Skip to main content

tv   Power Lunch  CNBC  March 23, 2018 1:00pm-3:00pm EDT

1:00 pm
that pulls a stump out of the ground that is what i'm looking for. >> give me your final trade. >> xle, long >> b of a city rare sale. >> intel holding up nicely. >> okay. that does it for us. hope all of you have a good weekend. back to "power lunch" which begins right now >> and welcome to "power lunch." i'm michelle caruso-cabrera along with tyler mathisen and melissa lee. president trump expected to appear any moment in the white house briefing room to talk about the spending bill that would prevent a government shutdo shutdown, the president saying he might veto the bill because of daca and wall funding. >> the dow again in correction territory. and let's bring in eamon javers from the white house >> reporter: there is an enormous amount of uncertainty about what will happen in a couple of minutes time
1:01 pm
but two sources tell me the president is expected to sign this omnibus bill in a couple of minutes. i'm told he might make a statement in front of television cameras and then sign the bill and he'll do that likely on national security grounds saying that there is a lot of defense spending in this bill that needs to happen. we know that he was meeting with defense secretary james mattis today who may have made that point to the president despite the president's tweet earlier in the day suggesting he's considering a veto of this bill, because of the daca fight with democrats so an enormous amount of uncertainty but two sources saying the president is expected to sign the omnibus bill, despite his tweet and if it pans out there is confusion whether he will be in a briefing room or some other room and whether or not we'll see him take questions from reporters that is all to be determined at this point reporters in the briefing room trying to get some explanation in the wake of his saying he
1:02 pm
will hold a news conference at 1:00 maybe some kind of statement on camera and what we're told is that statement is an explanation of why he will sign the bill. >> so we don't really know whether this is going to be a full-on press conference as such and if it is, it could get very, very hairy in a hurry, right >> reporter: right my sense is -- where we're going to land with this is a statement on camera perhaps in front of pooled reporters and maybe those pool reporters could shout a couple of questions but not a full dress press conference. but it is very unsettled right now. the press office giving us no guidance in the wake of president's tweet he'll hold a news conference and maybe still deciding even at this hour exactly what is will happen for that conference which is saying it is at 1:00. and it is 1:00 and so we're trying to figure this out on the fly but the expectation is to see him sign the bill and that would mean no government shutdown. but everything here is up in the
1:03 pm
air. >> and we tv anchors have voices in our ears and we're being told that it could be in the diplomatic room. >> that is a possibility. >> instead of the live shot which is the briefing room on the left hand side of the screen. >> that is a possibility some of the tv you crews were planning to sneak over to the diplomatic room as soon as the rumor started circulating. i don't have confirmation of that but maybe you do. but we are expecting to hear from the president on this momentarily. and we'll bring that to you as soon as we have it. >> somewhere, on something and somewhere. thank you. >>. >> reporter: always exciting. >> go check out the diplomatic room kayla to you first in d.c. you have more color on this. >> our colleagues at nbc news in the briefing room said there was an announcement that was made on the loudspeakers in the briefing room this is in the diplomat reception room and an availability for the pool. so a smaller groop representing
1:04 pm
outlets and media but not the entire press corp. so it would seem to be a much smaller availability than the president's original tweet led on when he called this a news conference and it is unclear how many questions he'll take. he does many of these availabilities whether he is on the south lawn when he's walking to marine one and takes several questions or standing alongside a foreign leader in the east room but he hasn't done a formal news conference takingquestions on multitude of topics, open-ended since february 2017. so it would seem he is not breaking with that tradition and this will be a smaller availability, just a pool in the diplomatic reception room. >> sorry, does this mean that this is not going to be live or there is some sort of a tape play-back. >> we don't have that information at this time but it is very possible that it could be taped play back if it is not live. >> for the viewers that aren't familiar with the workings of the way the press corp is down in d.c., the pool is a rotating
1:05 pm
shift of different outlets staffed of what -- 24 hours a day to be following the president, to be available to cover the president. and that is why it is not always the same people. >> reporter: right it is representatives from various news outlets and various media. so you'll have a couple of representatives from tv organizations, a couple from radio, a couple from print that basically serve as.nucleus of the press corp because the entirety of the press corp cannot be around the president at all times so it is a representation of the press corp a proxy for the press corp if you will that sort of surrounded the president or the white house officials when it does anything of note and it seems this is being open to the pool at this point and not the broader press corp. >> got it. thank you, kayla. >> and elon to join the conversation this press availability or whatever will happen seems to be flowing from the senate passed
1:06 pm
deal at $1.3 trillion omnibus spending bill that the president clearly has some knits to pick with having to do with the daca and funding for the border wall and so forth what can you tell us about this bill and what you are hearing about the reports -- the latest reports that he is going to sign it even though earlier today he threatened that he might veto it. >> reporter: well what i can tell you is that if the president does sign this bill on the grounds of national security, he's basically accepting the argument that gop leadership has been making, this is a bill that is essentially funds the military, they've been framing this as the biggest increase in defense spending in 15 years, a 2.4% pay increase for members of the military. so they've been trying to frame this around defense but the promise of a veto or the hope of a veto from president trump had really sparked some hope among conservatives. i talked to the -- one of the leaders of the house freedom
1:07 pm
caucus today who told me he thinks it is great the president threatened to veto it and hopes he does. senator bob corker offered to bring the president a pen so he could sign a veto. because conservatives are upset because they feel like the sprez reneging on some of the promises he made to his voters, including fully funding the border wall and that is one of the issues that of the president did bring up in that tweet democrats say there is no money for a border wall. republicans say there is money for a border wall system even if you can perhaps see throughit little bit so that kind of makes it a fence. so there is a lot of parsing of rhetoric here on capitol hill. but everyone thought this was a done deal and put to bed when the senate had passed it overnight. and president trump really sort of threw capitol hill into turmoil here with this tweet we'll see if he can resolve it in just a few minutes. >> it is an enormous amount of spending regardless. and a lot of talk about whether or not the treasury market could absorb the supply and the conservatives concerned about lack of funding for the cawall,
1:08 pm
are they concerned about spending all of that money. >> reporter: they want lawmakers to come back and renegotiate this deal so that issues that are important to them such as spending on a border wall are offset by cuts to other programs such as perhaps welfare programs or social safety net programs. so they feel like fundamentally this is a raw deal, not just in terms of dollars but in terms of process. this bill is 2232 pages long and lawmakers only had about a day to review it before they were forced to vote on it >> elon, thank you in washington for us and certainly with the twists and turns it has been a volatile day of trading the dow moving in and out of correction territory bob pisani is on the floor of the new york stock exchange. the s&p gained about six handles, six points on the headline that he is going to sign something today. >> that is certainly a positive given how confused the tweets were mulvaney saying he was and the president -- and this is the problem. this is much less volatile than
1:09 pm
yesterday but tentative because techs and financials aren't bouncing and another blip from the spending bill issues around 11:00, report thats the chinese ambassador was making comment and maybe the chinese government would showdown purchases of american bonds and they own probably a trillion dollars in u.s. government debt, a sizable amount be what are they going to do with the dollars but we saw the market weaken and bank stocks weaken throughout the day. you have the banks down 2% or 3% and now down 6% or 7%. most of the bank stocks are back to where they were on the february lows. not far from it. that is a significant decline. that is 15% of the s&p not participating in a negative and tech stocks, no rebound even though they are oversold, you look at micron and the semiconductor not bouncing this is the -- the hardware not bouncing
1:10 pm
so 2% declines in the major markets. and sea gate down about 3% that is 25% of the market. and you put it together and tech and financial and 41% of the s&p moving down. can't have a market moving when you have that. finally the trade war issues remember the key point, we are expecting double-digit increases in the next four quarters on earnings 20% in the second and third quarter. that is why the stock market is holding up they can't model what the trade wars mean for the earning situation so absent that people simply stop bidding and that is what happened yesterday. it wasn't the volume -- it was that nobody was interested in buying stocks when you get that moderate selling pressure you go straight down when you don't have any potential buyers out there. finally the leadership group -- what will do the leadership for us, folks, it is utilities and reits this month that is not going to do it that is 5% of the overal market. that is not going to be a leadership group we'll go quietly down further if we don't get financials or technology moving and right now, folks, we're sitting at the lows of the day on both of those
1:11 pm
major sectors. back to you. >> thank you very much. let's bring in chief investment strategist and cnbc economics contributor john rutledge welcome. good to have you on the set. >> great to be here. >> always good to have you with us. >> thank you. >> what do you make of the trade tensions that seem to be ramping up between the united states and china? we say we'll hit you with $50 billion or $60 billion and they say we'll hit you back with $3 billion does it stop there >> absolutely not. there is the debate over the philosophy, free trade and all of that. put that aside for a minute. this is about two individuals making decisions not a group making decisions we have trump and all of the uncertainty that we've been talking about so far xi is now lifetime president of china and he has to show testosterone to his local audience and they will come back hard the europeans came back in a thoughtful way
