tv Power Lunch CNBC April 3, 2018 1:00pm-3:00pm EDT
>> it's still up 17% year to date i still feel good about owning it the headlines are crappy, i totally understand that, the stock probably doesn't do that for a while, but i think the fundamentals are strong. jeffrey gundlach will join us tomorrow. that does it for us. we'll see you tomorrow "power" starts right now. >> scott, folks, thank you very much welcome. i'm glad you could join us we'll tell you what's on the menu the president getting ready to hold joint new conference with leaders of the baltic states we will bring that to you live don't give up on tech, despite the recent downturn, one big money manager says stick with the sector he will tell us why he feels that way. music to investors' ears spotify making its debut in an unusual direct listing
we'll talk to an analyst who says you should get in now "power lunch" starts right now welcome to "power lunch. ♪ play that funky music >> we're playing the song because it's turnaround tuesday. here are the u.s. markets. the s&p higher about i nearly eight points nasdaq in positive territory, but not by much. netflix, amazon, alphabet and facebook, they had all been in the green, that's turning around here in mid-session. auto stocks are seeing gains, hour, fee at, gm, ford, toyota,
all higher and speaking of autos, tesla making a comeback saying it will not need to do another capital raise this year. that's good for more than 4.5% melissa over to you on the floor the nyse, where spotify just did its direct listing, i'm with bob pisani i'm sure there's a huge sigh of relief here on the floor when it comes to how this thing started to trade and pretty much without a hitch very even indications. the shares are available we had no -- but you can see
immediately so as a market leadership group, this is a large move finally i want to point out what's been going on the market later in the year, when we were talking about lower growths, we have now changed the conference we're talking about trade wars, talking about tariffs, talking about higher deficits. the president's attacks on amazon tech uncertainty with facebook, and the conversation has changed. >> we'll see what set of words dominates earnings seasons on the conference calls thanks, bob. michelle, back to you. >> thanks, guys. the president making those comments moments ago eamon javers has the details hey, eamon.
>> reporter: hi, michelle. the president has renewing his fight with amazon here he's in the cab et net room room for a meeting with baltic po officials. >> the taxpayers i pay fog that money a report just came out 1.47 or about that, i believe. for every time they deliver a package, the united states government loses $1.47 so amazon is going to have to pay more money to the post office. >> we've been trying to figure out exactly what he's referring to, j.r. reed has been up as
headquarters has been doing some research it looks like he's references a record from citigroup, according to a write-up of the "wall street journal" that came in july of last year, they says the analyze from citigroup says the costs were fairly allocated, costing $1.47 a package to deliver. so apparently the president has been doing his homework. the question is whether or not there's any real action planned by the u.s. government going forward d this administration plan to do anything about this, or is this just the president spouting out, and venting some frustration? we don't know the answer to that we hope to talk to white house officials. maybe in this news conference coming up. all right. thanks, eamon. down to melissa at the nyse.
>> spotify just opening moments ago. let's about ink in rob sanderson, senior analyst, with a buy rating, 12-month price target of $200 >> thank you in terms of comparisons in the market, everybody wants a comparison is it netflix? roku what is it. >> i think it's something like a netflix, we can debate the discount because of the margin model and the lack of exclusive content, but right now it's trading around three times sales, where netflix trades 6 1/2 to seven times sales i think there's room in that >> you are recommending declines that they buy the stock. is there any trepidation, rob, about the first day of trade it's opened without a hitch, but
in terms of later on, there is no broker to step in and support the stock later on there is a lot of shares that could potentially be sold on the open market still. >> yeah, there's definitely been trepidation about the process itself, and i think the longer concern from many people was more on the supply side. right out of the gates, i think they have done a good job of managing it so far, but it looks like 8 to 10 million shares have treaded. though there are many shares potential available for sale, i think most of those are unlineally to come to the mark in the near term if the liquid was there, i think at the be more healthy. >> what is the driver? this is a business with 71 million paid users, 157 million monthly active users in 2017 these are 2017 numbers what do we need to do here
>> what's your path to 200 >> it's really three factors, the top line, driven by subscriber growth. from there it's gross margin, and then the third big lever is the dynamic of church, so subscriber retention versus the cost of acquisition. in all of three of those i think are working in a positive direction, and we expect it to continue. >> how sticky are the paid users in 90% of revenues are from paid users. so i guess the golden egg would be for them to start converting the 157 million active users to paid users do those users stick around? >> yeah, the church dynamics have gotten progressively better they have improved by more than 100 basis points for each of the past two years
it's still arguably a higher left north of 5%, but i think that's opportunity to continue to decrease. what they closed their filing is 40% of the disconnects are represented to payments, debit cards going bad. i think that's an opportunity to continue to tighten down, but they have been making pros >> robert, thanks for your thoughts today appreciate it. >> melissa, thank you. despite today's market rebound, all three indexes still in correction territory are we headed even lower if earnings season disappoints. randy warren is cio of warren financial, and jason, let me start with you what are you looking for in earnings season. what could the damage be
>> it's a great question i think given we're on the cusp of q1 earnings, that's where investors are looking to obviously with -- expectations are somewhat high. we've seen them come up. i believe december was around 12%. now it's around 17, so i get it depends on how you define expectations if it comes to 15%, 16%, 10% off of highs and in correction territory, that's probably good enough to suggest a corporate earnings health is still strong. if it comes in at 10, 11, 12%, i think that would be a true disappointment. >> one more for you, jason i know you are bullish apple, amazon, facebook, microsoft and google are you adding to those positions? have you trimmed >> we recently added to amazon
and apple on the pullbacks, amazon obviously getting hit -- >> do you feel that? do you fear they may really have a pain price to pay? >> no. i mean, in every instance where the president has tweeted about a company, there's been a buying opportunity, whether you look at boeing or lockheed you name it, when he tweets you get a pullback on a good business, that's a good buying opportunity. >> so randy, what do you think gets the markets out of its slumps here? if anything. will it continue to decline? >> i'm going to take the other side and say i would like to thing that earnings season will put us out of the our slump, but with the way wall street is responding to what's going on in washington, d.c., i'm not sure it's going to matter at all. i think depends on who you are,
whetheru a millennial. gen-xer, you have to find a way to buy stocks in a safer way we've put stocks in our own equity fund, which is essentially there to ride out bear market waves. >> are you worried about a bear market right now >> absolutely. you have to look at what's going on. >> the market is telling you that earnings are not going to be as strong as a lot of people predict? why? >> no, i think the market doesn't care what earnings are going to do right now. we're all hoping that's going to change come the middle of april, but right now the market couldn't care less all it cares about is what the president is tweeting. one man's twitter account is just royaling wall street. >> should he knock it off?
