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tv   Power Lunch  CNBC  March 14, 2019 2:00pm-3:00pm EDT

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that's not wanted by anyone on either side including a majority of mps as we saw last night but if as expected, mps vote in the next 20 minutes to look and seek for an extension, the onus is then on the eu to grant the extension. if they don't, we've got 15 days left >> woilf, thanks. wilfred ross i'll be joining tyler and melissa for "power lunch." >> see you in a moment i'm with tyler mathisen. new at 2:00, facebook facing criminal investigation over its data that stock is dropping right now. we've got the fallout ahead. boeing facing major legal problems following the ethiopian airlines crash grounding financial risks facing the company. elon musk taking a bold step into the hottest area of the auto business. will his big bet pay off "power lunch" starts right now >> indeed, it does, melissa.
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thanks very much welcome, everybody, to "power lunch. i'm tyler mathisen kelly will unijoin us in a minu. nasdaq on for the last week in the last nine. rallying up 6% this week alone bullish new callout today and speak with the analysts who made it minutes from now. check the british pound. a little bit weaker against the dollar there you see it british parliament rejected a second vote on brexit as kelly was just speaking a moment or so ago with wilf. let's hear what willem has >> reporter: that was not a binding vote that was not entirely off the table but those campaigning for a second referendum earlier today said they did not want mps to vote at this moment in time and we saw one of the main opposition parties actually abstain from that vote since then, we've seen the
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members of parliament narrowly vote against it, having control of that process. lost by two votes. a couple more votes coming up. one will seek to push theresa may's deal off the table and not voted on in the future and the main motion put forward by the government, that's the one that will essentially call to extend the period of negotiations we've had two years of that so far. they will rely on the europeans turning around and granting such an extension and theresa may is hoping the europeans grant an incredibly long one to force one side of parliament to back the deal or a short run to force an entirely different faction of lawmakers to back her deal really very narrow tight rope over the next few days find out in 20 or 30 minutes to see whether she'll be able to get that extension supported by parliament and then she'll have to go to brussels to ask for it. >> wilem, thanks, willem marx is following this
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the trump and xi meeting is delayed. what this would mean for the likelihood of this deal getting done. >> reporter: it makes it increasingly unlikely. i'm told by three people briefed on the skudiscussions that china suggesting any trip to the u.s. would need to be coupled with a formal state visit i'm told the u.s. and china discussing a potential state visit for president xi jinping since last year and have been discussing this since president trump was received in beijing in november 2017 on an official state visit there. unclear whether the white house has committed to holding such a state visit for president xi or exactly when this would take place but this is something china is holding out there as something that would potentially be needed to get this deal done. president trump yesterday wants to close this deal in person the top trade official
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ambassador lighthizer said many issues still remain. lighthizer, we should note, at the white house, met with a couple dozen ceos, members of think tank, the private sector counsel on trade issues. couldn't glean much on what's discussed behind close doors they have to obtain top secret clearances to discuss these sensitive issues but spoke with one of the members who said there has been some in the near term but thinks this administration is committed to getting the right outcome. >> any time you address a tariff, there's challenges on the front end and on the back end but ultimately, this is about america. this is about putting america first in order to make sure we get free, fair, and balanced trade agreements >> so we continue to watch the calendar we continue to parse every single public statement from both sides and we'll bring you any more news as we have it, guys. >> kayla, thank you. kayla tausche at the white house keeping us posted on trade the social media giant facebook facing a criminal
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investigation over its data sharing deals despite today's drop the stock is still up 30% so far this year. julia boorstin joins us to explain in the facebook data saga julia? >> reporter: melissa, the justice department is investigating facebook's data sharing deals with about 150 hand set makers and other electronics companies. "the new york times" reporting a federal grand jury in new york subpoenaed at least two smartphone makers. they're among the companies who partnered with facebook to access users data from facebook as well as their friend list without the user's complicit consent. this is several of the investigations ftc seeing if they violated consumer data. considering fining billions of dollars. sec, whether they adequately warned users
