launches. front and center are rising mortgage rates the average rate on a 30-year fixed was in the 3s back in december, but began rising in
january and then sharply in just the past two weeks it's now just above 4.5% while it is historically low, it not only takes away purchasing power, it makes it hard for people on the margin to afford a home prices continue to rise for new and existing homes far faster than income growth and inflation. why? problem number three a critical shortage of homes for sale especially on the lower end of the market, where most of the demand is. supply in january was down 10% from a year ago, and while new listings will come on for spring, they will not be nearly enough that keeps prices high and bidding wars not the exception but the rule back to you guys >> thank you very much >> so with this triple whammy of issues, what should buyers, sellers, and agents expect as we head into the spring season? let's bring in mark, chief economist with moody's analytics
and skyler olson with zillow mark, i missed you since i saw you last evening on another program. >> how are you doing >> nice to have you back are you concerned that the head winds that housing face could really stall price growth and sales? >> no, i'm not i mean, if mortgage rates -- mortgage rates is the biggest headwind if mortgage rates are rising because we're creating more jobs unemployment is declining, wage and income growth are accelerating, we should be fine. i think the housing market, it's not great. we want lower mortgage rates if you're in the housing market, but in the grand scheme of things, i think we should be okay here's another important point in a normal well functioning economy, mortgage rates, 30-year fixed rate mortgage rates should be between 5.5% and 6% even at 4.5%, they should be manageable >> skyler, in yesterday's
numbers about resale homes or existing homes, it was sort of a tale of two market segments. at the low end, sales were down sharply. but at the upper end, sort of $500,000 to $750,000 and above, sales were actually up in unit volumes or closings were up. can you explain to me why that happened and what it says or suggests >> yeah, i mean, certainly, so new home sales are kind of driving a bit of that picture. when i look at higher price points, you know, that's where generally, a, there's a little more lubrication in the marked things are moving. you know, competition hasn't been so fierce, so people are looking in that segment aren't stuck in a built of self-re-enforcing cycle where i can't list my home because i can't turn around and buy a home there's a little more lubrication happening there and they're benefitted by new home sales. in the really entry level tier, that's where we're seeing the most fierce competition. that's where the most pressure is and where we are very unable to
build in many ways >> most pressure because there isn't inventory because builders aren't building at that price point because it's not as profitable >> well, not just it's not as profitable for very real reasons. the cost of land has been increasing, the cost of construction labor has been increasing and materials, both lumber and through the price of oil and into plastics. so when those costs increase, i can make that return back again more easily on a higher priced home >> so mark, you know, one of the things that americans believe in is that their house will always go up in value it doesn't always happen that way. and certainly, you go back to 2007, 2008, it didn't happen maybe the first time on average the american home actually declined in value. is that a possibility here again, or do we need even to worry about that are house values basically secure as far as you can see
>> well, i don't think anyone believes that house prices can't go down. certainly not after the experience in the last decade. i think we're all -- have clear hi eyes about that now. having said that, i think house prices are in good shape you know, with this lack of building, low vacancy, continued strong demand, you know, i really don't think house prices are at risk. the one thing i will say, though, is the tax law, which reduces the value of the mortgage deduction for property, that's a problem where you live, you live around new york city somewhere, your community relies on those property and mortgage interest deductions so in those markets, prices could go soft. you might see some declines, but generally not. i think house prices are safe. >> i'm a jersey boy. i feel the pain. skyler, final thought. to that very point, how big a risk to price increases is in selected states where there are high taxes income and property
taxes, california, new york, new jersey, massachusetts, connecticut, even around d.c., is that going to cap price growth >> i think we do expect a little bit more price softening in those kinds of areas, both because of the tax bill, and also in the sense those are the same areas where with rising interest rates, they're already looking at a mortgage payment that takes up a larger share of income than it has done historically with even higher interest rates, that is an even greater stretch. so that puts a little more pressure on that monthly affordability. so with price softening, you know, we do expect that maybe that to begin happening. it's also important to mention in the same places, the bigger barrier is often the down payment for many buyers, so softening prices might actually be good news for a lot of new buyers >> got to leave it there skyler, mark, thanks new jersey's motto is we may be expensive, but at least it's crowded and dirty. >> we're worth it.
