tv Power Lunch CNBC May 15, 2018 1:00pm-3:00pm EDT
america survey that i referenced, a lot of money plowing into financials betting rates are going to continue to go up and those stocks will work. >> also c-car is coming right around the corner and valuations are still pretty reasonable. >> dow is down 181 that does it for us. have a great rest of the day we'll send it over to "power lunch" which begins right now. >> thank you, scott. i'm michelle caruso-cabrera and the dow seven-day winning streak in serious jeopardy. what's fueling today's slide and where do we go from here stick around to find out. plus amazon and starbucks are fuming mad after seattle passed a controversial tax the money is intended to help the homeless will other states follow and will it make amazon question its growth plans in washington state? we'll debate. big bets on sports the winners and losers in legalized sports gambling. and sin city's big plan to lure younger gamblers plus hedge fund titan david tepper is close to nabbing an nfl team "power lunch" starts right now
welcome, everyone, to "power lunch. i'm sara eisen the dow breaking its eight-day win streak suffering its biggest one-day drop in three weeks. same for the nasdaq. despite today's tumble, the dow and s&p having their best may since 2009 the nasdaq having its best may since 2005 wall street's so-called fear index moving higher, at its highest level in a week. and treasuries are lower yields on the benchmark ten-year treasury hitting their highest level since 2011 also emerging markets are getting slammed. the eem on pace for its worst day in almost two months tyler. >> sara, thank you very much well kocome to "power lunch." home depot one of the biggest dow losers they missed sales estimates. we have more on this one ahead. and uber releases new details about the way it handles
sexual harassment claims the company is rolling back the use of controversial forced arbitration agreements for employees, riders and drivers. forced arbitration lets companies keep sexual harassment, assault claims, other things out of the courts and out of public view. and shares of vodafone are down on the news its ceo is stepping down. its finance chief is the front-runner to take over. we begin this hour with the markets where the dow's eight-session winning streak is in serious jeopardy, as we said earlier. bob pisani is at the new york stock exchange with more on why. hey, bob. >> hello, michele. yeah, what happened? why the sell-off today there's two things going on. number one, it's a little bit tired. eight days, 100 points in the s&p 500, 1,000 in the dow. it's a little overextended the other concern is inflation related. we had the retail sales report showing gasoline prices were higher that's an issue. also the empire state survey, a
survey of business in the new york state area, and prices paid were much higher i don't normally quote from this survey they said the prices paid index rose to its highest level in several years indicating significant input price increases and the prices received index remained elevated that means these people are paying more to get the goods they need to manufacture their products that's an inflation concern. predictably the futures dropped. remember, we had this concern about wage inflation with the jobs report a few months ago there is the reported ec 30 and we dropped 30 points on the s&p and that's where we are. interest rate sensitive because the ten-year moved over the critical 3.03 level. were all under pressure. regional banks were the big winners today. obviously they're interest rate sensitive. emerging markets were to the downside we saw home construction stocks
move down, real estate investment trusts move down, utilities move down, all of them interest rate sensitive. regional banks would be the biggest beneficiary from a rise in rates you can see they're all up about 1% back to you. >> all right, bob pisani, thank you. with that in mind, let'sgo to the center of the financial world today, to the bond market. ten-year yield hitting new highs. rick santelli tracking the action as always at the cme. rick. >> hi, sara. bob said something very important. he said the prices paid the highest in years input price going up, a common theme, even though ppi and cpi were tame. but that's the whole thing you hear people on the floor saying are rates going up for the right reasons? the right reasons are we have enough growth, enough wage compensation to pass along higher input costs all the ships rise together. something you'll have to answer, is it going up for the right reason we're up seven basis points today, about 11 basis points low-to-high on the range in general over the last 24 hours
a year-to-date chart, we just took out the 3.03 high that is so significant we took it out after a period of consolidation that didn't take us below important support levels like last year's high if you look at a chart going back to may of 2011, you can see the last time we spent any serious time closing above 3.03 was in july of 2011. finally, a one week of the dollar index, it's up over half a cent today you see on that one-week chart it did take out that 93.40 and backed up a bit. traders say listen, it's okay. two steps forward, one step back, a side note. here we are at 3.20, the 30-year yield. the 30-year is the only benchmark maturity that is not made a new cycle high. 3.22 is the mark pay attention to it. we may take it out or test it later on today tyler, back to you. >> all right, sir. rick santelli, thank you a rapid update on the american
economy. steve liesman is here with the quick details. >> yes we quickly take the data from the day and plug it into the gdp forecast on the street and tell you the effect folks, we are headed for a strong second-quarter rebound. the meeting of seven economists in our cnbc rapid update tracked second quarter growth with today's retail sales and inventories number at 3.6%. >> wow. >> that's exactly the right response there, tyler. >> wow. >> and look at the bounce-back from 2.3 in the first quarter. that remains the same. and the reason is the retail sales number coming in on track but with an upward revision to the prior number clothing was strong. gas was strong and that's important because we had this discussion yesterday consumers did well despite paying more at the gas pump. furniture up strong and nonstore retailers, including internet stores, up 0.6%, continues to capture a lot of the spending by consumers. every indicator suggests the bedrock support will continue to push consumer spending forward
meanwhile some fireworks courtesy of who else, massachusetts senator elizabeth warren at the senate banking committee confirmation hearing warren asked about a fed proposal to lower capital standards for some of the biggest banks. here's what happened >> you haven't read this proposal that would take a significant step that by his own admission would reduce capital standards for the largest banks? you haven't read it and you're telling me you don't have an opinion about it >> senator, i'm aware of it in broadways. i've not studied it in detail. it's my understanding that before any final decision on that, there would need to be another vote. >> that was just a snippet of it you know what, it doesn't really matter that much they should both get out of committee even with bipartisan support while fed governor marvin, his candidacy languishes
a little bit. >> did you get anything from any of them since they will all be voting members on monetary policy outlooks. >> can i complain about the questions from the senate banking committee which were pretty darn lousy? they did not get at these issues clarida was a little lukewarm on qe he said the stock market volatility is not a key pillar of making monetary policy, but not a lot of questions he also likes the idea that the current plan for reducing the fed's balance sheet but not a lot about that reaction function, which is what we want to know. how will you operate with current data and what's your trajectory thought on the way to go. >> they should have interviews with us, right more from washington now president trump is on capitol hill this hour for lunch with senator republicans and kayla tausche joins us live from the white house. hey, kayla. >> reporter: he'll be facing those 50 republican senators that he previously addressed during the legislative throes of health care reform and tax reform last year this lunch, i'm told, will focus on the legislative agenda for
the back half of the year. according to white house officials that i spoke with, they say that the list of the president's priorities that he will address in his prepared remarks before taking questions from the republican senators will be in this order. first, how to break the logjam of more than 300 nominees. how to move those nominations more quickly how to align messaging among republicans throughout the summer and going into midterms about job creation and economic growth about foreign policy, the meetings that the president has coming up, namely that summit with north korea's leader, kim jong-un. and then with some legislative movement that the president wants to see on bills regarding veterans affairs as well as banking deregulation but what's not on that list and what congress really wants to hear from the president on is trade. of course you have a congressional deadline for nafta looming on thursday and then you have many on both sides of the aisle on capitol hill who are very upset about the president's potential decision to relax enforcement actions on the chinese telecom giant zte.