1:12 pm
we'll go after levi, harley-davidson. >> bourbon. >> not a lot of dollars. but china capital goods, think boeing and number two is high-tech think cisco and microsoft. and number three is agriculture -- >> soybeans. >> specialty chemicals and soy beans. there is big dollars there and we don't know when it stops. >> so the tariffs announced by china last night, the observers said, oh, they could have been much more harsh. they only did $3 billion to $6 billion and what explains that, are they showing a moderate sponsor is there more to come? how she we interpret the first step >> i think they probably don't know very much more about what this man is going to do than we do and so they're not -- we don't see a very firm response here because they're not sure what they are dealing with. but they cannot afford to not deal with it and the issue for us -- >> and you said it doesn't stop
1:13 pm
here >> no. the tariffs imposed don't hit china. we don't buy steel or aluminum from china we buy from europe and canada and mexico. >> when you say that he's -- she's going to have to share testosterone he's been elected for life so he doesn't have to worry about the next people's congress but president trump had mid-term elections and does china have the upper hand when it comes to waiting out this trade war or tit for tat or whatever you want to call it. >> chinese leader always has an advantage in having to do things for local media consumption. because they have a lot more power. and they control media so that is in their favor. but the trump comment says we have rational thinking going on on both sides. when you are dealing with a lot of people on average making a decision, you can count on rational that is the e.u. and council when you are dealing with trump on one side and xi on other, there is no large numbers
1:14 pm
helping us so you could get very wild responses. >> you were an old china -- you spent a lot of time in china being on larry kudlow's show all of the time and talking about china. >> you remember that guy >> yeah. >> talked to him yesterday he's doing well. good guy. >> the premise for the section 302 is that they rip off our intellectual property. most ceos we talked to say that is true. do you buy -- that correct >> you talk to american ceo's, and which is part of it. but it is probably -- it is correct. i've had things stolen from me in china and businesses i work with, it is a wild west over there. and the laws were written here they don't feel especially encumbered by those laws and so -- but intellectual property there is finally gathering strength some of the -- the alibaba and the like, all of that market cap is based on protecting ip. so the ip case in china is getting stronger but it will take a long time to get there. >> so we say they're not playing
1:15 pm
fair. >> yeah. >> are we? >> no. nobody plays fair in this game the issue -- >> are we on the right side of the laws of the wto on this? or not >> we're within the nine iron of the -- >> the nine iron >> we have political pressures and make deals also. but this is all about rule of law. basically if investors can't count on rule of law in the global economy, how do they make their bets like bob said, how do you make a capital spending decision for 12 years down the road. >> and within a nine iron of the rule of law and they're within what -- >> make like a -- >> a four wood. >> one of the drivers with the big head big bertha they're not perfect. they are not good or nice or anything it is just they are more predictable. >> is there anything we could do to change their attitude towards our intellectual property or foreign intellectual property? i assume they steal from
1:16 pm
everybody. what should we do if not this what we are doing now under the trump administration >> we need to spend a lot of time getting to know each other and that is not a very exciting answer but that is the key. if you know the other guy and you have skin in the game with each other, that helps the scale of their tech sector helps a lot. because they've got now huge market cap in tech >> our producer paul said they knock off those big drivers. >> yeah. >> but your recommendation to get to know each other, that feels like the answer we have gotten for 30 or 40 years. let's talk and talk and talk and talk >> yep. >> but nothing has changed why should we still do that? >> well first of all, if your going to fight with somebody, you need to know what is in their head you need to know them. and this isn't about playing niels, it is about knowing your opponent and i've been there a hundred times over the last of years i still am an amateur at understanding china. so we need to get the professionals back in the game, not at amateurs and what can we
1:17 pm
do on that we have to keep pressing on defending the law. >> we're going to keep you here, john joining us now are tim seymour and tama i'll start off with you. the market seemed tentative after yesterday's big selloff. what are you thinking here >> i don't see why markets need to do a whole lot going into the close. and there is obviously some important technical levels if you look at emerging markets they've broken through the hundred and we're watching this 25 and 70 level on the s&p i think the reality is that the trade wars are just one of a mosaic of factors that i think are troubling investors. they just included dynamic in terms of positioning and in terms of volatility at 20 rather than 10. i think it is the norm for the next ten years i think you value stocks differently in that environment. i don't think a lot has to change and i don't see a lot changing until the end of close.
1:18 pm
>> and given the risks and the interest rates are rising, do we need to evaluate where evaluations are in the s&p. >> i don't think you need much more interest in the headlines right now and one caveat is that the thing that all of these risks have in common, whether it is trade tensions, questions about the spending bill, et cetera, is that these are things that affect market sentiment a lot and tend to have a relatively minimal affect on your economic out look and so what that does is as a nuance to your asset allocation where you expect volatility and the environment to increase, to be more volatile, but you're not necessarily changing your directional views on whether you are leaning into risk, et cetera so the question becomes how do you hedge against that higher volume environment one given that the high level of volatility, you don't need to take as large a position size in your portfolio to get to a certain risk budget. another thing we're doing is
1:19 pm
emphasizing relative value bets as opposed to big directional views on equities. so as last year it was -- the big story here was you take a directional view on equity and you like them everywhere this year it is more nuances we like yem as a bar bell to u.s. as a growth versus defensive play >> hold on that, ben, because we want to get an update from eamon javers at the white house with possibly more about what we think we might be seeing. >> reporter: we're seeing the diplomatic reception room and you could see the bill there on the table. so this has all hallmarks of a bill signing and as i said, two sources tell me the president intends to sign the bill and likely make the argument he is doing this on national security grounds, despite his tweet threatening a veto suggesting he was frustrated over the daca fight with democrats and frustrated over the lack of spending in this bill for his wall nonetheless, two sources telling me that the president will sign this bill. he'll make a statement, we are
1:20 pm
told the pool of reporters has been brought into the room so there are a couple of reporters in the room who will shout some questions at the president but this has been a very uncertain day throughout the day today. and the immediate aftermath of the president's tweet today, i was in the upper press office in the west wing trying to get anybody to respond to me at all and give us a sense of what the strategy was here, what was going to happen and what president was thinking everybody was completely buttoned up. no comments across the board officials just not saying anything about this tweet which caught a lot of them by surprise given that white house officials were out in the hours and day beforehand saying that the president would, in fact, sign the bill so real confusion here leading up to this hastily called event in the diplomatic room at the white house and in which we're told the president will sign the bill >> i think we just got a clue. you can't see the view but they slid in a table where he tends to sign or do things. >> a big podium and a small
1:21 pm
table and a bill with a stack of about 1200 pages which i'm told the bill is from beginning to end and we await what -- >> are there pens on the table take a look and see if there are pens there that will tell you. >> i don't see any pens so far. >> my two sources say he will sign it. >> scissors. >> i'm sticking with those guys until otherwise informed they are wrong. but look, white house officials have been reluctant to comment or say anything throughout the day because they simply don't know what is in the mind of the president. they don't know what he's going to do from moment to moment and they don't want to be out in front of him predicting him so they've been buttoned up all day. it is a fascinating day here at the white house. >> i'll bet. thanks. >> you bet. we were talking about the market john, you also manage money. >> yep. >> we talked about china what do you think the market here as we watch this drama in washington unfold. >> it is a bizarre situation the fundamentals are stronger than dirt. revenue and earnings are rising but the first time since world
1:22 pm
war ii all acd countries have positive growth. i'm a happy guy. but in the elevator i heard four young guys talking about unicorns and block chains. this market is going too long now. there are too many amateurs that don't know what happen and so how high interest rates go, depending on how high inflation goes and pressure on both of the fronts and to michelle's point, the treasury will be sell being a trillion dollars of bonds a year the central banks will be selling about a trillion dollars of bonds a year. the private investor, if they bite into the inflation story will be sell being a trillion dollars -- and who will buy them there will be nobody home. >> and how much do you have to pay to attract those buyers. >> and this is a market whereas bob said, there is nothing under the surface, no volume under there to support a market if it cracks so we get this big sudden moves. that is the kind of condition when somebody can lose confidence and you can have --
1:23 pm
what we called last time a financial crisis these sudden moves are what to watch out for. i have more than half cash >> half cash >> is that the highest you've been if a while? >> yeah. >> okay. >> tim, a year ago the market stepped over everything. there was nothing that phased it this year there is a very different texture to what is going on >> right well, look, i think the good news from me and i've started to feel this really in the last 24 hours, certainly as i was watching japan trade last night is my sense is the complacency is left this market and i think that is very good. so what john is referring to, i think a lot of us were very uncomfortable with people thinking you could tie up the volatility of nine weeks ago in a nice neat little bow and keep moving once you got your 10% correction and equities are not cheap if the ten-year is at 3% and the volatility is at 20.