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time for street talk analyst recommendations on the stocks you ned to know about we kick it off with roku shares down after they reported weaker than expected sales forecasts. raising the estimates of the price target to $45 from $28 they say today's decline is a response to the massive rally we have seen over the past few months and the big growth that was already priced in. they think roku can still sustain robust growth in active accounts and total hours streamed >> boutique upgrades the oil company from buy to hold they like new field's lower operating cost, the mix of oil and gas. and it makes it simply a better value. $38 target is 55% upside by the way, b. riley cut their target down to $36, so they're still bullish. >> third stock, pandora. lowering its price after the
company's earnings revenue guidance light number of listeners were below consensus. the ongoing transition will keep a lid on the stock the company keeps its buy rating saying it's taking steps in the right direction. has good long-term value >> all about the streaming today. your final stock is a virginia based defense company. raising their target, not their rating but their target. they noted the target was mixed, but cash flow expected to grow nicely expect nearly $700 million in generated cash this year they're launching a buyback program with that, and analysts think they could buy back hundreds of millions of its stock. that $75 target on ldos is 13% upside >> that's street talk for today. meantime, we have a ge showdown on tap the stock may be the top performer today, but it's still down 50% over the past year. ahead, guy adami and tim seymour battle it out on whether or not it's time to buy
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these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. i'm courtney reagan and here's your cnbc news update at this hour. president trump meeting with state and local officials on school safety at the white house. saying he wants to see trained teachers carrying concealed
weapons to ward off potential school shooters. >> i want certain highly adept people, people that understand weaponry, guns if they really have that aptitude, because not everybody has an aptitude for a gun, but if they have the aptitude, i think a concealed permit for having teachers, and letting people know that there are people in the building with a gun, you won't have, in my opinion, you won't have these shooting because these people are cowards. >> a federal judge sentencing dr. solomon melgen to prison for stealing $73 million from medicare he was also orded to pay $46 million in restitution he had been accused of bribing bob menendez the charges were dropped after the trial ended with a hung jury >> for the first tame in ten years, general mills is introducing a new shape to its lucky charms cereal. a unicorn will replace the hour glass marshmallow.
kids clamoring for it on social media. it will become widely available in march that's the cnbc news update at this hour. >> thank you very much >> let's give you a check on the market, the major indexes rallying soon after the open and right now, there you see the dow. maybe you can see it but i can't. >> 285 is the gain >> 285, much younger eyes, better than mines. >> a screen right here >> the s&p 500 up 17 the nasdaq is up 25.95 >> the market was up bigger, you could see it >> the numbers are bigger, i can read them. all 11 s&p groups are higher today. even with these cheaters that i bought from reader's.com one of our advertisers real estate leading the way today. energy as well >> the oil market set to close for the day. let's go to jackie deangelis did i read that right, jackie? just kidding how are you? >> good afternoon. crude getting a little bounce today after the eia report this
morning. we saw a drow down in inventories when expectations were seasonable built. u.s. production was flat week on week exports were up, all bullish indicators you have also got the stock market moving higher today, and a dollar index that's slightly weaker perfect supportive storm in fact, the session high, oil crossed over $63 a barrel, breaking the top end of its most recent range for the close, it looks like we have a lilt less than 2% in gains. back to you. >> thank you very much, jackie >> let's get back to one of today's big stock stories, general electric these guys are making me laugh behave shares are up more than -- >> i don't know what to tell you. >> up more than a percent after jamie miller said during an investor conference they would not sell their stake in baker hughes the stock, though, is still down 13% so far this year joining us now to discuss, fast money traders, guy adami and tim seymour. good to see you guys again tim, i'll go out to you. you have been a shareholder for a while now. what's your take on what's going on at this point and what the
cfo specifically said at the investor conferences >> he said he sees significant value or the baker hughes assets are undervalues so they're not going to exercise to get out when you look at the sum of the parts of this thing, this is the big debate i think the energy units right now are still priced significantly cheap to their intrinli intrinsic value. when people look at the sum of the parts, they're probably getting this wrong the bottom line for ge still haunted by ge capital and the unknown in terms of reserves, what the company is really going to do to generate free cash flow to pay a dividend and ultimately to be that stalwart it always was. i will say if you look at what semen se that was a very value creative move for them and the health care business for ge is going strong >> i get your notion that it's haunted by ge capital, but i think it's haunted by creating a
