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tv   Power Lunch  CNBC  June 28, 2018 1:00pm-3:00pm EDT

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trade war pressures, but the stock is down a bit. you got 2.5% dividend. i think you buy the stock. and it is 13 times earnings. i think you buy it i also like this marshfield opportunity fund >> hilton, it is on the lows >> thanks for joining us "power lunch" starts right now and welcome, everybody i'm tyler mathisen america first. president trump in wisconsin right now to break ground on foxconn's new $10 billion facility out there that in stark contrast to neighbor harley-davidson wisconsin company trying to navigate tariffs that had been sparked by the president's trade actions. amazon taking a big step into health care buying online pharmacy shares of walgreen's, rite aid and cvs moving down on that news
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and the worst losing streak ever, worse than the mets. the financials trying to avoid a 14th straight day of declines. should you buy at these levels "power lunch," right now quewelcome to "power lunch. stocks are holding steady this hour the dow hit its lowest level since early may earlier. crude oil is rallying again hitting new highs not seen in more than 3 1/2 years. more on the oil surge ahead. and the transports are hitting correction levels trading below their 200 day moving average avis, u.p.s. and fedex leading the decline. and today we begin with president trump about to tour the grounds for the new foxconn factor in wisconsin. eamon javers live at the white house. >> reporter: that's right, the president is expected at foxconn
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shortly. this is the kind of event the president likes a lot. the billionaire chairman of foxconn has been with the president before, he was at the white house just about a year ago. the president knows him and the company well he likes this story, he likes groundbreakings. there you see the video from last year. this is in wisconsin president is convinced that there will be a lot of jobs here he has been tweeting about it today saying i'm in milwaukee soon for a big groundbreaking for foxconn building a new plant. 15,000 jobs the president says politics are a little complicated by the fact that harley-davidson also a wisconsin company headquartered just about 30 miles away from where foxconn is going to be, harley-davidson is moving some production to the eu to get around some of the retaliatory tariffs in response to president trump's tariffs which were announced earlier this year. so some unsettlement in the business landscape in wisconsin.
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>> certainly with those two companies doing these things at the same time. what about also the fact that we also got the date and location for the president's summit with vladimir putin >> yeah, book your flights july 16th, held ssinki. the president seeming to side here with president putin of russia over his own u.s. intelligence community saying russia continues to say they had nothing to do with meddling in our election where is the dnc server and why didn't shady james comey and now disgraced fbi a littlgents closy look at it remember of course the intelligence community assessed that in fact russia did meddle in the election on behalf of president trump. and against hillary clinton. the president there though raising questions and raising the idea of vladimir putin's denial of that >> all right and another matter that is really on the docket so to speak, 24 hours since justice
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kennedy is said he is going to retire from the supreme court. already hearing some names that the president may be considering as a nominee, but maybe even more important is when he will make that decision any sense on the time line >> we expect the tyime line to e fairly short he already had a list of 25, maybe two that maybe people are sir li scircling in pencil. the republicans want to get it done there you see the two names circulating so far on the short, short list but the long list is 25 names and the president really could pick anybody from that list. >> all right thank you very much. breaking news on on the world's biggest hedge fund, andrew ross sorkin joining us on the news line this is interesting stuff, andrew >> it is interesting stuff a major transformation from a governance and management perspective of bridgewater, has $150 billion under management,
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founded of course by ray dalio who created a unique culture, often described as a ma meritocracy. the company sending out notice that the firm will be turned into a partnership very much like the early days of goldman sachs. this firm was tightly controlled by ray dalio and two of his lieu continue narnt nants who controlled it electrically and through governance votes under the new partnership proposal, the top 50 senior executives will not only get an economic stake in the company, they will also get voting control for the first time and it may very well change the culture of bridgewater which has been known for really this idea of radical transparency. it will be a test of the management in many ways because
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this radical transparency is this idea of encouraging employees to openly challenge each other historically however despite all of this open challenge, it wasn't a democracy in the past and now it will become somewhat more democratic. so we will see whether the senior employees ultimately want to continue with that type of culture. perhaps it will shift. perhaps it will be more pronounced but a major shift at the world's largest hedge fund >> andrew, how are they messaging with clients a founder leaves, you get worried about the strategy of the company. what are they doing with clients to ensure that they don't have outflows >> so ray dalio is not leaving bridgewater. let's be clear about that. they announced a plan, this is part of a ten year strategy that they have described for some time where ray dalio is effectively taking a bit of a back seat when it comes to managing the operations of the company, but he remains the
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co-cio and he has talked about wanting to remain in that role for as long as possible. so he is not moving from the company, but clearly in this memo they describe this idea thatultimately the company wil be controlled in large part by the employees of the company and ultimately ray dalio will not have the power and influence that he once did as part of a longer termtransition. >> so it sounds like a dilution of power rather than a stepping back from key operational roles. i mean if he is going to remain the cio, he will call the shots. >> he will still call the shots, no question about that at least in the short term but when it comes to the management of the firm, there clearly will now be a greater vote, a greater say by the
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employees about the future of the firm and how they approach different issues there will be representatives of the firm on the board. this is just the beginning of a process. they say in their memo that it is the beginning, that they don't have all of the answers. but that they wanted to begin the process and clearly today is the beginning of that. i don't thinkations to the earlr question about outflows. i think this has beaeeen telegraphed, the idea that ray dalio will be ceding some on control over a period of time and this is just a piece of that >> you mentioned a partnership like goldman sachs used to be. is there anything in that sentence that we should read that eventually they might take this public? >> my understanding based on conversations with sources is that there is no plan today at all or even real thought about one day being a public entity. should be worth noting they have
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sole stakes of the firm already through number of pension funds. singapore pension fund has a piece of the company the texas pension fund the oregon pension fund. imf actually owns stakes in the company already. i don't think that you will be seeing an ipo or public offering of bridgewater anytime soon. having said that, when there are 50 employees now who will have economic stakes in the company, at some point perhaps they will want to exit those stakes and monetize them. how that ultimately takes place, i think we don't know yet. >> got it. andrew, thanks for calling in. >> thanks. oil another big story today spiking to a new 3 1/2 year high jackie deangelis is at the commodity desk >> crude prices hitting $74.03 they are backing off a bit, but still in positive territory. the issue of waivers from the state department for countries
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importing iranian oil has been central to this trade all week more iranian oil could come off line that is more oil than the opec increases last week could cover. what are we hearing today? that state might work with countries that could keep more iranian oil around but traders say it also adds a little confusion because they don't know the details or how it will play out. two other reasons, demand is alive and well and an outage at a canadian facility, it may be longer than folks are expecting. bottom line, momentum is to the up side and deep in mind that the weekly gain in wti is almost twice what we're seeing in brent. so clearly issues close to home are having an impact here as well as global ones. >> thank you the dow earlier touching its low heest levels since early may and trying to avoid its 11th down day in 13 plus the loss of 15 points or more today would put the dow on track for a second straight quarterly loss for the first time in three years.