1:24 pm
and if you look at earnings in the next couple of quarters i'm sure they are fine but i can look at price to sales and price to book and say the market is not clean. having said all of that, i think the world's not a bad place. we are talking emerging markets. we're seeing eps revisions over the last nine months when you start to see a inflection point. that is great news i think it is about earnings and it is about other parts of the world that is also been talked about as -- you have a synchronized growth story that the trade announcements of the last two weeks will not change that we're talking about what is will happen from here but i think in the short-term, i like the fact that markets are nervous. >> ben, what do you make of what is happening here? especially when you hear what john rutledge says about rising interest rates and what it could do to the markets? >> i think i'll agree that global economy is fundamentally sound. i think one of the main differences this year is that we're seeing two-way risk around that so interest rates are a great
1:25 pm
example. you have the fed on the move responding to tightening labor market and a positive growth outlook. so i think three or four hikes is pretty much nailed on for this year. we don't see a lot of -- possibility that you get two hikes or five hikes. so that is happening i think we have to keep in mind that the pass-through of those rate hike news the long end of the yield curve has not been so complete and so we can see a world where the ten-year trades through 310 and 320. but there is still a lot of down side risk and inflation. you still have foreign buyers out there notwithstanding the risk -- >> and we have to interrupt you because president trump has just walked into the diplomatic room. let's listen to what he has to say. >> thank you very much, everybody. we have a lot of good news to report some tremendous trade deals are being made with various countries, we're negotiating
1:26 pm
very long, very hard but very quickly. and the deal with south korea according to secretary ross and bob light hiez ser ve-- lighthie to being finished and we'll have a wonderful deal with a wonderful ally we're getting close to it. it was a deal that was causing a lot of problems for our country in terms of employment and in terms of lots of other things. i might ask secretary ross to just say a few words about that and then we're going to get on to this ridiculous situation that took place over the last week so secretary ross. >> thank you, mr. president. we believe we are relatively close to a pretty comprehensive resolution with the south korean
1:27 pm
government it will encompass, if it goes through, both the 232s and broader trade issues and we hope by sometime next week to be able to have a real announcement >> thank you very much, wilber i appreciate it. the last time we negotiated something like this and as you know it is always a problem for our country. they get together and they create a series of documents that nobody has been able to read because it was -- it was just done. now you tell me who can read that quickly it takes a long time to read it. for last eight years, deep defense cuts have undermined our national security. how old -- and if you look at what is taken out, they've hallowed our readiness as a military unit and put america at really grave risk.
1:28 pm
my highest duty is to keep america safe nothing more important the omnibus bill reverses this dangerous defense as crazy as its been, as difficult as its been, as much opposition to the military as we've had from the democrats, and it has been tremendous i try to explain to them, the military is for republicans. and democrats, and everybody else it is for everybody. but we have tremendous opposition to creating really what will be the far -- by far the strongest military that we've ever had we've had that from the democrats. so if we take something for the military, they want something for -- in many cases things that are really a wasted sum of money. it is not right. and it is very bad for our country. we're looking to do funding for
1:29 pm
our final fight in certain areas as you know, we've gotten just about 100% of our land back from isis we have troop increases necessary to accomplish what we have to do and we have very importantly a pay increase for our troops and this will be actually the largest pay increase for our incredible people in over a decade it increases total defense spending by more than $60 billion from last year and funds the addition of critically needed chips and planes, helicopters and tanks and submarines we have submarines being built the likes of which there is nothing anywhere in the world like the submarines we build our military equipment is the best equipment in the world. and one of the things you saw two days ago with saudi arabia and with other countries, saudi arabia is an example is buying hundreds of billions of dollars worth of our equipment and we're getting very fast approval on that
1:30 pm
therefore as a matter of national security, i have signed this omnibus budget bill there are a the -- a lot of things i'm unhappy about in this bill there are a lot of things that we shouldn't have had in this bill but we were in a sense forced if we want to build our military, we were forced to have there are some things we should have in the bill but i say to congress, i will never sign another bill like this again i'm not going to do it again nobody read it it is only hours old some people don't even know -- $1.3 trillion. the second largest ever. president obama signed one that was actually larger which i'm sure he wasn't too happy with either but in this case, it became so big because we need to take care of our military and because the democrats don't believe in that,
1:31 pm
added things they wanted in order to get their votes we have to get rid of the filibuster rule. we have to get rid of the filibuster rule. and go to 51 votes in the senate if we're going to have really sustained continued success. daca recipients have been treated extremely badly. by the democrats we wanted to include daca. we wanted to have them in this bill 800,000 people and actually it could even be more and we wanted to include daca in this bill. the democrats would not do it. they would not do it to prevent the omnibus situation from ever happening again, i'm calling on congress to give me a line item veto for all government spending bills and the senate must end -- they must
1:32 pm
end the filibuster rule and get down to work we have to get a lot of great legislation approved and without the filibuster rule, it will happen just like magic i want to address the situation on border security which i call national defense i call it stopping drugs from pouring across our border. and i call it illegal immigration. it is all of those things. but national defenses are very important two words. because by having a strong border system, including a wall, we are in a position militarily that is very advantageous and before i get off of that subject, i would like to ask secretary mattis to talk about
1:33 pm
what we've accomplished in terms of the military. because there has never been anything like we've been able to do our military is very depleted. but it is rapidly getting better and in a short period of time it will be stronger than ever about. so i'd like to ask secretary mattis to saya few words, please >> thank you mr. president, thank you and ladies and gentlemen and in 1790 in georgia washington's first annual address to congress, he stated to be prepared for war is one of the most affective means of preserving the peace. as the president noted, today we received the largest military budget in history. reversing many years of decline and unpredictable funding. and together we are going to make our military stronger than ever we in the military are humbled and grateful to the american people for the sacrifices on behalf of this funding now it is our responsibility and
1:34 pm
the military to spend every dollar wisely in order to keep the trust and the confidence of the american people and the congress thank you. >> thank you very much thank you very much. the border we've worked very hard on. we have a lot of really by any standard, a lot but not by this standard, but we're going to make it go a long way. a lot of money coming to the border and it will be coming over a period of time. we funded the initial down payment of $1.6 billion. we're going to be starting work literally on monday on not only some new wall, not enough -- but we're working on that very quickly. but also fixing existing walls and existing acceptable fences there are some areas that you have to see through. you have to be able to see through the other side in order
1:35 pm
to see what is coming. and in many cases it is not a pretty picture when you look but you have to be able to see it so we have $1.6 billion for the wall that will start immediately. this is a short-term funding but it is immediate, starts immediately and i would like to ask secretary nealson to say a few words about what we've done in terms of homeland security and what the bill does for homeland security. thank you. >> good afternoon. we at the department of homeland security work very closely with the department of defense and we support this omnibus and the defense of our country as the president has stated under his leadership he has delivered for the american people this is a down payment on a border wall system this is a 10% increase for immigration and customs enforcement and this will help us improve our aviation security with badly needed upgrades and we look forward to working with
1:36 pm
congress on additional needs that we have i will say, however, that it is unfortunate that congress chose not to listen to the men and women of dhs and those on the front lines. they told us how to build the wall and where to build the wall and we'll continue to work with them to make sure that the wall is where we need it, how we need it, as the president described and to make sure that it serves the american people and serves the security of the nation and continuing to work can congress to close the loopholes the president has mentioned many times and to continue to increase our overall security. anl finally we think those in congress who support the department of homeland security, i will continue to make myself available to them. i look forward to working with them but we must fund the department and give it the tools and resources it needs to execute the mission the american people have asked us to do thank you. >> thank you very much, secretary. so we have many elements in the bill that we wanted.