>> yeah, that would be nice. >> if if it was mr. obama, most of the business community could way she's declared war on business. >> but as one of the guys in the last program, you can't put the toothpaste back in the tube. once our government is using social media, it's not going to stop trump has been toss the first guy with a twitter account here on out every president will have one, and it's going to matter. >> and he loves a good fight, a good joust clearly, i think of the tom petty song "i won't back down." that's a classic metaphor. >> but investors need to remember there's a lot of opportunities out there. a lot of great tech and software -- i know fang is the biggest part of the index, but it gives you an opportunity to
buy things lice service now or salesforce some of the great companies out there doing wonderful things, and actually making money each with the pullback. >> you didn't mention you were adding to facebook, which is one of the stocks that's gotten hit the most why not? >> well, we feel like we have a full position in facebook. it's one of our larger positions in or flashship portfolio. that was principally the reason we didn't add to it. >> did you sell any? >> pardon? >> did you sell any? >> no, we have not sold any facebook i do want to mention things -- what was just described, that's the noise. here's the signal. the signal is the economy is doing well, valuations are lower, interest rates, which was really the bugaboo of the market back in january and february are
lower. inflation is not running hot the pillars of the equity market are flashing, so the short term sentiment has turned sour. we get that. the fundamentals still look good we're still long the market. >> all right, gentlemen. thank you, randy and jason let's go to the bond market. rick santelli is tracking the activity. >> if you look at a two day of tens ranges aren't why. high if you consider the range of the last month and a half or so, it certainly seems as though the treasuries are weathering the equity storm let's look at the october start of 31 boonds they held the high 290s. if you look back to october that
was a significant technical area a lot of things people are paying attention to, with the long-end yields. very quickly, it continues to build on its gains. it's low today was under, so pay passengers to the hyg. stocks selling off in the past month or so, in part because of fears of a trade ward is the tariff tantrum an overreaction we'll look at the real economic impact we await the president he'll be holding a news conference with the head > lomo "weluh"
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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. welcome back stocks bouncing back today, the dow down 3% in a month a lot of that in reaction to tariffs and the potential trade war they could spawn steve liesman is looking at the
actual economic impact it's really too early to tell, but you can do some forecasting, i suppose. i can content of get the feel what the economists are say of of two themes running through. first, they're confused. second, they're -- the report from goldman sachs - michael ferolli writes do me last night, we've had a heart time pinning down a specific numbers. nobody is figuring out the up side steve navarro says the market that is this wrong, it could focus on the positives in the economy from tax cuts and other administration policies and not
worry about trade. >> the market is know reacting to the incredible strength everything in this economy is hitting on all cylinders. >> the trouble as tyler alluded to, this is a chess game if the administration slaps that $60 billion in chinese tariffs as threatened and then china then reciprocates, is that the end or is there another round? is the president serious from withdrawing from nafta or is it a negotiating tactic? and now we move to a new head of the new york federal reserve bank. >> yes, john williams replaces william dudley
something of a controversial decision there was a lot of talk about appointing a diverse candidate to that job. there's been a lot of criticism about the federal reserve not having many of those folks on the board, and also elizabeth warren has criticized john williams for the supervision of wells fargo. for sure williams is not come with a strength? supervising and regulation, but perhaps the new york's fed board was forced a bit by the notion there's no vice chair right now overall for the federal reserve the with the chairman jay powell not being an economist, they do need a -- this is a group of directors approved by the board
of governors in washington. >> thank you, steve. let's talk more about trade. steel and aluminum stocks have been highly volume tiff stocks plummeted 18% on the day that the white house announced exemptions for the european union and several other cunning. joining us now is -- good to have you here, mr. bless where do you stand right now with the president and his position on trade, considering how negatively your stock has reacted? >> great question. i think you're right there's a lot of confusion out
we remain extremely confident that the policying and objectives are going to be followed through on that they're going to come with quotos that do 'meal yorrate or dot deaden the impact to that end i was at our planned for a couple days last week. one of our heads down, full steam ahead. tell me why do you think the stock is down so much. all of that should mean better news for your bottom line, but investors aren't acting like it is it will be better news
it's not for us to say why investors do one thing or another uncertainty is not a great thing as far as investors. until this gets adjudicated, until we see that the administration -- and we have full coached the administration will follow through on the stated intent, come with quotas that don't dent one iota the intended impact of the tariffs, there will be some uncertainty out there. commodity composed equity by design, so we're volatileon a typical today, and in this environment or equity will be volume tiff. we have confidence, and that's why we're committing or funds to restart this capacity. what are you hearing from your customers? >> the answer to the first
question -- that's a great question, i'm going to see the ceo of were on you big customers tomorrow we've been having discussions specifically about some of the product we were hoping would come back the the so-called high purity, military grade content this is the beauty of a commodity market whatever the lme price is, that equals the delivered price, we'll accept that price. obviously the tariffing are here to mare sure that's a fair price. real customers want reproduct. >> thank you so much for joining us >> appreciate it very much. >> the ceo of century aluminum. tesla shares are rebounding. what's goosing the stock
that's next. we're waiting for the president to hold as in conference with the heads of the baltic states we'll bring it to you live as soon as it begins. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. you'll only pay $4.95. you're still here? we're voya! we stay with you to and through retirement. i get that voya is with me through retirement, i'm just surprised it means in my kitchen. so, that means no breakfast? voya. helping you to and through retirement.
expected gm and fee at criesly better than expectation when you look at each of these, there's a theme that runs through. trucks, suvs and crossovers are in demand. the ford f-series, close to a record high. jeep march sales hit a record high for, and the across the streetover sales for gm, you have 41% that's why all stocks are moving higher as for tesla, this is the story of the model 3 the number's not as bad as some people feared, but it's the forecast that people are excited about, or relatively relieved. last week they produced about 2020 but their target remains -- and we should point out that the company said today that it is
not planning to raise capital. that's the reason why shares of tesla have gotten a nice boost today. at one point, remember yesterday they were trading about 247, 248, now trading at 267. it's a relief rally, guys, that as investors are saying, whew, not as bad as we feared. phil, thank you very much. i was going to ask you about gm, saying they're not going to do this once a month anymore. >> i expect all of their major competitors will say, you know what maybe we'll go to quarterly sales as well. i would be stunned if they continued reporting on a monthly basis. if general motors doesn't have to, why should they come out and say we had a rough april or may, whatever it might be
hi there i'm contessa brewer. here is your cnbc news update. scott pruitt's embroiled in ethics controversy over alleged travel abuses, among others, but president trump reportedly phoned pruitt to say he's got his back and keep his head up. here is pruitt talking to the epa. the dutch lawyer alex van terr zwaan, for lying to investigators about contacts in president trump's campaign hundreds of russians had to be evacuated due to heavy
flooding higher temperatures melted snow quick quickly. walmart will allow customers to transfer funds to people in more than 200 countries. that's the cnbc news update at this hour. scott, melissa, back to you. >> i got by scott, too, sometimes. let's look at where the markets stand. it's worth noting that we had been about 50 points higher. as no the nasdaq about 11 points her too, but firmly in the green now, energy, materials, staples your leaders, it's also worth knowing that the small caps are outperforming today. >> thanks, me lessa president trump is about to hold a news