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what is behind the slump let's ask bob pisani and mike santoli. >> i think the big thing here, second half of the year, clarity is not quite as great as it was say on january 1 so five things that i'm identifying for the future that is a little bit of a worry one is clearly the trade impact on earnings particularly in materials and industrials and technology and then we've got the flatter yield curve that is essentially taking out banks as a leadership group for the last several week. and then we have the dollar index up 6%, it is killing emerging market stocks and then we have the slower global growth first in europe where earnings are in the mid single digits. 5% in europe right now slower growth. and of course we've seen the slower growth in china and we've been talking about that, china down 20% this year off of its highs. >> to me the big explanation for why we've seen pressure is
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mostly it's come from overseas currency pressures as well it actually feels slightly as a milder version of the second half of march. that was toward the end of a quarter, the fed that just raised rates you had treasury yields come down, you had the stock market come in, volatility go up. it is a similar rhythm the big difference is overseas markets as you mentioned are much weaker because of the pronounced slowdown evidence >> and one final point about the markets, we're closing the second half out. you see a lot of strange imaginations around this because you get pensions funds doing rebalancings and you can see it here, they are selling for example the russell the last several days. despite the fact that -- this is a sign that people are sort of he rebalancing their portportfo. >> and today you see emerging markets bouncing a bit, banks trying to hang firm. so we'll see if that noise is already played out >> all right thank you very much. the latest aaii survey shows
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that pessimism among individual investors short term about the direction of stock prices is above 40% for the second time this year. the sharp drop in optimism, those second half worries and a midterm election looming large, how should investors position themselves let's bring in grain grant budm lisa erickson. welcome to you both. often when i see investor sentiment decline from optimistic levels, i take that as a pretty good thing >> generally speaking when sentiment is the worst, it is a great time to buy. and we would view that as a good opportunity today to reinvest in assess classes that have been underloved over the last six months >> like? >> what you've seen this year, emerging market selloff. particularly china it has been a huge dislocation driven not by necessarily fundamentals, but more so sentiment and concerns over trade policies between beijing
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and washington now, we don't know whether or not we will go into a full fledge trade war we don't think that the white house even knows whether or not we'll kind of ramp things up further as we kind of go out through the summer but investors are clearly worried about that and so from our perspective, you need to take a longer term view and really find the distinct opportunities in the asset classes amongst emerging markets as well as u.s. equities that can take advantage of some of that near term volatility. >> lisa, how do you feel about the u.s. market here would you rate it a buy, sell or hold >> we're actually neutral on the u.s. equity market right now as grant points ut, part of th reason for that is on the positive side actually the fundamentals look okay so if you look at the top down indicators for example, a number of concurrent and also leading economic indicators, what you see is two-thirds are in positive territory in addition to that when you look at the bottom up, corporate earnings are still very good so expected to come in at 8% for
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the second quarter as well as 20% year over year for 2018. so overall the fundamentals are good the reason we're more at a neutral stance however is because there are a number of factors on the other side of the scale. you have a number of geopolitical risks that are causing the levels of uncertainty to go up valuations are slightly elevated right now on trailing 12 earnings they are somewhere around 21 times. in addition you do have technicals that need some repair so we see the scale as fairly balanced right now >> so grant, lisa is a little alarmed by valuations. i take did you are if not not alarmed you are a little heartened because the ps have come down, es have come up >> the growth in earnings has been phenomenal in the u.s. market >> so you are more comfortable now than you were say -- >> i think it is one of those things where if you looked six months ago, people were concerned about the multiple for the s&p. that has come down to 16 1/2
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times roughly forward earnings we continue to believe that earnings will do well led by technology which is a big overweight for our port follow dw portfolios he at t s at the mom. so there is a lot of opportunity.follow portfolios at the moment so there is a lot of opportunity. >> isn't there is a reason for the cheechneapness the dollar is stronger >> i think it is bad if rates move up from a shock perspective. if it is the continued norm normalization of interest, that means the backdrop is quite good so that is generally good for emerging markets we don't see a repeat of the taper tantrum like 2013. we think there are secular growth opportunities >> lisa, would you go outside like grant suggested >> we are neutral across the board this is actually a little
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bit of unusual stance. we usually have more over and under weightings but the reason why, if you look across the board, while generally fundamentals are still hanging in there, you do have a similar valuation situation overseas again, it is not elevated, it is not priced to perfection, but they are somewhat above median areas. and in addition, you are seeing a little bit of a slowdown on the fundamentals side. and again, worldwide we have technicals that need repair. so we're neutral overall i'm really looking for opportunities to exit and reentry some asset classes as pricing continues to develop >> so maybe you just answered it, but quickly, what does neutral mean in practice for an individual investor who is listening going she's neutral, what does that mean i should do? >> absolutely. so we're advising our clients to stay pat with their strategic asset allocations. so to neutral relative to those. and then wait for those tactical opportunities to appear. >> lisa, grant, thank you.
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good conversation. >> switzerland >> yeah, neutral news alert in the bond market rick santelli is tracking the action for u.s. government debt. who wants to lend money, how much >> you know, it was on $30 billion seven year notes 2.809. pretty tight with the one issued trade. i gave this auction a "c." the high water mark was five years yesterday, c-plus. so basically we had three very he average auctions. but we have a lot of above average supply considering it was 100 billion in total 2.53 bid to cover. 60.6 incorrect is a little light. 15.2 a little heavy. normally dealers take about 21% of the auction this one they took a bit more, 24.1%. we're done with the supply there is always t-bills and even though all the supply should mean maybe a steeper curve, it
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certainly hasn't played out that way. tyler, back to you amazon shaking up another industry buying online pharmacy. what does it mean for the drug distribution stocks? and will it be enough to boost amazon's stock price not that we should worry too much about it. we'll talk to an analyst who sees $1900 a share on amazon soon and we're waiting for president trump, he will visit the site of a foxconn factory in wisconsin sywothat and more coming up on a bu t hours of "power lunch." whoooo.
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amazon buying pill pack for an undisclosed amount and that is having a huge impact on the drug stores like walgreen's and also the distributors. losing billions in market value today. meg tirrell has more on what this means for drug distribution >> the amazon threat had been a major overhang on the retail pharmacy space as well as on drug discontribute betributors a factor in the massive consolidation we've been seeing including cvs's purchase of aetna. and those worries have abated a bit as it became clear that amazon didn't have the right licenses, and it signaled that it may be backing off.
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but with its first of pill pack, it appears to be back in the game once again. pill pack is a five-year-old online pharmacy specializing in patients with multiple prescriptions. the announcement didn't include deal terms, but it is thought to be around $1 billion with that wiping multiple off the valuations of cvs, rite aid and amazon isn't signaling what it will do, but everyone seems to be interpreting this as the first move it needs to make. >> and the key asset that they had, drug distribution rights in 50 states whereas amazon wouldn't have to go through the regulatory process now >> right they get the licenses and know-how and also the technology of really managing prescriptions and interacting with patients and pharmacies and doctors online that can basically serve as an infrastructure >> and there was a note that prescriptions are stickier than you think.
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and when they are talking to pharmacy benefits or benefits consultants, there wasn't a near term benefit to actually using a service like that versus the existing eservices >> and also analysts making a point that while pill pack is in networks now, that may not always necessarily be the case >> meg tirrell, thank you. luke capital markets raising it price target. shares already up 40% this year. on the news line is the analyst who made that call anthony, great to have you with us you raised the price target in advance of this deal what do you think of this deal and what could amazon deal with this particularly when they have that joint venture with berkshire hathaway and jpmorgan? >> sure. so we see this deal as a trojan force. amazon is able to snap its
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finger and now has licenses to distribute drugs in all 50 u.s. states, which a lot of people thought it would take them years to do if they had to do it on a state by state basis pill pack doesn't move the needle much for amazon in the near term, but it is about the relationships, about the licenses, about the technology and so we really think that this is a shot across the bow for the retail drug chains as well as pbms >> did they buy the right company? sounds like they really zeroed in on one that could help. it is not a big company. 100 million in revenue >> you know, we don't know a ton about pill pack, but from our perspecti perspective, they bought the right company because it got them the ability to distribute in all 50 states we know that walmart was bidding for this as well so there has to be some value
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there. and a billion dollars is a drop in the bucket for amazon >> and when you see the billions that are wiped out in market cap, do you just transfer that to amazon? should it rise in market cap the equivalent of those are falling at this point? >> i think it is tough to do that exact math. but i certainly understand the selloff in these companies today because in some ways this is their worst nightmare. it was supposed to take amazon years to get all those licenses. and suddenly you wake upnd s ane this headline. so clearly they are not backing off at all and one thing i'm always reminded of is jeff bezos' famous quote, your profit margin is my opportunity. >> and tyler brought up the point that this is a small company, only on 40 thou,000 pat or something like that that they can serving.
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we were talking about the rbc note saying that pharmacy benefit consult tachbt ants are there is not much of a benefit of switching to a service like pill pack. but given the relationship with jpmorgan and berkshire hathaway, if they could switch the prescriptions over, would that move the needle, start getting amazon critical mass in the space? >> i think you are 100% right. look, i cover retailers, i don't cover the pbms but to some extent i think you're being naive if you think that this is not going to affect the pbms, if you think it won't affect the retail drug chains. look at the history. amazon is not going to race to become a $1 trillion company because they generally don't know what they are doing and as you said, the fact that
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they have this joint venture with jpmorgan and berkshire, the fact that they have the technology, relationships, the capital. you know, you should be very afraid >> all right anthony, thanks so much for your time facebook shares rebounding nicely since its privacy problems the stock is up more than 25% in three months up next, we'll bring you the company's latest announcement on advertising. and we are awaiting the president at the site of the new foxconn plant in wisconsin he'll take a tour, make remarks and we'll have it for you.