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and fbi in the cambridge analytica scandal. they take these probes seriously and cooperating with investigators. it's worth noting, most of the shares now down over 1.6% today. back to you. >> thank you very much julia boorstin what are the risks for facebook and investors? joining us now is scott kessler, ahead of technology research he has a buy rating with a price target of $238 a share you like this stock. not troubled by the investigations swirling around it and increasingly, let's just say prickly press that surrounds this one time darling? >> well, so tyler, i think there's two separate questions, honestly this is one of those situations where you don't necessarily have to like the company to see the stock as attractive, and that's really what's going on here. when we downgraded our opinion on facebook last summer, before the company reported qt results,
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we thought very positively about a lot of the things that the company was doing but thought the stock was overvalued here, we have a situation where issue as you referenced earlier, the stock is recovered nicely, but we still see a lot of head room because we think the fundamental story is in tact despite significant risks related to a lot of inquiries and investigations around the world and here at home >> as you speak to or analyze customers, by which i mean users and advertisers, are they as riled up as regulators seem to be >> it doesn't appear to be the case we haven't seen obviously what the company is going to report for q1, right, they're going to talk about q1 results likely next month but i think it's fair to say that now this scandal or kind of offshoots of it is really about a year old and what we've seen
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is that for the most part, the fundamental story, particularly on the top line, i'd say is more in tact than people probably anticipated going back a year or nine months or six months and so that's something to keep in mind but of course, there are other things going on at the company they're transitioning more to a stories format and spending a heck of a lot of money on the health and security of their platforms. >> the idea, scott, that perhaps advertisers could go elsewhere is that completely put to rest in your view or headline risk continues and the public at least pays attention to these things and regulators as well, could this become more of an issue? >> you know, so melissa, the way i look at it, i wouldn't say it's completely put to rest. we have no idea what the next revelations are going to be. if someone said a year ago, what would have happened over the past year happened >> that one, i'm sorry to interrupt, but that one statement speaks volumes
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we're just waiting for the next shoe to drop the idea that you can sit there with a rating or someone can say, i like this company and not know what the next shoe to drop could be, whether it's a criminal investigation into, you know, partnerships a couple of years ago or whatnot that seems like a big unknown. >> well, so understand, what i'm saying is i have no idea is advertisers are going to be completely comfortable with the next kind of revelations related to this. but what i would say is, to me, it seems highly unlikely that you're going to see substantial changes in spending solely based on this. it really has to be driven by audience shifts and honestly, we haven't seen a lot of those. if anything, people are probably spending more time on instagram and maybe less time on facebook than a year ago. >> i'm reading roger's excellent book zuked, a title clever in
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its own right and he makes the point, i think, not only that facebook was really culpably slow in grasping the data risks that they had builtinto their systems, but maybe worse than that, were willfully slow in in the respondinnot responding where have they been actively protecting users data or not >> there's no question that roger macnamy has gone from one of the biggest supporters to one of the outspoken critics what he said rings true. it's obvious to a lot of us that the company could have recognized earlier that there were some issues in terms of how they were, let's say, accounting for user data, how they were making it available to third
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parties and i think they largely recognize this now of course, largely because now you have a lot of, let's call them global authorities looking into this in a serious way so i would think to some extent, they didn't appreciate the seriousness of what the implications of what they were doing would have >> quick final question. if you or a socially responsible investor, would you invest in facebook >> that is a tough question. i think it would depend on what your kind of definition would be i think there are big questions about the company, but i think what's most important is what have they been doing most recently to address these concerns if you see what management has to say, they are on the same page in terms of making sure that data is secure and protected for all its users. >> scott, always good to see you. thank you for your insights. scott kessler. the apple worldwide
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conference june 3rd. cowen out with a bull iish. krish, thank you for being here. >> thank you for having me. >> this is outside of your coverage universe. why initiate apple >> sure. actually, my coverage is actually traditionally going to be covering the i.t. hardware sector and apple the most attractive name and actually a pretty good time given where the stock is and what it's gone through the last six months. >> so you're going to approach this analyzing apple as a device company? i see here a big part of your argument is about services and obviously quite controversial on the street about whether you can really value this company on that or not given the kind of disclosures they have today and the way they're looking to grow the business what makes you confident about the $220 price target?