here's what the national economic council director, larry kudlow, said about trade this morning. >> at some point i think we get a deal, i really do. i don't know, however, if it's a deal that will be to our liking or to the president's liking, but i think there's going to be a lot of movement and i think you're going to see it very soon. >> reporter: so that was kudlow being optimistic about the prospects of a deal with china ahead of the vice premier's visit this week but very skeptical about what the content of that deal would look like >> all right, still remains a lot of uncertainties on the trade front. kayla, thank you. the dow having its first down session in nine it's now negative for the year is the rally already losing steam? let's bring in bruce mccain, chief investment strategist at key private bank and jamie cox, managing partner at harrah's financial group. bruce, the mood is decidedly different today. is it all about rising interest rates or something else is worrying people? >> i think part of it is we're
having to recover our nerve after the first correction in a long period of time. it's kind of a template for the year uncertainties about interest rates, about inflation and a variety of things will throw curveballs at us throughout the year the important thing for us is to manage our nervousness and stick with the market that's still good both in terms of economic outlook and in terms of earnings potential. >> in other words, you see days like this as just sort of a blip in the longer trend, which is higher >> i think so, but i think we're going to see a lot more volatilities we need to be used to the fact that you get disappointing reports from time to time that will cause investors to back away and then we'll go back to the longer term trending which is still positive, yes. >> jamie, it says here you like staples, utilities and telecom these are the most hated groups as the ten-year yield hits a new high at 3.07. >> yeah, sara. what i'm suggesting to people is that while we return to normal with interest rates, these
particular sectors will take it on the chin and investors should take the money they have made in this faang trade and reallocate it into staples, into utilities, into telecom pick up some difficuvidend-payi stocks there's going to be a payback some day and this is a good opportunity to pick up some defensive names that do well during bear markets and resessions it's possible with the new tax legislation and some of the things going on that the economy could go into recession in a couple years now is a really good time to pick up these defensive names so you're ready when that occurs. >> it sounds like it's a long time away. a long time when you have rising -- when you have a high dividend paying stock, the dividend can get bigger in percentage terms because the underlying asset keeps going down do you think that's over or you're just saying people ought to take that yield and live with it even if the stock goes down >> and i thought you'd say take this as an opportunity to lose some money for a while that's what it sounds like
you're going to have to endure. >> true. but that's just like any other investment it doesn't necessarily have to pay off right away but what you're trying to do is build your portfolio for income or whatever you're trying to do for the future you're assuming stocks will stay up forever, which they're not going to, particularly the high-flying ones if there is a recession, the things that are bid up the most will get hit the worst we saw it back in february and march when the market fell a little bit these high-flying sectors didn't really do well i'm just suggesting markets have been up for a very long time interest rates and other matters are starting to rise we're getting back to normal we're going to have normal things occur like the business cycle going into recession, we just need to get ready for it. people need to make sure they're not caught off guard if you look at manager surveys, the most crowded in the world is faang. >> so be contrarian, in other words, which often serves people well, right, bruce >> yes. >> what do you do here >> i think the fact that the growth continues, you want to
focus on the fundamentals and the ones that have the fundamentals coming through will do well in this environment. at least until you see a bigger setback in the economy and people truly become defensive. we think that could be quite a ways into next year before that occurs so pulling back too soon both in the picks you make but also on the exposure to equities as a whole would be a mistake at this point. >> one pick you have is conagra, return to frozen food. >> that's a little more of a contrarian play but particularly the fact that they are focusing on frozen food in a niche that's not amazonable as readily as some of the other things makes that a good pick within that space. diversification of names, still sticking with the portion of the growth stocks that make sense going forward and holding on through this period of time is critical, we think. >> all right two opposing views there thank you very much, gentlemen, for joining us on this market. bruce mccain and jamie cox. and as we've been mentioning, the dow's eight-day winning streak in jeopardy right now.
the dow is down about 200 points, 204 right now. home depot one of the big drags. what's fueling the fall in the dow and in home depot? a closer look at its earnings and everything moving market coming right up on "power lunch. it can power your apps with public services without starting from scratch. it brings your business up to speed, doing more with systems you have in place.
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there. you were talking right up till the second home depot, one of the stocks fueling the dow's triple-digit drop today america's biggest home improvement chain missing revenue and comp sales estimates. what's behind that and what's next for home depot? alvaro and courtney reagan here. alvaro is an analyst and courtney is here as well you know, you can look at the profit number. profit numbers are often very fungible you can manipulate them by what you counting and when you choose to count it and you have a little issue with that profit beat but the real concern here was sales. how worrisome was the sales shortfall or the miss there? >> listen, tyler, going into the quarter you knew there were a few moving pieces that would create some disparity around what the comp would be i would highlight whether it being the biggest impact. >> is it a legit excuse?
a lot of companies a lot of times say it was the weather. >> is very much is it's legit if you look month to date in may, they're talking about double-digit comps. >> there was not much gardening going on in this area mid-march to about a week ago. >> that's right, that's right. >> and they quantity fified it us home depot came out and said our u.s. comps were 4.2% if we didn't have this impact for weather, they would have been 6.5%. it's 15% to 20% of the business in the quarter it is substantial, but may is the most important month for gardening and luckily things are looking up for the full quarter for comps so far. >> it's a matter of spring breaks and it looks like it's breaking in may. >> gardening is not their total business whu whenever you have a miss, you have to wonder has housing peaked. >> that's a key question because we want to know it before it happens, right
they look at a number of things and the cfo told me, i spoke with her just a little bit ago and she said we look at a number of things. affordability index is one thing we look at and that sort of takes into account the housing price but also incomes right now it's 152 and the historic average is 127 so they're pretty far away from that she also looks at things like transaction and ticket size and all of that is trending in the right direction, so she feels good about that. we looked at other areas appliances up double digits, which is interesting because that includes those tariffed washing machines by the way. it doesn't look like customers are balking at that. >> what's the impact of rising interest rates if we're so focused on housing and what that could do in terms of home sales? how much does that feed into home depot's bottom line >> interest rates are clearly something that's important a little less so for repair/remodel over new construction so, you know, we might expect
short-term volatility from rising rates but ultimately you're looking at robust average selling price. you're looking at home equity value reaching $15 trillion and half of the u.s. housing stock over 40 years old, those are all long-term drivers for repair an remodel. >> which do you like better, home depot or lowe's >> i like them both. home depot a little more predictable but over the next three years you could get potentially higher earnings growth at lowe's. >> you also cover whirlpool. in light of what courtney just mentioned, the tariffs on imported washing machines from other countries, what's your thought on whirlpool, quickly? >> i would say it's a very competitive industry pricing has always been a concern. this is obviously something that would help incrementally, but would say that we have a hold recommendation on whirlpool. our thought is you're going to continue to see intense competition. it will be hard to drive price across the different categories. if they're able to do so, what
will happen to volume. >> i like those machines with the glass tops where you can wash and watch at the same time. >> you do your own launds ry, tyler? >> yes, you bet. >> i don't believe that. >> details, too much information there, ladies and gentlemen. alvaro, thank you. courtney, thank you. did the city of seattle just poke the eye of its biggest business the controversial tax that has amazon up in arms. arizona pushing ahead with self-driving car tests despite a deadly accident. we'll tell you how one city is rewriting its laws for these self-driving cars. "power lunch" will be right back ♪
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arizona is the center of the autonomous driving movement, despite a deadly accident two months ago the phoenix suburb chandler, arizona, actually changing its zoning laws to accommodate self-driving cars. phil lebeau is live in chandler, arizona, with more on the story. phil. >> reporter: sara, there's a lot of work involving autonomous drive vehicles behind me are autonomous vehicles built the first ones will be shipped% out here in six months not only here in the united states but around the world as you mentioned, a lot of focus on the phoenix area following an accident involving an uber self-driving vehicle in autonomous mode. this happened in late march. after the accident happened a lot of people said, wait a second, is phoenix moving too quickly testing on real streets.
by the way, that crash is still under investigation. uber has said that it eventually plans to restart self-driving vehicles, test programs. we'll see if that happens here in the phoenix area. what you do see on the streets of chandler are a lot of these minivans these are self-driving minivans that are testing right now they are going to be starting an autonomous ride-share program. we think it will likely be here in the phoenix area. it will happen later this year they haven't announced the exact location where that will take place. you see so many of these we stepped out and asked a number of people here in chandler does it freak you out seeing autonomous vehicles out on the street? here's what they had to say. >> i'm intrigued by it i won't say i'm freaked out. >> doesn't scare you at all? >> not one bit i'd say push harder and get more. >> i have no problem with them at all. >> it doesn't worry you at all they're mixing with traffic. >> no, it does want. >> why not >> because they seem to go with the flow and i'm comfortable with that.
i figure they're probably the safer car of all the ones out there. >> reporter: quickly take a look at shares. it was downgraded by piper jaffrey today. ford saying we've got a lot of things being developed and it's very early amongst the automakers and tech companies in terms of figuring out what the future will be in terms of autonomous drive vehicles. but a lot of interesting stuff going on here in the arizona area back to you. >> all right, phil, thank you very much. phil lebeau staying out of the way of the autonomous vehicles out there in arizona. las vegas' sports gambling monopoly over as of yesterday. does that mean a lot less people will visit the strip, and if the supreme court ruling hurts las vegas, will it help sports team owners mark cuban thinks so >> everybody who owns the top four professional sports teams just basically saw the value of their teams double at least.
