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tv   Power Lunch  CNBC  June 4, 2018 1:00pm-3:00pm EDT

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give me a break. thanks for nothing >> let's remind you that the nasdaq is above its all time closing high at was 7588. you are at 7598. "power lunch" starts now >> thanks scott, i am melissa lee. tim cook is about to take the stage with the stock and hitting new highs today. we are live in san jose, california the president is heading to canada and talks with china hitting the wall, are things about to get uglier. the bulls are firmly in charge today. where are the money going in this rally "power lunch" starts right now
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oh, welcome everybody to "power lunch," a busy day as so many have been lately. i am tyler mathisen, nasdaq is 100 and as scott just pointed out. the nasdaq is above its record closing high right nowssa mentiw highs there, tech sector of director highs, news about to break from the developer's conference a number of other stocks are at record levels, amazon, netflix and macy's and tiffany sara >> i am sara eisen, live today in lowerttant three world trade centers open in a few days 80 stories over 2.5 million square feet of office space. it is all apart of the big apple building boom in lower manhattan more than $7 billion of me mega development joining me this hour to talk
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about it, legendary developer, larry silverstein. and also joining me washburn back to you michelle >> i am michelle caruso-cabrera. we are live in san jose where tim cook is about to take the stage. josh lipton is live. >> reporter: some of the big themes we'll be watching here. apple may introduce new tools to give users so much time they spend on their devices and digital well-being and improvements to series which is actively used on half a billion devices all around the world and making it that digital assist t
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assistance can work and as well as an upgrade of a.r a market that tim cook is passionate about we'll listen in and bring you all the headlines as they cross. >> we know you will. thank you so much josh, it is going to unfold here during "power lunch." there is moratorie turmoil. cayla tausche is live with us. >> reporter: that was what resulted in a temporary trade truce. commerce secretary ross will be briefing the president today on cnbc last month he says if this beijing trip yields nothing, talks with china will be over.
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>> we are hopeful that something constructive can be done but if it does not meet the president's requirements, it will not go forward and they won't go forward if we don't have really good protectn of intellectual property and really good protection against force technology transfers, all of the important longer term issues >> meanwhile, the u.s. have distanced itself with allies by imported goods of europe, canada today prime minister theresa may told trump in a phone call it was unjustified and deeply disappointed it is worth knowing not just international allies were on edge based on the white house's trade policy the coke brothers are lawn fiun
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a million dollars -- >> cayla tausche thank you, reporting fromc. eamon is live at the white house. >> reporter: the president got legacy in his mind the president summed up from his tweet. he says this is my 500th day in office and we have accomplished a lot. massive tax and regulation cuts and military and vets and lower e and immigration and best economy and jobs ever and much more the president is going onto say we had repealed and replaced done of the savings of our country for one trillion dollars except for one person. it is getting done less expensive plans will be announced this month drug prices are coming down. as the president there tweeting
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about his accomplishments and the campaign promises he lived up to. he's also tweeting today about an issuet could dominate or at least take part in the next here is what the president said on the issue of the presidential pardon where the president himself saying as it has been stated by numerous scholars. i have the absolute right to pardon myself, why would i do that the never ending witch hunt led by 13 very angry and conflicted democrats and others continue inside the midterm the president here raising the prospect of using the presidential pardon powers to benefit himself, that's nomethin done before and come templated before and there are some legal questions on whether that would be allowed under the constitution of the united states the president here asserting abroad self power, we'll follow that in the next several days.
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>> aeamon, thank you very much let's go back out to california where tim cook is taking the stage at the developer's conference let's listen in for about a minute as cook talks good morning good morning i hear the student developers. good morning and welcome to wwdc, 2018 it is great to be back in san jose with everyone we have developers here from all over the world this morning from, 77 countries that's more than ever before >> from tim cook, we'll keep you posted anything that comes out of this. we have a lot of discussions coming up during our two hours
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a lot that'll be discussed will be about software i am proompro d bug fixes and more on series or other topics, we'll keep you up to date on that the market does appear to be brushing off any concerns that are there about trade. we have the dow holding onto triple digit gains as you see right there as about 190 points there about. russell 200 hit another record inner day high as scott mentioned a moment ago, nasdaq is trading a bit on its all time closing highs our
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>> joe, how about you? is your take or equity are in a good place or which would you prefer in the decembomestic rea, small or larger caps >> the u.s. equity market is likely to end higher you do have some risks a some head wins that we are dealing with whether it is broad issues in europe or here at home as it relates to trade all of this is happening against the solid economic backdrop. let's not also forget of this tax legislation has provided a
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meaningful tail win to corporal profits. you have the s&p 500 earnings up, north of 25% and we are expecting it to beat north of 20% over the course of this year as far as large cap or small cap, i think small cap will benefit a little bit more from the fiscal stimulus there are a number of risks and those risks will lead to high level of volatility and choppiness over the year >> darren, does that mean that you would avoid anything international. you were so gung-ho on domestic stocks did you stay away from europe? >> no, not at all. i think s quite the contrary international stocks and may really struggled of italy and we had some issues that went on and from their attractive standpoint, we are rising in the united states and everything else is staying flat or dropping
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a little bit right now u.s. stocks are trading about average and international stocks are trading at its long-term if you factor it all in, barr borrowing some of these trade issues, we are the strongest right now. i think eventually that's going to fade and that realis it is kind of like the warriors won the first pick in the overall draft. we don't need it right now when things calm daown, international will slow down >> where would you prefer to put your money >> well, as we look at the global equity markets, we are neutral equities and that's really because we have seen a meaningful bull market over the last nine years.
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as we are getting later and later this the economic expansion, we know that everyday we are getting closer to the next recession while we don't believe it is imminent we want to be mindful in light of all the risks out there today we stand neutral and taking one step closer it does provide a little bit of stability in times of market stress to answer your question, where do we see opportunity, it is still in u.s. equities but we want to be mindful against all of the headlines and head winds we have been reading >> thank you very much we appreciate it >> lets go back to san jose, california with josh lipton. >> tyler >> reporter: tim cook on stage is talking to 6,000 people right behind me here so he points that he now has 500
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million weekly visitors to that app store. he points out that apple is going to cause a big number here the money of developers is going to out cross $100 billion. apple's software chief, he's announcing ios 12. right out of the gamte, he wants to remind developers when apple announce its software, people move to that new software very quickly. half of the customers moved to ios 11 within seven weeks. we are going the standby here and listening to some of the new features that ios 12 promises and get back to you guys >> josh lipton, thank you very much >> brand new skyscraper is opening this week. sara eisen is there. what do you have coming up
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>> reporter: coming up we'll hear from the man who made it all happen live from the incredible three world trade centers with the developer, larry silverstein when "power lunch" comes back. we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering?
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what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.
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welcome back to pur"power lunch," i am sara eisen.