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>> one of the things that's differentiated it is the services side of the business. right? this was about $30 billion revenue business last year touching up on $50 billion next year and it's grown pretty impressively over the last few years. what we do think is over time, so this is going to be a bigger piece of the story iphone has had peaked a while ago but in terms of revenues, margins and more importantly, on the earnings, which we do think eventually will translate into a better multiple for the stock with services, revenue style of business higher multiple. >> i thought what was interesting with how you got to 220, applied 12 times multiple for full year 2020 or fiscal 2020 to apple's hardware core business right now and 25 times multiple on the
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software services recurring revenue part of the business how much does that part of the business or the software part of the business ratchet higher as the years go on? >> absolutely. so the way we looked at it, by 2021, going to be almost a $60 billion revenue business and we do have some expansion because we think apple is going to be innovative on the services side, providing more services and probably creating more value with the existing install base the second thing to your point, melissa, i would say that services with the recurring revenue is considered higher quality pbusiness the $3 attributed to services and then going to be doubling to $6 two years down the road >> the services revenue, is it assumed all of it is recurring,
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apple care the service that doesn't fit into the recurring revenue sort of model, a different sort of multiple >> absolutely. to your point, about 45% of the revenue actually recurring revenue story, but the other thing to keep in mind is in general, services is a sticky business once you have the installed base the second thing is the companies kind of with a high recurring revenue, kind of like the space and also, if you look at more of the higher growth names, the cloud computing names. so we kind of came with the in between multiple right in between where the low growth recurring and high growth recurring business goes. 45% recurring revenue doesn't seem as high it's impressive and services as a whole is growing three years ago, no one spoke about services for apple but beginning to become a bigger part of a long-term invest for apple. >> krish, thanks for joining us
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today. >> thanks for having me. coming up, more bad news for ge today sounding off, is the worst really over and boeing's problems nowhere near a conclusion the latest on just how long those planes could be grounded and how equipped boeing is to deal with the financial fallout. "power lunch" will be right back you.
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there are shares of ge higher today by nearly 3% after ceo larry culp offered an optimistic view for the struggling power business. it's game on this year as he turns the unit back to positive free cash flow in 2021 for the whole company, culp predicted lower profits, described 2019 as a reset year we'll hear much more when larry culp joins jim cramer on "mad money. the faa saying it will not unground the boeing 737 max planes until the software upgrades have been installed, tested and approved. contessa brewer with the latest on boeing. are these the software upgrades that traced back to that original hawaiian air crash last fall >> yes, and another crash with faa investigators very eager to dig into the information collected by the cockpit voice recorder and the data recorder
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to see whether they reveal why there are similarities between the aircraft movements before the lion air and ethiopian air crashes. those black boxes arrived in paris this morning, severely damaged in the crash they require specialized equipment to extract the information on them. so the process of collecting that data has been delayed this could be the key to clearing the boeing 737 max 8 or fixing any identifiable problem. in the meantime, the grounded planes expected to account for 48% of boeing's commercial aircraft revenue this year clearly, a major contributor to boeing's bottom line many on the street expect boeing to keep up current production rates of 50 to a month but expect that deliveries could be halted with boeing having to carry inventory until this grounding is lifted. something that boeing's balance sheet can handle but boeing has lost $25 billion in market cap since march 8th. there are three financial risks going forward for the aerospace
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giant. one, the expense of software fixes. two, the risk of delivery delays and three, the potential compensation to airlines and leasing companies who have had to keep their planes parked because of the faa order >> contessa brewer, thank you. with hundreds of planes grounded around the world and airlines beginning to see compensation as contessa mentioned from boeing, how much risk is the jet manufacturer facing chris niccolo. great to have you with us. >> thank you for having me. >> boeing's balance sheet is strong the back of the envelope, calculating what it could be facing in terms of liabilities, how do you start to think about that >> we think the company has sufficient liquidy to handle the situation. they had over more than $5 billion revolving credit facilities so based on what we know now, we think that should be sufficient