1:37 pm
just to look at a few of them, we're providing $654.6 billion in total discretionary funding for defense. it is a record all records for defense. there will be nobody that says that our military is going to be depleted like they've been saying over the last -- long period of time long period of time. frankly beyond president obama that won't be happening. we're spending a lot of money on nuclear -- our nuclear systems to upgrade and in some cases brand-new, whether it is submarines, nuclear submarines and others so we'll have by far the most powerful nuclear force on earth and it will be absolutely in
1:38 pm
perfect shape and condition and hopefully praise be to god we don't ever have to use it. but there will be nobody that is even close this will give a substantial increase to people even outside of the military. but military-related some of the many things that we're buying in the military, we have $23.8 billion to procure 34 navy ships and our navy is at about the lowest point in terms of ships that it has been in over a hundred years and we're adding a significant number of extremely advanced vessels. $10.2 billion for 90 f-35
1:39 pm
aircraft that is the most sophisticated aircraft in the world. jet fighters total stealth. they are hard to find. they're hard to see. therefore they are hard to beat. it is tough to beat a plane when you can't see it this is the most advanced in the world. $10.2 billion for 90 f-35. we have $2.9 billion for 15 kc 46 tanker aircraft the tanker aircraft is very important based on everything. it allows our planes to travel anywhere in the world without landing. $1.8 billion for 24 fa-18 ef superhornet aircraft fighter jets $1.7 billion for ten pa -- the poseidon incredible stuff $1.1 billion for 56 uh 60
1:40 pm
blackhawk helicopters, the most advanced helicopter in the world by far, a fighting machine $1.1 billion for the upgrade of 85 abrams tanks. $705 million for the cooperative programs that we're working with israel and others on various missile defense systems. we're spending a lot of money on missile defense. we have a lot of offense that has been recently installed. we're spending tremendous amount of money on missile defense. you understand what that means, everybody does with what we have out there. missile defense is very, very important. we are funding our border patrol agents and our i.c.e. agents they are working long hours under tremendously dangerous conditions we're adding large numbers of
1:41 pm
immigration judges high quality judges. not only are we adding them in the district court level and the federal level of court of appeals, but we're adding immigration judges at a very high level so while we're very disappointed in the $1.3 trillion, nobody more disappointed than me, because the number is so large it will start coming down. we had no choice but to fund our military because we have to have by far the strongest military in the world. and this will be by far the strongest military that we've ever had so when you look at all of these pages, a lot of that is devoted -- a lot to the military i just want to thank members of congress for working so hard, while we can be disappointed in
1:42 pm
some ways, we have to also know that there are a lot of strings pulling everybody in different directions the republican senators, the republican congressmen and women have been steadfast on their fight for the border and steadfast for their fight on the military we're also spending $6 billion on, as you know, various forms of drug control, helping people that are addicted. it's a terrible problem. but this will be also -- this will be a record we'll be suing certain drug companies for what they've done with the opioids and we'll be bringing the suits at a federal level the level of drugs that are being put out there and the
1:43 pm
power of this addition is hard to believe people go to the hospital for a period of a week and they come out and they're drug addicts there has to be a better way doctors are way down in their orders of the opioids. way down that is a great thing. we're also looking for -- and in our research funds, looking for a medicine that can stop the pain without the addiction so that people aren't going to become addicted to these incredible drugs so that is part of what we have. we'll have $6 billion in having to do with opioids and other problems that this country -- and in fact the world is having with drugs so we're extremely proud of what we've been able to do when it comes to our military. our military will be far superior than to my military anywhere in the world.
1:44 pm
that is important. you see the players out there and you see what we're dealing with we are very happy with what is happened with opioids. we're very happy with what happened with certain elements of the border. not happy with $1.6 billion, but it does start the wall and we will make that $1.6 billion go very, very far it is going to go very far i can tell this, and i say this to daca recipients, that the republicans are with you, they want to get your situation taken care of. the democrats fought us. they just fought every single inch of the way. they did not want daca in this bill and as you know, daca is also tied to the wall for the major funding. the $25 billion for wall and other things so i think that will be coming up very soon
1:45 pm
but i do want the hispanic community to know and daca recipients to knowthat republicans are much more on your side than the democrats who are using you for their own purposes with that being said, i just want to thank everybody for being here we're very proud of many of the items that we've been able to get. we're very disappointed that in order to fund the military, we had to give up things where we consider in many cases them to be bad or them to be a waste of money. but that is the way, unfortunately, right now the system works but we have a great country. we are going to have the greatest military we've ever had. and lots of good things are happening. the trade situation will be talking about next week. we have many trade deals
1:46 pm
not only the deal being made on south korea, which looks like it is very close to being finalized, but many other countries are now negotiating fair trade deals with us so we'll be rolling them out as you see them and part of the reason frankly that we're able to do that is the fact that we have the tariffs on steel and the tariffs on aluminum. because it showed how unfair some of the trade deals that have been in existence for many years, how unfair they've been so it will be great for our country and frankly it will also be great for other countries and it will be fair and it will be reciprocal. thank you all very much. i appreciate it. thank you. >> mr. president -- [ inaudible question ] >> you'll figure it out in about 20 minutes after you look at it. you'll figure that out and we looked at a veto and looked very seriously at the veto and think being doing the veto
1:47 pm
but because of the incredible gains that we've been able to make for the military, that overrode any of our thinking >> how concerned are you about the impact of the tariffs on the stock market and -- >> well i think the stock market is going to be great and the stock market is way up when i came in to office, the stock market was from a different planet it is way up china is going to end up treating us fairly for many years they had free rein and they don't have free rein any more. we have great relationships with china. and it is time it is time last year we lost $500 billion offer trade with china we can't let that happen thank you all very much. >> and there goes president trump. his last answer there, i think the stock market is going to be great. china is going to end up treating us fairly and we have great relationships with china in response to a question about the imposition of
1:48 pm
tariffs on chinese-made goods. the president signing a 2200 page omnibus spending bill sort of with -- over his own objections to certain parts of it most notably what he regards as an insufficient down payment on a border wall of $1.6 billion. but he said that while he considered vetoing this bill, his instincts were overridden by the good in the bill, specifically the large increases in military spending for equipment and a substantial pay raise the first in many years of scale for people who are in the military let's continue to talk about this with john rutledge and steve liesman and tim is still there and eamon javers what did you hear -- you heard what we heard there. he took really no questions other than on his way out, one
1:49 pm
about the tariffs. >> reporter: not exactly a news conference as this event was billed if you don't take questions until you are off mike and walking out of the room. but nonetheless, the president signing the bill and that tracted with what my sources were saying ahead of the event, the president would sign it and cast it as a national security decision but he put himself into a political box by tweeting out that veto threat after the bill had already passed the house and the senate and after members of congress had already left town. there was no possibility for him to negotiate for a better deal once he put that veto threat out there. he was stuck in a situation after he put that threat on twitter to either sign the bill or allow for a government shutdown that he would take sole political blame for so as a result the white house was looking for a way to sign this and do it for a demonstration of strength and you saw that exactly. the president flanked by his defense secretary mattis, by the homeland security secretary as well in the room
1:50 pm
both framing this very much as a needed measure for the u.s. military the president boasting this is a record amount of spending for the united states military but also expressing enormous frustration with congress, calling for an end to the filibuster because he needed 60done, and v with that. given that he had to give some concessions to democrats also an interesting point that almost slipped by there. the president said that the u.s. government is going to be suing drug companies because of what thigh they have done on opioids and saying they'll file the suits in federal court not clear when that's going to happen but that's another potential piece of news in the event we saw >> he also made plain something prior presidents have talked about, he wants a line item veto he's not going to get it >> congress has the power of the purse, and they like to have the power of the purse, and they're not going to give it to him. >> a quick google search suggests it might not be constitutional >> steve liesman, let me ask you this question. you have obviously read the 2300 pages of this bill
1:51 pm
>> committed to memory >> committed to memory would any republican have voted for it if barack obama were president >> no. no, almost certainly not >> there were republican dissenters here from the freedom caucus rand paul and others >> i think you're bringing up a great point, tyler, which is the context of what just happened, the president signed a bill that he called ridiculous i'm not quite sure if it's right to read into his comments to say he didn't read it. that he is in dramatic opposition to it so why did that whole theater take place it takes place because of the extremely strong opposition to this bill on the president's right. if you go out and read what's going on in twitter land right now about this bill, i read one tweet that said, we're done with magga. no possibility anymore they call it a betrayal, this
1:52 pm
bill mind you, and eamon will correct me if i have the numbers wrong $140 billion increase of which $80 billion is for the military and $60 billion is for domestic programs the $60 billion includes the $1.6 billion of the wall he didn't say what he didn't like in the bill that he criticized, so that was another political thing there, but he didn't get his $25 billion for the wall that's the thing, it sounds like from reading press records and hearing other reporting that he is most upset about. >> shocking, shocking that ultimately when push comes to shove, doesn't matter what party politicians come from, you put them all together, and they all agree to spend a lot more money. >> well, if you believe president trump, he's not going to sign another bill like this, even though congress is going to be in the same place after the end of this fiscal year on september 30th but i think what this press conference or press availability, if you will,
1:53 pm
showed is that president trump has been about this bill all week long. earlier this week, house speaker paul ryan had to go to white house to make case to the president directly secretary mattis was at the senate policy republican lunch this week talking about the benefits for the military and trying to drum up support amongst that sort of conservative flank in the republican party so there's been a lot of divisions amongst republicans on this bill. so not surprising that the president himself would be using words like disappointed, crazy, ridiculous, wasted sums of money during his speech. >> at the same time, using steve's analysis about what border wall funding has meant to president trump's candidacy when he was running for president and now, does this maybe show that the president is showing some signs of reason, maybe by signing this bill and not just rejecting it. we're watching the markets the dow is now up by six tenths
1:54 pm
of a persnlt >> he couldn't not sign this bill this is 75% of that speech was marketing. there's a lot of partisan stuff in it. >> an hour ago, though, we were all sitting here,obe maybe more, we were wondering if it was going to be a confirmation of the tweet heent earlier today. we didn't know he would sign the bill >> it's very important the president blew it on this one in the following way he should never, ever be in a position, if he uses his political party correct in congress, of being the one that gives a thumbs up or a thumbs down on the closing of the government right? that should be something that never gets to him being a binary choice it never happened. eamon, i'm sure, knows the history of it. >> but his willingness to agree to this shows a degree of pragmatism his wall isn't there, and he signed it anyway maybe he was forced to do it, but he did it.