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come back josh lipton has some news on facebook >> we are here at facebook headquarters where the company just announced some new programs to give users more clarity, more insight about the 5ds they are s ads they are seeing as well as who is paying for them sheryl sandberg speaking here today saying the company in her words is deeply committed to transparency and taking steps to put more transparency around what they are doing. so for example they expanded their so-called view ads program. this that allows you to see every ad currently live that a page has run they also talked about this new what they are calling active ads section. so you could actually look at an ad, see where it is running and then report that ad if you think it is bad, if you think that it is violating company policy.
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of course we all know taking a step back, this is part of the company's broader effort to introduce more accountability, more france parns city on ttrane sharp criticism from investors and lawmakers after the election where millions may have seen ads created by russian-backed trolls sheryl sandberg now saying that she believes with these updates that facebook is more transparent than any ad platform out there. but they are not the only ones in the news today. twitter also making moves in this area too. they actually introduced what they are calling an ads database showing all ad campaigns that run on their platform. back to you. >> josh, thank you let's get to sue herera with the headlines at this hour >> and here is what is happening. deputy attorney general rod rosenstein and fbi director christopher wray facing sharp questioning from the house judiciary committee. it was rosenstein's first
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appearance before congress since an internal justice department criticized the fbi's handling of the hillary clinton e-mail probe. both men say that they support the report >> although the ig report did not find any evidence of political bias or improper consideration actually impacting the investigation under review, that report did identify errors of judgment, violations of or disregard for policy and decisions that certainly in the benefit of hindsight were not the best choices >> defense secretary jim matt test has arrived in japan following a visit to south korea. while in seoul, he reassured south korea that the u.s. will maintain its current number of troops on the cokorean peninsula here at home, walmart is out with a new 3d virtual shopping experience shoppers can buy their way through the 3d tour at walmart.com. there are nearly 70 items to choose from that apparently are
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ideal for small living spaces. that is the news update this hour back to you. >> or for people with new york city apartments. >> exactly perfect. >> thank you, sue. justice kennedy retiring, a move that could have wide ranging effects for years to come what does it mean for business coming up. and the supreme court allowing states to legalize sports betting. will that help or hurt atlantic city contessa brewer is there >> reporter: and the big question, will new casinos help atlantic city. this is the brand new ocean casino, we just sought ribbsaw n cutti cutting. but if the rebel didn't work, why will ocean work? why will ocean work? all that ahead how's your family? kayak. search one and done.
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betty called me at she thought it was a fire. it was worse. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day.
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let's get a check on the markets. major averages carving out modest gains the s&p 500 up by 0.4% and nasdaq by about half a percent we should note the dow was down 120 points earlier in the session falling to its lowest level since the beginning of may. crude oil hitting new highs. we are seeing wti up by more than 1%. and transports, they are in
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trouble. the group hitting correction levels trading below their 200 day moving average transfers overall down 1%. two new casinos in atlantic city opened this week. will they. and the legalization of sports betting bring the city back? contessa brewer joining us live from an area that has been hard hit in recent years. but now showing a little bit of a spark. >> reporter: so the ocean casino literally just cut the ribbon here today and its gaming license is so fresh, the ink is probably still wet it opens with sports gambling newly legal, a wide variety of fine dining and shopping inside. the colorado developer is hoping to make a quick return on his $400 million investment. when this building first opened, it was the $2.4 billion revel. it closed in two years and in fact in the early half of this decade and the previous
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five years, ac's casinos closed, half of them did, and gaming re news fell by 50% there was just all this tough competition from regional kag see knows. 11,000 people lost their jobs. but that meant fire sales. and today the hard rock just opened as well it is really focusing on entertainment as the draw there thinking that it can bring visitors in. and analysts say it is great that they are coming in, but this is going to provide 3,000 more rooms, lots of competition after labor day, it will be a tough sell morgan stanley is predicting 20% can balancization. the smar hoping the investors will let it ride >> thank you, contessa and justice kennedy announcing that he will step down from the supreme court next month and this will give president trump the chance to fill a second seat and solidify
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its conservative base. let's bring in adam white, study of the administrative state, george mason's scalia law school good to have you here. we want to tell people the names that are being thrown out there, bren amy coney barrett, tom mar tin baccarda -n and just crossing the tape, the reports that president trump is considering senator mike lee from utah. have you heard that, do you think it is possible, what do you know about him >> i had heard rumors about that yesterday. takes happens back in february of 2011 when scalia had just been in the senator few weeks, i wrote a piece saying that he
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would be a great justice he asks really tough constitutional law questions, the plo bhroper balance of powe. and he showed a pretty keen mind of course he was a lawyer before all this and a clerk for justice alito. and the son of president reagan's solicitor general rex lee. so he is a natural for this job. but at the same time, kavanaugh and barrett attracted a lot of immediate attention a. kavanaugh is one of the leading conservative judges of his generation appointed by bush and barrett really he showed herself very well in the confirmation hearing under withering pressure from some of the democratic senators. >> where do the justices, potential justices you just mentioned, stand or fit on the spectrum nearest to the justice gorsuch who was just approved? >> well, it is hard to say a couple of the names we've seen
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elsewhere, kethledge, former kennedy clerk. kavanaugh himself is a kennedy clerk. so they have that in common. i think a lot of the names we've seen reflect the legacy of scalia and they are comparable to gorsuch there are others more libertarian, people like judge don willett who was on the texas supreme court. but the hiding names so far are very much i think in the model of scalia and gorsuch. >> in your view do these candidates differ enyates themselves in terms of chances or are they all equal? >> barrett did so well in her last confirmation hearing that had to impress some people she understowithstood real fire especially for her religious beliefs. her performance probably instilled confidence that she could manage to make her way through the even brighter spot lif light of the supreme court confirmation hearing >> and what decision do you
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think would be coming out under what would be a decidedly more conservative court that would affect business? >> i think that whoever president trump nom natures, among the names wife seen, will probably continue the trend of conservative skepticism towards increasing agency power. that was a movement that justice kennedy was part of including some of his most recent opinions >> agency power, in other wordses federal agencies, having too much you power >> that's right. and the courts being too differential to the agency's exercises of power kennedy was questioning that and i would expect definitely judge kavanaugh, his view of the structural constitution and balance of powers between the court, congress and the agencies >> and what will be of great concern to the democrats is what will happen on key social issues such as abortion do you think that the court will become conservative enough that we would see something like roe v. wade undone >> even with the replacement of justice kennedy, ar it is hard
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imagine an outright reversal of roe or for that matter the same-sex marriage case but what we will see i think is a court that continues to leave some space for the states to make reasonable regulation, the provision of abortion, that was something that justice kennedy often agreed with actually even while he agreed with the core right of roe vs. wade. and i think one reason why the left will be so inflamed in the upcoming confirmation fight, they were hoping for a future in which the court would expand those rights and what they are seeing is not necessarily a rollback, but much more likely a slowed or stopped expansion of those rights. >> got it. adam, thanks so much let's take a check on the xlf. down 13 days in a row before today. s&p 500 up by 0.8% is that a bad sign or maybe it is a perfect time to buy
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plus we know silicon valley real estate prices are out of control, but one tech titan is asking nearly $100 million for s ace. those stories and much more coming up. alerts -- wouldn't you like one from the market when it might be time r sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. fidelity. with tripadvisor, finding your perfect hotel at the lowest price... is as easy as dates, deals, done! simply enter your destination and dates... and see all the hotels for your stay! tripadvisor searches over 200 booking sites... to show you the lowest prices... so you can get the best deal on the right hotel for you.