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and so when we show up to a fire and pg&e shows up with us it makes a tremendous team during a moment of crisis. i rely on them, the firefighters in this department rely on them, and so we have to practice safety everyday. utilizing pg&e's talent and expertise in that area trains our firefighters on the gas or electric aspect of a fire and when we have an emergency situation we are going to be much more skilled and prepared to mitigate that emergency for all concerned. the things we do every single day that puts ourselves in harm's way, and to have a partner that is so skilled at what they do is indispensable, and i couldn't ask for a better partner. i'm courtney reagan and here's your cnbc news update for this hour.
taliban fighters battling for control of western afghanistan today causing a new crisis for the afghan government. the taliban using heavy weapons and night vision equipment to aid in their effort. there were dead and wounded on both sides. turn i president erdogan along with his wife meeting with queen elizabeth at buckingham palace the turkish leader is in london and will also meet with british prime minister may. hundreds of demonstrators in front of the israeli consulate in istanbul to protest the u.s.' decision to relocate its embassy to jerusalem it also condemned the killings of palestinians by israeli troops in gaza. former democratic senate leader harry reid is recovering from cancer surgery. a cancerous tumor was removed from his pancreas on monday. doctors are confident the surgery was a success and the prognosis for recovery is good we're wishing him the best back to you. let's get a check on the markets at this hour the dow is down triple digits,
off 214 points the s&p is lower by 22 and the nasdaq is lower by 69. the dow breaking its eight-day win streak and suffering its biggest one-day drop in three weeks. it is now negative for the year. however, there are some winners in today's down day. dominic chu is tracking them. >> if you're looking for positive price action on an otherwise negative day, check out what's happening with the financials, specifically regional banks key corp, people's financial as interest rates rise for longer dated treasury bonds traditional lenders like regional banks often seen benefitting from higher long-term rates and that's helping to push shares of the ticker kre towards its seventh up day in the last eight sara, back to you. >> dom, thanks. >> now a news alert on lyft. >> hey, sara, lyft is following in uber's footsteps announcing that it has removed the
confidentiality agreement for sexual assault victims as well as ending mandatory arbitration for these individuals. it will apply for lyft employees, riders and drivers. now, this follows a similar announcement before its larger rival, uber, just this morning which was a bold move by the company to move past the scandals of last year. forced arbitration has let some of the biggest companies in tech keep sexual harassment and assault claims out of the public courts and, thus, out of the public view. and it has -- it's a practice that has come under serious scrutiny as silicon valley rec ons with these issues over the last year. >> do i get this straight. if somebody was sexually assaulted while on a trip in theory, they could not go to the police, they had to do an arbitration process instead? >> that's right. they had to settle it out of court as well as agree to a confidentiality agreement, which was in the policy. this applies to employees as well, so not just drivers and riders it's fairly common practice that a number of large companies,
microsoft made headlines late last night when it ended mandatory arbitration. so this now lets these cases actually go to the courts and be tried by a jury. >> got it, thank you big bets on sports now that sports gambling has been legalized. who will be the winners? plus sin city trying to entice younger gamblers with video games. and david tepper closing in on the carolina panthers of the nfl. our reporters are all across the country covering all the angles. let's begin, however, with eric in ocean port, new jersey. eric >> that's right. we are here at the william hill sports book inside the monmouth horse racing setup here, the track here but this is a sports bar and this is where all the sports betting will happen on top of all the horse racing that's already happening. you can see these tvs behind me. they're not set up yet that's where all the odds will be all the odds for the basketball, baseball, football games it's going to be right there
you can make bets with the tellers who will sit in these brand new seats. if you don't want to talk to a teller, you can bet at these kiosks, bet without talking to anybody but it's all happening at this horse racetrack in monmouth but you can't see any horses, you can't see the track. this is almost a separate facility within this entire horse race setup and they're expecting on top of the 10,000 to 20,000 people that come every day for horse betting, they're expecting another 5,000 to 7,000 people just because of sports betting you're going to be able to start doing this on memorial day weekend if everything goes to plan, and they said they're going to keep it open late, past 2:00 a.m. to get all those west coast games in as well so a lot of money expected to be made here. they said their directv bill will be $300,000 just because of all the subscriptions they're going to have for all the games they're going to show. back to you guys. >> that was certainly quick. they were ready to do this memorial day weekend, eric, thank you. so if new jersey will benefit, does that mean las vegas will be hurt our contessa brewer is live
there in vegas on the strip. contessa. >> the answer, sara, simply is no, they don't think so. the companies that have a national footprint think caesar's, mgm, boyd and penn will benefit the most. they have calculated the potential benefito igt gaming technology to be $100 million in ebidta now comes the task of figuring out state by state what the regulatory hurdles will be, what the taxes will be, what the return on investment will be take, for instance, the investment in a sports book. the people who will benefit most are those with established sports books somebody like boyd, who's farming out its sports book has to decide now will it make more sense for them to bring it inhouse and duplicate it across their properties while caesar's and mgm are factoring it in, they're looking at mississippi which could have sports gambling by the end of june also looking where state
legislatures have not taken it up yet in massachusetts, wynn has its only exposure to this potential benefit in massachusetts, but they're waiting on legislators to take it up, the massachusetts gaming commission as well and of course their license is under review at this moment. one of the advantages to sports gambling, guys, is that it draws in a different demographic to the gambling and to the casinos. and that's been a real challenge for these las vegas casinos. they're talking about all the different ways that they can appeal to a younger crowd because the gambling demographic is aging out so they're doing it with things like djs in residence and fancy clubs and really high-end dining but also looking to technology take for instance the tri-station machine approved just this month by the nevada gaming control board it's a skills-based game picture those games you might play on your phone that you might be really good at like candy crush. imagine you see that this a casino
you walk by and think i can master that. you voila turn someone who is not interested at all in playing the slots into a machine gambler. it's just one of the many ways that they're looking at trying to get the crowd here. coming up at 2:30, i talk with the ceo of caesar's about what sports gambling means and getting younger gamblers into the casinos. >> looking forward to that thanks, contessa. yesterday on cnbc, mark cuban saying that he thinks the value of sports teams could double as a result of the supreme court decision on sports betting. so maybe hedge fund manager david tepper got a steal of a deal robert frank has more on his purchase carolina panthers. >> i don't know if it's going to double but this is another reason why team values are going up and up. the deal to buy the panthers tys him for the highest price ever paid for any sports team fertitta bought the houston rockets 2 $2.2 billion last
year there are now 87 sports teams in america worth at least $1 billion. the number of american billionaires who can buy them has tripled over the last ten years to more than 1,000 sports teams are the ultimate trophy asset they generate cash, status and of course that long-term value when steve ballmer paid $2 billion for the clippers in 2014, it was four times the previous record price for any nba team lots of people said, well, he overpaid forbes now puts the team's value at $2.2 billion. the dallas cowboys of course are the most valuable team in sports worth an estimated $4.2 billion followed by the yankees at $3.7 and man u at $3.7 as well. there's no sign of any price constraint despite all the concerns about broadcast rights and the internet encroaching on their turf. >> and these teams, especially in the nfl, they do not come up for sale very often. >> that's true this is the first one this year
and the first one in four years. >> in four years. >> talk about timing, here right? this was all presumably negotiated and then you've got this landmark decision from the supreme court and, bam, the value goes up. >> he must have known that it was possible, right? >> a lot of people thought it was going to pass. >> but it was at $2.5 in the bidding and then it came down in the past couple of weeks had this decision come out two weeks earlier, i think that $2.5 probably would have held, so it's terrific timing, you're right, sara. >> he's known for his market timing, right? >> robert, thank you very much the city of seattle targeting its biggest companies like amazon with a new tax is it reasonable for the city to do this to get needed money from those who can afford, in quotes, to pay or are they making a big mistake that will drive companies away we will debate that one next on we will debate that one next on "power."