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liquidity to handle the cash flow from this. >> what gets you concerned there have been reports, and granted, this is the early stages and a lot of these airlines have said we are reviewing, you know, whether or not to take delivery these planes are reviewing proposals until we know what comes out of the black box but geruda thinking about its orders, kenya airways, in the meantime, president macron of france is touring africa and saying, you can buy airbus ethiopia, china, buy airbus. >> that's true and over time, if there is a perceived issue with this aircraft that orders could shift more to airbus, but right now, boeing and airbus are producing by the aircraft as fast as they can because the demand is so great and airbus, in the short-term anyway, wouldn't be able to increase capacity enough to offset any airbus cancellations on boeing aircraft, certainly in the next few years. >> if there is a revenue interruption or a revenue
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reduction that is enduring as we look live at renton, washington wrr where that plane is manufactured and if there is a revenue interruption, at what point does the credibility rating of boeing get called into question >> it is hard to put a specific number on it at this point right now, the key ratio we look at for boeing, for the single rating we have on them is funds from operation and then 2018, about 65% and we've said we would lower the rating if down to 40% so that's a pretty significant amount of cushion. that would be either increase in debt or decrease in cash flow. so we think there's a fair amount of room so it's really, if it's settled the next couple of months, probably not a big issue if we look at something longer, we'd have to reevaluate. >> if you look at past groundings, the dream liner, for instance, that plane was grounded for three months and that didn't involve two fatal crashes. any sort of extrapolation you make in terms of worst case
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scenarios as you think about how the situation could unfold >> it appears again from the current information that if it's just a software fix, that's a lot easier than the fixes that had to be made to the batteries for the 787. but to your point earlier, there's many more 737s that have been delivered and in process. so it does sort of add up to a bigger number, but if there's nothing new that comes out of the ethiopian crash that indicates a different problem, seems like the fix is on its way and shouldn't be more than a couple of months delay >> appreciate it, chris denicolo willem >> what we've seen in the last couple moments, lawmakers here voted in favor of the government motion to extend the negotiating period around article 50 that specifically is the brexit process where the uk would depart from the eu
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that will now mean that in theory, theresa may has to go to brussels next thursday for a meeting with all of her 27 european heads of state counterparts and ask them for that extension very specifically, she will ask them that they have up until the end of june for a short technical extension. if she's able to get her deal through again next week. if she's not able to get her deal through next week and very likely that will be another vote midday through next week on that, she'll potentially be in their hands with how long this extension could be and something that's very verifying for those heavily in flavor of brexit. the idea you could have an extngs of oe extension of one or two years. the second referendum, that was not binding and there are many people here in the uk, specifically in the building behind me who would like to see a second referendum. that is not something you could entirely rule out at this stage. >> thank you very much we appreciate it >> we should mention the dow has been fluctuating with positive and negative territory with this
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shares of snap soaring on an upgrade. do the charts paint a pretty picture for the stock? "trading nation" is next speaking of charts, tell you why right now is a crucial moment for the maetrks. speaking of, the s&p is down "power lunch" comes right back measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org when yowhat do you see?itical issues facing our world,
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welcome back to "power lunch. i'm michael santoli at the new york stock exchange. check out shares of snap spiking today after an upgrade to buy from long time skeptic rich greenfield at bge&t still down about 35% from the 52 week high. can shares continue to snap back bill beiru and mark tepner, your "trading nation" team today. this stock has been all over the map, bill. it's been above $20 in the last 13 months. been below $5. now here it is above 11. where does that leave you looking at this chart as a potential opportunity? >> reporter: i've said it here before do not chase a position on a fear of missing out. although snap has had a good little run here, it faces tremendous resistance with the line with the high
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if it closes out there, the 50 day moving average and a tailwind that could take it to 14 to $17. you've got to be cautious. a failure here could get the market back to $7. stick your game plan and don't chase it >> mark, the market i guess with this rebound is suggesting that the company has a place in the social media eco-system. what do you think? >> they do but it's a very limited place. i mean, look, the company has a cool product and it's actually the preferred social networking among teenagers and user engagement is really high. that's the key to attracting advertising dollars but the problem is that teenagers don't have the deepest pockets and they're really struggletoloing o attract the 35 plus crowd. those are people with the spending power they see revenue per user half of what twitter realizes twitter has the audience they want yeah, they're making improvements to the user interface, adding a pixel to