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so i think about the details. fine, i obsess over the details. introducing chase ink business unlimited with unlimited 1.5% cash back on every purchase. all right. president trump is in wisconsin. let's watch the proceedings there are a foxconn plant is beginning to be built out there. it will employ thousands of people over its years both in construction and then as it turns to the manufacturing of components, i believe it is display components for flat screens, cellphones and other things we will monitor to make sure that we don't miss anything the president says >> i believe that is the chairman of foxconn next to him. they will make flat screen
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liquid crystal display people. 10,000 people at least when fully expanded to 20 million square feet. >> interesting juxtaposition where the president slams harley-davidson for moving manufacturing abroad, welcoming a chinese company bringing jobs here to the united states. but again, we'll monitor this. >> and harley-davidson headquartered in wisconsin >> ultimate irony. financials trying to break their streak of 13 straight negative sessions, longest since 1989 today they are up almost a percent ahead of the release of the second round ever stress te results. so what is next for the banks? let's bring in mike mayo from wells fargo with his top picks what are the surprises tonight >> i brought a prop. >> of course you did >> and this is fed stress test take eight and we're a couple hours away from that. this is the eighth year the fed stress test. and let's pull the ones back a
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little bit here. this is the most harsh stress test ever. i mean the stress test has a hypothetical assumption gdp down 7%, unemployment up to 10%, stocks down 65%. do you know how many times larger the losses are than the current level of losses? do you think it is like a quarter more or a third more or half more? seven times higher the assumed losses in the fed stress test are seven times larger than the current level of losses this is one big stress test. so after assuming this hypothetical stress scenario, the fed allows banks to return capital. so long as their capital ratios don't dip below the minimum. and the result, which we'll hear in a few hours, we strongly believe will be record capital return by u.s. banks even with -- >> how will that compare to investor expectations for the individual stocks? >> we will have fireworks. it is like saying will the fireworks be 25 minutes or 20 minute we will have fireworks
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it is record cap return. we think it is splitting hairs if you look at the dividend yield adjusted for buybacks, it is at an all-time high after adjusting for the ten year treasury yield so we expect 18% increase in cap return. a chance it could be 15% or 16% could it be 20%? we're still in a good range. we still have fireworks. >> so why are so many of the systemically important banks in the world down 20% >> what we have here is a trifecta of bad news you've had a flattening yield curve. the second thing is the stress test was overly stressful when it came out last thursday night and it concerned people and the third factor would be the trade issues, they didn't matter until they mard. having said that, if you go back in history, looking at the flat yield curve, which we do think it's driven banks lower recently, you go back the '90s, banks outperformed, in the '60s, banks outperformed and frankly since the election, and for some of the same reasons, we think
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banks will still outperform over the next three years justlike the '90s, better fissiefficiencw just like the '60s, you had an asset remix. >> did you think the banks would have outperformed the market year to date the stars seemed to align for this sect at the beginning of this year. rising interest rates, right, supposedly increase in business activity >> the economy's getting better. >> right all these things, lighter regula regulatory touch why should we believe they're going to do any better even when considering that they had everything at their back at the first half >> so melissa, another way you could phrase that is mike, you've been wrong this year, why do you think you'll be right now? which is fair. i've been on the show here >> and it's not just you, to be fair >> that was consensus. >> beautiful tail wind as rates rose >> i'm happy to own the fact that, you know, we thought banks without outperform they have not outperformed t. reason i'm so willing to embrace
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that, not only because it's true, it's because we think over the next three years, banks will outperform sometimes you have issues and stocks go down and you go, uh o oh, i have to reevaluate things are coming in pretty much as order except for the flatter yield curve, which maybe that could hurt 5% to earnings or something. that's not make or break so we think this is a lot of noise, a lot of randomness and when you get these stress test result, you get the earnings coming through, banks will outperform >> and you like these tiny ones, jpmorgan, citigroup. >> thank you for the second half playbook thanks, mike coming up next, our powerhouse we're going to take you to a summer spot that's even pricier than the hamptons. we're going to show you some lonchlous real estate next "perun.">>ove that love it!
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our phones are more than just phones.up! they're pocket-sized personal trainers. last minute gift finders. [phone voice] destination ahead. and discoverers of new places. it's the internet in your hand. that's why xfinity mobile can be included with xfinity internet which could save you $400 or more a year. it's a new kind of network designed to save you money. click, call, or visit a store today. i'll show you what's going on with the markets. t industrials higher by 86%. the s&p 500 is higher by 0.4% and the nasdaq higher by 35 points strongest member of the dow right now is verizon time now for the powerhouse. each week here on "power lunch," we're going to bring you inside some of the most expensive homes
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in the country who else but robert frank is here with more hello, robert. >> hello, michelle well, believe it or not, nantucket is now more expensive than the hamptons. the average sale price there, $2.3 million versus only $2.1 million in the hamptons we toured a $42.5 million mega home which is actually 12 homes in one and it's got its own digital brain room you're looking at harbor hill, one of the most expensive estates on nantucket the 18,000-square foot mega home was repeatedly listed for $42.5 million. >> what makes this home different from any other home on the island is that it's a cluster of 12 cottages, each very reminiscent of classic new england architecture >> each structure is connected by glass hallways. there's a cottage for the dining room, one for the master suite, and even one that's home to the great room the owner is a telecom tycoon who spent a fortune to wire his summer home with a cutting edge
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glowing brain room >> the technology alone is worth $2.5 million >> the millionaire hid the island's only subterranean movie theater. he also built his guests a cottage that houses a super suite with a private gym and spa. >> people come to nantucket to escape, to unwind, to celebrate the joys of life this is the perfect property to do that in >> now, this property is no longer officially listed, but it's kind of -- >> sorry, tyler. >> but wait, it's a whisper listing. if you're the right kind of like, like tyler mathisen, they will show it so you and he is accepting offers >> you got to fly up there private, don't you >> absolutely. >> why would uh evyou even ask ? stocks are around session highs right now plus president trump is visiting the site of a new foxconn plant in wisconsin also, there you see paul ryan speaking there at an event in mt. pleasant, wisconsin, as well we will go to that later on, on
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"power lunch".
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welcome to the second hour of "power lunch. president trump is getting ready to speak any moment about his america first policy he's at the groundbreaking of
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foxconn's new $10 billion plant in mt. pleasant, wisconsin we just moments ago saw house speaker paul ryan speaking the president is touring the factory right now and he is expected to talk about how this particular facility will impact american jobs and the economy. this is a live shot here of the president being shown around >> do you remember when we first talked about this plant and there was skepticism because foxconn has made plans in other states and never actually built anything so everybody's waiting to see and they did this >> and it's dependent on some tax breaks that were controversial. >> still >> still are but those tax breaks went through. are they breaking ground today are they opening the plant it's unclear to me >> i believe they're opening the plant. it's a smaller facility than originally planned yes, breaking ground >> he's touring another facility and they're breaking ground on the big plant, says sandy in our control room so this is obviously -- because there was a plant that he was going through that had automated
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operations there just a few moments ago. >> let's get live to kayla tausche in washington. she has more on what we can expect to hear from the president. hey, kayla. >> reporter: hey, michelle we expect the president to talk about the scale and the size of the nebraskinvestment it's the largest investment from a foreign corporate attraction in u.s. history based on the number of jobs created the state of wisconsin saysing that be 13,000 jobs that will pay on average about $54,000 a year also, we expect the president to talk about his role in securing the investment for wisconsin we heard house speaker paul ryan thank the president for bringing the investment to wisconsin, and last year, when this deal was announced, the president said the company would not have come there if not for him foxconn plans to invest $10 billion. it's receiving $4 billion in incentives to do so. construction on that plant, they're breaking ground today. it's going to take four years and the state's economic board expects that those incentives could be recouped in 25 years.