well, it's earnings season we will debate that one next on "power." once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. (barry murrey) when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. we call that the golden hour.
evaluating patients remotely is where i think we have a potential to make a difference. (barry murrey) we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away as we get faster wireless connections, it'll be possible to be able to operate on a patient in a way that was just not possible before. when i move my hand, the robot on the other side will mimic the movement, with almost no delay. who knew a scalpel could work thousands of miles away? ♪ seattle passing a new tax targeting big business amazon likely will be the hardest hit. we have all the details on this
one. >> sara, a smaller version of that tax was passed, but amazon is hitting back hard, saying that it's disappointed in seattle's, quote, hostile approach and rhetoric toward larger businesses, forces us to question our growth here now, the tax bill raised $45 to $49 million annually to fight seattle's homelessness crisis and will cost amazon about $11 million a year this is a drop in the bucket amazon made $1.6 billion in first quarter profit, but the company says the city has a spending efficiency problem. amazon's cloud computing chief was asked about the tax on cnbc last week. >> to me, the answer is to work with companies to find solutions rather than disincent job creation. >> amazon has also contributed to its affordable housing and homelessness problems, straining its relationship with the city now it is searching for a second headquarters many of the finalists already
dealing with housing and homelessness issues. other companies affected are starbucks and nordstrom, which are headquartered in seattle and google and facebook and other tech companies that are growing parentheses there. >> hasn't seattle spending gone up what would they spend the money on if it wasn't helping the homeless >> this is the criticism the starbucks ceo says the city pays more attention to owners of illegally parked rvs than families seeking emergency shelter. the city council would not argue with that but that's the argument from big businesses is that it's not efficient spending at the same time, revenues have been going up like crazy because of the economic boom provided by companies like amazon. >> got it, thank you let's bring in cnbc contributors james pathekukis and my good friend, jared bernstein, former economic policy advisor to vice president biden. jared, jared, jared, when you tax something, you get less of
it now they're taxing employees does seattle want fewer employees in the city? >> no. and i'm somewhat sympathetic to your argument. a head tax of this sort does have a problem however, i would ask you and everybody else who opposes this tax, what would you like seattle to do? and don't just weigh yoave yours and say spend your money more efficiently. the state of washington prohibits a personal income tax. it prohibits a tax on wealth so those sources are not there if the state had a personal income tax, we wouldn't be talking about this problem it caps property taxes >> i'm not surprised, jared. >> let me just finish. i would ask those who oppose this tax, what's your solution for a city with the third largest homelessness problem in the nation right now >> and i know jimmy probably has an answer. jimmy, what should seattle be doing instead of a head tax? >> the same thing a lot of these high productivity cities that
are tech hubs which have these housing problems should do build more housing seattle has a huge amount of their housing devoted to single family homes and also one bedroom apartments or studio apartments it's like a bar bell, not much in between they need to build more high density multi-occupant housing. >> who's they? >> cities won't do it. san francisco won't do it. >> is it a zoning issue in terms of what doesn't get built? >> yes, listen, i just did a podcast with jared's good friend, jason furman, former obama economic advisor and asked him what is the one big economic issue, it's housing. yeah, it's housing it's housing in all these cities there's this huge not in my backyard problem it's the same thing in seattle what they shouldn't be doing is taxing these companies are they trying to turn amazon's hq 1 into hq 2 because that's what they're going to ending up doing
what they need to do is build, build, build. >> jared, a lot of critics of cities like san francisco say the city council gets really, really strict on zoning so they don't allow bigger use facilities that would provide more apartments, more housing, et cetera. and so when you constrain supply, of course price is going to go up. >> it is a compelling argument, it's a logical argument, it's a correct argument and it's also a hand wave. i'm sorry to tell you. i've watched these zoning arguments take place for years upon years and they haven't been solved yet. now, perhaps washington will take the right move here, but i don't see it coming. so in the meantime when you have a city that in real time, and i think jimmy and furman, my good friend, would agree with this, i think that in realtime you can't say, hey, solve your zoning problem and then we'll talk about this and by the way, in terms of the magnitude of this tax, again, i don't love the head tax because
i think it's going to fall on the least able employees but the idea is that it will sunset, this is in the new law in a few years, and become a payroll tax of 0.7%. now, that's tiny and i think perfectly affordable to a company posting the kind of numbers amazon has and so, again, i think this is a reasonable thing i also think, one last point, i think it's really germane to think about this in the context of the hq 2 debate a lot of cities are giving up their tax base to get a bunch of jobs that are going to create a bunch of new costs in terms of services and infrastructure and you see what these companies say when you go after them. >> so where does this $45 to $49 million a year go? what is it going to be used for, number one number two, are you suggesting that if zoning rules were better, that builders in one of the wealthiest areas in the country would build housing for the poorest people in that city?
>> listen, what i'm saying is that you would have more building of housing of all kinds, so that trickles down to the entire housing market and makes more housing of all kinds available to everybody seattle is on track, it has 100,000 new jobs since the financial crisis and have only built like 30,000 new homes. they aren't building enough. it's the same story with san francisco. this is a massive economic problem. and building, you know, more shelters for the homeless, maybe that's a good idea they also might want to think about doing it differently utah has a great model for homeless housing they should do that in seattle but the bigger economic problem, and it is a macro national economic problem is that we should have more people being able to move to the places where we have high productivity, high income, and they can't do it jared, listen, the obama administration wanted to do some stuff about it so the federal government is aware of this. >> we've got to go you're both in washington, right? just go meet each other in the hallway.
thanks jimmy and jared. >> i will say that a city like seattle has this problem because it has an economic and housing crisis because of companies like amazon that have grown so quickly and that have increased the it doesn't mean that they should just tax the jobs, but still, it's a problem anyway, my -- >> housing prices there, probably third highest in the country, maybe why is a company that sells deodorant and soap accepting bitcoin from customers odands like a lot of work to buy deort and smell good deort and smell good we'll ask the company's ceo. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. andyou don't chaseat, the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.
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[ child offscreen ] hey! let's basement. and thanks to these xfi pods, the signal reaches down here, too. so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. the big guys are going natural. unilever buying schmidt's naturals, putting the giant in a position to take a bite out of the organic market, an industry predicted to be worth $22 billion by 2025 and yesterday, schmidt's became the first unilever brand to actually accept bitcoin on its website. joining us now is the ceo and co-founder of schmidt's natural. first, a big brand actually accepting bitcoin? how does that work >> well, it's something that our consumers really were asking about, and we've gotten here by listening to their feedback like when our consumers are like, we
need a deodorant that works and natural and we listened to them and we built a powder-based deodorant. >> this is just a publicity stunt, right one bitcoin, it's several thousand dollars, and deodorant has to cost less than $5 >> and it swings wildly. >> how do you buy one little deodorant with bitcoin the cool thing about schmidt's is we have our retail business and our direct to consumer business a subscription business is where a lot of subscribers sign up to be able to try new products. we can get feedback and some of the subscribers were like, hey, we want to be able to pay if bitcoin and wed we had a lot of questions but when we launched rose vanilla, one of our number one scents, it was because the consumers asked for it, we put it online, it became number one sku and it's one of our top five skus >> how old is average buyer of schmidt's deodorant? >> we have a lot of millennials
but our core demographic is 25 to 55-year-old females >> how big is the market for natural deodorant? i've been skeptical that you can make a deodorant without aluminum i tried when i was pregnant and it doesn't work. >> i think the natural now is the mainstream market. our consumers are not looking to niche stores we're in drugstores, macy's, bloomingdale's >> yeah, but she asked if it works. >> 100% it works >> it doesn't do anti-percent pra -- anti-percent prant >> it's a tradeoff, pricey tradeoff >> we're affordable. we're a prestige brand but affordable pricing so when we look to develop a product, we're not trying to goej tuge the consumer >> i meant the tradeoff of sweating but not smelling. i thought that was too high for me some other people may be willing to >> we do have magnesium and arrow root powder in the base so it helps absorb wetness but it's not going to be like blocking your pores with aluminum
>> talk about what it's like to go from a niche brand into the arms of unilever, which is a company that makes dove and degree i mean, it's completely opposite from what you do >> oh, it's definitely, we thought about it me and jamie were thinking about it when we were looking at the differe options on the table but the cool thing about unilever is they're an entrepreneurial spirited company they've embraced us and haven't tried to change us they have one of the greatest supply chains in the world and give us skiaccess to over 129 countries. >> have you conducted a bitcoin stran transaction? >> yeah, it's on the website the first live, across all our sites on monday. >> and you have received bitcoin? >> we literally just launched it so yes >> okay. >> but we're going to look at the next two week and see how it does because now there are questions like, accept this coin and that coin and we're like, let's stick with the ones that are the most liquid and reassess in the next month.