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the latest step of bringing downtown manhattan back. our bob pisani has more on downtown's revival >> reporter: the financial district of new york is experi a renaissance downtown now a major hub for tech, media and advertising firms. 61,000 people lived in the financial district more than ever b there is tourists galore, so many that you can barely walk down the street. 8% increase from 2016. hotel business is booming as well there are 7,000 hotel rooms and 32 hotels downtown and another 2,000 are under construction >> while there are still financial firms here, we got tech and media and creative firms who come down and change the look and field of the neighborhood >> the world trade center, it is taking a while
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the 8 million space is sewcoming lease and newly opening three world nt, nearly 40% leased downtown leaderstrying to improve traffic flows and moving to right in front of the ncac. >> let's bring in the man behind the incredible building. joining me, chairman of silverstein property >> thank you for being with us >> my pleasure >> what does it mean of the rebirth? >> well, it is part of the series of steps forward. we have been taking for the last 17 years this needs to bring tower three on board is particularly exciting it is a large building and over 2.5 million square feet of
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office space and all together of 2.8 or 2.9 million square feet of building. >> how about the process you started this buig in 20>> well, actually remember the was a financial crisis about that time and then there was a period of time when it was extraordinary difficult to get financing, mortgage financing for building it was a time when without financing there was no way you can erect this building. but then suddenly the markets started to change and improved significantly. in the six-month, we went from incapable of getting finance for this building to getting the constructional financing that we required financially and from the marketplace. as soon as we got the financing up the building one.
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>> you have some big business coming in and mackenzy is coming in and spotify >> yes >> only 40% occupied how aru going to fill the rest >> to have 40% at the time you are open is not bad. we occupy that one and we were the only tenant in the 52 story building in may of 2006. we signed a lease with moody's and the building fell up these buildings never stayed empty for very long. >> you have a lot of competition. >> midtown and manhattan has been drying and wall street firm is for years is it becoming harder for new york to compete and for you to fill these offices >> we have leased down here for the last five or six million
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square feet of space in the building, collectively and, just a question of timeo fill the rest. it is going to happen and always does there is competition, yes, but i find that we are taking our good share of tendencies. >> new york is not being over built? >> you know when you look at the age of the existing of office building stock, you will see that they are 50 or 70 years of age in many cases. the aging process exists today of the existing office stock it is time to replace these buildings. the truth the matter is, today's corporation needs technology >> what about the tax law as it kicks in as a result of the tax, are you worry of migration of upper income level in new york >> candily, i don't see it affecting us in any major
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degree we have -- >> there are estimates of hundreds of thousands of people could leave because their taxes will skyrocket especially those making ten million or more >> there will be people who'll believing by virtue of the tax change but i would say the overwhelming number will probably not -- most of them will end up staying as we have seen in previous years issues of this nature surfaced >> do you see any turn in the market, recession or anything? >> i do not. i see the mark as being strong it needs first class new building office space for technology purpose if nothing else there are a lot of tenants out there who still needs to be surfaced we expect the service of the tower. >> larry, we'll keep you here and talking about this n for now, we'll send it back to
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you guys we'll continue with larry s silverstein in a little bit. >> thank you, now let's get back to josh lipton >> reporter: he'talking abousym. fred introduced a new a.r. measurement tool calls measure a tool that can measure real world objects and kind of permits measurements in 3-d. he placed a photo on a frame on stage here and took measurements of the photo we had an adobe exec was on stage talking about new apps for their creative cloud that's going to enable a.r. as well we know it is a technology that tim cook is excited about. how popular is a.r. and some analysay they have not lived up to the expectations e a lot of estimates there and how big it could be? a.r. revenues could hit 90
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billion by 2022. not hardo understand why these developers are so excited about this >> i want to ask you, the new ios 12 older phones faster. those upgrades did exactly the opposite to older phones >> reporter: yes, it sounded like they're saying that this ios is going to manage power a little bit better and managing how quickly they can wrap up and down and of course, that was an issue that we all heard with prior updates that it was a technical challenge there. we had to take technical steps because if we did not manage the power effectively, phones are going to shut down ios 12 is going to address that concern and managing the power up and down a little bit more effectively. >> josh, thanks for that
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>> here is boeing higher today >> bitcoin is not up today we'll tell you all about the big deal that's lifting the stock. another report of a dog dying on the flight c is delta to blame? is delta to blame? you got all the details. and target weeds more precisely, right down to the root. roundup. trusted for over 40 years.
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experience amazingill of the at your lexus dealer. is. welcome back to "power lunch.
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boeing is the biggest contributor to those gains that's after signing a deal with the french company phil lebeau has all the details. >> boeing and the french aero space company is creating a 50/50 joint venture. what they'll be using is auxi auxiliary power units. you take a look at shares of boei, this is all about growing its services division. they get their 25% revenue from the service division if we cancel to airlines and cargo operators, that makes us a much more attractive option as supposed to go out and have
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honey well or whoever else you have thinking about supplying that apu increasingly. they bring more suppliers under their umbrella if you will and increasingly come head to head with honeywell and united technologies >> trying to deliver one solution we want to ask you about this dog dying on the delta airlines. what do we know? >> we don't know a whole lot we are hoping to get answers for r the next week or so. the family's attorney says they'll be performing an autopsy for the dog so they can determine the cause of death their offer was not accepted the family is doing it
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independently. boeing once again apologized for this incident. >> something else with the airlines there are about 24 or 25 cases where animals died in airlines in airplanes, commercial airplanes last year. it does not happen it does not mean every case that something completely wrong >> why are we hearing of this one because they are suing >> they have not sued yet but they went to an attorney and to the press, therefore, you are getting more attention nobody knows what happened with this dog or it may die of natural causes we don't know. >> where are animals are not transported when they are not carried right in the cabin of the plane. >> you mean in the cargo hold? >> is it temperature control or oxygen control >> it is not like they're thrown in a deep dark cave and it is cold it is temperature control.