conference eamon javers is live at the white house. all of these countries are so worried about a resurgent russia i'm not sure that's on the top of the list for the american media. >> >> reporter: they'll well put. we are expecting a different format, one question for each of the leaders, because we have the three leaders along with the president. it will be more scatter shot than we have seen previously, but the president is in a chatty mood today he was in a lunch talking about a range of topics, so there was some question whether he'll do that again today you get a sense of how diversion the u.s. interests just by who in the room here, larry kudlow
is here, but also h.r. mcmaster, as well as the secretary of center rick perry. a lot of issues here, but the big topic is expected to be russia we'll see if he underscores language in this more formal setting. >> i thought it was you who asked him about scott pruitt what is the nature of the president, the white house's support for the epa director >> reporter: yeah. that's a really good question. one of the reporters in the room did ask about scott pruitt, he said i hope he'll be fine, i hope, as a presidential appointee is never a good thing, right? of course, the president is in charge of his fate ultimately. so it seems like scott pruitt
may be on thin ice there's been some reporting confirmed by the at the white house spokes american that the president called scott pruitt and so did john kelly, making calls to pruitt, but nobody will say exactly what exactly the content of those calls was, so it's not clear whether he was getting reassurances or a stern talking to, but as the afternoon develops, we may be able to get more information normally if it's only two heads of state there's two questions, the american press, foreign press, american press, foreign press, and those there's only one round? >> that's call a two and two but today the expectation is each of the leaders will call on their own reports, so presumably
just one american report will have an opportunity. who knows, we may be awaiting some improvization the president was eager to take questions, talking about china, the mexican border, and amazon which has been on his mind so much lately. eamonafter, at the white house wee rejoined them shortly, as we await the press conference with those leaders, let's bring in michael farr, sarah fagan, and "the hill" columnest niles stan itch the president never walks away from a fight, but at the end of
secure he hassal zoom, and his approval numbers seem to be moving up. >> i think a lot of it even though we may feel differently watching the market day to day, but the base loves a fight they love sticking it to the man, so to speak amazon, the largest company, the owner of the amazon, jeff bezos, of course, owns "the washington post", it's like a dual win for the president, going after the media and a large corporate entity it's politically popular, but for me it's foolish to take valuable airtime on a day like today with a major international meeting that has but this is how
we do things some people are pointing out there isn't a lot of agenda done done this year the big things, the spending bill is done the tax bill is done infrastructure isn't going to get done and some of those other things, so something has to fill the airspace, the empty airspace, and maybe amazon is it for this week. talk about the context in which we hear the white house talking about the economy, we have news about higher tariffs and chinese receiptry abu or whatever, are the underlying circumstances of the economy able to withstand these noises >> that's the main question for investors, are the underlying
growth fundamentals sufficient to overcome the noise? yes, i think they are. are they suv to overium higher interest rates, which seems to be on a steady march higher? that's the big question, but all of this noise out of the washington is making me nuts investors are supposed to be able to price in things like the president's approach he ge gins with bluster, a very pugnacious style, and we kind of back off and end up in a pretty good situation with north korea. maybe that's how we get the tax bill passed. maybe we didn't get to 20% on the corporate race, so why can't wall street figure this out? he isn't going to put an end to amazon c'mon. >> i use the term advisedly, niles, but to michael's point, maybe this is the genius of mr. trump, in other words, he stakes out a very aggressive stance on
amazon, maybe what he's really aiming for is to get the postal service to renegotiate a better deal with higher revenues, on korea, on russia, on nafta, the idea is to plant a stake firmly in the ground that is aggressive and relentlessly positioned. what do you think. >> it could be that's one view, a view that the president's supporters would certainly endorse, but the other view is that it's him that moves the stake in the ground to the consternation sometimes of the business world, and we see that on a number of issues as well, the previous guess mentioned north korea. there was the trade deal that the president out of the blue
they are concerned about -- and they are concerned the -- will provide significant protection, so you -- you'll have -- as well as american address that are just percolating around rush abc and our own domestic political environments we had a guest on earlier that every time the president tweeted about a company, it turned out to be a buying opportunity are you saying that? >> kind of in the fish market, ignore the yelling and screaming and pay attention to the price of fish. you have to go to the substance. one of the things i think we're seeing is a shakeout of weaker hands. the speculators of some of the stocks being shaken out and i think fundamentaled will carry the day, but you can't forget the economic argument and
benefit of an amazon it's delivered a lot of really cheap, lower-cost goods to middle class and poor in this country that have made their lifestyles a lot better. i think it's improved markets. it's the ultimate free market, right? i think investors are focusing too much appeared should be paying attention to those number. >> there are a lot of things --
>> announcer: ladies and gentlemen, it's the president of the united states, the president of latvia, the president of estonia, and the president of lithuania. >> thank you today i'm honored to host the president of estonia, the president of latvia, and the president of lithuania at the u.s.-baltic cent tenial summit thank you all for traveling to the white house for these really important discussions. we have just spent a long time together this summit proudly displays to the world america's deep and lasting friendship with the baltic nations on behalf of the american people, thank you and we are going to have another 100 year, very long and beautiful relationship this is your 100th year of
independence congratulations. for a century the united states has stood with the people of the baltics in support of their independent sovereignty. through the decadesoccupation, states never ceased to recognize the sovereignty of the baltic republics. in our discussions today, i was proud to reaffirm america's commitment to the wells declaration of 1940 and the u.s. baltic charter of 1998 these same principles lie at the heart of america's approach to world affairs honoring the right of peaceful citizens and nations to protect their interests and chart their own wonderful destinies. all three baltic republics are committed nato allies. i want to express our gratitude to each of your countries for fulfilling your full obligations and meeting the 2% gdp benchmark
for national defense this year your commitment to burden sharing is an example really that other nato nations and partners all around the world will have to all get together and bear some of them do not make the same commitment. hopefully, they soon will. when nations are committed to peace and to security, they have to pay their share, and we will all enjoy a much more safe and prosperous future. baltic countries are also providing security assistance and training as part of the coalition to defeat isis the coalition has liberated almost 100% of the territory once held by isis in syria and in iraq. and we will not rest until isis is gone. in economic matters, our cooperation continues to develop
and grow as you well know. we're excited about several new opportunities for collaboration, especially in science, medicine, and technology immediately following this summit, the department of commerce and the u.s. chamber of commerce will host a u.s./baltic business summit to expand the mutual trade and investment between our nations. and they're all looking forward to seeing you. the baltic countries remain a key market for u.s. aircraft, automobiles, machinery, and medical equipment, and we welcome increased bilateral trade with all three nations based on the principle of fairness and reciprocity finally, we are enhancing our cooperation on energy security we're all collaborating to diversify energy sources, supplies, and routes throughout the baltic region, including expanding exports of u.s.
liquefied natural gas, of which you have become a bigger and bigger user. these are just some of the many wonderful opportunities we can seize together to all three baltic leaders with us today, thank you again for helping to celebrate, and this is really a very great celebration because it's a historic milestone our friendship will continue to grow closer, and our cooperation will continue to bring about the greater security and prosperity for our citizens and you have done terrific jobs as leaders, as presidents of your countries and we tell you that for your citizens, we're there for you. as we begin the next 100 years of our partnership, the baltic republics can trust the united states will remain a strong, proud, and loyal friend and ally thank you very much. thank you. thank you very much.