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track web site traffic, international penetration, all that stuff but after this price move, this is a tough stock to get behind and intriguing at $6 but $11, i'm on the sidelines until they can prove to me they can attract the 35 plus crowd. >> all right and back up to $15 billion market value as well at these prices thank you very much. mark and bill. for more "trading nation," head to our web site or follow us on twitter at @tradingnation. back to you. michael, ahead on "power lunch," a big moment for stocks. breaking out to higher levels? plus tesla ready to unveil new model y. this suv a game changer? beto late than never shaking up the new democratic presidential race. all this when "power lunch" returns. >> and now, the latest from tradingnation.cnbc.com and a word from our sponsor. >> when it comes to investing, there are generally two popular
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i'm courtney reagan and here's your cnbc news update at this hour. blizzards, flooding and strong winds are part of one weather system impacting millions throughout the middle of the country. the tbomb cyclone has stranded motorists. former trump adviser roger stone appeared today before a judge who warned him to not violate a court imposed gag order while promoting the release of his book. major league baseball is rolling out new rules aimed at speeding up the game the changes take effect over the next two seasons and include shorter commercial breaks and a three batter minimum for pitchers another horse was euthanized today after breaking both front legs at the famous santa anita park the 22nd animal to die since december the track reopened for timed workouts on monday after being closed for inspections they're taking a look at why so
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many deaths have occurred at that track in particular this season that's a cnbc news update at this hour. back to you. >> that's just incredible, another horse going down during training courtney, thank you very much. may not feel like it but this is an important moment for the markets. bob pisani is there as he often is at the nyse to explain. why so important, robert >> we're trying to break out of this range for five months now. not doing it today trying to break out of the 2800 range. look at this i've been circling these numbers for the last five days failed five times in the last six months right where we are now banks, tech and energy stocks all cyclicals, they continue to lead and in fact, they're doing so today this is continuing the pattern since the december 24th bottom we've seen strengthen the cyclicals and the communication services and energy. good for the global economy. defense sectors like health care and utilities and consumer
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staples, they're up but they've gained less than half of the cyclicals. after the weak china industrial production numbers, expect a lot more stimulus out of china adobe and oracle the first large companies to record first quarter earnings if we get decent guidance from them, that's important the chances that the first quarter will see negative earnings growth for the s&p 500 as a whole will be greatly reduced. you can look at the market leaders today. good to see apple leading. highest level since december 3rd at 183 banks up with j.p. morgan and citigroup leading. the little engine that always can. visa, historic high. again, up 17% so far back to you. >> robert, thank you very much the markets have been on a very nice run this week. can we keep going higher from here bob pisani outlined a little bit that goes into it. let's bring in our contributor michael and joe duran, founding
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partner of united capital. question on the table, mr. farr. can the market move up from here meaningfully >> yes, sir. i think it can and, you know, i'm always very cautious about the markets, tyler, but i think we saw confidence in the consumer really swoon in december and a lot of the weak data we've been looking at since december, even in january, is a result of those weak retail sales numbers. weak home purchasing, weak home starts and all of that all a result of, i think, a 20% drop in the s&p. a government shutdown, fed raising rates, all of that stuff made the consumer worry but the consumer hasn't been at any point really much weaker the consumer remains sound so i think we're beginning to see a change in sentiment. i think what we're hearing out of china is very good in that lighthizer's not rushing to a deal i've known bob for years we'll see something more substantial when we get a deal that will be good for the united
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states mortgage rates in a 13 month low, things look okay and you could see this market break out to the upside. >> joe duran, tell me whether you agree with michael or not and if you do or not, what are the worry signals that are in front of you right now >> i think we've had a very good recovery for two months. it wouldn't be a surprise to get a little bit of a giveback i do think we're going to be considerably higher by year end. we started the year, we thought we'd be in the low double digits we now think we might be high as a 15% for the year on the down s&p. a couple of reasons for that the overcorrection we had in the fourth quarter was more than that was necessary given the information we had secondly, a lot of the big issues that were in front of us. china, the fed, brexit, everyone willing to kick the can down the road which means that tariff increases, rate increases, there is a situation in england, doesn't have to be a tax on the economy. that's great for stocks.