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>> having said that, think about this from the animal's perspective. if you have been in the airport and you see these dogs are in cages, they're barking and freaking out it is not a natural feeling so to speak i don't know, i would assume that the dogs probably there is a high amount of anxiety there whether or not that contributed to this case, we'll have to find out. >> yeah. there is truly nothing natural of air travel and i have seen a lot of customers >> humans or dogs.>> i have sees barking at the airplane. phil lebeau thank you. >> if the airplanes are coming, you may as well making money of it the ceo of the company are ki big bets on automation, that's next on purch "powunch."hard-earned points
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hello everyone, i am sue herrera. here is your update for this hour former president george h.w. bush have been discharged after
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being treated for low pressure mr. bush is deeply appreciative for the terrific care and th many good wishes that he has received secretary of stay mike pompeo was renewing his call to suspend venezuela from the group speaking to the oas members in washington pompeo accused -the venezuela president -- although officers did not fire >> and saudi arabia has issued the first driving licenses to ten women as that country prepares to lift its ban on female drivers late r this mon women campaigned to drive remaining under arrests. they are awaiting a possible
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trial. you are up to date melissa, back to you >> sue herrera let's get back to josh lipton at the conference in san jose of e latest, josh >> reporter: they're getting people behind me excited about ios 12 there was a big focus on augmented reality. he talked about 2.0 and one big change that's coming here, a.r. app looks like they'll allow multiple users so two people can play the same are and see the same virtual objects that's a big deal to gamers. we talked about photos that are captured on these ios devices every year apple added the now features here where you take a photo with some friends, applwould recommend the people you want to
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share those photos wit more a.i. chats here. and we are talking about series here of fred calling it the world most used, siri did have its critic siri lags competition in terms of quality apple is making some big hires when it comes to this. they took google former a.i. chief that's going to report directly to tim cook that tells you these guys are serious about this i am sorry >> presumably the 10 billion requests on siri per month are successfully answered? >> reporter: no question there about whether they are
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successfully answered but just that they are completed. we get real stats and we got this 10 billion and we know it is used actively on 5500. whether they'll break down or get it cly, i will let you guys know. >> the senior ed contador wiit. i will start with you. >> it could get 10 billion requests a month this is sort of the hurdle perhaps in terms of apple getting into the home in a way that amazon has been able to get into the home. >> here is the thing, the more requests you get, the smarter it becomes. that's how these things are designed amazon's echo does the same thing. it is their acknowledgment and we need more of these requests to come in that's why this update to siri
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it allows developers to plug into siri better and allowing you to set non app using siri. it just needs more data. >> complete request -- >> that happens a lot. >> she completed and she could not answer she's not great at clearing the internet the way that google is. and it is not as great with third party apps of the way amazon is. that's one of the key missing parts of siri that apple is trying to update with this >> dan ackerman, how much of that is people are spending money on games >> games are a huge part they have the huge model now where you get the games for free and you pay for upgrades it is a way completely redon and almost the entire game industry
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selling a full prize of software is largely being replaced. look at fortnight, that's a free game and that's why they're able to say $100 billion is gone out to apps over the past ten years. >> apple gets a piece of that, radioig right? there >> there is a lot of in-app services people pay that and that adds up that's the bulk of the service revenue that we keep on talking about. >> they get the 30% tax. and if you or subscription business in the app store, a year or longer, they give you 15%. >> i am curious both of you to learn what if anything that's said about what i think is the biggest game coming and that's sports betting who's going to develop that app, dan, take a whack. >> how we are closer to that actually happening, which big companies are going to get in
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bets with that, it is an industry that a lot of companies have shied away from if you make it and say for legally, does that mean everyone is going to rush in it to? >> is apple going to alloway ha it >> other android based stories and windows and app stores and apple pride itself on being a curator and a gate keeper. >> if it is legal and money behind it, there is a good chance in some form or another >> it is going to be third party. it iing to be apple itself >> ed, dan, thank you. >> thank you >> all right, sticking with technology whether it is in tesla's assembly p or amazon warehouses a lot of money is being invested in automation. they have acquired three major robotic companies.
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here they are. universal robots and energid >> joining us now is the ceo it is good to have you here. >> thank you >> people will see 75% of your revenues still come from chip equipment testings what is going on with robots here >> yeah, look, i think testing electronics have been around for 60 years now it is a very good business, it is also a mature industry. we are looking for new platform of growth for the next 50 years for the company and automation and the new form of automation of particular is a perfect platform for that. >> what kind of robots do you sell >> so the first acquisition we make three years ago is industrial arm about the size and human arm. if you looked at it, it has about six joints and looks like your arm we added a mobile platform so it
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is a little robot muiing around in your factory material >> we are showing videos of your robots now but i see that people are in there i ask and the context of what we have been hearing relates to tesla. and what he discovers when you automate too soon, you automate mistakes and he's had a lot of trouble. what's the trade off between increasing aud mitigatiing autol having humans involved >> our products are by design collaborative robots meaning they are built to work with human and they allowed incremental automation you can start with small island of automations and there are generally people involved. there are a person training the
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robot to do a task and retraining it to do a different task the next day. if the robot runs into trouble, a human can come up and help it to work the problem. it is collaborative and it avoids this big bet kind of automation and traditionally and heavy industry that companies have to make to automate >> people look at what happened in april, you got hit really hard because what happens still within your chip equipment testing when it comes to wi-fi at what point do you become a company who stock trades on robotics which is still less than 10% of your revenue verses being a chip company that rolls in with all those others >> well, we have a way to go there. frankly the industrial robot business is growing. last year it grew at 70% and it grew if access of 50% every year at the rate we are going, we expect for it to be greater than a billion dollars business for
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the company by 2021. >> we are within five years, i think the company having the center of gravity shift over industrial automation successful the downside is volatile in the revenue streams, it is unnerving to a lot of investors. that becomes a smaller part of the story of the paradigm. >> wish you the best of luck big change in the company >> thank you good to have you on. >> up next, for more on the the lower manhattan, it is not just businesses are coming back people are living there as well. it is a hot neighborhood we'll explore it after this.
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we are inside the building, since 2005, close than 200 companies have called lower manhattan their home the question now is what is next for new york's downtown revival and beyond this area the building boom is getting over heated. with us now is alex wash and
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larry silverstein. tell us where we are in that process and people moving downtown >> it is been an inspiration to watch and a miracle that only in new york could have happened the transformation have been totaled. what we see today is a downtown that's worthy of any place in the world. it is a downtown with character that mixes with living and shopping and working in a way downtown before 9/11 did not have we are so much stronger down here today >> everyone larry moved downtown to oversees the buildings going up what about residential and 3,000 residential units being built in new york city, feels like there is a lot of supply going up but what about the demand? >> i think it is more than 3,000
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jer residential units under construction currently it is harder for the people who just finishing their apartment houses the competitio because of the number of newly-built units that are available in the rental market in manhattan today, but with time, those units will get absorbed, and about a year and a half, two years from today, i think the current new supply of new rental housing units will have been fully absorbed and thereafter, i think the market will once again be very strong and very attractive for rental housing. >> we saw the new york market get hit after the financial crisis but resilience, i think, is the word because it came back pretty strong. what happens if we face another downturn, based on what you've studied? >> from what i've studied, the key to resilience is never