>> probably it's my turn >> yes, whatever you like. >> it looks so >> ladies first. >> of course, we're very thankful for the possibility to be here, especially not only because of our region, but because of alliance which we're in with the united states by adopting the declaration we say that article v is iron clad for all of us, and the collective defense issues are important to all of us, and we understand how important nato is for all of us, and why we during our discussions talked so much about the reforming, for the reforming nato the investments into our defense, the amounts of necessary to invest into our defense, and of course, together where it is necessary, all of us, and lithuania is with the united states on fighting the terrorists through all of the world.
we back in afghanistan, in mali, in kosovo, in ukraine together so we're partners, allies, and trustful allies. and because of that, we are sure that the reforms of which we're investing together and preparing together will be resultative, as it was before, but especially now because we see the united states leadership, we see the willingness of the united states to see a different nato, different quality of nato, and i can be probably open we talked with the president i will joke a little bit, joeging about we need leadership sometimes for decision making, given unpredictable leadership to make enough leverage in pressure of rivals to believe we can make a decision. and that's, we think this kind of leadership in president trump. and this is good because without the leverage and pressure, there will be no additional spending
in our defense, in nato. there will be no additional decisions for rotating military forces of the united states in our countries. there will be no willingness to look into the matter of air defense, which we need very much from all this point of views, we trust that our partner and ally is investing seriously in the future of our defense, not only our regions, but nato's territory defense and in the peace and security of the world as it was before of course, the businesses are coming together. allied in military cooperation, goes with economic cooperation i'm happy that today in our business forum, we will sign two agreements with two american companies on the liquid gas corporation. lithuania has liquid gas station and factory.
so-called floating boat, but we can be independent, all three baltic states, on the gas supply because of that. and this gives us strength and possibility to make our own decisions, not to depend on one supplier, and american liquid gas will come on time and will make us more independent in our decision making and diversify our gas supply and this is about a real friendship, about a real cooperation between our region and the united states. and this comes also together with a trade matters where today we see some discussions on the world level between the united states and european union. we are together with the decisions that the trade needs to be useful and equally fair to all sides. there is no sense to go to the war, but decisions, if there's disbalanced, need to be found, and this we will support as an
ally of the united states. so together with international obligations in military, together with the cooperation in the economy, together with the united states and european union in solving the trade issues, we're standarding with and together, and we hope that as the president said, next 100 years will be even better, closer together, and we will be able to achieve and make more. thank you. >> thank you thank you very much. please >> my esteemed colleagues, dear friends. the baltic u.s. president summit s are sure to show our commitment, our long-lasting friendship and steadfast partnership that we have enjoyed for nearly a century the united states of america is
our closest friend and ally. i appreciate that we help each other's mutual support in our endeavors as well as in the security challenges we are facing today, we reflected on our many achievements and set a course for our future >> we're going to leave this news conference for a few moments. wait until we get to the question and answer part of president trump meeting with the leaders of estonia, latvia, and lithuania. let's bring back michael, sarah, and nial >> we're hearing a lot about nato, about president trump being happy all of these member countries are meeting the designation of 2% of their gdp they need to spend on defense spending this was such a hot issue about whether or not president trump still believed in nato and whether keeping it together was something he wanted to do.
>> yeah, well, this was a big part of the agenda by the leaders today. to make sure that the president's comments on nato were more campaign rhetoric than reality. because if you think about where russia is putting its troops, significant numbers of them on these -- on the border with these countries. so nato, which has been growing weaker over time since the cold war ended, arguably needs to be bolstered, needs more money spent on it, because there's a strong belief in the foreign policy community that russia could roll in through these countries and take them over very quickly before nato would have an opportunity to even respond. >> one of the arguments about why so many people have said for so long that a lot of the western european countries needed to increase their spending on defense, because they hadn't been doing it for years. they hadn't been hitting even 1% of gdp michael, it's one of the reasons the defense sector has been so hot for the last year, ever
since the election because so many countries in the world are spending so much more on defense >> absolutely. with a new national security adviser, perhaps you know with mr. bolton in there, things might even get a little better for that defense industry again. we have a good defense spending budget in this latest spending back package a lot of money for the defense department they're beyond the rhetoric, they have a lot of cash that's going to be spent in that sector right now. so i think lots driving that, and probably going to spill over to some of the industrials in that area as well. the utxs of the world. >> john harwood joins us as well this is a moment in time with the united states relationship with russia being what it is, and these countries are right on the frontier and obviously, incredibly sensitive to every twitch and twitter, literally, that the president might make about russia >> no question
and as sarah just indicated, russia has mass troops near those borders, and could move very quickly if they were so inclined so one of the things that hawkish members of the foreign policy community want to do is make sure that the president is not too accommodating to russia, and all the signs we have had, although the united states has joined our european partners in responding to the assassination attempts on british soil, the united states has been accommodating to russia. we know, for example, that the president has had an extreme difficulty saying anything negative about vladimir putin. we have the news that he's invited him to washington for a summit and even with the expulsion of those 60 diplomats, we know that those can be replaced. they're not reducing the size of the diplomatic contingent. they're simply telling those 60 people they have to leave. so there are a lot of reasons to
be concerned obviously, the mueller investigation is the backdrop to this entire conversation >> let me turn to what john just talkedunts there was the sort of tit for tat expulsions of diplomats. but those things feel to me more for show than for dough. is the way to get putin's attention to go after the dough? >> yes is the short answer i mean, most people would agree that really where vladimir putin feels the heat that might make him see the light is attacks upon -- not attacks on, but sanctions on russian businesses or russian business people who are very close to him. mr. putin's inner circle, as i understand it, is very well stocked with very rich people who have very significant business interests, both in russia and internationallies that, most people would say, is the point of leverage or the point of pressure that the united states could bring to bear in this question. >> yeah, take away visas, make
it very difficult for them to travel and spend money in london or new york. make it really hard for their kids to go to harvard or wherever the heck it is so they can get out of the country >> yes, exactly. and that is the kind of personal approach or personalized approach that we haven't really seen i mean, to john harwood's well made point, we see these things like the expulsions, but when it comes to president trump's rhetoric, it seems really quite warm to vladimir putin, congratulating him on his recent election, haven't apparently been warned not to do so, and did not mention on that now somewhat infamous call the poisoning of the two russian people, including the ex-double agent in england i think that's where people see a disconnect between the mood music set by president trump and the policies that we have already alluded to >> one of the reasons why the leader of lithuania may have mentioned almost at the very pop of her comments about article v
of nato, the collective defense. if you attack one member of nato, the rest of nato will defend you these three countries are right there on the western border. they're the first ones that's why they're so worried. they wand to make sure that article v is truly believed by the president. >> to put it out there like that right in front of him to all the american press, she was sending a message. we need to know that the americans are with us if this happens. and there are many who think it could happen and are perhaps surprised it hasn't happened yet given how aggressive vladimir putin has been around the globe. i would like to raise a point, though, that tyler made earlier, and you as well, michelle, which is for all of the bluster about trump and the way he does business, we're standing here today talking about the fact that these countries have put their gdp percentage into nato, which again is something, they're small, relative to poland and germany however, this is the trump style -- >> hold on we have to break in.