financial balance sheet that is overly complicated, that analysts could not see through people just could not understand where the underlying earnings power is guy, we just had john in from deutsche bank, and he was making the point that it was a very, very complicated thing now investors are saying i'm not going to bother with that. >> complicated is a warning sign it shouldn't have been that complicated. to tim's sum of the parts, which okay, i can get that argument and understand the bull case the other side is what's the right valuation for a company that has basically no earnings growth and it trades in the same valuation of a company like honeywell, who is kicking their rear end for the last decade i would submit it's got to be at least 12 or 13, they're going to make a buck a share, maybe $1.05 if you want to give them a break. you're talking realistically on valuation, a $12.50 or $13 stock, which is significantly downside, and kudos to the folks at cowen what is -- he's watching
but kudos to the cowen folks who six months ago said it's an $11 to $15 stock >> is there an argument to be made, talking about ge, but generally, when everybody is kicking ge when it's down. everybody was so positive a few years ago. now everybody is, ge is on the ground, and they're throwing stuff at it. isn't that when you're supposed to take a nuanced look at a stock? >> now, you say that, and you're correct in saying it, but quite frankly, people have been kicking this stock, some people have been kicking this stock since it was a $30 item. you could have make that argument a year ago. >> i agree >> sentiment is at its knees i would argue that management had nothing to gain by talking about earnings growth for the next couple years. they're going to earn $1 a share. doesn't make the company cheap, but right out there, there's very little people are willing to say positive about ge right now, and while that makes sense,
again, the health care business is very strong the power business, i think, inherently is undervalued even if they overpaid it doesn't mean a lot of the last 20% in the stock has been about the unknown. it's about are they going to split it up. do they have the ability in terms of cash reserves to cross cover some of the reserves that's been the last $5 in ge stock. it's not supposed to be the stock you put 5% of your money in at this point it's a 60-basis point position it started out for me. it's a 50-basis point now, owning it from about $15 this is a stock i feel comfortable owning here. >> all right dead air >> never a good thing. >> i was looking at you to ask me something i'm sitting here i can keep talking all day >> i thought he was going to keep talking all day >> that's what i do, people. i keep talking until you tell me to shut up >> the human rain delay, we call him. >> where is tim, by the way? we didn't address where tim is >> it sounds like he's in the hallway? >> in florida? >> somewhere balmy, getting some
work done before possibly -- >> a great word, balmy >> moving on to other things >> i miss tim. >> we're back monday >> what's that fake skyline? looks like st. petersburg. >> yes, that too >> let's play guess where tim is >> a fun game. >> put it on the twitter poll. >> i'll be at fast money on friday at 5:00 p.m., so looking forward to that. great to be on "power lunch. >> thank you >> love it >> later, team >> all right, this is kind of cool if you're in the market for a new car, we have something for you. consumer reports is out with its annual rankings of the top car brands and its top ten cars of the year also some brands you may want to avoid. this is my favorite time of year, and this year, phil, i really think there were some surprises. >> yeah, and the biggest surprise is the number one brand. because i think a lot of people when you say, hey, are you in the market for a luxury car, and they say sure, what are you thinking about you mention genesis, they say excuse me? who is genesis that's the luxury brand from hyundai, it's been launched over
the last couple of years it's been in the market for a couple years number one according to consumer reports, ahead of audi and bmw for those who are not familiar with genesis, they have two models you have to have two to be ranked by consumer reports we'll talk with jake fisher in a little bit about why he says this is luxury with good reliability. in terms of tesla because i always get this question, where do they rank same as last year, number eight in the consumer reports book basically a tale of two models here model s gets good marks. model x, reliability is still an issue. that's something we can talk with jake about. finally, the chevy bolt is pi picked as the top compact green car. jake fisher says you want to note this car because of, a, it's fun to drive. and also, it's really the first affordable long-range electric car in the market. as for the bottom three brands, boy, we seem to see these guys at the bottom of these lists not just with consumer reports, but with others on a regular basis
land rover, right ahead of jeep, and dead last for a second year in a row, fiat we reached out to jeep and fiat. they pointed out they have been working hard on improving their brands, including jeep and fiat. and that they welcome outside opinions let's bring in jake fisher, who is the director of automotive testing for consumer reports all right, jake. i think some people are looking at the top three and saying, why? why is genesis ranked ahead of audi, ranked ahead of bmw? >> well, pretty impressive, really i mean, as you say, a brand that a lot of people don't really know about and they're doing a whole lot right. luxury vehicles, and while there are other luxury vehicles on the market, these are luxury vehicles that are reliable they hav electronics, and they work and it's not complicated or distracting like other models do with their complicated electronics and features >> let's talk about the bottom three, not that we want to pick on anybody, but it seems like a broken report.