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giving up. larry personifies that it's bouncing back better, no matter what the hit is we honestly didn't know if downtown was going to make it after 9/11 and then after the financial crash, that was more oa hit. but every it's me bk with a better balance, more richness in the types of buildings that are here, the types of open spaces i think things are going in the right direction, but it's based on one major planning decision that was made right after 9/11, and that was to give new york more downtowns, to make it what's called polycentric. people thought that was crazy because downtown was one of two downtowns back then, midtown and lawy lower manhattan but with this decision to make eight downtowns in terms of brooklyn, in terms of jamaica queens, harlem, people thought -- >> that's the whole area >> people thought it would harm downtown but it didn't it made it stronger because it let it become more like itself it let it become different from the others and it let it become an attracter for brooklyn and jersey around it >> but just on the building
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boom, larry, i'm thinking our reporter has done some recent pieces on the impact of natural disasters, for instance, we saw what happened during hurricane sandy, so much concrete here going up at a time where hurricanes are on the rise and i'm just wondering if that representing a big risk down the road or a potential area of concern. >> there's a potential area of concern, no question, but at the same time, the buildings that are being built today are cognizant, have taken into account the realities of the flooding, e flood plains and so forth, and so what you've gotten is much more attention paid to these realities today than they had been before sandy. people are now much, much more sensitized to what the circumstances are and how do we have -- how we have to protect against those possibilities for tomorrow, because with time, they'll be there, and we just have to learn to deal with it and deal with it in a much better fashion than we had before >> we could talk hours about new york residential and commercial
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real estate but we'll leave it here for now larry, thank you for having us here ahead of the opening and thank you, alex, for joining us as well. back to you, melissa shares of merck were higher tony announcinpositive trial res drug in treating lung cancer meis with merck's head of research >> dr. roger from merck joins us now. thanks for being here. >> thanks, meg it's a pleasure to be here again. >> those lung cancer trials for ketruda are the ones people are talking about here, some people calling them practice changing what does that mean for patients >> let's stand back for a minute and just recognize that as joan shiller pointed out in her editorial in the "new england journal of medicine" just last week, progress in nonsmall cell lung cancer had been halting and slow and for three decades,
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there hadn't been much improvement in the broad set of patients who had advanced lung cancer in terms of overall survival to see now the introduction of ketruda in combination with chemotherapy, both in the nonsquamous as well as in the squamous so representing about 80% of the total non-small cell lung cancer patient population, that in those settings, we have a dramatic improvement in overall survival, well, you look at that and as a practicing physician, you say that's something i want to be able to give to my patients and it's a remarkable change after 30 years of really not such impressive results, to see this >> a lot of people have sort of declared merck the winner in that space out of this weekend and from previous data but you do have competitors in bristol meyers and astazenca and we had the ceo on this morning and we asked him about that comparison that his chief scientific
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officer made saying ketruda and optiva are like coke and if you look at the totality of the data, the drugs are the same do you agree with that >> of course i wasn't there to hear exactly what the question was. >> it's pretty much exactly that >> but what i would say is, first of all, you can't really make a coke versusep comparison, because as is well known, i mean, these molecules are chemically quite different they're biologically different it's easy to see that there's a difference in their fundamental biology, and the question that's being asked is, well, clinically, is there a difference, and what i would say is at this point we have overall survival data in non-small cell lung cancer in the first lin setting. we first described that about two years ago for patients who had high levels of a particular biomarker called pdl-1 that was an extraordinary result, and since that time, we've shown that's true in patients who have a lower level
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of pdl-1 expression, which we showed at this meeting, and in additiin combination with chemotherapy, we could improve overall survival for all patients irrespective of pdl >> -- we describe that for squamous cell carcin this particular meeting so you look across those four studies, it's very dramatic. there are no comparable data, no other agent has shown improvements in overall survival in non-small cell lung cancer and that's where we are t now. >> a major move that companies are making now is to combine immunotherapy agents you and your partner had a setback in a combination immunotherapy trial but we are seeing more than 1,000 of these trials ongoing across the industry do you think that pace is sustainable? is it the right way to be testindrugs or are people kind of throwing spaghetti at the wall a little bit? >> i can't speak to what everyone is doing but we have a very systematic way of exploring
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combinations and it's based on our understanding of the fundamental mechanism whereby ketruda acts on the pd-1 axis. that's the target. to we've thought it through quite carefully. we're not going to succeed every time, and we don't expect it but our goal is simple, and that is we want to improve the rvivae for more people who are suffering from cancer around the world, and to do that, we're taking advantage of our deep mechanistic studies. my expectation is we will find ways now that we have ketruda as a foundation for therapy, we will find ways to amplify that effect still further >> right well, we'll stay tuned for that. doctor, thanks for joining us >> thanks so much. >> tyler, back to you. >> meg, thank you very muc big interview on cnbc earlier with the ceo of mcdonald's we'll tell you what he said about the growing company that he's runng and markets have reacted plus amazon shares all-time high today and one analyst thinks the rally is just getting
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easterbroo welcome back to "power lunch. i'm michelle caruso-cabrera and here's what's on the menu. extremely low unemployment, could it actually be a warning sign for the markets and the economy? answer may surprise you. the apple of investors' eyes, companies developers conference under way as the stock hits an all-time intraday high will today's news keep the rally intact plus the moat gets bigger. amazon's push to private labels is making one analyst very bullish on the stock and you won't believe just how high he thinks it can go "power lunch" starts right now and welcome back to "power lunch," i'm melissa lee. stocks kicking off the wee gains here, the w is up 224 points at session highs right now we are up by about 0.75% right now, s&p 500 up by about 0.33%. technology consumer discretionary and staples are your leaders today utilities are the laggards
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within technology, apple and alphabet are the leaders retail on the move as well with the etfx art on pace for its be day. and oil stocks are moving lower as oil is falling on excess sus. baker hughes new field range resources are some of your laggards welcome, everybody i'm tyler mathisen here's what else is happening right now. global airlines is slashing their forecast for industry profits in 2018. why? that spike in fuel costs they also warn that higher interest rates in geopolitical tensions could add to operating risks. the supreme court has ruled in favor of the colorado baker who refused to make a wedding cake for a gay couple on religious reasons. the vote was 7-2 and according to zillow, u.s. home values rose 8.7% in april ands that the fastest year over year climb since 2006 san jose led the gains with a
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26.2% rise meantime, let's sends it down to sara eisen at 3 world trade. hi, sara >> hi again, tyler thank you. that is right. i'm at 3 world astrtrade center new york city, a massive 2.5-million square foot complex opening next week. just ahead, we will talk to the tenant, ceo of ad giant group m, why they've made the move downtown and the state of advertising, digital versus traditional, lot to get to that and much more straight ahead from downtown new york michelle, over to you. >> looking forward to that, sara thank you so much. alrigh ple, as we mentioned, new intraday high, back to josh lipton at thapple developers conference in san jose josh >> reporter: michelle, so, craig back on stage here talking about how ios devices are pretty powerful tools but sometimes some of those apps might demand more attention than we realize so apple wants to introduce new tools to give you back some of that control, so he's ing about a new feature called screen time that gives you more