1:55 pm
>> pragmatism card, definitely, he's getting more pragmatic, and that happens to every president. they get people around that help them actually decide things. but the fact is, this is -- we use the national defense card, and we use the daca card those are both red flags for different groups that are really marketing things >> i think the question here is not really should the president use his veto threat? that's the president's prerogative, but it's the timing of which this threat came out. they have been in negotiations for this bill for weeks, and the president is just now this morning after his administration had been out publicly guaranteeing that the president would sign the bill, saying now he's having second thoughts. we have reporting here from nbc news that says a democratic aide just called the president's remarks the craziest damn thing i have ever seen the fact he issued the veto threat after both the house and the senate in a bipartisan manner had already passed it, that's the part that caught
1:56 pm
everybody off guard. >> beyond that is the theater here, right? i mean, he got up there. he signed the bill but he's very critical of the bill i continue to maintain a lot of this has to do with what's going on on his far right there, when it comes to the house freedom caucus and those folks that are out there. but i don't know maybe he played it okay here >> steve, all you have to do is ask, if he did veto it, what would happen an hour later we can't not have the government - >> what is on the tv the tv is the president lambasting the bill. what happened in reality the government didn't close. >> absolutely. the bottom line of all this is there is no -- >> it's crazy but it worked out. >> there hasn't been a budget process for long time. >> i think steve is making the same exact point you are it's theater a lot of theater to try to defend himself and marketing absolutely all right, guys. thank you, john. thank you, steve thanks, ylan >> another big hour of "power" ahead. the dow swinging in and out of correction territory it's up 130 points
1:57 pm
carving out decent gains all three averages on track for their worst week in six. there are two new leaders emerging, however, in the volatility we'll tell you about them and the stocks leading the way after a quick eabrk. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.
1:58 pm
1:59 pm
2:00 pm
i'm melissa lee. here's what's on the menu. president trump moments ago announcing his signed the spending bill. he said this is the last time he'll do this. markets are surging at this hour, recovering from the red side, as the dow is up triple digits from food to pork to wine to steel pipes. china fires a warning shot at the u.s., saying they're ready to impose their own tariffs on more than 100 product. could other countries follow suit and fight back against our actions? >> and the tech wreck from semis to social media to big names, the sector taking a beating. is this a big buying opportunity or is there more pain to come? "power lunch" starts right now >> what a busy day, what a busy week welcome, everybody to hour two of "power lunch. i'm tyler mathisen volatile trading session for stocks dow trading in a 270-point range today. dipping in, dipping out of correction territory
2:01 pm
now heading towards session highs, as you see right there. up about 150 points. do i see 151 financials and utilities are your laggards. energy, consumer staples leading the way. defense stocks doing well. nike, boeing, sysco, now your dow leaders. nike reporting better than experted earnings, dow, dupont, 3m, some laggards. >> dropbox soaring on its first da of trading. there you see it up 40% on the day. a nice debut for dropbox >> the president signing the $1.3 trillion omnibus spending bill in the past hour. eamon javers is at the white house with more, even though we didn't see him physically sign it, but i assume he did. >> he said he had signed it, so we'll take his word. but the president, after hours of uncertainty and anxiety here at the white house, after issuing that last-minute veto threat this morning, the
2:02 pm
president said he had signed the bill even though he was frustrated with the process, frustrated with some of what was in it and not in it, but ultimately, he said it came down to a matter of national security. here's what the president said just moments ago >> it's a matter of national security, i have signed this omnibus budget bill. there are a lot of things i'm unhappy about in this bill there are a lot of things that we shouldn't have had in this bill, but we were in a sense forced, if we want to build our military, we were forced to have there are some things we should have in the bill but i say to congress, i will never sign another bill like this again i'm not going to do it again >> now, on his way out of this event, which was billed as a news conference, the president did take a couple questions from reporters as he headed for the doorb. one of those questions was about his assessment of the stock market in the wake of his new tariffs on china, whether he was concerned at all about the
2:03 pm
impact on stock values here's what the president said >> i think the stock market is going to be great. the stock market is way up when i came into office, the stock market was from a different planet it's way up. china is going to end up treating us fairly for many years, they had free reign. they don't have free reign anymore. we're friendly with china, we have great relationships with china. and look, it's time. >> another piece of news there, michelle, is that the president said the federal government would be suing some drug companies over their role in the opioid crisis. so we'll wait for some more details from the white house on what exactly that portends for certain drug companies the president didn't name them we'll wait and see that should bring an end to what has been a very busy week at the white house. >> certainly has >> we had some interesting reaction, initially at least, in terms of cardinal health and mckesson they went to session lows for their possible role in the opioid crisis. they're back now
2:04 pm
let's get back to the markets. we have seen an overall reversal in the markets bob, the last time we talked to you, you said you can't get a market to move higher understand you have the participation of financials and technology. it feels right now like they're trying we had a big reversal in apple while the president was talking. >> they're trying, but they're still mostly to the down side. so what we have seen, market leaders this month, utilities, real estate investment trusts, they're like 5% of the market. without tech, without financials, you can't move forward. that's about 40% of the market besides trade protectionism, you have fed policy, raising rates somewhat more aggressively certainly in 2019. then we have all the chaos of washington you know, mike, for everybody who says, oh, washington doesn't matter the market rose as the president came on and said i'm signing the omnibus bill you think why would that move things, but it did matter. >> within an hour, without a doubt, this is a market that's more twitchy toward headlines in general than it was last year.
2:05 pm
and so i do think that's why it seems like it's a little more unsteady today the s&p, talking about it bouncing, but barely at all above the flat line right now. you lost 70 points on the s&p yesterday. 40 points in one day earlier this week. so the market is obviously traveling around the lower part of this range we have been in for two months, trying to see if we actually find firmage yesterday, for how dramatic the drop was, not a lot of intensity behind it. the volatility index didn't shoot through 25 or anything like that. i don't know if it's good or bad. >> it means that there is not a lot of intense selling pressure, but the buyers are just walking away i think the big question, we all cannot resolve is exactly how much impact on earnings growth will any trade protectionism be, because we don't know the extent of it. we're expecting 20% earnings growth every single quarter. that's remarkable this year. that's why the market is up.