>> yeah, if you call bitcoin liquid thank you for joining us on that move and acquisition and everything else. michael, schmidt's naturals approximate. the ebola virus, alarmingly, is back. we've got everything you need to know about the latest outbreak of this deadly disease we are all over the markets as well. the dow is down 239, almost 240 points can a 2:00 p.m. rally save this winning streak you've got to stick around to fi o e second hour of "power" begins after this.
i'm sara eisen here is what is on the menu. rising rate fares, stocks having their worst day in three weeks the future of sports betting the ceo of caesar's will join us exclusively. wh what it means for his company's bottom line. and raise a glass. it is the 21st anniversary of amazon's ipo after revolutionizing the way customers shop for nearly everything, what will they disrupt next "power lunch" starts right now ♪ ♪ raise your glass
>> welcome to "power lunch." i'm michelle caruso-cabrera and stocks are snapping an eight >> day winning streak on pace for the biggest one-day drop in three weeks. you can see the industrials, the s&p 500, the nasdaq are all lower but roughly 1% interest rates with the big story today. the ten-year yield is hitting highest level since 2011 and real estate, tech, and health are the laggards within the dow, though, intel, caterpillar, and 3m are the worst performers walmart is leading the way in terms positive beibeing the str performer. airlines are getting a bump as well tyler? >> thank you, michelle welcome, everybody i'm tyler mathisen here's what else is happening right now. home builder sentiment rising in may, strong demand, short supply of affordable homes for sale that is helping to boost builder confers. chipotle to host a special mid-quarter call on june 27th.
to discuss the company's strategy under its new ceo and apple music has surpassed 50 million subscribers, including both paid memberships and trials this is up from the 40 million it reported back in april. sara >> let's get more on today's markets selloff with bob pisani and mike santoli you say this is a logical place to stall and pull back question is, how far does it go? >> well, that is the question, sara i think we came into this week at one of those logical places, not just the eight-day winning streak but you also were up about 4% also the s&p 500, you fell off pretty hard about two months ago so a lot of people watching. at this point, i don't think today's decline is any kind of a game changer you've had a couple extra clicks of the ratchet so slightly tighter financial conditions, let's come to terms with these bond yield levels
>> first, eight straight up days is enough so the market's a little bit tired maybe a little bit overbought. that's one factor. but number two, we've got this inflation issue back again the gas prices were higher and the empire state survey shows prices paid the input prices were notably higher as well so sort of back to this inflation worry. my sense and i agree with you, is that this is different than february when we had that wage growth remember the s&p was down 50 points that day in february when the jobs report came out we're only down 25 points, half of that, and the volume is much lighter so tomorrow's going to be a big day the next couple of days, to see whether we actually start rolling over again on these inflation concerns my sense is that maybe we won't this time, that i think the market may be getting a little more used to somewhat higher inflation, and it's different when the -- when you're seeing yields go up because the economy is generally still pretty good and i got some moderate commodity costs. >> hey, guys, i was just wondering what you're hearing on levels i mean, with the ten-year yield
at 308 and the dollar at highs of the year, both of those things can be harmful to stocks. so what sort of pain points should we be looking for >> i have to say i'm not hearing a lot about specific yield levels that are going to all of a sudden flip the switch and make it bearish. i think it's a process of investors kind of making their peace with each level. if you look back, the five-year note at labor day was 1.6 so ultimately stocks can go up against those head winds but it takes a while once you get to each fresh level >> the key question is, do we roll back towards 2,500 where we were twice already this year or do we just roll over for a little bit at the end of the day and start testing those recent lower lows that we had here, which the less than 100 points away my sense is no tomorrow, if we end on an up day, that will be a major sign that the market's starting to get used to higher rates >> bob, mike, thank you very much so is the rally taking a bit
of a breather or are we in for another round of volatility? let's bring in art hogan, chief market strategist. art, good to see you i want to make money between now and the end of the year. do i want big stocks, small stocks, international stocks, no stocks, what >> you definitely want stocks, tyler. our guess is that the small cap is going to outperform large cap in the form of the russell 200 0. we've already seen that year to date just rub temember the russell 2, largely not affected by the strong dollar, not affected by domestic focused companies, certainly a larger beneficiary of lower effective corporate taxes so i think the russell 2 continues to outperform. it has on a year to date basis and probably your best bet when you think about, you know, how to start of position yourself, if you will, into the end of the year >> as my core position, do i want to just buy an index fund that buys the russell 2000 >> that's one way to do it we think that sort of active invest is actually going to have
a resurgence here in 2018. i think a lot of that is showing up in correlations breaking down we've seen that happen on a realtime basis throughout the course of 2018 we started to see that at the back end of 2017, so you actually may do well in stock picking if you have the time to do the homework. we certainly think -- >> pick me some stocks >> we love some energy we love us some energy this year energy's going to continue to look pretty attractively valued, three names that we like there we like pdx, high crush, and we like select energy, wttr three names that are really dominant in the u.s. production and exploration for energy, and i think there's a three names that we're going to hear a lot from this year one is a sand play, one is a water play and one's the largest north america emp play so when you think about energy, you think about north america's ability to produce >> i know you're sticking domestic with the russell 2000,
but do you worry at all about the trade headlines the fact that u.s. ambassador for china says we're still pretty far apart on those trade negotiations, we can't tell whether there's progress on nafta or not, these are huge issues for business across this country and clearly for the markets. i'm not sure anything negative is actually being priced in. maybe it shouldn't be. >> well, i think a lot of negative is priced in. i think the biggest head wind this market has had this year is concerns over trade policy and the problem with that is how you phrased it, sara yesterday, we had this glimmer of hope, this olive branch that we'd see negotiation with china and that gets wiped out today with a one-liner >> where is it priced? where do you see the valuations lower because of trade head winds? >> we had earnings where the s&p 500 had 26% gains on 9% revenue games in the market. >> so overall. >> yeah, overall when you think about the fact that you have s&p 500 and it's growing 1.5% and it's growing earnings 26% and revenue growth of almost 10% so not moving on that means that head wind is
fears of a policy mistake in either trade or monetary policy. that's exactly where it's not priced in. i think nafta relief comes before china relief does on trade. the problem is it's a black box. we aren't hearing any news and when we do hear news it's throwaway lines that give us either a glimmer of hope or put us back in despair and that's exactly what we're doing on a day-to-day basis >> where are the linkers when we need them? >> maybe there's nothing to leak, tyler. >> there's no news to leak >> good to have you, art hogan >> thank you so much we've been talking about it, the rise of u.s. interest rates and the dollar, creating issues outside the u.s. for sure. some of the problem children of the global economy are back and in focus italy, its ten-year yield at its highest level in two months on concerns that the government that's coming into power is going to raise spending cut taxes, and hate the euro too the turkish lira plummeting again today, sinking to a record low after moody said there are
risks in that country's banking sector and they've elevated because the president there is promising to take even greater control of monetary policy finally, argentina, we wait to see the results of a massive local currency bond auction worth about $30 billion. can argentina roll over that much debt before the notes expire tomorrow? we're waiting for results in the next couple of hours let's bring in doug sandler, global strategist with river front investment group we haven't talked must have about what has been a very, very tough couple of weeks for the emerging markets, which are widely owned in a lot of portfolios in the united states. are you worried about any kind of contagion effect from some of these problem children that we see starting to rear head and spreading into u.s. stocks or u.s. bonds >> yeah, not particularly. you know, let's remember, emerging markets were the number one performing asset class last year, so it's not surprising to see some digestion
ultimately, emerging markets have trading with the dollar, so dollar strength isn't a good thing for emerging markets and so much of their debt is dollar denominated so dollar goes up, their financing costs essentially goes up so right now, that's, i think, what's driving it as art said earlier, certainly we're also in the middle of trade negotiations with two big areas of the emerging markets, which is china, and then the nafta countries. so, certainly something to watch. >> you know what we got to interrupt you. i'm so sorry about that, but we told everybody president trump was meeting with gop leadership on the hill to discuss priorities they finished up that lunch. let's listen in. >> and reviewed all of the new developments abroad, not only the decision on iran but also highlighted the meeting on june 12th in singapore. we were all in a celebratory mood as a result of having approved the 21st circuit judge
