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tv   Power Lunch  CNBC  May 2, 2019 2:00pm-3:01pm EDT

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>> this actually segues into it. companies like amazon so good at applying technology with productivity but a downside. amazon's technology will decide when their workers are not meeting the product need to be terminated so might explain why people aren't feeling so great about a lot of the strong economic numbers we're having. >> you fit it in like a master that does it "the exchange." "power lunch" begins right now see you in a moment. fear and uncertainty on wall street what is fueling it fed up, president trump's controversial pick to the federal reserve withdrawing his name the fall-out ahead tesla looking to recharge cash pile and elon musk pitching in what it means for tesla investors and mark zuckerberg with an historic threat to the pou power.
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"the exchangshow "power lunch" now. stocks are under some pressure this hour. worst day in more than two weeks but well off the lows at this hour with the dow down 157 points s&p down by 9. oil, in the meantime, plunging having the worst day of the year the trump administration stopped issuing waivers that allow several countries to buy iranian crude and that's sparking uncertainty over prices. wtif, up more than 3% and it is the ipo of the day beyond me more than doubling on the first day of trading kelly? >> 65 right now. goodness bob pisani, beyond meat not lifting the markets here >> reporter: we've got some problems, kelly. there's some sectors that are starting to lag the overall market you see oil down today talking about this all afternoon. we're seeing some big hits to these oil stocks and remember, they never really fully recovered. where we were in 2016 with the oil indexes.
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apache, marathon, concho down. coming down here gold is near the lows for the year and we had a brief rally in gold stocks early in the year. that's kind of reversing harmony, corp. mining. the health care providers and some of the pharmaceutical stocks all are weak again today. you see cigna, anthem, y unitedhealth some pharmaceutical stocks the risk for the rally, talking about it, no trade deal and question about what progress we're making on that and saw the hissy fit yesterday when powell did not imply a rate cut was coming they're wanting that and not getting it and we have a concern if the china recovery stalls we believe that's happening but that's a sentiment we need harder date about the china recovery and finally,
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kelly, said it all day stocks overpriced. we need earnings up a little bit more in the next couple of d inquiries. >> bob pisani. dom chu looking at the recent winners and losers in this market. hey, dom. >> let's expand on the themes that bob just laid out with regard to sector moves today if you look at the year-to-date basis for the s&p map, it's all green because every sector, all 11 in the s&p 500 are actually in positive territory. year-to-date, tech consumer discretionary, industrials doing well and health mentioned, health care is still up 3% so far. but you take a look at some of the more stock specific elements with regard to the moves higher. the best performance in the s&p 500, you can count among the ranks there. kpooer xerox. also, chipotle one of the big winners and advanced microdevices on the chip side of the things. big losers, look at these. oil names could be one of those
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at least laggers out there but look at some of the other ones macy's, biogen on the health care side and kraft heinz, worst performing stock but make no mistake. the three most important stocks arguably in the s&p 500 are these names. we're talking about microsoft, apple and amazon why? because they carry the most weight in the s&p 500 and they are still up markedly. each one of them and that, kelly, is one of the reasons why the s&p is power to the record highs we've seen over the last few days back to you. >> indeed, dom thanks the s&p has had its best four month start to a year in more than 30 years. here's a stat. there have been 7 other times since 1980 each ended with positive returns. should you stay with stocks? he is editor in chief of the stock almanac. the momentum is now so strong that based on history, the whole year should finish positive. any context you'd add to that?