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insight and control about how you spend your time in those apps you're going to get a weekly summary of how you spent your time, where you spent it there's also another feature called app limits, michelle, where you can establish time limits for each app. you'll be notified when you've kind of hit your limit on that app. it's interesting because earlier this year, we saw some pretty big name apple shareholders, they wrote tt open lr to apple saying they wanted them to develop new software to give parents more control we know digital well being is simply a much more important hot button topic right now he then switched to talking about messages, some news there, an emoji now comes with tongue detection so i know that's a big deal you can actually stick out your new tongue some new animojis as well, tiger and t-rex. and face time, this is a big deal too there is now a group face time so kind of works in the same way you'd set up a group call. 32 people, it will work on
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iphone, ipad, and macs >> i must be a luddite, josh i don't understand the sticking my tongue out, thing i could have an emoji and before it didn't recognize when i stuck out my tongue and now it does? >> that's big newsly if for my nieces they're going to be extremely excited about this so this is animojis. you can stick out your tongue, it will track, and you can is send it to your friends and family >> just a brick in the path to $1 trillion, michelle. >> thank you, josh all right. markets are in rally mode. courtney reagan is live at the new york stock exchange. she's not going to stick her tongue out at me but tech is leading the way, right, courtney >> i would never stick my tongue out at youmichle, and that's right, tech leading the way. we saw stocks move higher at the open and it's a continuation of the rally we saw starting friday morning with that strong labor report, really markets shrugging off trade worries, at least for now, thinking other fundamentals are strong enough. market participants say the
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economy is strong, corporate earnings growth is solid and when compared with the rest of the world, the u.s. is really the best house on the block when it comes to where to put your money so major averageheld but w records, the nasdaq less than 1% away from another record, russell 2000s hitting another all-time high. mid caps less than their all-time highs barring trade jitters, stocks could be in for a summer rally, neither the dow nor the s&p has seen stocks decline in june since 2015 though the nasdaq was down last , so broke the pattern across the board, at least. tech is the leading sector again, on pace for the second straight record close. followed, this, by consumer staples and consumer discretionary today. apple, amazon, microsoft, all hitting all-time highs we've been talking about apple shares off their highs as the headlines come out from the worldwide developers conference, we're still about 6% from hitting the trillion dollar market cap and i know that's a
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goal that we watch very closely. lastly, i want to end on retail. what a bright spot etf that tracks at the xrt, up almost 2%. all hitting 52-week highs. melissa, back to you >> court, thank you. iday's jobs report much stronger than expected with the current unemployment rate at an 18-year low but is there a warning sign >> the outlook is bright for strong growth and even lower unemoyment, but some see a dark cloud in the very data that looks so good. let's look at the latest forecast from the national association for business economics. above trengrowth, 2.8% this year, the trend may be as low as 1.8% so that's a full percentage point higher low inflation, this would equate to about the fed's 2% target they use a different gauge jobs, both of them above the growth of the workforce. unemployment going down to 3.7%
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and the fed funds going all the way up to 2.9% remember that number when we come back. and a very low probability of recession. take a look at the next chart. and what you see, is that you don't get to the 50% probability quarter of 2020.ntil the second if that happens at all but robert kessler in a report last friday when that low unemployment rate came out, points out that just before you get to recession, months before, in fact, you end up with the lowest unemployment. we went back to 1970take a look. each one of these circles is the low of unemployment. the gray shaded area is the recession. so, monthse you get these hereunemployment coming back to who knows what happens right here the average, 5.4 months before recession, unemployment hits its low. the average rate is 4.9 for those lows so we're well below that already and the fed's long-run sustainable rate of
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unemployment, it sees as 4.5%. so, just going on, i want to show you two very zoom-ins you can see right here '70, '79, just before that happened, you can see just months before, then it took a little bit longer over here, leading into the 2001 recession. we hit that 3.8% level so, a lot of this depends on the fed, guys. as the fed getked theselow une see inflation coming and does it lift rates higher to slow the economy and create that recession. one thing we know is it has concern about all of the stimulus that's entrained from the fiscal packages that were passed so it's an area of concern that bears watching. my guess right now is that the fed will let this run. >> got it. okay that is the key question thank you so much, steve important because recessions are what tend to bring on bear markets. still today, stocks are continuing to build on may's gains, market trending higher for two straight sessions and the nasdaq is setting its sight on a closing high.
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let's bring in dan fitzpatrick, president and technical analyst and eric gains, president of titus wealth management. good to have you here. i don't know if you could hear steve but he brings up a good point. unemployment very, very low. historically, that tends to be a signal that we're getting closer to recession, rather than far away, and that's generally bad for stocks k market right here?out the and you know, you don't hear too many -- you don't hear too many people talking about the political environment in benign terms. everybody's really, you know, emotional on it one way or other. >> their hair's on fire, you know if you watch certain networks, there's a constitutional crisis coming >> pretty much it's always something, but if we just stop and, you know, get away from all that stuff and just look at it from a psychological perspective, and the way that the media treats ething, again, i'm not taking sides i'm saying that the -- the damper that the news is putting
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on otherwise really, really solid numbers as steve was just s a little bit of a lly kind ceilin a market that, if our administration was red, everybody would be cheerleading and we would be reaching this level of irrational exuberance so from a psychological standpoint, this is a really healthy market, because it's giving us an opportunity to work off what i call the january blowoff, where we ramped 7.5% in a month. >> so eric, his point is that there's skepticism out there, right? built around the market because of the political environment, not necessarily because of the economic environment eric, what do you think of the markets here >> well, so, when we think about where we are today, we've seen a lot of -- a few big, large multinational companies at q1 say, this is going to be our best for the year, earnings great, revenue's good, it's as good as it's going to get. we saw some volatility spike up and when we take a step back and
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say, well, what typically happens in midterm election years from may to october, that's typically one of the worst years. granted, we haven't seen that in the last few years, but we've seen a real divergence in growth and value right now, so what our theory is, is maybe you just scrape a little bit out of your growth sid things and slide it into more dividend-paying stocks for a short amount of time >> like what kind of dividend paying stocks? like utilities like apple and microsoft >> yeah, more of larger, i would say, technology as well as coupled with some telecom, banking is also good and certainly energy's going to fall into that bucket as well. and when we look, you know, tech's up, maybe, 6% or 7% for the year a lot of these stocks are down maybe 5% to 7% for the year. so, gives you an opportunity to take some of youcash, maybe reallocate if you're an
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investor, and still see some appreciation and i agree with dan about where the market's going and where the sentiment is >> dan -- >> we're not really over our skis, but maybe we could change our allocation a bit >> dan, very quick thought on one of your picks, which is facebook >> yeah, i think, look, from an -- i don't do facebook, it's not my deal, but from an investing standpoint, look, the company's doing great. that was a total buying opportunity with their pr stuff. i think it's underowned relative to the other faang stocks. i think the stock's going to continue to go higher. but again, i have to say, i don't like facebook. it's not my deal, but i would buy the stock. >> okay. >> you don't like it as a product. >> okay.to be honest with you. >> you're not necessarily the target >> my kids like it >> i bet they do guys, thank you. dan fitzpatrick, eric gains. here's what's coming up on "power lunch." bullish call on amazon and the analyst who just changed his price target to $2,000
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what made him do it? but first, back to sara at 3 world astrid >> we're going to talk to the ceo and advertising giant of group-m, his take on the state of advertising and why they just chose to make new york's financial district their new home that got 14 floors in this new building "power lunch" will be back in two minutes. ♪ in new york
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♪ ♪ i'm on top of the world >> welcome back to "power lunch. we are live inside that glass building, 3 world trade center, the fifth tallest building in new york city, 80 stories, 2.5 million square feet, 700,000 of them will be taken up by my next guess grm is a division of advertising giant wpp, handling one-third of all media buys on earth for the likes of google, ford, unilever, our parent company. it's also the largest tenant of this building. why did you decide to take a few thousand employees from midtown manhattan down here? >> well, we had a pragmatically, we had a number of leases at were coming due this year and rather than continue to be based