just a few moments ago that means that 1/8 of the circuit judges in america have been appointed by donald trump and confirmed by this republican senate so we think we're making dramatic progress on that front as well, and of course everybody's excited about the condition of the economy and the way the country seems to be in an upbeat mood heading into the fall election. >> tomorrow, the senate intelligence committee will vote gina haspel or the committee she is quite likely the most accomplished person ever to be nominated as cia director, and she reiterated this morning in a letter to senator mark warner, the ranking member on the intelligence committee, that she did not believe that the cia
should ever restart any of the interrogation program for which she is falsely accused of participating in actually, she learned about the program in some detail a year after members of congress like nancy pelosi and others were briefed in detail on it after 9/11 and i would just say that john brennan, who was the number four at cia, who was confirmed with a vote of 64 bipartisan votes in the senate, he was number four at the cia whereas when she was there, at this particular time, she was the equivalent of gs-15, roughly a major or lieutenant colonel. obviously not a management person when it comes to running the cia. but i think the democrats are running out of excuses to block this highly qualified nominee, and i hope more of our senate democratic colleagues will come across the aisle and support her as they should >> as the leader pointed out, we had a good discussion with the
president today, and as the leader also mentioned, a lot of it had to do with what's happening in the economy, and i think the president rightfully can take great credit for some significant strides that we've made if you look at the economy today, i think it's a reflection that a pro-growth, pro-jobs agenda can make a profound difference in the lives of american people. unemployment is at a 17-year low in the month of march, there was a record number of jobs created, 6.55 -- i should say number of job listing, 6 p.55 million job listings, a new record about 800,000 jobs have been created since tax reform passed last fall so on the jobs front, on the wage front, on the growth in the economy front, there's been a lot of progress, and you compare that to where we were just a few short years ago, and you can see where a pro-growth, pro-jobs agenda really does make a difference in the lives of the american people. we want to continue to work on that, and the president does as
well, and keep that focus on the economy, keep that focus on jobs, keep that focus on wages and american families and how we can improve their standard of living and their quality of life by putting policies in place that allow them to keep more of their hard earned money in their own pockets and an economy that continues to grow and expand and create better-paying jobs. >> we had a very productive meeting. >> that was senator thune, one of the republican leaders in the gop senate the gop leaders in the senate. concluding his remarks about a luncheon today with president trump. so, let's now go to kayla tausche for some breaking news from the white house >> hey, tyler. one of the issues that was going to come up at that lunch was some of the legislative priorities that the white house had, among those moving the relief bill on regulation for financial institutions and i've just learned from four sources that the house is expected to vote on the senate's banking bill on tuesday, this upcoming
tuesday, so a week from today. that is a significant movement for this piece of legislation that had previously, for the last several months, been at a stalemate between the house and the senate but this is a significant obstacle that has overcome the scheduling of the house vote on this bill. i'm told the house will then take up some additional legislation on capital formation and small business relief that were not included in the bill but that they're going to try to pass this by memorial day and by doing so, they will vote next tuesday and it is expected that the president will vote as soon as it gets passed or will sign this piece of legislation as soon as it gets passed back to you. >> an important one, certainly for community banks and regional bank banks, lessens their regulatory load here's what else is coming up on "power lunch." pob t pop the bubbly look at what the retail giant has accomplished since then and what industry could be ripe for
disruption by amazon next. >> allowed to drink now, amazon. 2 1. >> it can go to a bar. place your bets. the ceo of ceas aar's weighs ino the supreme court ruling will it be good for his business and sports ratings 'ralovwee l er this story. "power lunch" is back in two minutes. 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. 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.
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someone needs to buy amazon a drink because today marks the 21st anniversary of the company's ipo. since then, it's up more than 100,000% it has a $700 billion market value and its prime service has more than 100 million subscribers. after revolutionizing the retail world, what is next for this company? joining us now, brian white, global head of internet and software research and jason, senior editor at read code good to have you here. brian, it's going to be easy they're going to do 104,000% over the next few years. >> our price target indicates it will exceed $1 trillion and it's possible during jeff bezos' lifetime that he becomes the first trillionaire it's very possible >> and is there any risk to this big battleship is the main risk regulatory? is it that it gets too big for
its own good what >> well, i think, you know, when you only have 1% of the global retail market and 4% of the u.s. retail market, there's still a long runway in terms of the retail aspect of it. in the cloud, only about 15%, 20 w 20% of workloads are in the cloud. so there's still a long runway there. and you're seeing advertising start to kick in, and there's probably some new market opportunities, so to answer your question, i would say probably regulatory but it's a pretty tough argument to make that there's any type of monopoly status today >> jason, what do you think the biggest risk, if any, is to amazon's future? >> i'm going to agree there. the only thing that seems like a -- at all feasible in slowing the company down right now are regulate regulatory concerns. does the company recognize the power it holds and take that
responsibility, you know, super seriously. we've seen the hq2 campaign for a new headquarters, brilliant marketing, but it's rubbed a lot of people the wrong way, because of the power disparity it puts on display so that's the only, you know, it's a hard case to make i don't know what the regulatory, you know, limits will be, but i agree that's the only thing right now that looks like a real potential impediment >> why isn't profit an impediment i know it never has been with amazon and investors just give bezos and they've earned it, a long leash, but i read in a cnbc article that apple and a quarter profits more than amazon has in its entire 21-year-old life. >> that's true definitely true. >> can that last forever >> well, you know, amazon, if they wanted to be more profitable, they could they'd grow slower you know, it's the same with a lot of these other, let's say, maybe saas companies if they don't want to go out and acquire as many customers and grow slower, they could be more
profitable today >> isn't it margin too. >> >> it's definitely a business that's not a margin, say, like a hardware company or a software company. >> like apple for sure >> so it's a different margin profile but they could be more profitable if they wanted. >> which i think about whether or not to buy the stock, though, i think of the law of large numbers, what could slow it down itself melissa always plays would you rather on fast money would i rather have a stock that's already grown 105,000%. it can go to a trillion but can i get something better somewhere else >> well, i think because there's still such a long runway in retail, there's a huge opportunity, and so when you're big and you're the leader and you've got the brand, and you've got kind of the magic formula here, i think -- i'd rather go with an amazon, because we know this market more of it's going to go online and we know there's
new areas of growth, whether it's cloud, or we could talk about health care or financial >> is this a -- is amazon unadjacent, unamazonable in other words, does it have a moat that will protect it? if you look back at the history of companies that seem to be indomitable, dell computer, blackberry, ibm, you go back through dozens of them >> was that phone i used to have those two phones i used to have. >> motorola. and i wonder whether there is some way that amazon's history could mimic that but i got to confess, i don't see it i mean, myself >> yeah, i think -- i mean, a big key here that we don't talk about is sort of the execution of the top and consistency of the top management of the company. so, when i think about, you know, can someone amazon amazon, you know, i'm thinking years out where perhaps jeff bezos steps aside and there's new leadership team but again, the group of people
under him, you know, you could poke holes for a lot of reasons in sort of diversity and lack thereof at that level, but the group of people under him have learned the amazon life forever, that as long as they're at the top of the company, it's hard to think that execution will start failing. >> all right, jason, thanks very much, brian, thank you for coming in. good to have you ebola is back. we're going to tell you where and what's being done to contain it and as we head to break, take a look at the retail names that are bucking today's down trend. mattel, under armour, coors, big lots and fossil. lots more ow lchahd."perun" ea [ male announcer ] eligible for medicare?