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there is some irony in today's event for two reasons. first, the proximity of harley davidson, which is just a half an hour away and currently in a trade spat with the president over those tariffs but also because this is an event touting a major foreign direct investment by a taiwanese company during a week when the administration has endorsed a stricter review of inbound investments. this week, wisconsin's governor scott walker urged more foreign direct investment in the state and fewer tariffs during an appearance you have a lot of governors that have stressed the importance of this foreign money in job creation and that's one of the arguments that i'm told really landed with the president when he decided this week to forego those stricter investment restrictions >> kayla, thank you very much. as we await the president, is the news foxconn plant the start of a renewal in u.s. manufacturing? joining us is scott paul, president of the alliance for american manufacturing, and greg, chief economics
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commentator at the "wall street journal. scott, what do you say here? i mean, this is clearly a feather in the cap of the president, a major factory being built, and there are other companies that are expanding or building factories in the united states are we seeing something real and lasting? >> tyler, it's a good question, and i think time will tell, but consider this. if you would have asked anyone five or ten years ago whether you would see a large-scale plant ever built again in the united states, for anything, that would employ 5,000 people or 10,000 people, people would have probably laughed you out of the room so, the fact that this is happening, that elon musk is building this enormous battery factory in nevada, shows me that there is a future for manufacturing in the united states it needs to be backed by good policy, but even in this age of globalization, technology, automation, robotics, that it's possible to have this with the right kind of support, with the right kind of vision and that
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it's possible to eclaim some electronics manufacturing. >> how do you feel about harley davidson saying they're going to leave? >> look, i think harley davidson, you have to look beyond the face value of that. there is no certainty that those tariffs that the eu has in place are going to remain in effect. my belief, my strong belief, with respect to what harley is doing, is that they have long-term plans to outsource more of their production firms often look at public policy announcements and use those as a rationale or an excuse for some behavior that may be upsetting to the public or to their investors or to their employees. i think this is more of a convenient excuse than anything else, because if europe and the president were to make a deal, say, next month, or next august, those long-term plans that harley is making to offshore the production look pretty ridiculous >> they're already building in thailand and elsewhere for the asian market, presumably they're
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going to build there and elsewhere potentially for the european market. greg, you write in a column about something that ian equilibriumbremme has written about as well and that is that globalism is on the wane after 70 years in the ascendance i was trying to figure out whether the implication of that is that more production will be brought to the country where the items are sold and that that would -- could potentially help american manufacturing on the other hand, that would mean smaller installations, and there are certainly tricks in that for the supply chain. >> so, i think, tyler, a kind of cuts bothways and on jobs, it' kind of a wash so the united states will lose some jobs when harley moves out motorcycle assembly because of european tariffs on the other hand, bombardier is going to move some aircraft assembly to alabama because of u.s. tariffs so at the end of the day, we gain some jobs, we lose some jobs at the end of the day, when
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these companies have to break up their supply chains and only make in each market what they sell there because of these government barriers, it ends up being a very costly and inefficient proposition and we as consumers will pay more what i think is kind of interesting in today's news is that foxconn could not be putting that plant in wisconsin if it was only choosing the most optimal location and the lowest cost it's nowhere near any of its sort of existing customers and so forth it's instead foxconn is basically buying some political insurance. having jobs in the united states helps insulate it from the sorts of protectionist pressure the u.s. administration is showing right now. and even at that, it only makes economic sense because wisconsin taxpayers are kicking in $5 billion >> and we should let everybody know terry just walked to the podium he's the chairman of foxconn and we are anticipating the president at some point. >> scott, pick up on what greg was just saying there. he suggests that the more production is on shored, the
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higher -- and global supply chains are disruptive, which have been economical and cost reducing, the more we should expect to pay for manufactured goods. is he right? >> you know, i'm not sure that's the case, because of our fiercely competitive market and i'll also explain it this way. i think as labor costs have declied declined as a factor of production, and they do, with technology, with automation, with other factors like that, having protection close to the market where it's sold makes a lot more sense and not only as greg indicated is foxconn buying some political risk insurance, it's also hedging against exchange rate fluctuations, against changes in shipping costs, against the problems that arise from having offshore centers halfway around the globe, which presents some barriers to factory owners i think that we reached peak offshoring, perhaps, about five or six years ago, maybe even longer than that, and that savvy
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supply chain managers, savvy corporations are beginning to understand that having assembly and having supply chains that are close to the market makes sense for a lot of reasons >> scott, would you concede there are certain kinds of manufacturing that maybe the u.s. shouldn't want back >> yeah, i don't know that it -- it's a question of shouldn't want it back but i do think that you have to look at cost competitiveness i think people would be happy to have good middle class jobs. as i'm traveling around america, that's what i hear is that there are jobs out there, but middle class jobs, jobs that can support a family those are still in short supply. and we need more of them so i think attracting manufacturing jobs is going to be very important, and whether those are new industries we haven't even imagined here in the 21st century yet, or traditional industries, i think that we ought to try to claw for every bit of our share for that.
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it does mean doing it in a policy way that makes a lot of sense, and it has to be a good deal for taxpayers >> all right, gentlemen, i believe one or more of you are going to stick around as we await the president's remarks up there in mt. pleasant, wisconsin, at the opening or groundbreaking of this foxconn plant but if either of you has to go, so long thank you for your participation. if you're here when we come back, so much the better stocks are hitting session highs at this hour the dow had been down as many as 120 points earlier in the session. right now it's up by 83 points s&p up by 12.5 bob pisani has more on the action >> highs for the day, you're right, but still feeling the effects, the hangover, really, from the trade trade's a little bit more quiet today. still have industrials down, materials down, energy's down, health care getting hit, of course amazon buying that online pharmacy pill pack, it's been a terrible few weeks for the market a lot of new 52-week lows,
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particularly industrial stocks, general dynamics, ball, american airlines, parker hannifin, 52-week lows not a lot of big banks at 52-week lows but some of the investment companies, some of the insurers down. how bad is it? i watch relative strength index. this measures how overbought or oversold are certain sectored of the market when you're below 30 and this follows in about a 2-week period, you are really oversold. when you hit 10, you don't see that very often. that means historically oversold industrials, semiconductors, even the transports at 20, these are basically, on a historical basis, these are buy signals heaven knows if they would work right now but on a historical basis, they're definitely buy signals. >> thank you very much, bob. is volatility here to stay how should you be positioning your portfolio for the second half let's bring in cnbc contributor ron and lamar, he's portfolio
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manager withvillery and company. what do you make about the underpfunde underperformance of the banks, ron? >> recently underpfrpsz erforma technology the big market leaders have failed in the last few weeks and that's not a good sign energy now comprises a larger component of the s&p 500 than tech >> that's because of oil >> and so i'm not sure this is a type of leadership you want for a sustained bull market move so i suspect we're kind of stuck in this choppy, very unsatisfying mode on wall street. >> lamar, we are stuck if you look at the one-year chart, i mean, we've been stuck in this range now for months what's going to finally break us out of this? is it going to be to the upside or downside, do you think? >> you know, i would say more likely to the upside i'm not sure what's going to break us out of it i doubt it's whatever's trump's going to say at the foxconn opening. but s&p 500 earnings up in the mid 20% range this year and the
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market's basically flat so we think there's a lot of room for the markets. >> they weren't a catalyst the last quarter, lamar. why would it be a catalyst this quarter? >> i'm sorry, what i didn't hear. >> earnings season wasn't a catalyst for stocks to break out of that trading range last quarter. why believe that it's going to be a catalyst this time afforou? >> eventually, the market's going to catch on. we've seen it in small caps where we're focused. small cap is significantly outperforming large caps this year we would expect large caps to join the party later in the year, although they've got the head wind of the trade war combined with rising interest rates. >> you nervous about that outperformance of the small caps it's been so strong. have you lightened up at all even though it's the sector you focus on >> we have not as a matter of fact, we're more passionate than ever you know, if you look at the outlook for small caps right now, based on where we are, they're definitely more
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attractive the small caps have underperformed the last couple years. >> lamar, i'm sorry, we got to interrupt you for the aforementioned president trump speaking at the ceremonial groundbreaking of the new foxconn facility in mt. pleasant, wisconsin. we see him coming to the podium as he shakes hands with the chairman of foxconn. ♪ >> thank you very much, everybody. you know, 18 months ago, this was a field. and now it's one of the most advanced places of any kind you'll see anywhere in the world. it's incredible. and i want to be thanking terry gao, chairman of foxconn, and a friend of mine, one of the most successful businessmen in the world. very few people even close and i want to thank him for
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investing in wisconsin and investing in the united states and this is just the beginning i know terry this is just the beginning this is one of the largest plants in the world, and when you think in terms of 20 million feet, if you build in manhattan, a million-foot building, that's a very big building. they don't get much bigger and here you're talking about more think of it. more than 20 million feet. and that's probably going to be a minimal number so, i'm thrilled to be here in the badger state with the hard-working men and women of foxconn working with you. moments ago, we broke ground on a plant that will provide jobs for much more than 13,000 wisconsin workers. really something really something thank you, fellas. i want to also thank secretary
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steve mnuchin who's here thank you, steve secretary wilbur ross. secretary alex acosta. and administrator linda mcmahon, friend of mine for a long time where's linda? thank you. and also, paul just got -- just left i said, go, because we got to pass legislation we're passing so much. look at what's happening with our supreme court. look at the victories we've had. look at the victories we've had. and terry, i didn't speak to him about it, but he'll be in particular happy about one of those victories. do you know which one we're talking about? i think you do so i want to thank paul ryan i want to thank our great
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congressman. where's glenn? thank you very much. great job, glenn and we have so many other officials. but i have to thank a man who i gave it to -- it's like handing the football off and he ran for 2,000 yards that game. because most people couldn't have done it terry and i have had a great relationship and terry was thinking about doing this and -- you want to talk about another successful guy. he was in my office. he said -- friend of mine set it up and said, i want to invest $50 billion in the united states i said, you don't mean $50 billion, you mean $50 million. and that would have been okay. that would have been worth about a five-minute meeting. $50 million. so i thought he was saying $50 million and when it was set up, it was $50 million and i wanted to make it quick but i
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heard about him. he, along with terry, they're best friends, he came out and so, good, what are you going to invest in? he said, yes, we're going to -- >> i said you can't do that for $50 million. he said, no, no, i'm going to invest $50 billion and he misrepresented to me i can tell you he did because he spent much more than $50 billion in the united states and that was two years ago and now they're going to do a lot more, so i want to thank him. masa, are you back there come come come on up here, if you can understand what i'm saying come here. he doesn't play games, doesn't like numbers, right?