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in five or six different offices around new york city, we saw an opportunity to bring everyone together mr. silverstein and his team were creating a community with an incredible vision we have a very ambitious, creative, modern workforce >> you have a young workforce. average age? >> it's 28, 29 and probably 80% of our employees -- 80% of our employees are under the age of 40 so we needed to be able to offer a space where people could collaborate, be inspired, release that creativity on behalf of our clients. and we found that here at 3 world trade center so we're incredibly excite. >> talk to me about the advertising business in general. >> the advertising business has been challenged over the last several years as you know so advertising has tended to track gdp around the world we've been underperforming that measure for a number of years. we expect moderate growth in 2018, 2019, globally, and as you know, greater share of advertising expenditure is going
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to global digital channels, google and facebook in particular, but others as well that creates challenges but it also creates great opportunities to be better targeted in how companies can talk to consumers. that's good for companies because it avoids waste. it's good for consumers too because better targeted advertising is hlye relevant and interesting entertaining in some cases >> do you see those trends continuing the growth of digital ads at the expense of traditional tv advertise something. >> those lines are blurring so it's not so much traditional versus digital both play -- traditional tv networks, for example, play on digital platforms so people don't just watch nbc in a traditional sense. they watch it in many different devices, through many different platforms. so, we see digital continuing to grow, but we see all media companies digitizing and moving to delivery of content in digital platforms. >> is it just going to be this duopoly of google and facebook
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controlling the ad market? >> they are responsible for a huge percentage of digital advertising globally and here in the united states, as you're aware. we do think there are emerging platforms, well, calling amazon an emerging platform is probably not quite accurate but as an advertising platform, we see amazon and others continuing to offer alternatives to google and facebook and we're excited about that >> wonder if one reason you've been undergrowing, the overall economy in terms of advertising the consumer staples big household products, makers like p&g or food companies like nestle cutting their marketing budgets. is that getting worse? >> it is, in some cases, it's getting worse. you can'ne company to company but we do think the environment will remain challenging for consumer goods marketers. i think as they continue to innovate, as they understand younger audiences and use their expertise in hr growth emerging markets, we do think we'll see a return to growth there but they have been challenged as the traditional bellwethers of the advertising market around the world.
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>> big change at your own company, your parent company, wpp. has that affected business, the abrupt exit of sir martin? >> we've moved on. clients are mostly concerned with getting great work, that their teams are motivated and stable a focused on helping them win in an incredibly challenging business >> the man who built this whole company over three decades, must be quite a change. >> it is quite a change but as i said, we're moving on. we see opportunities everywhere we look, whether that be geographically, whether that be in new categories of clients who are investing aggressively in advertising spending, and again, if we continue to hire thetype and had motivated about helping clients win in challenging business markets, our business is going to be just fine >> you worried that he's going to come back in his new venture and be a big competitor? >> we welcome competition. it helps us innovate it's good for clients and markets and agencies like ours so bring it on, martin >> kelly, thank you for joining me kelly clark, group m ceo has a pretty good window into so many
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different industries and is bringing that very young and modern workforce to downtown manhattan. >> thanks so much, sara. still ahead, modernizing mcdonald's, the stock is down 7% so far this year the ceo telling cnbc exclusively about his aggressive growth strategy are investors loving it? are investors loving it? we discuss next. well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.
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mcdonald's stock is up 62% since president and ceo steve easterbrook took the helm in march 2015 and began modernizing the business, but shares have underperformed in 2018, sliding 7% since the beginning of the year here's what easterbrook had to say about mcdonald's stock this morning in an exclusive inte cnbc. >> we've now had 11 quarters of growth, top line growth, and the market's reacted very generously to us over the last three years and i think the reality is if we just keep driving the growth and taking care of the cost side of things, and, you know, they will end up being winners and losers
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in this market share battle, and if we keep positioning ourselves on the winning side of that, i think the market will react accordingly. >> joining us now is rj, morning star sector strategist rj, great to have you with us. why is mcdonald's a loser this year when it comes to its stock performance? >> i thinkre's thr things that have put pressure on the restaurant the big refranchising trade we've seen the last couple years where mpanies sell their company allocation and franchisees level up and return that to shareholders that's kind of played its way out and i think that's cost some rotation out of the names. on top of that, i think there's concerns about a potential recession and what that means for names like this and then on top of that, the third thing, i think, that's going on is that people are concerned about the costs and what kind of operational disruptions there might be as we start to see this kiosk and the technology initiatives that the company puts in place, how long do we
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have to bait we are the champions -- how long do we have to wait to see the impact >> carl was with steve easterbrook today and showing everybo everybody how the kiosks work and how this future layout is so different from current mcdonald's when will investors see the returns on this investment >> i think it's not a minor cost, certainly. it's a big investment but a lot of it that the company's going to be sharing withts franchisees is part of the experience the compandeto partner with its franchisees in a lot of the investment for this so it's a significant investment for the company but i think it's one that we start to see play out, aus usually about three to four quarters after these are implemented. it's something that takes time for the consumers to recognize what's going on and how to use the technology takes time for the crew and the staff to adjust to the technology changes as well but usually when we get about three or four quarters in, that's when we start to see about a 10% to 20% lift in the average ticket when people are making kiosk or mobile ordering
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and i think that same thing will play out here so probably not a 2018 story i don't know if that gets u.s. coms from 3%, which the market's expectin 4% range but i think if you look in '19 and '20, this could be a big driver and i think what gives us confidence is if you look at what t international segment, where we've seen the experience of the future rolled out, australia, uk, france, it's had a meaningful impact. >> i've used them over in europe, and i have found them a little difficult, but that may have been bee i was in a country where the language was not my natural language. and i was paying in euros and the whole business but big mac is a big mac in any language you said 10% to 20ft in the average ticket why is that? what is it about the technology that makes people buy more, eat more, drink more >> i think it's just you have the complete freedom wheyou'redg yoting there, you get control over it and i think whdk on add-on orders, the things r at counter, maybe i'm g to embarrassed to tack on that extra item, you're going to tack
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on extra things and it gives you a chance to promote other products that the customer wasn't going in to buy maybe they cancel the value menu and go to the premium sandwich or the limited time offer. i think that's a big opportunity. >> so if you're ashamed to order the double mcflurry. >> super sized fries >> and the super sized fries, because somebody's going to hear you, the kiosk can help. rj, thanks, man. >> thanks, tyler >> good to see you to sue we go for a news update >> here's what's happening at this hour, everyone. 33 people have been killed by a massive volcanic eruption in guatemala. that eruption started yesterday, sending ash into the sky and lava flowing through rural parts of the country there are still people who are unaccounted for at this hour china tightening security on the anniversary of the 1989 brutal crackdown of students protesting government corruption it led to the tiennemen square massacre human rights activists say
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several thousand students may have been killed by chinese forces president clinton weighing in on the me too movement on the "today" show in the context of his relationship with white house intern monica lewinsky >> nobody believes that i got out of that for free i left the white house $16 million in debt. but you typically have ignored gaping facts in describing this and i bet you don't even know them >> and that is the news update at this hour back to you, michelle. >> okay. thanks, sue. sue herera well, the market closing for the day. let's go to jackie at the cnbc commodity desk >> hey, michelle crude prices kicking off the week on a down note today. continued anticipation of opec putting barrels back online.