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this easy-to-understand guide will answer some of your questions and help you find the aarp medicare supplement plan that's right for you. welcome back to "power lunch. the world health organization deploying vaccines to the democratic republic of congo in an effort to contain an ebola outbreak meg tirrell is joining us with the latest. >> reporter: there have been 41 cases of ebola reported in the democratic republic of congo according to the world health organization the world is better prepared than it was for the massive outbreak that started in 2014 in west africa that ultimately
infected more than 28,000 people and led to more than 11,000 deaths for one thing, there are vaccines available to deploy and the w.h.o. says it has a supply of more than 4,000 doses of the vaccine from merck the w.h.o. shows it's been shown to be highly protective against the ebola virus in clinical trials it's maintaining a stockpile of more than 300,000 doses. johnson & johnson also developed vaccines, and it's got a stockpile that it's ready to deploy the outbreak is settled in a remote area of the company about 175 miles south of the capital of the province, a city of more than 1 million people. meanwhile, last week, president trump requested congress rescind the remaining $252 million in funds from the 2015 ebola outbreak response so folks are a little concerned about, will there be enough funding, will the u.s. jump in to help with this outbreak. >> that was money that had gone
unused from the previous outbreak so it could have been redeployed or there's a lot of ammunition already there >> there is some ammunition there. the w.h.o. estimates they need a budget of $18 million over 3 months to take care of this is what they're saying right now. they don't have all that money allocated just yet, at least as of their recent reports so it's unclear where the rest of that is going to come from. the u.s., though, had that leftover from the previous outbreak and president trump doesn't want to keep it allocated for ebola. >> all right, meg, thank you very much. sharp jump today in the ten-year treasury yield up to nearly seven-year highs and that is taking a toll on the housing market diana is live in washington. >> mortgage rates loosely follow the trend and today's jump will mean a big move higher for the 30-year fixed which has been on the rise since the start of the year the 30-year fixed started 2018 just above 4%. lenders today hit an average of
4.75% for the best borrowers and 5% for average borrowers it was below 4% just last september so now we're about a full percentage to point higher, all this according to mortgage news daily who says this break hire carries serious technical momentum freddie mac's chief economist says the symbolic risk of a 5% mortgage rate on top of higher gas prices may cause a slowdown in home buyer demand, particularly in western states and excerpts much more of course on cnbc.com. >> we will be certain to read it thank you very much, diana let's get to courtney with your cnbc headlines at this hour >> president trump giving an update on first lady melania trump and her recent kidney procedure before a speech of the 37th annual national peace officers' memorial he shared how she was feeling. >> i want to start by saying that melania is in the hospital doing really well. she's watching us right now. and i want to thank the
incredible doctors, walter reed medical center they did a fantastic job so, thank you, and she sends her love >> russian president putin driving a truck at the opening of a new bridge linking russia and the crimean peninsula. he was behind the wheel of an orange truck but led a small convoy it was broadcast live on russian state tv united airlines bringing you back tomato juice after briefly removing the beverage. it reversed course after a deluge of complaints tomato juice tastes better in the air. i'll have to give it a try that's a cnbc news update at this hour. >> that's so funny that is almost always my drink of choice. >> never had it in the air >> only on an airplane i don't know why >> because it tastes better. >> and who knew putin can drive a stick shift. what a man all right, thank you still ahead, the path is clear for states now to legalize
[ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. welcome back to "power lunch. taking a look at stocks right
now, we're off the worst levels of the session but the dow is still down nearly 200 points, nearly 1% drop, therefore the nasdaq s&p 500 down about 0.75% almost all the s&p sectors are lower. energy just popped into positive territory as crude oil turned positive but overall it's fears of rising rates with a ten year yield above 3.08 >> well, the ripple effect of the supreme court ruling to legalize sports begt tting is working its way through the sports industries and shares of caesar's are up since yesterday which would how's the casino giant hoping to capitalize on the news contessa is live with ceo mark frissora. >> reporter: and tyler, this is mark's first interview on cnbc since he joined caesar's such big news, a really big impact on your share price the immediate impact for
caesar's >> well, immediately, we'll probably be in a couple states this year. sports book obviously is existing in nevada we're already in nevada and we do well there and obviously new jersey and we think mississippi will be the next two states -- >> we've got a frozen shot there. we'll work on getting it back up and get back to contessa with the ceo of caesar's. we'll stick with the story on gambling what are the odds that the ruling will actually boost sports ratings for that angle we'll go to julia boorstin >> some are betting that betting will increase sports rating. the ceo of samba tv which analyzes tv viewing data across platforms telling us that he believes gambling will drive more viewership. he goes on to say much like fantasy football expanded nfl viewership and interest, legalized sports betting will drive tv audiences back to live game broadcasts for all sports
just last year, nathan predicting that if sports betting were legal, roughly 10% of nonbetters would bet on sports but a lobbyist for the nba and mlb argued it's not guaranteed that betting would boost ratings and that the league should earn a fee on gambling revenues it's unclear how media giants who have spent billions of dollars on sports rights will want to participate in the complexities of sports betting espn backed away from a potential investment in draft kings back in 2015, though comcast ventures invested in three different rounds in its rival, fan duel. back to you. >> we'll have to watch got a lot riding on it thank you, julia still ahead, the battle over 5g verizon ceo lowell mcadam on where his company stands in the race to reign supreme. and here's a look at the dow 30 heat map. the dow down more than 200 points
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contessa brewer and her exclusive with caesar's ceo, mark frissora. >> the question is how much do you want to leave on the table, right? mark, sorry about the technical glitch we're talking about the big impact that the supreme court ruling will have on caesar's itself what do you anticipate >> well, we're excited, because we think it's -- we're in the best position to take advantage of it. we've been very focused on digital and mobile as platforms that we want to incorporate in our business model and this plays right into that. and there's a couple states that obviously will be first in line. one of the states we're already in is nevada so we've been doing this for a while and we're excited by the size of the opportunity, aga, american gaming association, right now says that illegal sports bettings is around $150 billion. that's the handle a year and we think it could expand as we get what we call in-play experiences, software development into in-play experiences and that starts to grow in the business. >> are you concerned at all about some of the negatives that come up, that the potential for
game fixing will increase, that gambling addiction could be more widespread than it currently is. >> we think those issues will be more resolved because what happens today, it's an illegal market and people are, you know, it's not -- it's not monitored properly and there's an awful lot of stuff that goes on that will not go on in a what i call legalized environment. so we think it will clean up the game and clean up sports betting. >> how much of a benefit is it that you have this established sports book in las vegas that you can duplicate and put into play right away? >> well, i think that's exactly the point. we have that capability. we also sold a company called platica, which was a large social mobile platform game that we sold during the bankruptcy for $4.4 billion and we still had that core capability in-house so we're able to set up very quickly to the states that pass legislation with the paspa repeal so again, it's probably 13, 14 states already have legislation
that's being moved through their respective states to have this legalized, and it could hit every single state in the country because everyone needs these, what i would call, tax revenue dollars that come from this >> mark, you brought up the bankruptcy you've now had two quarters after emerging from bankruptcy you're spending $500 million to buy back shares, a big investment in indiana, and yet for so many years, caesar's was under the sort of tightening screws of hedge fund managers. how do you catch up with capital reinvestment when you're competing with wynn, mgm or the venetian across the street >> we think that's an exciting opportunity, actually, because we did underinvest during a period of seven or eight years but since the bankruptcy actually started, we've invested $3 billion in total capital and we'll continue to invest at a clip of around $600 million to $1 billion a year. we're about 50% of the way through on the strip and then we