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now, when we get certainty on china, it could be the boost and the boosters we have had cap x expansion in both china and the u.s. from cross country for both countries because you'll remove the uncertainty about what's happening. soy thi so i think that's the secret if we get that done, i think y'all see even if we don't understand how it works, companies will be able to invest knowing what the rules are and a good boost for earnings across the world. i'm quite optimistic in good shape, although we've had a good run and wouldn't be surprised if we don't test and fool around with 2800 for the next 4 to 6 weeks. >> that makes sense. >> i feel like we need pom-poms out there, guys. >> take the rest of the year off. >> michael, i want to ask you, a finer point within your commentary and that's, you think we're going to get a good deal with china is that good for china because even though bob pisani mentioned, you know, some weakened data overnight, there
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was an uptick in acceleration that shows the stimulus of the chinese government put in place is actually starting to pick up steam. so that's the thinking, there's a lot of other stimulus programs that have been put in place in the past couple of months that take effect a bit. the china trade data in there as well and a real uptick if you think the u.s. is good, could china be even better >> i think china is still fighting a downward trend, melissa. still going down and i understand they did get some uptick on cap x and good numbers. also some bad numbers overnight. i think the overall trend is still for contraction in china i think longer term, a levelled playing field, something where we don't feel that by doing business with china, at least on technology issues, and ai, also means as it has meant in the past that we're getting robbed behind we're going to lose our technology and it's too dangerous to actually trust and actually have oil in the gears of doing business with china
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but, you know, i don't know we're going to break out right now to the upside. 2800 level has been tough for the s&p. longer as you go through the year, particularly as the fed not only has moved to the sidelines, but indicating that they're going to stop those bond rate purchases some time over the summer we've heard that from loretta and said summertime, probably going to back off on those sales from sales from the fed's portfolio. there are a lot of tail winds building the economy is strong. >> gentlemen, thank you very much >> farr and duran. thank you guys the bond markets now rick santelli tracking the action today at the cme. rick >> bob was talking about we're in this range for five months and now we're trying to break out again. it's sort of the same with treasuries except for it's the low end of the yield range and the important thing is maybe
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moving a bit higher would be better for the equity markets and even investors a three day chart. 30 year bonds let up and down and now turning back three base points. down a basis point tens versus s&p, you can see we're starting to relink again two day dollar index, also, finally, the pound versus the dollar i question whether all the news i'm hearing on these votes and delays is good but the pound seems to like it best year since mid level 2018 melissa lee, back to you >> rick santelli, thank you. beto o'rourke throwing his hat into the ring for president. how will hdiertie e ffenat himself from a crowded field of democrats? up next on "power lunch.
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where's gate 87? don't get mad. get e*trade and start trading today. markets slightly lower kayla tausche with breaking news at the white house >> there is a vote ongoing on
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capitol hill, kelly, where so far, 55 senators have voted to overturn president trump's border emergency declaration in that tally, 12 republicans vote to rebuke the president's decision that he made just a month ago in the rose garden here at the white house to declare a national emergency at the southern border. this was a democrat authored proposal which the president speaking from the oval office earlier today said that he would veto if the senate did in fact overturn that national emergency. we're still waiting on a handful of votes to trickle in but right now, 55 votes, enough to pass to overturn that emergency declaration. back to you. >> all right he has said he'll likely veto it thank you, kayla beto o'rourke joining a crowded field of democrats john harwood with the story there. john >> major new entrant in the race today. beto o'rourke, the former congressman who ran unsuccessfully for senate in 2018 but ignited a wave of
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enthusiasm among democrats traveled to iowa to begin his campaign today before he did that, made the announcement with this video with his wife. >> understanding that we have to boldly change our criminal justice system to stop penalizing people for illnesses. >> not just for corporations we can invest in the dignity of those who work and those who seek to work and all of us, wherever you live, can acknowledge that if immigration is a problem, it's the best possible problem for this country to have. >> beto o'rourke comes from el paso, texas. founded a small business in technology and web services. served three terms in the house, also on the city council down there and distinguished himself from other democrats by saying in a "vanity fair" interview that he was a proud capitalist what he told "vanity fair" is the ingenuity and innovation you
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only find in capitalist systems. this will be an issue he faces questions from bernie sanders, of course, socialist member and other progressive remember >> i was going to say, who's doing the harnessing but anyway, that was john harwood talking about beto o'rourke's entry into the presidential race for 2020. we are just hours away now from tesla unveiling its model y crossover suv. this will be an suv y. suvy all we've got so far is the mysterious picture of this suvy. we'll be groovy on the suvy when we rush: e: t: u: rn okay, paint a picture for me.