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>> sure. gains tend to be good in general. we looked at the four month top 20, you know, four month gains and it does frontload. it takes a bit of weight away from it. worst six months, as you might imagine, a bit weaker. remaining eight months, about 6.5% or 5% nasdaq has got more. it's not a bad thing that we're up that much we had the january indicators all positive and pre-election year it's may you know it's time for a little bit of a pause. >> do you feel like there should be an asterisk in front of the four month performance only because it erases the losses in the fourth quarter >> i don't think so. it's common to see those declines get replaced, taken back very quickly. we've had studies out there about that as well not surprising it was pretty heavy back there in december and if you, you know, have seen that kind of thing before as we did, we were patient. we held the best six months trades without a stock
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>> it is unusual to have the lows almost to the day coincide with the end of one year and then the the start of another. it just happens to place the rebound at exactly the time where the calendar flipped. >> very uncommon to have the low and high and/or high at the beginning or end of years even though people want year end targets, all that stuff. normally we get that sort of correction in the mid year earlier. october is a pretty common area. but we did have a weakness in december remember 74, we had the dow bottom in december '74 but thank god for santa claus. we had the usual year end rally and had a good, you know, we're in the sweet spot and good q1 and beginning in q2. remains to be seen here. >> do you want to see a continuing broadening out of the rally? dom mentioned the move in the three base stocks and that's holding up the gains we've had so far we have had broadening but would
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you like to see more to be more convinced? >> internals, advanced declines, highs and lows gaining some traction, it was running with the rally first few months of the year, we've seen that taper off a bit where it's flattened out and new highs haven't been as prevalent and new lows picked up a little bit. we like to see that. that's supportive for the market >> all right jeff, thanks very much good to see you. stock traders on that. a huge debut for beyond meat soaring in the ipo aditi roy. >> reporter: up more than 160% after pricing at $25 a share the latest unicorn to go public faces intense competition in the alternative protein industry which is going after the $1.3 trillion global meat industry. part of beyond's appeal is the long list of celebrity investors including leonardo dicaprio. the top competitor, impossible
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foods. backed by serena williams. you'll see the impossible burger at all burger king stoers and already in 7,000 restaurants worldwide including red robin and white castle beyond's future competition could also be pretty strong. tyson foods recently took the stake in beyond meat after the own plant based protein products and then memphis meats big food companies, bringing culture meat products to market and by the way, i just spoke with impossible foods c.o.o. who tells me despite the fact they're the competition, they're all high-fiving each other at the office over beyond meat's ipo because they see this moment as a rising tide for the entire industry >> $67, melissa. that's astounding. we've seen other food companies, chipotle doubled but so was like noodles and company. >> pot belly. >> we haven't seen this in some time. >> what is cultured meat
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>> so what they do is they have starter animal cells that they start with in the lab. and then they basically make a piece of meat from those starter cells. we should mention that so far, the company's meats produce a meatball, some duck and chicken but those products have yet to go to market they haven't given us a timeline >> that one is even more controversial because farmers say it will put them out of business because you can just grow the animal in a lab. >> in a petrie dish. >> just plant based. thanks, aditi. stephen moore and herman cain, both dropped out from the fed. >> reporter: the president dropped stephen moore by tweet an hour ago and then got the stephen moore statement since then here's what stephen moore had to say on his withdrawal from consideration for the fed nomination
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he said i'm respectfully asking that you withdraw my name from consideration. the unrelenting attacks on my character untenable for me and my family and three more months of this would be too hard on us. we've now gotten a statement from chuck schumer, the senate democratic leader. he did this over twitter saying, ultimately, first, herman cain and now stephen moore. thank goodness neither actually nominated. only thing less funny than mr. moore's tasteless sexist jokes was the idea that president trump would consider him for a seat on the federal reserve. calling for serious candidates up to the federal reserve board. you'll see who's here. white house not saying right now who else they're considering for the federal reserve board, for those who available slots now but i'm told that the decision to move away from moore was made by the president very recently that is, relatively shortly before his tweetsme
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as of last night, it looked like stephen moore had a chance and the president was going to fight for him. that's why we saw stephen moore today giving interviews as recently as this morning suggesting he was all in in terms of the fight for the federal reserve board. now though, i'm told the president made the decision recently and he's moving on without stephen moore. the question is, who's he going to put on the fed and we don't know the answer to that just yet. >> eamon javers. coming up, two stocks making big moves today. tesla higher as the company raises cash and underarmor raises guidance. is today's gain just the beginning? we'll ask the "trading nation" team the dow down 1% or about 250 points right now down 150 we're back in two. uh-oh, looks like someone's