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are you proud of terry say something about terry. come on. >> terry is my best friend and we are the brothers. >> what about me no >> of course >> go ahead. >> so i promised the first time i met president trump, just before you became official president, i think i was the first ceo came to celebrate you. >> that's true >> and i said $50 billion investment and 50,000 jobs to the united states. because, i said -- no, i couldn't have decided such a thing before this new president. because i said, now i see the passion. i see the opportunity. i'm more energized so i made a voluntary promise, and now i'm very happy
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we're making great success, and i said, i have one more thing to promise, which is foxconn. >> that's right. >> so, those three things i promised, and i did not have official, official permission from terry, but i promised >> we brought him along, right we brought him along >> yes but i'm so happy today that my promise came to true so, this is a great historical moment because i think united states did not have the ecosystem for new technology last 20 years, and now this is a beginning of new ecosystem of high-tech manufacturing back into the united states
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>> thank you one of the great businessmen of the world also those two. that is some combination standing backstage i said, whoa but they like each other they love each other and his $50 billion turned out to be $72 billion so far he's not finished yet. and that doesn't include foxconn. so, big stuff. i want to thank another very special man. i hope he can hear me because i want him to come on stage, because i handed the ball over terry's a friend of mine, and i recommended wisconsin in this case and i'll be recommending ohio and i'll be recommending pennsylvania and i'll be recommending iowa and i'll be recommending -- but this was something that just seemed right. and the reason is that you have a car plant in a very nice location, and i flew over that plant with another great
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wisconsinite, reince you know reince. good man i think he's around here some place. he's a great guy and i said that would be a good site the only problem was that site's about 1/100 the size of what they did here. you're going put one of the smaller buildings on that site this is big stuff. but i handed it over i said, terry, this place is such a great place you know, i just realized the other day they told me, i didn't -- when we won the state of wisconsin, it hadn't been won by a republican since dwight d. eisenhower in 1952 did you know that? and i won wisconsin. and i like wisconsin a lot, but we won wisconsin and ronald reagan, remember, wisconsin was the state that ronald reagan did not win. and that was in 1952
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and i've gotten to know the people here. they're incredible, and i said to terry, this would be an incredible place then i started hearing the magnitude of what he's doing this is magnitude like nobody's ever seen. some of you have been able to see it and this is just the beginning. this is just the absolute beginning. but -- so i had this incredible company going to invest some place in the world, not here, necessarily, and i will tell you they wouldn't have done it here except that i became president, so that's good but they wanted to do it some place now in the united states, and i immediately thought of the state of wisconsin terry came up, fell in love with the people, fell in love with the location, fell in love with the concept here he's going to make robotics here they're doing many other things, including full television sets they're doing many things here and they'll do a lot of expansion. but i had to hand off the ball and in private life, you know, you hand off the ball and sometimes they do a good job and
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sometimes it's like, what happened didn't work out. why didn't it work out because they didn't know what they were doing. and sometimes that happens and there are very few governors that i could have said, good luck, you're going to build one of the largest operations in the world, over 20 million feet. good luck. i gave it to scott walker. he literally didn't have to make a phone call to me for the last year and a half. he is a unbelievably talented guy. i'm telling you, scott walker. scott, come here is scott around, please? scott walker governor scott walker, come here come here. whatever he said, he should say it >> well, thanks, mr. president as you mentioned, you got the ball rolling foxconn would not be in america if not for you back in april 27th, when you met
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be terry gou and told him about not only being in america but told him about a pretty good site, that's an honest truth in fact, reince priebus will tell you, the only thing we said was we got to get a bigger site than that and your team, your team in the white house, jared, your cabinet, everybody was just hands on deck, great team effort here, and we couldn't be more proud to have foxconn's 8k technology, lcd panels for the first time ever outside of asia made in the usa, proudly here in the state of wisconsin thank you, mr. president >> so, i gave scott the ball and he carried the ball, and if that were football standards, nfl standards, he ran for about 2,000 yards in one game. special guy. special talent forget about special guy he's a special talent. so i hope he doesn't run against me because that comment -- that
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comment will come back to haunt me he is a special talent and a special person as foxconn has discovered, there is no better place to build, hire, and grow than right here in the united states america is open for business more than it has ever been open for business between our low taxes, our cutting of regulations, and we're not finished with the regulations. and we'll have regulation, but it's sensible regulation you'll be able to get things approved quickly or disapproved. sometimes it's going to be disapproved. we have clean air. we have crystal clean water. we're going to do all the things you have to do but we're going to speed up the process. you have people that wanted to build a plant like this. it would have taken them 25 years to get approvals 25 years they got them almost immediately. and the federal government had a lot to say we had to get going. and they did, and here we are,
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and they're starting other sections right now so we're open for business, made in the usa it's all happening and it's happening very, very quickly we've created 3.4 million jobs since the election, including over 300,000 manufacturing jobs, and as you saw, the recent poll just came out, the highest percentage of happiness by manufacturers in the history of the poll, which is a very old poll unemployment claims are the lowest they've been in 44 years. unemployment for african-americans is at the lowest level in history. unemployment for hispanic-americans, the lowest level in history unemployment among women, and i have been saying it's just changed today, is at the lowest level -- and i'm telling you, 21 years, it's now at the lowest
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level in 65 years and it's going to be in history very soon history sounds even better for the workers, after 20 years, wa wages are rising remember, i used to say they did better 20 years ago than they did 2 years ago. now they're starting to do better and they're having their choice of jobs, where they can enjoy what they're doing and a recent study found that 95% of manufacturers, they want to get going, and they're going to get going, and we have a lot of these things happening in the united states, but to me, this is always going to be the special one, because people that are highly sophisticated, business people that have come out, looked -- i had a friend came out two weeks ago because he heard about it. he is a highly sophisticated business person that you all know he could not believe it. he called me up, and he would love to tell me, it's nothing.