2:06 pm
you tell me exactly what the impact, even on boeing, is going to be on trade protectionism i can give you a model other than that, who knows that's why you're getting the volatility >> i also think in the backdrop is this idea that the pace of earnings growth, we can probably see the peak it's not right here. and trade is a psychological factor that's going to tell you whether you're at a peak plus, here and now is this short-term funding issues in the banks, that's what's been weighing on the financial sector and that's something that probably has to work its way through. we have quarter end next week. i don't know if it's going to exacerbate it or not >> he wants to start talking about libor. >> i was just looking at deutsche bank. it's down 11.5% week to date >> you, too. >> short term funding costs. thank you. gentlemen, the dow moving out of correction territory in the last hour. it's in, it's out. it's up, it's down now up triple digits, near session highs. what is driving -- what is not driving the market let's bring in brian, chief investment strategist with bmo
2:07 pm
richard bernstein, ceo and cio, he has two hats, richard bernstein advisers, and todd gordon, cnbc contributor and founder of richard, let me begin by asking you, how worried you are if you are, about incipient inflation and rising interest rates, not just because the fed is nudging them higher, but because there's a lot more bonds out there that are going to need to be sold >> tyler, i think you have hit the nail on the head that is the issue i think that's driving everything behind the scenes right now i think volatility is one thing, but nobody
2:08 pm
and so when you get these thousands of volatility, a lot of times they are related to inflation. for instance, tariffs. >> brian, your thoughts? >> i think, of course, rich is right. i think the biggest problem is that we have had no inflation and interest rates going down for 36 years you can't change behavior. you can't change behavior of a client and accounts that fire aim ready at every single type of news avent or fluctuations in the markets. i think the biggest problem with investors is nobody knows how to
2:09 pm
be a fundamental investor anymore. no one understands what we like to call the circle of life interest rate goes up, the dollar goes up we haven't seen a situation like this 6 the 'nienltsz, before that, the '60s we continue to think we're heading into a high-quality large cap value driven market that favors clearly favors technology to some degree, but also favors things like financials, which we think that our clients around the world are massively underweight still, and not playing that, and not understanding the fundamental attributes with how strong a theme of wealth management in commercial banking one thing rich talked about in terms of interest rates heading higher, no one is talking about the great rotation anymore, and we think dividend income, but more importantly, dividend growth as a secular trend for the next ten years how many people you talk to talk about a ten-year theme >> i want to get todd in here. what do the charts spell out in
2:10 pm
terms of the s&p 500 and what do they show? has there been significant damage to the leadership groups in the past few days >> there absolutely has. if you look at just below index level, the below the dow, s&p, and nasdaq, that's where you get a read of the market, and there's one, xlk, which is technology everything else is below we're seeing a major loss in leadership it's something, obviously, the break of a 38-year up trend in bonds. bonds selling off, yields going up i don't think it's infla inflakzflationary as a reason. why is xlb on the lows i understand oil is going up, but in terms of inflation, i don't think bonds are moving up. >> what key levels are you watching in the s&p right now? >> it has been deliberate, smooth, it hasn't been capitulatory, is it a word >> it is today >> we know what you mean >> i see the downside around
2:11 pm
2480 to 70 that's the 200 day moving average. if you look at the charts in terms of the up trend over the last since 2010, the support level would be just around 2500. i think we need a good solid push down. >> so -- >> absolutely. i have actually pulled some in the bounce we saw just now, saying the dow has come roaring back it's more of a technical bounce. the russell is still down, the nasdaq is down >> rich, what should i do with my money we heard in the last hour, john rutledge saying he's at a higher level of cash than he's been in many years above 50%. i think he said 60%. what should i do with my money >> well, first thing i would do, tyler, is i would tell investors to stop watching the drama of washington if you think about what's going on, we knew that they would pass tax reform we knew that they would pass some kind of fiscal spending for the midterms we knew this was all coming.
2:12 pm
we even knew the president was really going to sign the bill today, right but what happens is he doesn't want the government to close ultimately, what we get is a law of drama, put the fundamentals are what drives the market, and the fundamentals are still quite good what i would do in structuring a portfolio is try to take advantage of the sectors that benefit from the improvement in nominal growth don't think about real growth, think about nominal groetninal , meaning real plus inflation. that would be things like material, like financials. that would be cyclicals in general, industrials all these kinds of stocks are what would benefit >> thank you guys. brian, todd, and rich. >> so here's what else is coming up on "power lunch." we were just talking about industrials with richard bernstein. they're getting hit hard today on fears of a trade war. an overdone sell-off or could it continue maybe they're recovering >> they're higher right now. >> higher right now. plus, melissa shakes her head.
2:13 pm
incorrect. >> they're changing quickly. >> the view from the corner office coming up the results of our exclusive cfo survey shows cfos are getting more cautious. te y w a wt ndha their number one concern is. and what does technology's terrible week mean for the sector long term we'll debate that and more coming up on "power lunch. ♪ cfa charterholders have proven themselves by passing
2:14 pm
one of the most rigorous exams in the world. demand the best. demand a cfa charterholder. cfa institute. let's measure up.
2:15 pm
you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, 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.
2:16 pm
we have thoughts from daniel rosen, good to vuio here, dan. >> great to be back. >> do you agree with the assessment, a lot of people in papers are reading this is maershed response from china is it, and why would it be >> i have breaking news for you. people are still operating with tremendous amount of confusion here the announcement the chinese put on the table today of these countertariffs are not actually connected to the 301 case the president signed yesterday what the chinese are talking about presently is connected to the steel and aluminum tariffs that were announced a couple weeks back, and finally, the exemption list became clearer this week. so $3 billion of american goods the chinese are targeted is tied to about $3 billion of chinese
2:17 pm
metal, steel and aluminum, getting hit by the united states as you noted, the president is talking in the 301 case about targeting up to $60 billion worth of chinese products coming into the u.s and you can expect the chinese, once we know what the list actually includes, to target a proportionally large amount of american stuff so this is something your viewers really need to understand >> that is a really important distinction you have just made there, because $3 billion sounds very moderate in response to what was discussed yesterday so you clearly think that something more proportional, if indeed we go through with $60 billion in tariffs applied to a whole array of chinese goods, consumer goods and others, you think that the proportionate response will be on the order of $60 billion. >> i'll bet anybody on it. i'll start right here with you guys if you brought your wallets with you one other thing to point out the value of the tariff that we
2:18 pm
threaten to impose on china yesterday is not actually $60 billion either $60 billion is the value of the chinese goods coming in to the u.s. which we're going to put a tariff of 25% on will that stop all that chinese product from coming into america? that depends on what the products are if china is the only place that's making that product, then we don't have any choice but to keep importing it at a higher price to americans so it's not actually going to keep it out. so the administration has done a really poor job, i think, in making clear exactly what it's doing, what the basis is, what the tariff is, and now we need to make sure people understand what the chinese are doing in response >> dan, then what should we do when it comes to the issue of intellectual property? >> now, look so this is -- you add a third thing, really important to understand here. while in a way the 301 decision
2:19 pm
finally came down after all the bluster and setup for it yesterday, was a little less than the most extreme version of that, that we thought might have been possible over the past month. but the fundamental problem that there are issues between not just china and the united states, but china and everyone in the advanced economy world, that invests their whole, you know, our pension savings in tomorrow's innovative breakthroughs, we have a problem with how china works the ultimate question is, will china let the market decide who is really earning their profits and returns on intellectual property investments and where is the government leaning in to help some companies and not oertsz that is not resolved at all by the trade action this white house is currently taking. they're making a first step, but there's a long way to go this is the enonly the first round in a ten-round story playing out over years and years
2:20 pm
to come. >> we'll have to have you back then >> i am afraid so. >> dan rosen >> melissa >> simmering trade war fears have been bouncing industrials the sector is down more than 3% this week. 7% in the past two months. now on pace for its second straight negative months for the first time since october of 2016 our next guest says there are ways to play this pullback we're joined by scott davis. welcome to "power lunch. good to have you with us you say the selling has been indiscriminate what struck you is you're making the point that whether or not industrials stocks are exposed to china, exposed to international sales or not, they're selling off in the same way. >> really bizarre. i looked at my screen yesterday and almost every stock i cover was down almost identical, 4%. it was like that all year with the exception of ge. everything has been trading together regardless of really the exposure to china or even those who benefit really from this protectionist action >> in terms of the things you
2:21 pm
see benefitting this group to come, i would imagine tax reform is going to be a huge one, right? >> yeah. well look, you have all this money coming back to the states. you have this on-shoring trend is real. hundreds of billions of dollars that will be spent, whether it's on the factory floor, on buildings, whether it's just upgrades the information companies, the robotics, they benefit anybody involved in infrastructure if you look back past the next couple months of choppy trading, these make sense >> in the notion that companies might start dismantling themselves or as you like to call it, deconglomeration. >> when you think about what ge is going to look like in five years versus now, it's probably way different. you're seeing it already with companies like honeywell spinning off major assets. united technologies will be soon siemens spun off its health business it's lots of things going on to create more interesting pure plays, if you will >> sure, and the trade has been
2:22 pm
underestimating the value of the companies that are spun off. >> yeah, our data shows that the average spin-off outperforms the parent and the s&p 500 by 2x if you just buy the spin-off and hold those aloenl, you'll make money. >> all that said, what are your top picks? >> on this pullback, we love emerson. a great story to look at we love rockwell animation 100% animation company honeywell is a big beneficiary and you know, ge is flat on its tail hard to ignore that story. >> what is the thinking behind the idea that everybody is going to benefit no matter what happens? >> we have a view that localization is the next big trend. globalization was about the last 20 years the supply chains are stretched now all across the world the supply chains are now getting risky. to risk mitigate, you need to bring the supply backs locally and build plants here in the
2:23 pm
states to do it. the investment spend is going to be massive your average install base is 23 years old in the country >> has to be an upgrade as well. >> scott davis >> tyler >> let's draw your attention to the dow. when we began this hour, up 150 points it is now negative doesn't take long. now down 26, as you see right there. where do cfos want to see the government spend your taxpayer dollars this year? we have the results of our exclusive cnbc survey. that is straight ahead plus, as many overseas markets edge into correction territory, we will telyou l which global plays may be primed to bounce back but you have to stay with "power lunch" to get it we can't predict what tomorrow will bring. but our comprehensive approach to financial planning can help make sure you're prepared for what's expected and even what's not. and that kind of financial confidence can help you sleep better at night.