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is that the main reason? >> it does risk the story. the operational guidance for the second quarter, it implies a 50% increase in the vehicle sales from the first quarter and we just don't see that happening so we think there's a lot of risk there still and also have heightened concerns regarding competition. there are dozens of electric or partially electric vehicles set to hit the market. really, starting with the 2021 model year which is only, really, a few quarters away. >> so i mean, in terms of the, so you're just a skeptic whether or not they can ramp as quickly as they're forecasting they can ramp in terms of making those cars >> that's right. >> okay, and so money can't help that problem in your view getting that shanghai factory
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online by the end of the year, that can't help at all >> no, that will certainly help. we just think over the next few quarters, they're going to have a really difficult time. if you look in the first quarter, they burned about a billion and a half of cash so if you look at this $2 billion capital raise, that's really about four months of, at their cash burn rate from the first quarter. so we were kind of surprised they didn't do a larger offering in $2 billion. but, you know, it does help alleviate some of the concerns regarding their balance sheet in liquidity, that has been weighing on the stock that was down about 30% heading into today. >> you've got a question whether or not it can ramp to the latest quarter. at the same time, it sounds like you're skeptical of demand for the vehicle. so which really is the driving force here because if the company can't
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ramp as quickly but the demand is not there, you might have supply demand more in balance. >> that's right. and that's what you saw in the first quarter was a pretty big inventory build. and we think that continues. it really all goes back to what happened on january 1st when the federal electric vehicle tax credit went from $7500 to $3750. that tax credit is set to phase out over the course of this year, in fact, it will drop by another 50% at the end of june so they're going to be facing that headwind really over the next few quarters and so we just don't see them hitting their shipment guidance even for the second quarter or even the full year. >> just real quickly, garrett, what do you make of the $10 million participation from elon musk in this offering? >> sure. i think it sends the right signal, but you really have to put that $10 million in context
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for his overall net worth. he owns 20% of the company that equity stake is worth about $13 billion at the current market price so, you know, this is someone who practically finds that amount in between his couch cushions >> garrett, thank you very much. garrett nelson tesla shares up 4.5% on this news noah syndergaard aka thor. ge up 10% propelling tim seymour to an early lead you can follow along the leader board at cnbc.com/stockdraft but early. >> we should make the producer leader board public as well. >> it is very interesting. coming up, the "trading nation" team about to weigh in on underarmor. that stock up 30% this year. can it run even further? facebook reaches a deal with the ftc.
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will that put privacy issues behind it? will consumers trust the company? we'll take a look and the nasdaq down and it could be the third straight down day. coming off the lows though stay with "power lunch." we'll be right back. one-millionth order. millionth order. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.
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welcome back to "power lunch. i'm michael santoli at the new york stock exchange. under armour jumping off an earnings beat this morning after a 30% rally this year, sit time to sideline this stock todd gordon of tradinganalysis.com and michael. very wide swinging range topped out at $20 a share. how does today's move fit into the picture? >> absolutely right. long-term chart of under armour dodgy around $12 almost lost long-term uptrend support but managed to hang on here it looks like, put my proper circle here, support has held and we can move up looking at the relative strength indicator. not overbought or oversold it's okay. as you mentioned, good earnings move here. we still have a lot of wood to chop right around the $25 mark
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there's a series of highs and certainly wanting to go off here, if we can get up we could close this little gap right around here at $30 i would be looking to play this as a trade so above $25 brings you up to 30 potentially new highs. >> maybe on the verge of something there. michael, on a fundamental basis, this is a former high flyer. really was a favorite in the athleisure space more of a show me right now. >> let's start you can wear athleisure to the jill gym or a party they had bloated inventories now down 20% year over year. they've reignited sales growth which is huge for this company and they're in a space that the consumer must have these clothes. we think it's continued growth and important to continue two trends of lowering inventories and continuing sales growth but
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we see it higher over the next six to 12 months >> head to our web site or twitter at @tradingnation. >> thank you. ahead on "power lunch," mark zuckerberg with the biggest threat to his power. what's at stake for him and the social media giant millennials matter in housing. how investors in home builders can profit from the tastes of young home buyers. and beyond, beyond meat. another burger stock shake shack reports earnings after the bell stock sizzling this year all this when "power lunch" returns. >> and now, the latest from tradingnation.cnbc.com and a word from our sponsor. >> overbought and oversold indicators are generally used differently depending on whether the stock is range-bound or trending look to buy a range-bound market such as the rsi falls into oversold territory and then moves back above it.