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he's that kind of a guy. not really a nice guy. but he's a great businessman he could not believe what he has seen we are demanding from foreign countries, friend and foe -- we have been on the edge of, as a country, we've lost our companies, we've lost our jobs they build a product, they send it in. that's why this is so beautiful, because this is as great as there is anywhere in the world, and we do it within our country. and i just want to let you know, we've put tariffs on steel and aluminum those businesses are through the roof, u.s. steel called me up, they're expanding or opening six plants they haven't done that in 35 years. georgetown steel in south
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carolina closed four years ago, closed and shuttered they're open for business. 600 people that's happening all over the country. all over the country so, i want to level out and i'm doing it, level out the playing field, and all of the things you hear, some, i mean, frankly, the smart people love it some people don't understand it. but we're going to be treated fairly when our great farmers in iowa, wisconsin, upper new york state, when we want to sell our dairy products into candidaada, they charge us 275% essentially, what they're saying is we don't want your product. because who's going to pay that? so we're going to level out the playing fields, folks. they send us a lot of stuff, no tax. we're going to work it out it's going to be friendly. we love canada we love canada i love canada. but we're going to work it out
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mexico, last year, made $100 billion, plus they have a 17%, almost, v.a.t. tax that nobody even thinks about so, we were behind the 8 ball because that tax was there at the beginning. right from the beginning, we were behind the 8 ball mexico wants to make a deal, we're going to make a deal with a lot of people. china. i have a lot of respect for china. i think it's great and president xi, i think he's great. he's a friend of mine. but we lost $500 billion over the last number of years, $500 billion a year. we've helped rebuild china some day, they'll say thank you. but we don't want to do that anymore. we want to have a fair and balanced situation, and it doesn't have to happen
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immediately, but it has to be fair because our country has never done better than it's doing right now. european union, last year, trade imbalance. we had a deficit of $151 billion they send us mercedes, they send us, by the millions, the bmws, cars by the millions we send them a bushel of corn and they reject it they have a barrier. they don't want our corn because they have their farmers. okay, i understand but you know, if you don't want our agricultural product, we don't want your cars, i mean, you know, it's not such a complicated formula. and they're going come back and they're going to say, let's talk frankly, don't tell them i said it, but they already have. don't ever tell them i said that you'll screw up my negotiations. but we're doing good european union, they're great. they're great people and it will all work out many, many other cases we've actually made a deal with
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south korea. we took the deal i expired it it was a terrible deal it was supposed to give us 250,000 jobs done by hillary clinton. and she was right. it did give 250,000 jobs, so she was right. it gave it to south korea, not to us. this was not a good deal but we've renegotiated the deal and subject to signing -- i always say subject to signing because lots of things happen -- and if it did happen, that's fine but we made a new deal with south korea. wonderful deal for both. and our farmers now are protected, and our tariff, which has been paid for years, which was expiring, has now been extended for a long period of time on trucks at the center of america's economic resurgence are the massive tax cuts that i signed into law six months ago. we slashed tax rates for individuals and we did numbers
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for business we did tremendous, tremendous amount of work, and it's the largest tax cut ever approved, ever gotten in the history of our country. tax cuts and tax reform. included in there is the largest drilling site, potentially in the world, in alaska and we got rid of the individual mandate, which is going to be great for the people here and the people that work here. in other words, we got rid of obamacare's individual mandate where you have the privilege of paying a lot of money for not having to buy health care. think of that. think of that one. you pay a lot of money not to have health care so, it's gone. most unpopular provision in obamacare by far, and obamacare is largely gone now, and we're
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opening up secretary acosta's here, secretary azar is here, we're opening up unbelievable health care, across state lines, highly competitive, really great health care. everyone's competing for it, all of the insurance companies are dying to get it. they all want to compete the costs are going to be low and it's costing our country nothing. nothing. and it's so much better than any form of insurance. we have association and then secretary azar is coming out in three weeks with a massive plan. you won't believe it and we did repeal and replace obamacare. unfortunately, one senator decided to put the thumb down, late in the morning, and that was not a good thing when he put that thumb down, but we've hemae it for it and in many ways more than made up for it but that was a sad day, to me but we repealed and replaced but now we have something that ultimately, i think, is going to be better, and that's what we
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do today, we're sewing teing the rs of the pro-american agenda, america first, make america great again, all those hats. greatest phrase ever used in politics, i suspect, right that's the greatest -- make america great again. so what are we using in two years? two and a half years can you believe two and a half years? so soon. you know what the phrase is, right? huh? that's right keep america great, of course, exclamation point, right keep because we can't say in two years, we were here for four years, we can't say make america great again, but when you look at what we're doing, it's very simple it's called keep america great we'll get you nice hats. maybe we'll make them green this time instead of red. green. representing cash.
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this plant will manufacture state of the art lcds, adding an average of $3.4 billion to the state's economy every single year and by the way, i don't know this, but i understand life and i understand politics, i guess or i wouldn't be here in a short period of time i must have potential, right because here we are all together but i assume the democrats are probably saying no deal is any good you know they say -- any deal you do, you know, the democrats, as headed by nancy pelosi and maxine waters, you know they have a new leader. maxine waters. this is our new leader but i assume, you know, because any deal you make, they have no idea what the deal is. we had a couple of them recently, a trade deal, and one of the democrats got up, the deal doesn't work. and he didn't know the deal. nobody ever shared it to him we didn't know the deal because we hadn't even negotiated it yet and he was saying -- but that's the way it is. they always will criticize this is one of the great deals
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ever what this is going to do and -- and i don't even know that anybody's critical of it i can't imagine they could be. i know that terry's investing $10 billion in the state $10 billion. incredible so, even at this early stage, the economic benefits of this new plant are being felt in 60 of wisconsin's 72 counties, already. don't worry. in another three weeks, it will be 72. foxconn has already contracted 27 local wisconsin companies to begin construction of the main facility as big as this is, this is just a toy compared to the main facility and i'm pleased to report that foxconn intends to build 100% of the factory with beautiful american concrete and beautiful
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american steel made right here. so important our steel industry, our aluminum industry, our solar panel industry, it's all coming back coming back fast one of the many people here with us today who will benefit from this plant is celia griffin. she is a mother of three and a member of the international union of operating engineers local 139. celia, could you come up, tell us what this foxconn job, this incredible -- this really incredible plant has done for you and for your family. celia. >> thank you for having me hello, everyone. giving honor to god. i started in 2005 as an
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operating engineer, and hoffman construction gave me my first job in a haul truck. i went on from there to work building the northwest mutual towers in milwaukee. now the two families are together and they've brought me to foxconn to work in the haul truck again and me and my family are grateful and very pleased to be at home again thank you, everyone. thank you. >> thank you thank you, celia and celia, we want to tell, by the way, harley davidson, please build those beautiful motorcycles in the usa, please okay don't get cute with us
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don't get cute they don't realize the taxes are coming way down. they don't realize that yet. spent a lot of time with them. build them in the usa. your customers won't be happy if you don't. i'll tell you that now let's hear from dawn wallace. after she and her husband, dave, worked hard to raise three beautiful children, dawn recently decided to take advantage of the new job opportunities that foxconn created right here in wisconsin. and i'd like to have -- can you come up, please? where are you? good hi, dawn hi. >> so, did you receive any of my tweets, president trump? >> i did >> you did >> i did >> stay at home mom turned into
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foxconn builder. >> i did >> i would -- i would just like to thank hoffman for giving me the opportunity to start something new. what a perfect way than foxconn. i was super excited when i heard it was coming in our area. >> good job. >> thank you >> thank you good job good job thank you, dawn. i'd also like to welcome chris, one of the project managers of the site, who has really done a fantastic job. chris, please. >> hello, everybody. so, one of the best parts of my job is getting to put these teams together it's one thing to build them it's analytical. we look at pictures and then we
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make them into the real thing in the real world but in order to do that, i need, currently, 110 people to help me every day, and they show up early and they go home late and we spend time together probably more time together than we spend with our families. but they're there every single day, and they do everything that we ask, and we get the job done on time. and that's -- that's the part that makes it special. so, we get together out there every day, and we make sure to care for each other, take care of each other. we actually treat it like it's a family it's a dangerous job in some ways, but we look out for each other, and i just think that it's probably the best thing -- i've really been doing this since i was about 10 years old, and i can't believe i'm standing here talking to you all today about it so, foxconn is probably one of the best things that's ever happened to hoffman construction, and certainly for
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chris, and i appreciate the opportunity, president trump thank you very much. >> thank you, chris. thank you. great job. by the way, as soon as i'm finished here, i'm going to hop in that plane, i'm going back to washington, and we're going to pick ourselves one great united states supreme court justice to take the place of a great man, justice kennedy really a great person, great man. i'm so honored that he decided to do this during our term and i think that showed confidence in us, but he is a very special person, special man, justice kennedy and just remember that name. he's done some very important decisions, very important things, highly respected, and we love him so, we'll be -- but we'll be picking somebody, and we'll be
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hopefully making you very proud. so important you know, when i ran for president, i started hearing, outside of obviously defense and all of that, the most important decision a president can make is the picking of united states supreme court justices if you're lucky enough to do that we had a fantastic choice with justice gorsuch. very proud of it doing a fantastic job. and we're going to try and do just as good so we're going to start working on that process. we've already started, and hopefully we're going make you very proud so just in finishing, i want to say that today's groundbreaking is only one part of the exciting story that is playing out across our nation, all over our nation. chrysler is shifting production from mexico to michigan.