2:24 pm
with the right financial advisor, life can be brilliant.
2:25 pm
2:26 pm
welcome back to "power lunch. i'm leslie picker. we have a market flash on dell they just filed for an initial public offering. the company provides a cloud needed platform to make cloud computing easier at the enterprise level it was once a jv of vmware and became part of dell after the emc accusation both dell and vm were spiking on the news but have come down
2:27 pm
since it first was filed there back over to you >> thank you very much, leslie >> cnbc top cfos what worries them, what they would like to see from washington, and where they see the market going from here jackie deangelis joins us now with the cnbc global cfo counsel survey >> good afternoon. what we found is there's definitely a shift in tone this quarter. and the cfos we surveyed, the majority of them, almost 30%, said u.s. trade policy is the biggest external risk to their business right now only one of the 38 respondents said their company actually supports blanket tariffs on steel and aluminum imports what was interesting was the comments here. it's a bad policy. a trade tariff war should be avoided. and the indirect impact from retaliation could be significant. at the same time, the majority of those cfosts the impact of the tariff would only be slightly negative on their businesses overall on the economy, a pointed change here while in the past, cfos thought
2:28 pm
stocks would go higher before they go lower, this time, almost half of those surveyed say they think the dow will fall under 23,000 before it crosses 27,000 for the first time on the fed, they're thinking three quarters of rate hikes, and where investors could find growth, almost half still think it's technology. that's the sector that outperforms. with tax reform behind the administration, 30% of the cfos said their companies will use those savings for buybacks as for what's next on the trump agenda, almost half think infrastructure spending should be the number one priority this year for full reports, head to >> the business world lost a legendary figure today wayne huizenga passed away at the age of 80. we'll look at the life and legacy of a man who started three fortune 500 companies and was often seen rhteronig he cnbc we'll be right back.
2:29 pm
2:30 pm
2:31 pm
2:32 pm
i'm sue herera here's your cnbc news update at this hour. support for tougher gun control is rising in the u.s a new poll by the associated press and norc center for public affairs research reveals nearly 7 in 10 adults favor stricter measures the strongest since the a.p. first asked that question five years ago. the poll released one day before the march for our lives rally in washington and around the world >> elon musk has deleted the facebook pages for his company's tesla and spacex the billionaire making the move after being challenged to do so by a few of his twitter followers. >> the latest on america's waistline is not good. new data from the centers for disease control shows nearly 40% of u.s. adults qualify as obese. and that is up from 33% ten years ago. >> and pga golfer shawn stefani hitting a memerant shot today at a championship in the dominican
2:33 pm
republic he made a hole in one. but he had kind of a delayed reaction and celebration, because he didn't realize it went in until a television news cameraman told him it went in there you go you got it that's the news update this hour back to you guys >> a hole in one is good no matter when you learn about it >> no matter when you hear about it, absolutely true. >> sue, thank you. today, american business lost one of its visionaries. wayne huizenga died at the age of 80. born in chicago in 1937 and moved to florida as a teenager after a stint in the army, he began building a business and sports empire. created waste management, auto nation, as well as blockbuster video. extended stay america, republic services and more. he also had a major impact on the sports theme down in florida. he was a founding owner of both the florida marlins and the florida panthers he also owned the miami dolphins for a while, and for one five-year period, he owned all three of those
2:34 pm
beyond the business and sports, he was known as one of south florida's and the country's biggest philanthropists. joining us nuto look back on the life of wayne huizenga is mike jackson. wayne was a mentor to him, a boss, and a friend our sympathies to you over the loss of your friend, wayne how did he do it how did he keep creating businesses and build them into national scale brands the way he did? >> well, i would say first and foremost, wayne had this infectious enthusiasm for life that included family, friends, business, sports, community. that if you were near wayne, you just got caught up into it so then when you say, well, how does that apply to business? he had a keen intellect, a tremendous sense of humor. he was driven. everybody had to work as hard as he did but it was so much fun, you
2:35 pm
didn't care. and wayne was always looking for win-win. he wanted to create jobs for his workers and employees. he wanted to create wealth for his investors. and he wanted those who worked with him to have fun and make a lot of money that's an outstanding formula to succeed. now, the other interesting motto of wayne, and it's ironic coming from a billionaire, but he constantly told me, mike, don't get greedy don't get greedy just look for win-win. be fair. take some off the table when it's reasonable. and that's how he lived his whole life and it created countless friends, great success, and endless business >> he gave you your job you have right now, right >> yes he did i was -- almost 20 years ago, i was the ceo of mercedes for the
2:36 pm
americas i was in the frankfurt auto show, and wayne and i talked a few times about my joining auto nation he called me with the time change, he didn't realize or didn't care, 2:00 in the morning, and said mike, i made up my mind you're the next ceo of auto nation i said i'll be back in the states in a few days and we'll get together he said no, no, i sent you a fax. it's an offer you can't refuse it's downstairs. please get it and call me back i put my jeans on, get this fax, and sure enough, it was an offer i couldn't refuse. and i called him back and said okay, wayne. i'm your guy but that's how he did it and again, it was an interesting test because if i had asked for more when he made such a gracious, generous offer, that would have been a mistake. he didn't like greedy people but if he was fair and generous, he was looking for a yes and my attitude was, you know, he's one of the greatest entrepreneurs ever i would do it for free it's going to be magic or
2:37 pm
tragic and it's turned out to be all magic. and i'm forever grateful for those -- for these 20 years i had with wayne >> what is the greatest piece of advice wayne has given to you that you use as ceo today? >> well, it's interesting. it goes like this. we have a room called the conference room called the founders room. my view is, and everyone in the company's view is, we'll have many ceos in the history of auto nation, but we will always only have one founder that's our wayne and we have his portrait on the wall and we have meetings in there consta constantly whenever we get stuck on an issue, we all go, well, what would wayne do we stare at the portrait for a few minutes. and it unleashes another whole round of creativity and thinking beyond the wouboundaries of what you could normally imagine from that, you take the discussion to another whole level, another dynamic and come to a much better conclusion.
2:38 pm
that was wayne's added value, was his creativity and how to think about issues and that was very special. and we still have it to this day, we still do it. >> mike, thank you for your reminiscen reminiscences. our sympathies to you. we're glad you took the job and happier you put your jeans on before you went down to pick up the fax. >> that's an image >> thanks very much. >> straight ahead, been a brutal week for technology. we're going to talk you through the opportunities and the menas to stay away from in the tech wreck. don't move because "power lunch" is coming back right now let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade.
2:39 pm
the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.
2:40 pm
...with its high-tech cameras and radar... ...contemporary cockpit... ...three hundred and sixty degree network of driver-assist technologies... ...and sporty performance... ...what's most impressive about the glc?
2:41 pm
all depends on your point of view. lease the glc300 for just $449 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. well, it was another night of up sets in march madness. number 11 seed loyal of chicago knocked off nevada 69-68 exciting late basket there they'll face a number nine seed, kansas state it took out kentucky, which i think was a four seed. it means that all of us get at least a couple more days to enjoy sister jean. that's loyola's 98-year-old team chaplain she's been a fixture on the sidelines at their games and has
2:42 pm
been there doing it for decades. there she is >> all right got to root for loyola, i guess. no, i'm told i have to root for syracuse because our producer paul is a syracuse guy i'm sure none of you had loyola versus kansas stay i had virginia, you know that, i'm out. just because your bracket is busted doesn't mean you're out of the action. there's a new way to get in on march madness and it could be the key to resurrecting tv ratings particularly for sports. joining us is cnbc contributor and executive chairman of win view games, tom rogers always great to see you. a lot to cover today, but let's focus on winview, and basically, as i understand it, it's a way for me to play along and use my knowledge and a little bit of luck and make some money in real time as i watch, let's say, tonight's ncaa games
2:43 pm
explain to me how it works >> you got it, tyler thanks for having me well, winview is a way to watch your favorite sports on television obviously, everybody is going to be consumed by march madness and you play along on your smartphone while you watch tv live predicting the answers to questions about what's going to happen next in the game. there's really no luck in it it's a real game of skill. the better you know the game, the better you'll do say in a half of ncaa basketball, you'll get about 20 or 25 questions. and the better you do, the more cash you can win the normal way you play is we have free games, or we have rooms where you can play with an entry fee of $2 going up to $100 and it could be a room of 20 to 25 people. and a lot of the rooms, half the people are winners, half are losers, but pretty good chances of being able to win based on what we call your sports iq.