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look to sell a range-bound market where the oscillator into over-bought territory and goes below it i'm lee bohl and schwab is the better place for traders
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hello, everyone. i'm sue herera here's your cnbc news update at this hour. stephen moore removed his bid for the fed chair. he attack the, quote, attacks on my character are untenable for me and my family moore under fire from critics in both parties according to a new survey by the university of chicago and the a.p., more than half of americans want major changes to the system of government including about one in ten who want a complete overhaul results showed dissatisfaction is closely tied with policy concerns jeff bezos space company blue origin completed a record-breaking five launches and landings of its new shepherd rocket today reusability a key part of the plan to turn space tourism into a growing business. a new baby western gorilla named grace was born at disney's animal kingdom in florida just
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yesterday. she is named after the grace gorilla sanctuary in the democratic republic of congo which works to save critically endangered gorillas. she's a cutie pie. >> she sure is thank you, sue herera. 90 minutes to go until the closing bell rights on wall street the down day dow down by 136 points or half a percent. s&p 500 continuing slide from yesterday post-fed meeting when you combine two days, down about a percent today. we're down a quarter of a percent and the nasdaq composite down by 18 points. kell the chair of the ftc taking place as politico and others report that facebook and the ftc are negotiating a settlement which would require new oversights for the social media giant. now, that could have a dramatic impact on mark zuckerberg's power at the company with us now to dig deeper is politico's technology reporter who broke the story, nancy with ryan and adjunct fellow for a
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lobbying group with limited regulation welcome to you beth. i'll just ask you. what power curbs are we talking about? >> the plan we're reporting on is a three part plan in terms of a new governance structure installed in facebook potentially if the plan agreed to so the three parts of that, new privacy assessor they're calling it who would have sort of oversight of how the company handles privacy policies at very high level and the creation of a designated compliance officer inside facebook that would zuckerberg, the proposal on the table and personally responsible for come plying the good privacy practices. >> do you think these are appropriate steps and going far enough, too far? >> these steps that nancy's reporting has revealed would come in addition to the $3.5
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billion civil penalty that facebook is expected to face based on a violation of a consent decree reached back in 2011 this sort of monitoring and specificity in terms of how the company addresses privacy is an unprecedented change to the degree in which the regulator is getting into the business of how a company polices privacy. the future of how the ftc intervenes in space and could signalenforcement to come >> are you surprised that mark zuckerberg will be the head of this committee and i understand the committee is independent but would it be better in terms of having checks and balances for this committee to entirely be independent and not have mark zuckerberg a part of it? >> to be clear, the committee is separate from mark zuckerberg's leadership sort of a separate entity within the company. zuckerberg would be an officer that would be sort of reporting
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to in some ways while reporting to the board keep in mind, the privacy assessor would have to be approved by the federal trade commission and some ability to say, hey, they've chosen someone to work in that oversight role and that person is not acceptable to us the zuckerberg inclusion in that power structure is important in the added responsibilities placed on him rather than additional powers placed on him. >> ryan, just all makes me think it entrenches facebook as a way of our bureaucracy i don't know how else to put it. what does it mean for let's say competitors or upstarts or is it just going to be a long period, frankly, of us working out what regulation and best practices look like for a brand-new industry >> it certainly are signs that the social media world is maturing notable example of where the government began to get involved where the microsoft anti-trust settlement was reached ultimately involved ongoing monitoring of microsoft's
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practices. this may reflect the wisdom that facebook's power is here to stay it may also mean that companies make mistakes or perceived mistakes, face constrict governmental scrutiny. the future of facebook is less clear but will certainly make the company more risk averse which may have positive privacy implications but not great for consumers. >> it's different than a federally approved person inside a company, nancy is there precedent for this and should companies in general be concerned that the federal government is exerting themselves into the corporate offices around the country, potentially, if this is sort of a precedent? >> two things. i want to make clear this is a proposed plan, not agreed to fully by either side there is some precedent. i think boeing had some arrangement with the federal government who started working with regulatory people with responsibilities placed inside the company but i think it