every year, it seems like every year, you have these fiat chrysler brands in the bottom including jeep and fiat. fiat ranking dead last for the second year in a row what's the problem here? >> we're looking at brands, a lot of things. reliability, how they perform, and when you look at fiat, unfortunately, they do neither well they don't perform well, they don't satisfy their owners, and their reliability is not impressive so they're not doing a whole lot right. it makes it a hard sell. >> the bolt, top compact green car. you like the fact that you've got a vehicle here that sells in the mid $30,000 rampg, and it brings a lot to the table. a lot that people may not realize, correct >> yeah, absolutely. so when you look at elecric cars, we had two options before, the short-range electric cars, 100 miles or so, or the tesla, knocking on $100,000 this is the first vehicle that's much more affordable, has a much larger appeal, and gets, in our testing, 250 miles of range. that makes it usable and it
could appeal to a lot of people. >> as i look at the rankings of the brands, i was surprised that mercedes-benz was number 15. right in the middle of the pack, below kia, subaru, chrysler, hyundai, mazda, and infinity what went wrong with mercedes? >> what's going on with mercedes-benz is they're trying to get more sales. so they have actually entered really a much lower market with entries like the mercedes-benz gla and cla. these are really nothing more than front load drive small cars that they have mercedes-benz badges on. they look good, but they don't perform well and i think it's hurt their brand. in the short run, maybe sales, yes. in the long run, we're going to have to see what it does to that idea of what is a mercedes-benz. >> we love these stocks as questions for you, but alt the same time, this doesn't correspondent with how the stocks do. taking a look at the bottom three. fiat chrysler is probably the
best performing of the three major automakers out there, ironically >> there's no correlation in my opinion between this list, and that's not a knock on this list, and the way that the stocks of these automakers perform fiat chrysler is one of the hot stocks right now and the reason why is because sergio marshio is believed to set the company up to ultimately be sold. i should also point out, the number one brand i get asked about by coworkers, by friends, by neighbors, by people all over the place, what's going on with jeep really like the style of jeep. can you tell me what's good about jeep and yet, it consistently struggles in terms of these types of reports >> that's because you don't buy a jeep for the quality you buy a jeep because they're fun, right i mean, that's -- they're cool they're fun. you take the top off and drive around with the family and everybody loves it you wave to everybody that comes in a wrangler and my wrangler has roll-up windows. >> that's good with the crank >> with the crank. >> i don't want anything in there, bottom base model
>> all right >> cool stuff. >> phil, jake, thank you six weeks to go until the masters. my favorite tournament to watch on television, for sure. golf season set to tee off, but we're going to talk to the ceo of the pga tour superstore about his company's record sales that's next. ein the 2018 lexus es,y system plus, standard... and the es hybrid. take advantage of special president's day offers now through the 28th, on the 2018 es 350. experience amazing at your lexus dealer. ♪ ♪ wake up early, o. ♪ slap on some cologne ♪ i'm 85 and i wanna go home ♪ ♪ just got a job ♪ as a lifeguard in savannah ♪ ♪ i'm 85 and i wanna go home ♪ ♪ dropping sick beats, they call me dj nana ♪
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welcome back to "power lunch. i'm seema motta. airbnb upping the competition with travel operators as it attempts to make it easier for hotels and bed-and-breakfasts to list their properties on airbnb. trip adviser saying we welcome the competition. it's a big travel industry worth trillions of dollars globally, and study after study shows our influence on travel and dining decisions continues to grow. take a look at how the stocks are reacting trip advisor trading down about 2% trivago trading down as well >> thank you >> golf season about to get into full swing boy, yesterday, it was 75 here we could have played yesterday today is day one of the honda classic in south florida we're about six weeks away from the masters, and that is good news for the golf retailer pga
tour superstore. which is already coming off a record sales year. with us now is dick sullivan, the ceo of pga tour superstore mr. sullivan, welcome. how have you done this in what is supposed to be a tough retail environment, number one? number two, with a sport that has had a hard time attracting new players? what's going right >> tyler, first, thanks for having me on today >> great to see you. >> you know, i think golf is in a really good place right now. i think a lot of people are still thinking about the old statistics i mean, since 2011, 20% more juniors are in the game. i saw a sporting goods statistic the other day that over that period of time, more kids are joining golf than football or soccer or baseball or basketball so i think there's this misnomer we're in a really good place we had a record year last year we're doing, i think, a lot of things right we have taken a lot of pages out of home depot.