2:44 pm
>> so do you -- does winview drive the questions out to the users of the cell phones in other words, who's going to get the next turnover? is it duke or syracuse >> we have two producers every game who are watching the game along with viewers, and they're pushing out the questions. and the way we have the integrity of the game and the way the app works, which you can do download either for apple phones or androids, is that there's a lock out that occurs, so that you can't enter your answer before you have seen the action on the set and that way we maintain the integrity of the contest and it's great it really creates a social experience, engages you. you can create your own room with family and friends. or play in a room where real cash is at stake now, the march madness element of this is, everybody has busted brackets and so people are thinking, hey, what's the point i can't win the pool well, we got a new tournament
2:45 pm
based on your playing the remainder of the sweet 16 and the elite 8. the top 64 people will get some money for qualifying as the top 64 and then you go into a tournament for $5,000, where the top winners of each of the brackets will qualify to play the final game where you can split up the $5,000 winnings even bigger is the perfect game opportunity we have. somebody won it last week in an nba game $20,000, if you get every question right over the course of a half of one of the games, either in the final four or the final game so a number of ways to play and win. >> someone won $20,000 that's pretty good so you describe this as a game where you can use your sports iq to increase your odds. so you would suggest this is a game of -- these are games of skill, not of chance
2:46 pm
so where does this product come down on that spectrum of people saying this is agame of chance and therefore there are legal impediments to it? >> well, we have all kinds of empirical studies to show that it's a game of skill and when you see the number of people who win over and over, the skill rises to the top based on really how good your insight is even if you don't win and you have good chance of winning some cash here, given the various ways the games have been constructed, it's a lot of fun it's a great social experience and after a terrible week in the market, it's a way to possibly earn a little back, particularly if you play the higher level rooms. >> or if you're a virginia fan, as i am, it was a terrible week. this could maybe make me happier. >> my new daughter-in-law is a duke varsity athlete, and she's convinced me duke is going all the way. that's how i'm playing it. >> she may be right. tom rogers, thanks
2:47 pm
from winview games >> thanks very much. it's been a rough week for tech, all across the board from the fang stocks to the chips the question, will the volatility continue? joining us is jean munster good to have you with us >> hi. >> let's tackle facebook first how bad do you feel like this could get? i feel like at the beginning of the week and maybe a couple days in, a lot of analysts are saying advertisers are sticky they have nowhere else to go so facebook won't in the long term suffer even though its the short term it may suffer in terms of the stock price what do you think? >> my thoughts on this are evolving towards the negative side at first, i thought this was about data integrity and privacy and all that stuff that would be dealt with, and facebook has taken the appropriate steps to deal with legislators around that, but i think the bigger question around facebook is what utility does it give the world and specifically, when you have a product where parents don't want their kids on the product,
2:48 pm
that essentially leverages what is core to every teenager's worst fear, which is popularity and harnesses that, i think that that creates a problem and i think that this, the tone and the conversation around facebook in the next year is going to evolve away from a privacy story towards a do we need social media more broadly >> wow, that would be pretty significant. that would be a big shift in the whole thinking of society. i mean, i hate to segue from such a deep thought to the following question, which is, so then therefore, does it deserve a lower multiple i mean - >> potentially this is something we're kind of working through, too and i think there is -- the counter to this is that this is a drug essentially, and younger people are hooked on it. as they grow up, they'll continue to be hooked on it, and enough said. i'm 46 years old, but now i'm too old to understand that and let's let it be and this will continue on. that's most likely what will
2:49 pm
happen, but this greater awareness of what is really behind it is going to happen i love apple stock i think that they're going to continue to do well, but they may face some of the same questions around screen addiction, too but i think that facebook is clearly -- >> even a hardware company that simply gives you the tool to access the sites, you think apple will come under pressure >> let me back up three steps here i don't think that -- we love the story. we think that there's upside new phone, buybacks. all that my point is pretty simple. i think that these questions that we haven't asked ourself over the last decade, there's going to be harder questions asked. apple is in a great place. they're a safe haven around privacy. go to apple. they have a whole section of their website dedicated to privacy. i think that that company is exceptionally well positions but i just bring it up in the context, not apple related but just the context of this but i think there's going to be a shift around facebook. realize it's not the topic today, but there will be a shift
2:50 pm
in terms of how people think about it >> all right, great discussion thank you. >> thank you >> well, global markets edging into correction territory. buying opportunity or should you say domestic we will debate that straight ahead on "power lunch." lunch. the cnbc trend tracker live board is brought to you by the cme group. 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. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade
2:51 pm
flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information. read it carefully.
2:52 pm
2:53 pm
we want to show you, we're at the lows of the session the dow industrials lower by 112 points this is on top of the more than 700 points it lost yesterday moving onto the s&p 500, you'll see a similar pattern with the intraday chart broader index down by 2619 nasdaq is the biggest loser, decline of more than 1%, down 85 points, 7,081 is where it stands right now. facebook cannot get out of its way today. time for trading nation. talk about some other sectors of the global market that are also in trouble a handful of international markets have fallen into correction territory check out spain, germany, the
2:54 pm
uk, japan, are all off double digits from recent highs let's bring in the trading nation team for more gina sanchez, bill is with blueline futures gina, what do you think, any overseas markets looked prime to bounce back at this time >> i think you have to look at the fundamentals if, indeed, we see a trade war with china, and that is what's weighing on the markets right now and maybe at the margins we're seeing concerns around geopolitical risks, but let's talk about the trade war with china. one of the bigger beneficiaricies of that would be germany. germany and europe broadly european trade with china has been on the rise for the last ten years. and i do actually think they would be huge beneficiaries. on the other hand, you have the uk, who is distancing themselves from europe, so that may not bounce back nearly as much then you have the nikkei the knee care is suffnikkei is everyone is rushing into the
2:55 pm
yen. i think europe ends up the winner and the dax at the top of that list. >> bill, you're looking at the levels in the german dax and japanese nikkei. what do you think? >> i think gina makes a very good points. i think there's a lot of support just below the market. if you back the chart out and look a rolling year, the nikkei is still up 8% and the dax is only down 1.2% these markets are on great runs. this drop puts it down -- the rsis are down into 30. these are almost into buy ranges there's some long-term trend lines that come up in both that come in at about 200 points below the market each. both in the cash market. i think what we see heading into the end of the quarter -- today is a bad way to see the day end if it's ending on the lows i didn't expect to see much anyways. the end of the quarter is next week if you're an institutional investor, you're look looking to do anything today. you either buy momentum after friday or buying lower next
2:56 pm
week and i think the market's going to recover off some of these big support levels. >> got it. ladies and gentlemen, thank you. for more market insights head to our website at keep an eye on this market we've taken a big leg lower and it could be another wild ride into the close check, please, is next >> announcer: and now the latest from and a word from our sponsor. >> short selling can help you profit from a stock's decline. however, because it involves unlimited risk, you the must have a plan. first, screen for poorly rated stocks showing weakness versus the broad markets. second, look for the stocks with the poorest technicals in that group. and finally, iorra rncpoteisk management techniques into your order to limit potential losses. obvious.
2:57 pm
sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪ and made it liberating. we took safe... and made it daring. we took intelligent, and made it utterly irresistible.
2:58 pm
we took the most advanced e-class ever... and made the most exciting e-class ever. the 2018 e-class coupe and sedan. lease the e300 sedan for $569 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise
2:59 pm
we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. it appears we're in a full-blown market selloff with the s&p down by 1.3%, down 34 points nasdaq is down 1.5% is the loss there. take a look at the interday chart of apple you can see it really just dropping sharply in the past half hour or so. this is the story of the markets right now as we enter this final hour. >> we began this last hour up 150 points so, we have lost what now, 350 points, basically, in swing in just the past 59 minutes and the intensity of the selloff seems to be picking up. >> we haven't mentioned john
3:00 pm
bolton when his name was mentioned for national security counsel, we saw a leg lower. not saying that's what's happening right now, this interday decline, but he is so hawkish on china or north korea and the degree -- he'll be higher pressure on trade maybe that's a cause for some selling, too. >> thanks for watching "power lunch. >> "closing bell" starts right now. ♪ hi, everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm wilfred frost stocks making a wild swing and well off session highs after president trump signed a massive $1.3 trillion spending bill. >> dow down more than 200 points defense stocks were sharply higher after the signing of that bill because of a big increase in military spending we'll look at the biggest winners. >> dan niles weighs in on the


info Stream Only

Uploaded by TV Archive on