now we're getting questions. >> -- specifically for the baltics. steve. reuters. >> thank you, mr. president. some of your military advisers are urging you to keep a contingent of u.s. troops in syria to insure the defeat of isis what is your current thinking on this subject do you still want them out secondly, could you clarify what you meant about having u.s. military guard the u.s. border along with mexico? thank you, sir >> first of all, the border, the mexican border is very unprotected by our laws. we have horrible, horrible and very unsafe laws in the united states and we're going to be able to do something about that, hopefully, soon hopefully congress will get their act together and get in and create some very powerful laws, like mexico has and like canada has and like almost all countries have we don't have laws we have catch and release. you catch and you immediately release, and people come back years later for a court case, except they virtually never come
back so what we are preparing for the military to secure our border between mexico and the united states, we have a meeting on it in a little while with general mattis and everybody and i think that it's something we have to do. now, the caravan, which is over 1,000 people coming in from honduras, thought they were going to walk right through mexico and right through the border as you know, nafta is a phenomenal deal for mexico it's been a horrible deal for the united states. we're renegotiating it now but it's been a horrible, horrible, embarrassing deal for the united states. this should have been terminated or renegotiated many years ago mexico, we have a trade deficit with mexico of over $100 billion a year and i told mexico yesterday that because of the fact that their laws are so strong, they can do things about it that hard to believe the united states can't. i said, i hope you're going to
tell that caravan not to get up to the border. and i think they're doing that because as of 12 minutes ago, it was all being broken up. we'll see what happens but we have to have strong borders. we need the wall we have started building the wall, as you know, we have $1.6 billion toward building the wall and fixing existing wall that's falling down or was never appropriate in the first place and that's very important. as far as syria is concerned, our primary mission in terms of that was getting rid of isis we have almost completed that task, and we'll be making a decision very quickly in coordination with others in the area as to what we'll do saudi arabia is very interested in our decision. and i said, well, you want us to say maybe you're going to have to pay but a lot of people, you know, we do a lot of things in this country. we do them for -- we do them for a lot of reasons but it's very costly for our
country. and it helps other countries a hell of a lot more than it helps us so we're going to be making a decision we have had a tremendous military success against isis, as you know. it's close to 100%, as i just said and we'll be making a decision as to what we do in the very near future. we'll be consulting also with the groups of our people and groups of our allies okay >> do you plan to pull the troops out >> say it? >> you're inclined to pull the troops out >> i want to get out i want to bring our troops back home i want to start rebuilding our nation we will have as of three months ago $7 trillion in the middle east over the last 17 years. we get nothing, nothing out of it nothing. and as you remember, in civilian life for years, i said keep the oil. i was always saying keep the oil. we didn't keep the oil who got the oil? isis got the oil, a lot of it. that's what funded their
campaigns. they took a lot of the oil, and it was largely responsible for funding. we should have kept the oil then we didn't keep the oil i want to get back, i want to rebuild our nation think of it, $7 trillion over 17-year period we have nothing. nothing except death and destruction. it's a horrible thing. so it's time it's time. we were very successful against isis will be successful against anybody militarily but sometimes it's time to come back home. and we're thinking about that very seriously thank you. >> lithuanian television mr. president, not about getting out but getting in the joint declaration mentions the periodic american deployments in the baltic countries. what specifically can you commit
to having heard a request and wishes of the baltic states? and president, you have mentioned russia as a terrorist state. did you have a meeting of minds here as to the threat that russia poses to the neighboring countries? thank you. >> well, we have a very strong relationship, as the presidents will tell you, with the baltic states and we are with them we're friends, and we're allies. and we are going to have a long-term very fine relationship in addition, we do business on trade. we work very hard on security together surprisingly, large numbers of trade, these are very industrious nations. you're from there so you know what i'm talking about tremendous people, and very, very industrious we do a lot of business with trade. thank you. >> the second part of your question, of course, interesting especially because we didn't
talk in that about the rival, especially on our border, but then country behaves aggressively, performs worse, threatens with nuclear missiles on your border, of course, you sometimes call this country not very friendly. that's why we invest into our defense. we invest into our security. we invest into reforming nato, and we would like to see strong nato strong alliance, and that's what we're going to do together >> thank you would you like to choose somebody >> your turn go ahead >> mr. trump, speaking about economy, about economic cooperation, my country, latvia, what is your message for investors in latvia and what is
your opinion about investment in latvia >> i think all three would be great places to invest stable governments, incredible people hard-working, industrious people i think they would be great places to invest i would have no problem with it, although i think as president of the united states, they would call it a slight conflict of interest, perhaps. you might be hearing from these people no, i think it would be a great place. i think all three would be a great place to invest. okay >> thank you >> thank you >> estonia public broadcasting. a question to mr. trump. before the press conference, you also said that at the same time, good relationship with russia is not bad. but how are you going to deal with president vladimir putin? is he as your enemy or as someone you can have dialogue with and the second question is to
our president. is the defense of the baltic states enough, or should there be something more? for example, air defense systems. thank you. >> i think we'll be able to have great dialogue, i hope if we can't, you'll be the first to know about it nobody has been tougher on russia than i have i know you're nodding yes, because everyone agrees when they think about it. strong energy, the united states my opponent was into other forms of energy like windmills we're very strong on energy. we're essentially now energy independent. we're an exporter of energy. that's not a positive for russia but it's certainly a positive for the united states. we just passed a $700 billion military budget, next year, $716 billion, the largest ever passed we are going to have a military stronger than we have ever had before, by far that's not exactly a great thing
for russia but that's the way it is we're going to have the strongest military we ever had nato, nato is delinquent, not paying their bills not paying, a lot of states, as we discussed, they were not paying what they should be paying since i came in, many, many billions of dollars additional have been paid by countries that weren't paying, and now they're paying and they will have to pay more, frankly. they're going to have to pay more there are many things that i have done, and not only the 60 diplomats, germany did four, france did four. we did 60. there's nobody been tougher on russia, and with that being said, i think i could have a very good relationship with president putin. i think. it's possible i won't. and you'll know about it, believe me, this room will know about it before i know about it. it's a real possibility that i
could have a good relationship, and remember this, getting along with russia is a good thing. getting along with china is a good thing getting along with other countries, including your three countries, is a good thing, not a bad thing. so i think i could have a very good relationship with russia. and with president putin and if i did, that would be a great thing. there's also a great possibility that that won't happen who knows. okay thank you. okay >> if i may, i would also like to contribute a little bit to your first question. as i reminded you all, we could trust the judgment of the united states administrations and people even while we were occupied we could trust the judgment when we regained independence and seek membership of nato, for example. we could because we are on a common foundation. you can work around them all and read, it's all written there this foundation, our compass, and therefore i trust the judgment of president trump and his administration on that
matter, too. now on your question on defense. yes, we did discuss the deterrence capacity necessary to make sure that our deterrence is believable to everybody who might want to question it. but you know, equal partners don't come to talk to each other this way i come here to washington to ask for freedom, i come here to ask, will you support me for this or that we're in a solution together and to find the solutions together that will work for us together because we're in it together we're equal contributors, according to our slice, to this process of protecting our security thank you. >> maybe today during our summit, we discussed security issues in our region with president trump, and i am sure that this discussion will help a lot to continue any
political dialogue with our eastern neighbor, russia >> pick a reporter please. you can pick a reporter. a baltic reporter, ideally real news, not fake news go ahead do you want to pick? do we have enough? yes? go ahead pick, mr. president. pick a reporter from the baltics. not the same man he was very tough. go ahead, pick a reporter. >> okay. >> yes, go ahead please >> hi, i am from latvia. i have a question for our president from latvia. you're going to san francisco after your meeting here in washington and you're meeting some people who are making business