are building a convention center, one of the largest convention centers we'll have, actually, behind the high roller, the wheel that you see here and so we're excited that this actually says that we actually have more upside, because every time we invest in a room product, we get higher pricing for it, higher adrs so that provides, if you will, more wind in our sails as we go forward the next three or four years >> non-gaming revenue is so very important in las vegas caesar's is taking it to an extreme with new properties in dubai and cabo that won't even have a casino element. >> that's correct. >> why >> well, for us, entertainment is growing food and beverage and hospitality is growing so in these markets, we have a chance to put our name and manage a facility that plays to our strong suits in entertainment and hospitality. and believe it or not, in las vegas, we make more money on the hotels than we do on the gaming product. so it's a fast-growing area, hits millennials, and we think in dubai and cabo, it's an asset-light way for us to have somebody else invest the capital, put our name brand and put our total rewards program in
and then manage the facility and manage the entertainment function itself. >> it's so great to talk to you today. it just happens to be on a really historic day, the day after the supreme court made this decision. mark frissora, so thankful that you were able to join us today thank you for your time. >> thank you, contessa i appreciate it. >> good stuff, contessa. thank you so much. while she was speaking, i want to show you the ten-year yield it hit the highs of the day, 3.095. let's see if it's held there or if buyers have stepped in as a result back to 3.085 that 3.095 was the highest level seen since 2011. shares of verizon slightly lower right now. verizon chairman and ceo lowell mcadams speaking exclusively with david faber earlier and david joins us now with the highlights. >> reporter: hey, tyler. we talked a lot about 5g it's something we've talked about on cnbc from time to time. as something in the future but it is coming coming quickly of course i'm talking about the next generation of wireless services it's not really as much for your
handset as it really is about the internet of things, machine learning, and the consumer as well but in a very different way than we've thought about it. it's not just because you're going to get your video faster on your phone. verizon announced this morning with us, actually, that los angeles will be another one of four markets that they are ready to introduce 5g services in, in the fourth quarter of this year. of course, they've been laying fiber which is needed. they've been doing a lot of other things in getting ready for that it's not going to be ubiquitous in any way but it is going to be a significant step towards having 5g available in many markets around the country over the next few years mr. mcadam, the company's chairman and ceo, of course, oversaw the move to 3 g and 4g by verizon, says this is nothing short of a historic moment for his company. >> i've been in this business since the first phone call back in '84 i have never seen a technology
that will be more disruptive and have more benefit for consumers than 5g. it's just so completely obvious to me. and it won't be the traditional way where your handset -- speed to your handset will get you all excited. it's the ability to do autonomous vehicles. you can't do autonomous vehicles without 5g you saw a couple of health care applications the opportunity to lower health care costs and have better outcomes because of 5g and the latency of it. you saw a gaming console yesterday or a gaming service yesterday, because of the latency of the network and for your viewers, that means how responsive the network is, you don't have to have big gaming consoles you don't have to have tethered devices. >> he's referring to yesterday where i was able to go to verizon's test site where it has 5g up and running in new york city and invites a lot of developers in to figure out how they want to do things with this new technology the key or one of the keys to it is the lack of what we call
latency. there's no delay, whatsoever it's immediate, and so you could imagine when he mentions health care that a service provider could be in one premises while the patient is on another, whether it be physical therapy or even one-day surgery by robot, remotely. these are all things that 5g will allow for us given its lack of latency we didn't talk a lot about revenues or earnings per share in this interview. it was more higher level in terms of what the future's going to look like and all the different potential applications that are going to be brought to bear on the disruption, as he said, that will also be brought to bear as a result of 5g becoming ubiquitous over these next 5, 7 years or so. but i did ask as well about something near and dear to investors' hearts, which is what about content? is verizon going to keep the focus on what it's got or is it as we've reported in the past going to continue to watch and wonder whether it should buy a charter or perhaps a cbs or any of the others out there. here's mr. mcadam. >> we've looked at that over the
years, and we made our decision to go digital. that's why we bought aol and yahoo and we talk now about super channels of sports and finance and news and some entertainment. we've had the chance to go down the linear model, either by purchasing satellite companies or purchasing content companies and that's not in our -- that's not our strategy >> well, the future's coming, guys we'll be watching it closely, of course, in part because it is a big business story, broadly speaking, not just for verizon, but for so many of the companies that will be affected. back to you. >> i think he called it the fourth industrial revolution david, thank you good to see you. management departures and a price target cut sending tesla shares sharply lower today should you ignore the headlines and bet on musk's vision trading nation takes a look with some breaking news in just a moment on tesla. >> announcer: the cnbc trend tracker live data board is brought to you by the cme group.
phil lebeau, what's happening? >> reporter: guys, we have a report from reuters that tesla is shutting down model 3 production from may 26 through the 31st this is to work on the model 3 assembly line. shares of tesla after this news came out minutes ago are moving lower. we point out in the earnings conference calls, elon musk said, look, periodically as we ramp up production of the model 3, there's going to be stoppages in the production either at the fr fr freemont plant or outside reno, nevada reuters reporting the model 3 production line is shutting down to adjust the line between may 26 and may 31st, and that's a reason why shares are moving a a little bit lower in ten to 15 minutes. >> feels like investors are losing patience with the delays, phil, thank you. speaking of tesla, we trade the stock now with the trading nation team.
tesla tracking for the fourth day in the red time to step in or should you be staying away from the stock? matt of miller paybacking and dennis with volatility management part was due to the downgrade slashing the price target of the stock. on production issues, hurting profitability, how does the stock look >> look at the chart on the stock, now breaking below -- two key support levels, one was the 285 level, the double pop higher from 2014-15, and once above that, that became new support. now that we watch that, it's a quick move to 250 level, that's the line in the sand investors are going to get concerned, and you have to be careful here, the short interest is high, higher than in march, shot right back up, and if
you're not a deep pockets guy, you need to be careful on the short side >> yeah, i mean, people underestimated, dennis, this stock before, and it's still got plenty of believers, but now management shakeups, production delays, and it looks like the analyst community is not so hot anymore. >> yeah, i mean, this is a stock haters got to hate they don't like the stock, negative spins to it, production shut down, but people who love and hate the stock, the issue with tesla is there's a lot of depth, so the stock can sell off because we're seeing interest rates go higher, but they need to service the debt at higher rates which could have a bigger impact on earnings short interest matt mentioned is key. a lot of people own the debt, and in order to hedge that debt, then they short the stock as a hedge. the anomaly we have in the options market is that calls are trading at a premium to where foots normally strike. >> all right thank you for highlighting that. by the way, that morgan stanley
price target was a from 391 to 291. for more, go to cnbc.tradingnation.com breaking news now. >> reporter: north koreans are saying they are suspended high level talks with south korea planned for wednesday, citing joint u.s.-south korea military drills as a provocation and they are going to cancel talks scheduled between north korea and south korea for tomorrow in south korea. north korea saying the provocation aimed in invading the north, so, therefore, their argument is this is unacceptable and talks need to be postponed the question is here, what the implication will be for that summit with president trump, which is scheduled for next month. does that indicate wobbliness in that we will ask the white house. they have not commented yet on the headline that just crossed
the wires in south korea >> thank you very much when we return, we deliver the check. "check, please." >> and now, the latest from tradingnation.cnbc.com and a word from our sponsor. technicians often look to wedge patterns as catalysts for stocks a bullish wedge occurs within an uptrend and consists of two converging trend lines. a break in the line is a bullish signal, and conversely, a bearish wedge is a down trend with two converging lines pointing up. a break of the lower line is a bearish signal as a control enthusiast,
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stocks are down in part because bond yields are up, 10-year note yield now 3.08% high as it's been in seven years. >> maybe it's due to north korea headlines. thank you for watching "power lunch," and "closing bell" starts right now >> i'm wilfred frost, and coming up, markets set to break an eight day winning streak, and 10-year treasury yields hits a level not seen in seven years. i'm phil lebeau in arizona, after a series of accidents around the country, is the development of those vehicles slowing down cnbc headquarters, home depot misses expectations, details on what it means for housing and key retailers reporting later this week. >> in las vegas, the ceo of caesar's spoke with me minutes