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some concerns that summer driving may not be as robust as some thought it would be but industry insiders are saying the selling pressure may be a little overdone, that even if barrels are added back on line, the group would start small. ang little less than 2% today. brent taking a similar hit as well now trading just over 75,guys. >> thank you very much, jackie and still ahead, the latest from apple's developers conference in san jose did investors get what they were looking for? it's not over yet. bus another conferenplus an under way, moving cancer stocks higher today, including this one, shares of blueprint medicine is actually down more y?an 9%. wh we'll have the ceo live on we'll have the ceo live on "power lunch" next to launch thousands of attacks. luckily security analysts and watson are on his side. spotting threats faster and protecting his data with the most secureed main frame in the world.
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welcome back to "power i'm lipton. apple's big developer show here in san jose, california, where apple exec kevin lynch was on stage talking about apple watch, specific the new watch os. the big push for apple with this device has always been health and fitness so they were emphasizing that a lot, a new feature where you can challenge your friends to a week-long
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competition. also the importance of staying connected on the watch you can send these kind of short voice memos to your buddies, like a walkie-talkie in fact, it's called the walkie-talkie feature. they also say notifications are going to get actionable and interactive. apple ofe isn breakout units for the watch, they say they shipped about 18 million hes lastear, took the lead in that category now we've moved on to apple tv, the new operating system for that charter spectrum is coming to apple tv later this year they have this feature called zero sign-on where if you're on your tv provider's broadband network, you can get sign-on to your apps automatically. i want to keep listening here, bring you guys some more headlines as they come >> josh, thank you very much for more insight on what we've heard from apple so far and when we might hit that mighty trillion dollar market cap number, let's bring in chief strategy officer and head of technology research at gbh insights and casey newton, silicon valley editor with the
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verge. what do they feed these people in the audience there to make them cheer so loudly are they sugaring them up? >> i think part of it just speaks to it's about the developer community. you look what apple is focused on >> enthusiastic people >> it's about the delivers of the lynchpin to apple, the 100 billion stat in terms of what they've made through the app store. microsoft aggressively in acquisition today, the only way apple hits a trillion and software services hits $50 billion a year is on those shoulders of developers, and that's why there was a no hardware focus today, all about software >> casey, it sounds like they are at least in some sense concerned about playing catch-up with siri. >> yeah, well, i think if you look at apple's recent history with siri, they faced a lot of criticism about it sort of never quite living up to the promise of an assistant that kind of follows you everywhere and of course we've seen amazon have a lot of success with alexa, so siri has been behind the 8 ball
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over the past year or so >> what do they need to do to fix it make it just -- just make it better simple as that >> yeah, that would be a big start. you know, one thing that they haven't done nearly enough of is to integrate it with third parties, so amazon is always bragging about how many third party integrations they've made with alexa apple is much more reticent to bring other developers in. >> is a multiplier effect though for apple in terms of getting siri right less than what e thia we think about this as a hurdle and this could unleash what amazon has gotten but amazon has the e-commerce component which apple doesn't have so that multiplier effect doesn't seem to bthere necessarily if apple can get into a home with a better siri. >> i'd agree with that home pod has been a huge miss. ultimately, from a pricing perspective, you look at siri, the capabilities, everything about it so i think this is sort of the bread crumbs to the next home pod but if you think about it in order, it's obviously iphone and
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the trifecta product cycle, the software services but speaker market, you look at google, look at amazon, you know, this was sort of apple saying don't forget about me in terms of where we are today >> casey, there's this focus on digital well being, they're going to give you a timer to tell you how long you've been in an a iss a lot of pc bs so they can get people off their backs >> there's been a ton of criticism over the past year of platforms not doing enough to help people manage the time that they're spending on their phones these phones are sort of more addictive than we can handle, and we saw google last month introduce a lot of very similar features at the system level and android that are designed to do the same thing so i think that shows you how scared big corporations are of this kind of backlash against tech addin. >> so you're a believer. okay thank you. casey and dan, good to have you on >> thank you thanks a lot health care stocks in focus today with the world's largest cancer research conference under
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way in chicago our meg tirrell is there with blueprint medicine ceo jeff albers meg, take it away. >> mel, thanks so much jeff, thanks for being with us >> thanks for having me on it's an exciting day for us. as you saw, we announced an important collaboration in china earlier today, and we think this is something that really can move us forward in an important area that last time i was on, we talked about the fact that blueprint's interested in partnerships that can either expand or accelerate access, and we think this collaboration can do that. >> well, i want to talk with you about that, but i also want to talk with you about some of the cancer research data being presented here you guys work in these genetically defined cancer drugs and really small patient populations where you hope the drugs will work really well for the patients that you've really tailored them to and you have a competitor which presented some data here at the conference. people are comparing those results right now. their response rate, 77%, yours is 50% that you presented six weeks ago at another cancer research conference.