connections from latvia and the u.s. do you see any certain outcomes out of that? thank you. >> first of all, i think during our summit, i will repeat again that we discussed how we can strengthen our cooperation between baltic states and the u.s. and of course, my visit to california, to silicon valley, will give, i think, good basis for better understanding what our business people need to be presented here and what i can help, how i can help them to be here because anyway, i think all these cooperations between baltic states, business people, and u.s. business people is very important for our societies, for our business societies and as i said, we are seeing not
only about investments in our country, and we're trying to make better environment for investments in our country, but also our business people are invested here, and i think it is important for both countries for latvia and for the u.s >> just want to conclude by saying that i'm very impressed with these three great baltic nations. and these three great presidents thank you very much for being here thank you, everybody thank you. >> president trump concluding the press conference now with the leaders of the baltic countries where russia was a repeated topic and he also repeated some of his key lines that we have heard him say, even since the campaign catch and release when it comes to immigration if you want to stay, you have to
pay. and then asked very pointedly by one of the reporters, is putin your enemy or someone you can have a dialogue with he said repeatedly, i think i could have a very good relationship with putin, while at the same time saying that nobody has been tougher on russia than he has let's bring back in our panel, sara fagen, michael farr, and niall stanch what was the most newsworthy >> the most newsworthy was that they're going to militarize the border with mexico he repeated his frustrations with nafta but that's the biggest news out of the day, which is that putting military troops on the border of mexico is a pretty significant development in the immigration debate in my view. >> niall, i would think the way he talks about syria, a lot of folks are going to listen to that and then say, okay, he's ceding that area of the world to iran and russia. >> so they might have to replay
his remarks to determine exactly what he was saying i wasn't 100% clear on that myself he did certainly reiterate an overarching desire to withdraw u.s. personnel from syria. but it wasn't quite as forceful on the point as he had been last week at one stage. that will send off some alarm bells in the foreign policy establishment, but it is consistent with his election campaign platform back in 2016, which is that america had got too involved in nation building to the detriment of its own domestic priorities and importance >> sara, let me come back to the statement with which he, i think, almost concluded. that is that no one has been tougher on russia than he has been and i think if secretary mnuchin wer here, he would echo that and say indeed, we have put lots of financial penalties, something we talked about before the break there, on russian individuals and russian institutions
what do you make of that claim has he in fact been tougher than, quote, anyone on russia? >> well, he may be tougher than other world leaders, but he's not as tough as he could be and should be given the role russia's playing certainly in the middle east, is playing in our own elections. you know, vladimir putin taking over ukraine, possibly lots of fears that he is moving toward the baltics or will move toward the baltics at some point. i think the point made earlier about really clamping down on vladimir putin's inner circle, that would be way more noticeable than kicking out a bunch of spies, which is a significant move, but certainly is not impacting the wealth of the individuals making these decisions in russia. >> michael, as an investor in the markets, do you hear anything of significance to you? what's your takeaway >> it seemed like a very
straightforward press conference it was the diplomatic, presidential president it wasn't the tweeting bombastic president. it was a president, i think, that the markets would like to see more of. i saw the dow go from about 200 or slightly over at the beginning of the press conference down to about plus 125, now up at about plus 150. when you look at the pressure on russia, and you think about the price of oil, price of oil, $63.50 or so that's not bad for russia. i understand we can export and do some other things there are certainly pressures on russia right now, but with the price of oil there, i don't think they're feeling a lot of pain the president has room to increase that. and i think he said, too, i don't have to be a friend of vladimir putin's so very presidential i think markets liked it not the bombast that worries us. >> all right, michael, thank you very much. sara fagen, niall, we appreciate it, and melissa, we'll send it
down to you. >> thank you very much i'm here with bob pisani we're standing by the spotify post we're looking at the price action here because it's trading below that first trade, which was $165.90. >> yes, and for a while, this looked like there was support right there at $160. you can see right across, but then just a little bit, 20, 30 minutes ago, it broke through $160, now trading at $155. but given the fact that 91% of the stock is available to trade, it's really rather remarkable. the whole process of discovery early on, very, very smooth. $145 to $155 $155 to $165 and the trading given the fact that 91% of the shares are available to trade, this could have been all over the place could have been up 20, 30, 40, down 20, 30, 40, and a narrow range on the levels of what could have gone wrong, this is pretty successful. >> it's worth noting the day is
still long the volatility could pick up and i don't mean to beat a dead horse, but the pop of 17%, that's from the reference price set by morgan stanley the night before not an actual price in which the shares traded. >> nerds like melissa and i debate this. $132 was a reference price, and nobody actually bought any shares there was no underwriting at $132 morgan stanley did not turn around, buy the shares from the company and sell them to people, institutional traders. it was a reference price based on essentially the last trades in the secondary market. but nonetheless, that's what everybody is using, the reference price. you can say it's about $10 below below the initial price. >> overall, the markets are holding steady >> but very tentative. if you noticed amazon in the middle of the day, when the president did that tweet around 10:00 eastern time, talking about, again, about the post office and amazon, amazon just went right straight down into the red. and it dragged the fang stocks down with it you can see now, it's essentially unchanged.
the market sort of turned around a rather remarkable thing. you can get the market turning around on essentially that all these stocks, all fang stocks were positive up until then i would say, yes, we're up, but it has a very tentative feel >> it does feel squishy here bob, thanks. michelle, over to you. >> let's talk about the squish amarkets joining us is ron insana and also david david, good to have you on you were on a couple weeks ago you talked about a retesting of lows we certainly had one now what you see the tentative nature of what happened today. what is that telling you about where stocks go from here? >> you have sabetter opportunity here the average stock on the s&p 500 trading 16% below its 52-week high we retested the lows valuations on earnings or cash-flow basis are right about back where they were at the election of 2016 when profits are much better. so the net result is what are you going to do? you're going to be a selective
buyer. i'm a selective buyer in small cap names like conduit, which spun out of xeer xerox companies with cash flow, so what do you do on a retest of the lows you selectively shop >> ron, what do you think about as we see this tentative comeback today, but certainly it doesn't make up for the stark losses wehave felt over the last week. >> no, and i like melissa's description as squishy, because it does seem like this is the type of environment in which you could easily lose your gains for the day. it seems we have, as i mentioned earlier on halftime report, it's more of a sell the rally than buy the dip environment, particularly for the names that have undergone turmoil since early february it depends i think if the levels hold, and joe and i were talking about this earlier in the day. this might be as much a time correction as a price correction rather than just a v bottom and take right back up, which leads to david's point of being selective and picking the areas the have not really been
standouts and might in fact perform better as the market continues to consolidate >> if you had cash you wanted to put to work, where would you put it to work, cash >> yes, if you're overexposed to some areas, you would want to rebalance your portfolio, take time and get selective this is for intermediate term investors. for longer term investors, you stick with the program if you're out 10, 15 years, there's not much to do if you're looking to selectively deploy money, i would look for rallies and other opportunities to take advantage of those stocks that aren't fully picked over yet >> how quickly -- i'll quickly add, what did not work now has the potential to work. and trend following in many parts of the market, in big cap tech in particular, we're getting very tired in light of that, u.s. small cap stocks have better earnings growth, sell at attractive valuations if you buy companies that spin out of larger companies, that's
a great formula to adding value. u.s. small caps look appealing emerging markets have had a good run. >> what measure are you using when it comes to valuations on small caps you can look at the russell 2,000, and it's much more expensive than the rest of the market a lot of people piled in there >> that's a fair question. and i am a cash flow and a free cash flow disciple if i look at companies on a price to ebitda, enterprise value to ebitda, you'll find attractive opportunities in the small and midcap areas, maybe in the small cap area, there's only three our fore analysts following the company, it gives you a leg up small caps have been out performing year to date. the rally has more to go there you'll find more stocks that are going to double in the space when you value them on a cash flow basis, they look appealing. the em markets, the emerging
markets, have had a good one year >> gentlemen, thank you so much. ron and david. >> thank you it's the leader of the free world versus the world's richest man. the president continuing to pick a fight with amazon and its founder jeff bezos we'll bring you the latest straight ahead on "power lun."ch 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you?