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reflects that regulators try to figure out how to police these industries that arguably just took a very hands off approach so they're trying to be creative about, you know, brian mentioned this, financial penalty, $5 billion, a lot of money but to facebook, not a great deal of money. trying to be creative about ways to keep money in check if money alone isn't going to do it. >> i understand and applaud regulators trying to be creative when it comes to solving this problem. there's no way to do this, is there? in scale if you look across the industry, if every company is going to have some sort of data issue or privacy concern or let's say there's a dozen companies out there, are there going to be federally approved officials at dozens of companies? >> so there are already a lot of consent decrees with the federal trade commission each time a new privacy violation emerges, it's possible they'll use the existing powers quite broad to seek to achieve something similar to what it
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looks like it's exploring through facebook so even without any additional privacy legislation, the ftc may be able to engage in a privacy by privacy regulatory scheme using something along the lines of what's being proposed here. >> bottom line, do you think it makes facebook less powerful or more so? >> i think it's a sign that the relationship between the company and the government may ultimately become closer so even though it may seem like it's making facebook less powerful, it may suggest as you mentioned to facebook, it's becoming entrenched. >> thanks very much. a lot to think about ryan, nancy and facebook shares down half a percent today. facebook's privacy move good for investors? let's bring in mark, what's your take on this >> probably immaterial to investors. i think what investors are focusing on is their ability to monetize better these instagram stories, the ability to roll out
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inner operability with the asset managements and if they want more features, looks like they do, facebook needs to roll those out. if they do, greater engagement amongst customers if they execute right. it's a win for facebook. >> does this fade though the specter of regulation on the industry at all by having this sort of, if this plan is, in fact, approved having a federally approved privacy person within the company and independent committee, does that improve the chances that regulation won't be so onerous >> i don't know, melissa as one of your last two guests said, we're in unchartered territories with government, you know, sanctioned people on the board. should there be, like a privacy committee at facebook? i think that's a pretty interesting and creative idea. who should be on that and dictate who's on that? i'm not sure what the right answer to that is. i think you've got regulation as a headwind or an overhang on
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large tech companies i think is going to be part of nature for these companies going forward. i don't think they can avoid it. by the by, they're so influential, large, and got such extensive reach into economies, cultures, politics, et cetera. they should bemonitored. absolutely true. >> it seems like in a way, that underscores their importance, centrality instead of harming it in any kind of way but mark, this comes as they're making a big push to go private and some executives left over mark zuckerberg's decision to do this as an informs fvestor, is goinge as lucrative as the traditional news feed as been in delivering ads? >> my guess is no but i think there's a mistake that is in that sentence of yours, that question of yours i think i've also heard from investors which is, one doesn't have to preclude the other. i think what facebook is going to do is offer you both. they use this cliche, maybe of the digital town square and the
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digital living room. you can go to facebook and its assets and what's app and in the future, get both i think that's the vision. not to replace the digital town square with the digital living room but offer both and i think that's why there could be increased engagement the investors year-to-date, they were so worried about these instagram stories diluting the instagram news feed and the facebook news feed i didn't it turned out to be creative and led to more engagement and privacy, a good product out there. obviously, people want it. maybe some of the growth out of snapchat may indicate that it's hard to tell but you can offer more products for a broader range of consumers i think that's a good thing for facebook's fundamentals and for investors. this is our top stock pick in a group and i think these product initiatives they rolled out the last two days, developer conference, i think it's a good reason for why you want to be along the stock. >> the last facebook report seems to put to bed a lot of investor concerns over the lingering impact of privacy concerns, mark but at the same time, as we look