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toyota and mazda will build a new facility in alabama, beautiful facility and we have many other companies coming in, not only the car companies, but this is where the action is. i go around and i see the leaders of different countries, and they always say, congratulations on the great economic success that you're having in the united states. and we have an economy that's almost twice the size of china, and much larger than any other, and you know, if you think we've made so much progress in the last year and a half, it's put us in this position, and we're going up nobody's ever seen anything like it and watch those gdp numbers. we started off at a very low number, and right now, we hit a 3.2% nobody thought that was possible in four years, but i think it's going to go a lot higher than that so you watch those numbers each point is $3 trillion and
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it's 10 million jobs just remember that each point and we already hit a 3.2 and i think we're going to be seeing 4s and i think we're going to be seeing 5s too and i think we're going to go higher than that, but that may be in the second term, okay can i have a little break? right? right, steve our secretary, our great secretary of the treasury. right, steve am i okay saying that, steve that's my prediction i think that's your projection too. steve mnuchin. that's his projection too. you better be right, steve in the first quarter of this year, american companies repatriated a record $300 billion that would have never come back to this country. its overseas profits, bringing the money back home to our country where it belongs and i think we're going to have $3 trillion or $4 trillion before that's all over it was impossible to bring the money back, virtually, for a lot of reasons now they're coming back. in fact, apple, as you know,
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terry makes a lot of the product, laptops, iphones, makes a lot of them for apple, and apple's spending $350 billion -- billion -- there's another case. i would have been happy with $350 million, right? but they're spending $350 billion on plants, on building an incredible campus. and terry's very happy about that we're also reclaiming our country's proud manufacturing legacy that's why it's so important that we open up our steel mills again. we need that for purposes of defense. we need that for purposes of legacy we're restoring america's industrial might and thanks to the hard working patriots like you, we're making america greater than ever before it's greater than ever before. very shortly, it's all happening. you see it happening you see what's going on. they're all coming back. we're the place they want to be.
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to foxconn and to terry gou, and to all of the amazing wisconsin workers with us today, and all over this state, i want to wish you good luck and congratulations on truly one of the eighth wonders -- i think we can say the eighth wonder of the world. this is the eighth wonder of the world. but this is something so special, so i wanted to just congratulate you all you're very special people, and a very special state thank you very much. thank you to scott walker. thank you, everybody great honor to be with you good luck. enjoy this great facility. thank you. >> we have been listening to president trump speaking at the groundbreaking for a new foxconn plant in mt. pleasant, wisconsin. he had a little bit of a report card for his administration, talking about the jobs created during his term so far as well as some of the developments in health care. he also made a point of sort of
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mapping out where he sees the administration going he said that he was going to hop right on to a plane, get to washington to start filling that justice -- supreme court justice seat that will be vacated by justice kennedy and also projected 5% gdp maybe in the ie second term for him. >> called out harley davidson. >> absolutely, yep >> thought we'd hear more of that did not mention the candidate he ran against did not visit wisconsin once >> thought we'd hear that. >> did say he was the first to win wisconsin since dwight eisenhower, and a fact check says there's not quite accurate. reagan won twice, and nixon won twice as well. he won when he ran the one time he did run, and that is indisputable >> let's bring in ryan and scott paul alliance of the american manufacturing. ron, you've been on set, listened to the whole thing, what do you think of it?
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>> well, you know, this is not unlike most other appearances the president make, touted various numbers, talking about impact that this will have on wisconsin's 72 counties, so on, and so forth, and god to see jobs created in states that need them in a country trying to revival the manufacturing sector, which has been successfully done over the last few years. this is not a new phenomena. auto makers bring large scale equipment and plants to the states, and it's good, but it's not as new as the president makes it out to be we have energy costs, lower labor costs, particularly the sun belt and build those here at home >> scott, what do you think it'll take to make this sort of a not just a one-off for the plant here in the u.s. as we pointed out before, wisconsin had to kick in a lot for tax breaks in order to get the deal done. >> they did. in fact, i'll be happiest when
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there's 13,000 workers getting paychecks, and they are at $20 an hour. not a bad wage, could be better. that's a couple years down the road, and return for taxpayers is 25 years down the road. it can't be a flash in the pan we're pointing out that is clearly not a sustainable strategy for economic development in the united states, which is why the tax code is important, our training programs for manufacturing are important. win wisconsin does a great job of that, why it has a far higher percentage of its economy and manufacturing than any other state other than my home state of indiana, and we have to get the trade case right again, they are doing this as a hedge against political risk, and the tariffs can't be too high or low, but we need pushback otherwise you're not seeing that reshoring. harkening back to reagan one of the reasons we have foreign auto makers making cars
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in the united states is because he threatened them saying you got to make more of the stuff here, so if we do see that and can create that ecosystem that was mentioned, i'll be encouraged i think the electronics infrastructure is the hardest to bring back >> all right gentlemen, thank you scott paul and ron estana. >> thank you two new casinos open in atlantic city today, and one is ocean resort, they are the first since the supreme court decision made it legal, and we are with the man in charge of the sports book fair, hi, contessa. >> reporter: in fact, they just took right now the very first bet, mark wahlberg bet on the eagles for the super bowl next year joe asher is the ceo of william hill u.s i know you grew upcoming here. what's it like for you explain the significance of seeing a sports book open in
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atlantic city and william hill being in atlantic city >> oh, look, very exciting, contessa working for this day for a long time litigation for the federal government to offer sports betting and sports league went on for six years, and it's just real exciting to get to this point to see all the new people that we've been hiring, a lot of jobs have been created as a result, not just here in ocean and atlantic city, but in mamoth park, further north in jersey, an office in hoboken, another office in south jersey, so it's very exciting. >> do you have any idea what you're looking at in terms of return on investment >> not really. we just know it's going to be a big success. we know that there's an appetite for sports betting here in new jersey, and it is going to be successful if we do well now and execute. >> morgan stanley said, look, william hill benefits from the legalization, but you're likely to face stiff competition from
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other operators and from casinos going directly to the technology providers. how do you innovate and manage that >> we face tough competition for years in nevada competing day in, day out against people like mgm, caesar's, wynn, and so competition's great as long as the rules are fair we'll do fine. >> an outsider coming in, saw hard strapped nevada towns come out of if. what do you think when you see two now casinos and boarded up store fronts and two blocks from here, most people know it's rough. >> as you said, i've been coming to atlantic city since i was a little kid so i have a feel for the market great to see the investment here hard rock is next door you'll see a movement activity to this end of the board walk, ultimately good for us >> you know, as long as the weather holds out because, really, what you need is summer time in the winter here. they are hoping by conventions bring them in midweek,
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entertainment keeps rooms packed in the winter, and sports is a big draw where they were just regular weeks before >> yep, thank you. it is gorgeous down there in the summer time, isn't it? don't move because "check please" is next. with the new chase ink business unlimited card i get unlimited 1.5% cash back. it's so simple, i don't even have to think about it. so i think about mouthfeel. introducing chase ink business unlimited with unlimited 1.5% cash back on every purchase.
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walgreen's on cue, and nothing but bad news since becoming a member of the back to the old saw we have, moment down, component leaves, takes a turn and goes up. >> joining it, bad news for the stock. >> to be fair, the stock reported good earnings this morning and traded higher, and then the news hit and took it down fast, so -- bad timing >> i would say that, you know, ron said this, we're in a choppy phase in the market and seems to me illustrating this week is the market is vulnerable to headlines. sunday night, there's a story that the administration will target china on intellectual property in a very aggressive way. the administration disputed it, did not matter, market goes down sharply on monday, and then tuesday and then wednesday comes word that we're going to use the process which seems to be a somewhat more light touch on intellectual property and foreign investment in the united states, and that cured the
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market the market's very, very vulnerable, in my view, to headlines, and that's going to be consistent this fall. >> at least for today, a close at the market, session highs for technology, lost leadership there, and we'll see if they hold the gains into this closing bell thank you for watching power lunch. closing bell starts right now. it is time for the "closing bell," i'm in for kelly evans, financials on track to break the 13-day losing streak as we await key stress tests after the bell. >> i'm kate rogers at cnbc headquarters, the ceo of chipotle restructures. why investors may lose an appetite for the stock >> reporter: amazon delivered a plan to deliver more packages. we have the details coming up. are we in a scooter bubble bird valued at $2 billion in the

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