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now you can get it, too. welcome to the party. president trump yet again laying into the internet retail giant samazon, and more personally, it's founder jeff bezos. claiming they're taking advantage of the american pos l al service at the cost to the taxpayer morgan brennan is at the stock exchange with a look at the facts behind the tweets. >> it started with a couple tweelts and escalated this afternoon. the president was meeting with baltic leaders when he was asked about amazon, and as usual, he didn't hold back >> the post office is losing billions of dollars, and the x taxpayers are paying for that money because it delivers packages for amazon at a very below cost and that's not fair to the united states. it's not fair to our taxpayers
you look at some of these small towns where they had a beautiful main street with stores. the stores are all gone. so that's a different problem that we're going to have to talk about. >> now, essentially, president trump is arguing that amazon has gotten too big and too powerful. and there are now lawmakers from both parties who agree with him. republican senator marco rubio recently tweeted that new economy monopolies will require close monitoring that sounds a lot like the rumblings from the left as well. elizabeth warren and bernie sanders have warned that their broad influence could be anti-competitive, and cory booker has asked them to weigh in on what he called the rising tide of corporate concentration. it's going to be hard to prove that a company is being anti-competitive when it's lowering prices. back over to you >> and if you're going to tell your constituents, hey, you may have to pay higher prices, that's not going to go over well, either >> thank you morgan brennan joins us now at post 9, and morgan has been taking a look at the deal
between amazon and the post office how much of what the president is saying is actually true when it comes to the great deal that amazon is getting? >> okay, so this is complex. it's nuanced in some ways, he's right, some ways he's wrong. the postal service and amazon have a symbiotic relationship. the usps has lost money for over a decade, but a big portion is pension and health care related cost and also, because the most profitable business has been noise diving package delivery has been the answer since the postal service is obligated to deliver mail to every address already anyway now, any deal the quasi-governmental agency strikes on its products, including parcel select, the last-mile delivery service that amazon uses, is reviewed by the postal regulatory commission to make sure it makes economic sense. over the years, the prc has signed off on the rates being charged. here's where it starts to get
more complicated how do you determine what makes economic sense especially when package volumes have surged and profit from the mail business, which is a monopoly, has gone to building out the broader transportation network. now, factor in retirement costs. that's how citigroup's chris wetherby got to the conclusion if costs were allocated the way a company does average packages, not just amazon by theway, would cost $1.46 more to deliver that's the crux of president trump's argument when you hear him tossing out numbers like $1.50. that's very likely being raised right now because, yes, amazon's five-year deal that was struck with the postal service in october of 2013, is expected to be re-upped later this year. i will tell you as the defense reporter and many ways this kind of feels a lot like the lockheed martin f-35, or boeing presidential aircraft conversations that we have seen that the president has unprecedently got involved in in the past >> except the president can't
needle amazon to pay more voluntarily. the report from citi, i read about the report as well what confused me was the line when he says, when you allocate the additional costs, do you ever allocate the additional costs in that way per package? because presumably, there is some build-out cost that gets amortized over time as opposed to per package >> this is the crux of this argument and this debate right now. i mean, the prc would not have okayed deals with amazon if they didn't believe that the post office was being profitable on those packages it's delivering you start taking into account the pension costs and everything else the fact that they do have a broader transportation network that's being built out what's paying for that it's really complicated. >> and by the way, amazon -- >> depends on who you talk to. >> amazon has its own network it's broadening out. they could easily say, we'll do it all ourselves eventually. they're going that way >> that, of course, the longer term risk, if you see something like that happen, rates rise at the postal service
they arguably need the business more than amazon needs them, at least longer term. >> morgan, thank you >> thanks for laying that out. so should investors stay bullish on the e-commerce companies that are out there, and the e-commerce giant in particular let's bring in mike olson, also aei economic policy analyst, james. good to have you here. mike, first, let me start with you. what do we know about amazon's contract with the u.s. postal service? is it public do we know what they're paying, when it expires and when their prices may go up >> yeah, the specifics of the contract are not available to the public so we don't know everything as far as pricing i think as was just discussed, what we do know is the postal regulatory commission is tasked with insuring that the post office is delivering ackages i a profitable manner. and thus has looked at the amazon contract and ironically on march 29th, the day that some of the trump tweets were coming
out, the prc did approve the most recent version of that. so i think at this point, we don't know the specifics, but we do know that the prc is on board. >> jimmy, i don't know if you have read through any of these citi reports, which is where i think some of this has started to come from, but one of them says that this is -- they have been underpricing their packages, creating systemic inefficiencies, crowding out other, you know, shippers like fedex, et cetera, and a lot of it is the nature of the u.s. post office, not necessarily the fault of amazon trying to exploit any of that. >> well, first of all, it's rare to have an american leader as fierce an advocate for the u.s. post office, maybe not since ben franklin, as we have from donald trump. it's amazing that we're focusing this much on the post office, which had problems for years inefficiencies for years, losing money for years. listen, obviously, this is used as an excuse to go after amazon.
and the bigger issue here is not the underpricing of packages but whether this is really setting up a framework you know, not today, not in the next six months, for future regulatory, and i think more likely anti-trust action against amazon >> i don't doubt that this is a fig leaf, but i guess at the same time, i wonder if it's worth asking the question, do big e-commerce companies pay what is commensurate with their use of the underlying infrastructure that is paid for by the u.s. taxpayer, and if indeed we are subsidizing them >> the one for sure analysis that we have says at least it says that we're not. which is the postal regulatory commission i recognize there is a citi report and a "wall street journal" editorial by someone who is an investor, i think, in u.p.s. or something, but we do actually have a legitimate analysis of these packages, and the answer to that is no and at the very least, i find it
hard to believe that looking at the evidence already before us that you could be as definitive as what the president has been in saying that taxpayers are getting ripped off i don't see the evidence there that you can be definitive like that >> when you look, mike, at the pricing schedules of the postal service and the two main other competing delivery services, u.p.s. and fedex, the postal service is always lower. that is -- and when i go and i want to ship something, i pay one price if i send it by u.p.s., if i send it by the u.s. postal service, i pay a lower price. everybody, it seems to me, is getting some kind of subsidy here, because the postal regulatory commission has set the rates for whatever reason, lower than they ought to be. that's not amazon's fault. is it? is may turn out to be amazon's problem, because they're going to come along under the pressure of the president and say, okay, we have to raise the prices here
so that we're not, quote, losing money on every package we deliver for amazon my final point is, it's not just amazon that's paying these rates. now, amazon may have a special bulk deal where their prices are even lower than, say, best buy's prices or if i buy something from costco that is shipped to me, but the truth is, have i come close to analyzing it right? >> yeah, i think you have nailed it there in general, amazon should pay a lower cost than everyone else because just like in any other business, when you're the highest volume producer -- >> you get a bulk discount >> yeah, you're going to get a discount and that's the case, and amazon is operating smartly, you know, under the laws under which they can operate. and so i think as we look at that, we need to keep in mind that, you know, as was kind of alluded to earlier, even if the cost of shipping rises for
amazon, we're going to end up paying for it one way or another because we're either paying for it by -- go ahead. >> i want to bring in melissa, and i also want to ask jimmy, the president made the point that lovely streets in retail districts around the country are hollowed out, implying that was because of amazon. >> right >> it seems to me that's been taking place for decades, long before amazon was a major retail player it's only 4% of retail sales in this country that was laid years ago at the feet of walmart. let me make a second point here. if you talk a lot to the third party sellers who do business on amazon, small companies like my brother-in-law's company, he will tell you but for amazon, he would be out of business >> right so you have the third-party resellers. you have companies using amazon web services so those are job creators, business creators.