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how do you see yourself competing with loxo in this space? >> it reminds me of an nfl draft where everybody rushes out to give the draft grades after any data disclosure and of course it takes time for data to emerge, just as it takime for a player to emerge with that said, as you mentioned, we share data at a medical conference here in chicagmonths back where 84% of the patients saw their tumors shrink with just one pill per day, so at that moment, we shif shifted our focus to moving forward at an optimized dose and the second part of that study and we'll really be focused on understanding the safety, the efficacy, and ultimately the durability of response but whether it's one therapy or multiple therapies that move forward, i think that still i understand -- ends up being what's great for patients. >> could your up looking better are we still pretty early days here >> that's why we do these clinical trials is that it's always incredibly promising for
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patits i early signals of activity, and so to have that in a couple different therapies right now is always very promising but you want tgo out and see what this is a -- with a larger sum of patients and a longer duration of therapy, what does that look like, because that's ultimately how we're going to mow we've helped patients. >> well, so this morning, you announced this deal for some of your drugs in china. and it's $40 million up front, about $346 million in potential milestone payments what does this deal say about the chinese market for medicines and how it's changing? >> so we announced this partnership with c stone pharmaceuticals and they're a well established biopharmaceutical company and what we have found with this collaboration is that access was a challenge in china, and we're seeing that change because of regulatory changes and because the establishment of companies like c-stone and so now we know the patients said there's a need for the patients there, but we
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now can access those patients, and we think this is the right collaboration to do that >> it's a huge market. we'll look forward to hearing more jeff, thanks so much for being here guys, back to you. >> thank you very much, meg tirrell. still ahead, a bold call on amazon the analyst who thinks the stock can rally another 20% and hit $2,000 per share hi, i'm joan lunden with a place for mom
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lots of good news for amazon shareholders today the stock is on pace for its eighth straight day of gains, hitting an all-time high today, topping $800 billion in market cap. our next guest says the company's tremendous run is far from over and the stock is headed to $2,000 joining us now is the senior internet analyst at sun trust. great to have you with us. the primary reason behind this price target raise is the emphasis on private label and when i saw the numbers, it
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actually shocked me. it's been more than double year on year to $7.5 billion in 2018. what is driving that private label component? s is it hardware sales? is it skus like toilet paper and cereals and things like that >> i'm going to have to go with all of the above if you look at electronics, electronics account for roughly 75% of all private label sales within amazon, x food and that's through the acquisition of whole foods and the smart speaker is -- has been one of the best sellers there. but clearly, there are very early in this process and one of the areas where we're seeing them not even tripling down but over the last six months, we think they have tripled or quadrupled the number of private labels is within apparel, and so apparel is an area that's very, very large for online merchants in general, but -- and for
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amazon, amazon is one of the top three largest apparel retailers, but with third party merchandise. what's different here is that we're starting to see them dramatically increasing the skus, dramatically increasing the number of brands under their own -- it's actually not under amazon but under different brands that are owned by amazon. so i would say from a dollar standpoint, it's primarily electronics, then it's food or cpg, and then lastly, it's apparel, but apparel is growing the fastest from a percentage standpoint >> i'm an amazon shopper, and t always amazes me when i go online to see how many amazon-branded products there are or other lines, like presto, for instan >> there are over 100 now. >> ely s to apparel, though, how did amazon get over that hump in terms of having peoplerust a private label apparel brand when the likes of, you know, they're competing against the likes of kohl's and walmart and target
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>> honestly, i think they're taking a page out of the costco playbook where ye very good, effectively, quality combined with a great price, and when you have the breadth and depth, particularly the breadth of a customer prime with over 100 million users, then people will give you a shot and you don't need to have a large percentage of those to build a sizable business we expect that private label today is roughly a $10 billion business for amazon and we think that over the next 4 years, by 2022, it will more than double it will be about $25 million the last time i was on your show, we had this conversation, it was roughly $20 billion and that was six months ago so within six months, it went to $25 billion. >> i had no idea they were that big in private label apparel i had no idea. how important is same-day delivery to their growth and future >> i think it's important, but because they're the pioneers of
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it, they're disrupting everybody else so, honestly, i think the vast majority of people will be okay with 48-hour delivery. i think them doing same-day delivery, them doing delivery at two-hour delivery, is a problem for everybody else and so, it's what i keep referring to as an unfair competitive advantage that amazon is building across all their verticals, but certainly delivery is how they differentiate their taufofferine most >> great to have you with us thank you. i do love the two-hour delivery in the meantime, sarah huckabee sanders holding a briefing at the white house, and here's what she said when she was asked about tariffs. do we have that? all right, we're going to move on could a big summer health care rally be on the way? one of our next guests says yes. ctheik iths who lesn e seor coming up.
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we think we fixed the
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technical issue. sarah huckabee sanders holding a press briefing at the white house. this is what she said about the ta >> what about the tariffs and how do you reassure the senators that various people who are complaining about this >> imposing the 232 tariffs protect us still in aluminum industries because they are critical to our national security, and for months, the united states has had discussions with canada, mexico, and the eu to find an alternati alternative. without an alternative solution, tariffs are the only measures appropriate to safeguard the country. we have strong relations with mexico, canada, and the eu and will continue, and those will continue even though the tariffs are there. >> sarah, what was the contents -- >> okay. there's more, we'll bring it to you, but time for "trading nation" and what's going on with health care? history says it could be setting up for a summer rally going back to 1990, health care is thee top sector between june and august according to one of the next
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guests who has a way to play the space. gary and gina are here, and you pointed oul health care stocks are creating equally. how do you play it >> that's right. i think the overall sector is mixed. key on industry selection here the industry we like are the medical devices. take, for instance, the etf ticker ihi, this is why weike it breaking to the upside, a source of leadership, and it scores very well in our momentum ranks. we like high momentum, and it's broadly strong, too, there's a lot of medical device companies that are participating and acting as that leadership. that's what we want to own, so where we want to stay away from is a group like pharmaceuticals, ticker ihe, still below 200 moving day average, weak, underperforming, a drag on sector returns, stay away from pharma, buy medical devices.
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got it >> gina, what do you think >> broadly, health care sector looks strong with strong dividend payers but have not rt is that tech has been really in fashion, so they are been strong drivers of growth, but also, you continue to have political rhetoric around the af ce act and trump's announce that he wants to lower drug prices is also adds to volatility of the sector i agree with ari staying away from the drugs makes sense right now, but this is still a healthy sect sector, something to lock at >> okay, thank you, good to have you on for more, go to tradingnation.cnbc.com and go to twitter @tradingnation check, please, is next and now, the latest from tradingnation.cnbc.com, and a word from our sponsor. >> volatile markets are a good
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wi'm really grateful that usaaq. was able to take care of my family while i was overseas serving. it was my very first car accident. we were hit from behind. i called usaa and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too. we're the hayles and we're usaa members for life. see how much you could save with usaa by bundling your auto and home insurance. get a quote today. >> check, please >> welcome become to power lunch, i'm still here at three world trade center ahead of the opening, guys, my check, please, larry silverstein saying he's not too worried about the state
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and local income tax, which goes into effect raising taxes on new yorkers potentially creating a migration out. listen >> i don't see it affecting us in a major degree. there are people leaving by virtue of the taxes they are taking, due to the tax change, but i'd say the overwhelming number will probably not >> now, he clearly has a lot of office space to fill, guys, with this building, 40% capacity, but i think it's still a big question mark what it does to places like new york city, like california, like the surrounding high tax states, new jersey and connecticut, obviously a big deal for us to cover >> whether or not there's immigration, i guess, the thanks >> right >> interesting point - >> i thought a guest made a point aeearlier when he said actually political turmoil in washington centered on the president is good for the markets because absent that, things would be too good for the markets, and there would be no
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woe of worry to scale, basically, and that it was better to have that drama than not because it keeps the market from going into a bubble >> that's glass half full. >> that's a lot to digest. >> yep thanks for watching "power lunch," and "closing bell" starts right now ♪ i'm kelly evans, this is the "closing bell" from the new york stock exchange, tech stocks lead higher, apple being the winner the latest headlines from the company's developer cancer >> reporter: top anytinames in business of oncology are meeting. traveling to china for trade talks, but no deal reached what happens next? that's coming up >> reporter: we're in chicagoing and boeing taking a shot at honeywell and united technologies details on the rivalry coming up i'm wilfred fros

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