arthur plank is our owner and our chairman i have been with arthur for 26 years. we create environments in our stores that is so radically different than anybody else in the golf retail space, and we're fortunate to have great products in our stores, fortunate to have great associated on the floors of our stores. >> you have done a lot of remodeling and revamping, and recalibrating the stores the one that i go to up in paramus here is a very different experience now, you have made it an experience as opposed to just a place where you go buy and get fitted for clubs >> yeah, i mean, and paramus, new jersey, whether it's denver or whether it's chicago or long island, i mean, this time of year, it may be 75 degrees, but most days, we have golfers coming in to our stores, many before work, and coming in and hitting balls. we have practice days. we have simulators in all of our stores we have restaurant buzzers we give out to golfers because of the wait to actually get in and practice and hit balls it's all free, and it's all fun.
we have leagues now in our stores we have long drive championships. we have oversized putting greens so we make it fun and games inside of our stores, not just selling product. >> yeah, it is it's much more experiential. and that, i think, is one of the keys and that's one of the keys to retail success. i think stores that are able to do that can distinguish themselves from the rest how much of your business is online >> only about 6% and, actually, i think that's a good thing and i say is that -- i mean, it will grow. our online business is up 30% again this year, it was up 45% last year, and it will continue to grow. but i think, you know, we separate ourselves from all those other online purveyors in our case, we gave over 50,000 lessons. you can't do that online we have over 100,000 customers you can't do that online we put over 1 million grips on golf clubs you can't do that online the services we offer and the fittings are so important,
manufacturers, they don't want a customer golfer to have equipment in someone's hands if if doesn't fit properly. >> sick sullivan, thank you very much. >> thank you. if you've lost kylie jenner, have you lost america? we'll adiscuss if the social media stock is about to disappear. straight ahead for investing. let's create jobs, build bridges, insure prosperity. as investment management professionals, let's measure up. cfa institute. this is where i trade and manage my portfolio. 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.
let's trade snapchat, sinking 8%, thank you, kylie jenner, on pace for one of the worst days in a long time. let's welcome in the trading nation team, gina sanchez, matt maley with miller taback any snap in the charts for snap? >> i guess kylie jenner is the new e.f. hutton. when she talks, people listen, right? it's tough to look at the chart on a short term. look at the $17 level. that was oil resistance. oil resistance becomes new support. it's getting right near that level. so, you know, and the other thing to think of, it used to have a lot of short interest a lot got covered when it rallied 47% when it ordered its
earnings keep an eye on the $17 level if it breaks below that, it will be a problem. >> if kylie jenner is slamming it, should our investors buy it or ditch it? >> look, there's a bull case and bear case. you know i've been skeptical of snap because i think it's very difficult for them to monetize obviously, what kylie jenner was reacting to was the redesign of the app, which makes it easier, or at least makes it possible for snap to try to monetize the business and, of course, the group that uses it, which is the 18 to 24-year-olds, they'll hate that. they have the attention span of a gnat i think it will be challenging because they have to move into an older group not sure that's going to work. i think it's a risks >> the attention span of a gnat. >> a slur on those 18-year-olds. >> thank you very much for more trading nation go to our website, tradingnation.cnbc.com check please is next >> announcer: and now the latest from tradingnation.cnbc.com and
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of the year. we talked about how 2018 was going to be a much more interesting year in the markets than 2017 had been, when it was just a flat upward slope that has been borne out. even today you see the dow now up 165 points or thereabouts at the peak, 358 points higher at the trough, 57 points higher. that's volatility. obviously, 300 points doesn't mean what it used to mean for the dow. we have seen a return of volatility we've seen a concern about interest rates we've seen a lot of things we have not seen in the market in many, many years >> yeah, we're showing the three major averages, the nasdaq turning negative once again. and we were highlighting before this sort of weakening performance throughout the session of the f.a.n.g. stocks netflix down by 2% at this hour with the rest of the f.a.n.g. group trading marginally lower that's putting pressure on the tech sec store. >> two different things for me i think the gun debate is going to start turning to the
companies, particularly the ammunition companies we tried to highlight, who are these names. on a much more personal note, i want to wish a happy 80th birthday to my mom i love you i'll see you tonight my mom turned 80 today. >> happy birthday. >> inspiration, left home, didn't graduate from high school, got her ged later and now i'm sitting here i love you. >> happy birthday. >> thanks for watching "power. >> "closing bell" starts right now. ♪ >> happy birthday, mrs. sullivan. >> absolutely. >> welcome to the "closing bell." ime chel caruso-cabrera. i'm in for kelly evans. >> i'm bill griffeth stocks in rally mode but way off the highs. dow was up 300 points before noon, hitting peak, and since then pulling back. the s&p still positive but the nasdaq has turned lower. >> the dow and s&p 500 are looking to b