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uh, well, this will be the kitchen. and we'd like to put a fire pit out there, and a dock with a boat, maybe. why haven't you started building? well, tyler's off to college... and mom's getting older... and eventually we would like to retire. yeah, it's a lot. but td ameritrade can help you build a plan for today and tomorrow. great. can you help us pour the foundation too? i think you want a house near the lake, not in it. come with a goal. leave with a plan. td ameritrade. ♪
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let's go out west for a news alert on uber. >> uber is planning to kick off the i 3o in april according to a reuters report. we reached out to the company and wouldn't come as a big surprise because remember that both uber and lyft, two ride hailing companies and rivals, they filed confidentially for the ipos on the very same day in december the question has now become, how
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close together will they ipo lyft expected at the end of the months if uber kicks off that process in april it could go before the end of the month lyft kicking off the road show and uber talking to analyst to tell the story and give team idea how to value the company, how to value ride sharing companies so easy task because they're so unlike any companies that have come before them. >> thank you very much, deirdre bosa in california for us. hours away from tesla's next big bet. will i pay off measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager
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the countdown is on just hours away from elon musk's next big bet and set to take tesla into the hottest part of the auto industry, suvs. the stock up 5% this week heading this announcement tonight. paul and joseph join us. guys, great to have you with us. i read your note if i had to play a game of match the rating with the note i wouldn't have put outperform with this note you think the model y and the launch is a signal that demand could be weak? >> yeah, i do. remember that the recommendation is designed to make people money over a period of time, a year. i think demand is weak and the
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model y can't necessarily change that over the near term and think that the company has the best range of product offerings out there and why i have a $406 price target. >> paul, where do you stand on the issue of whether or not tesla's launching the model from a position of strength or weakness there's a bear thesis doing this to take deposits they did on semitrucks, a vehicle yet to hit production. >> melissa, to me, a simple situation. new day, new model an same old story. the question is, can this company produce a mass market vehicle or mid market vehicle in enough volume to make a difference to the company? it's not happened with the model 3 yet and same situation with the new model y. different category but the same situation exactly. >> hasn't their problem typically been production related? and so now they had another model on to the production load, paul >> it's exactly it so the burden of proof is really on them to get the model 3 up to
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a production and sales situation that it's a meaningful product producer and now the same thing with another vehicle and really doubles down on the same dynamic. >> joe, going back to the stock you are saying it's the performance over one year and i wonder if you have to take a longer view. a year is not that much time wendy tillson was saying he didn't think there could be a secondary offering above $200. what would happen if they need more capital >> well, for starters, i'll respectfully disagree on the secondary offering point i think this company has a lot of avenues to finance itself should it choose to do so. but look i like to return to the point that was being made before about the model y. it actually has a lot in common with the mod 3e8 it's learning. slowly but it's learning and will do a significantly better job of ramping the model y than
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the model 3. >> is the fact that the model y is so similar some have said part of the problem? it doesn't have the wow factor it's not that differentiated. >> it's certainly not going to be as groundbreaking as the model 3 was but it's devastating. if they bring it at $65,000, that's a tough product for the competition to address and i think that will be enough. but look i don't think it's right for me to deny that demand is soft right now. that stocks are discounting mechanisms and will react to the prospects over the next couple of years. >> paul, say they come out with the car and manufacture it perfectly. is it going to stand up to the competition? >> well, the competition's getting tougher and tesla has great products no doubt about that. can they make them in enough volume, properly and cash in on the demand as joe knows, there's a trough
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in the demand right now but i have no doubt that this will be a competitive product if they produce it and market it properly. >> thank you so much we appreciate it. >> thank you. >> with that, thank you for watching "power lunch. >> "closing bell" starts right now. ♪ good afternoon welcome to the "closing bell." i'm wilfred frost. >> i'm sara eisen. former nec director gary cohn said the president is desperate for a deal with china. we'll get reaction from kevin rudd. oracle hit with a double downgrade and will report after the bell with adobe, broadcom and ulta beauty first let's check th

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