and the issue about main street. you know, blame walmart. no, blame shopper malls. no blame the interstate highway system this is a very old story to blame amazon now, i think, at minimum, shows a rather poor grasp of a business history by our businessman president. >> melissa you wanted to jump in >> no problem. those are all great points mike, in terms of how amazon can change this narrative, how quickly could they go from third party logistics, ie, using outside companies to deliver packages, to first-party logist logistics. meaning building out their logistics systems which they're in the process of doing, to eliminating the post office altogether that could really change the calculus of this whole thing trump is trying to put forth >> i think that's a great point. be careful what you wish for, i guess, is kind of the conclusion there. which is that, you know, it would take years, is the answer. it would take several years, but amazon is already on the path to
finding the most efficient way to deliver packages. and some portion of that is already through kind of direct fulfillment. we would expect more of that to be the case going forward. if that proves to be the case, and if the pricing of u.s. postal service rises to the point where it's become more of a problem for amazon, they'll only accelerate that and historically, investors have been certainly willing to let amazon spend on new initiatives without really punishing the stock. so in the end, i think amazon wins under that scenario >> all right, gentlemen, thank you. >> hot topic of the day. >> a live topic. it really is >> who knew shipping could get everybody so upset >> straight ahead, we'll talk to the best-selling author beth, about her push to teach children about how to manage money with a little help from "saturday night live"'s kate mckinnon. stay with us on "power lunch."
later? >> when you wait, you can save up for something you really want >> what is a credit card >> it spends money >> like this >> no, like this >> we have a situation >> tha that was a clip from a new video from beth, teaming up with "snl's" kate mckinna to teach kids how important it is to make kids understand the importance of money the book is called "make your kids a money genius even if you're not". >> i feel like money is one of those totally scary topics for a lot of people. talking to your kids about it makes people freeze up i thought, what better ice breaker than kate, and loosen people up and talk about money with kids. the very basics. we get money from working.
we have to wait to save up - >> that's what my son doesn't seem to understand particularly well >> it makes sense because they see you swipe, probably, a debit card or credit card. >> which is one of the things which is very interesting. i wonder if kids get the message of the value of money more when they see parents using cash as opposed to using a debit card. >> 100%. full disclosure, tyler was my boss he's the smartest. it's true. when people use cash, first of all, they understand the pain of spending when you swipe, it's a lovely motion, you don't feel like you're doing anything, so kids don't get it conceptually. kids see us swipe and they don't understand use cash give your kids cash aallowance or a debit card. they don't understand what that means. >> what is the key lesson when talking to them about money, what's step one? >> late gratification. have you to wait and save up for
something you want whether we wait for the swings at the park, we wait four or birthday, we wait for the holidays we used to wait for the wizard of oz to come on tv once a year. you have to save and wait for something you want opportunity costs, instead of spending $1 a day on chips after school, take that $1 a day and put it in a jar and save for the lego set we one. >> another one closely allied is the power of compound interest if they grasp that, if a child grasps that, they get the -- i can make money from money. >> exactly $100 a year, starting from age 10 to age 20, if you put it in some investment, gets 8%, you'd have $50,000 by the time you stop working you say to a kid, let's think about, $100 a year, you get money from grandparents, you get money from doing odds and ends around the house or from neighbors. save $100 a year by the time you stop working, you'll have $50,000.
>> i'm laughing so hard because my late father used to love to talk tomy about the magic of compounding interest >> the eighth wonder of the world. >> two questions and then we have to wrap should i ever, ever, ever divulge to my child what i earn, number one should i ever, ever, ever in a marketplace like yesterday, come home and say, we lost a lot of money. >> right, right. so, one, the answer is if your child is asking you, how much money doyou make, it depends o their age. generally, no. you don't have to tell how much you earn median family income is $65,000. we earn more than that, we earn less than that and talk about, you know, what their concerns really are. maybe they're worried about saving for college, that you won't have enough money. start that conversation. >> what about talking about market turmoil, when the market's going crazy and i -- the market was down 700 points today. >> right don't tell your kids that
because they think, we lose our house, do we have to move? can i go to camp this summer also, this is an opportunity to talk to kids about long-term investing. the market goes up, the market goes down. think about the long term. put your money in a roth i.r.a. even those kind of lessons, kids really understand when you explain it. >> roth i.r.a. great to see you. >> great to see you. >> i can tell she was a great employee. >> she was, she was, she is. >> melissa, over to you. >> thanks, guys. switching gears, time for trading nation chem on you semi stocks, seeing a bit of a correction. etf tracking semis off 11% joining us is gina and matt. matt, i'll start with you. do they look attractive here >> they're still looking -- there's this regulation issue. that's not going to go away or be resolved any time soon. we also have to keep the whole thing in perspective
the smh is doing no different than it has done four other times in the last year it's pulled back 11% that's happened all these other times. each time it got up to 20% premium, 200-day moving average and pulled back. it's still above its trend line going back two years and above its 200-day moving average even though there could be more downside, let's keep it in perspective. if you're looking for a stock, i like micron technologies that $50 level used to be resistance, now it's support if it can hold that level, since it's so cheap, it should be a great one to buy when this settles down >> gina, how about you >> matt's absolutely right there are broad concerns like regulation and specific concerns like around intel and the apple news the general fundamentals for semis is fairly positive that doesn't mean that the sector wasn't out ahead of its
skis but the fundamental is quite strong and 2018 is shaping up to be a strong year for demand for semiconductors on the back of a whole host of things happening within the industry. you know, ai, cloud computing, smart automotive, et cetera, et cetera so, i think we are still positive >> gina, matt, thanks for your time for more market insight, you can head to our website, tradingnation.cnbc.com check, please, is next >> announcer: and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> position size and risk/reward ratio are two important as spents of building a winning trade. you don't want a single position to be too big a percentage of your tradeable assets. additionally, you want to make sure there's enough property potential to justify the risk you're taking. consistly constructing suitable trades and adhering to your exit plan can help you build on trading successes. i'm very proud of the fact
so i'm not happy unless my hands are dirty. between running a business and four kids, we're busy. auto insurance, homeowner's insurance, life insurance policies. knowing that usaa will always have my back... that's just one less thing you have to worry about. i couldn't imagine going anywhere else. they're like a friend of the family. we are the cochran family, and we'll be usaa members for life. save by bundling usaa home and auto insurance. get a quote today. take a look at shares of amazon the stock is popping, turning positive on report there are still no ongoing white house talks on amazon. that's helping the broader markets swp. not quite at session highs, hit earlier in the morning, tyler, but still a night pop on the back of this report. >> that's right. 23 there is, quote, a subsidy
from the postal service to amazon, how big is it? and if am sdmron had to pay full price, what would the dent to amazon's business be or would they just shift their business more quickly >> i have spent more time learning about the post office finance. and they really stink. >> the finances do thanks for watching "power lunch". >> "closing bell" starts right now. ♪ i love this song hi, everybody, live from the new york stock exchange. welcome to the "closing bell." i'm kelly evans. >> aund i'm wilfred frost the last couple of days it's been a disappointing song. my apologies for having chose it the last couple of days. sharp selloff at the dow, 260 points at session high the market's driving forces, we'll be discussing that comin