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ahead and we've got indian elections going on and u.s. elections coming up in 2020, are there still potential land mines for facebook as we navigate the next election after the previous one in which they got embroiled in all these worries >> absolutely, melissa the midterm elections came and went and we didn't have any facebook, election tampering is the wrong word, but no lekelectn interference if there's a concern that facebook was knowingly misused to impact elections, this issue comes back up to the top and zuckerberg back to the hill to testify. so this risk is omnipresent for them and better focus to make sure they're not coming up to the hill again to testify. that they're super careful on who's on the site and how they're targeting so that it's not purely politically driven or partisan driven on the facebook
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platform. >> thank you, good to see you. >> thank you, melissa. oil down big today dom chu at the cnbc commodity desk. >> like you said, down in a big way. we see a close at $61.81 brent crude prices down by about $70.74 that's the last trade. 2% of the downside traders keeping a close eye on some key technical and psychological levels selling those u.s. futures, after wti breached the $62 mark on the downside. after that, it was $60.95 where we found some support for prices for now, at least, it is worth a 200 day moving average or longer where the price s. the losses are here even though geopolitical rises in places like libya, and the iran sanctions tightening further than proposed kaeesed carrying o the energy sector. now down and poised for eighth straight day of losses it arguably, melissa, is dragging down the market
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sentiment in an other parts but still oil prices a big part of the story today. back to you. >> dom, thanks dom chu. the bond market. rick santelli tracking all the action at the cme. hi, rick >> reporter: hi, melissa lee productivity caught my eye and zoomed since the press conference yesterday look at the two day of twos. we dropped like a rock briefly to 220 we're up 14 basis points from that level tens, not as big a ride from 245 to 255 and if you look at tens minus twos, the yield curve spread, what's interesting is all the odds that occurred at the end of last year in october, you can see the way the curve flattened. you don't really want that, do you? it has been steepening it was a lot steeper at one point when the markets were on their lows but when they bounce back, it flattened a bit we are curving up on that chart. finally, the next chart, the dollar index last week, we had three days in
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a row with 98 handle hadn't since may of 2017 we're only about a fifth of a cent away on the two week chart as you see there what's really interesting is that means we're less than half a cent away from the high that goes back 23 months. dollar index with the fed and continued to rally real quickly, the entire curve up about four basis points parallel shift things at an equilibrium and rates continue to climb. melissa lee, back to you >> thank you, rickme rick santelli. millennials are not moving to where you might think we'll tell you where they're headed and how investors, homeowners and landlords can profit from it democratic presidential hopeful amy klobuchar for her future of capitalism when "power lunch" returns. val, vern... i'm off to college and i'm not gonna be around... i'm worried about my parents' retirement. oh, don't worry. voya helps them to and through retirement...
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millennials are reaching home buying years and despite reports to the contrary, they are in fact buying homes but
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where might surprise you diana olick from washington with the details. diana? >> reporter: high home prices with strong demand have today's youngest home buyers moving to smaller cities and that could mean a boom for local economies and home values in those markets. a new study ranked top markets based on both high share of current young residents and millennials moving in and drum roll, the lead, madison, wisconsin. ranked among the top according to the national association of realtors 75% of recent transplants to madison have been millennials and mostly stayed in the area. tech is moving in and young home buyers like garek are following. >> one of the principle industries is technology i work at a tech company on the square and it's really cool being able to be involved in the tech sector while still kind of living here in the heartland of wisconsin. >> other new metros that might surprise you
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oklahoma city, grand rapids, omaha, durham, north carolina, el paso and salt lake city in the majority of the top ten markets, the unemployment rate is lower than the national average and home prices are also generally lower. based on average income, millennials in these markets afford to buy one out of four homes listed for sale. by comparison, millennials can afford just 10% of the homes in dallas and 13% in boston back to you guys. >> great story diana, thanks. bill smead i know is probably watching and cheering. ray dalio warns something is going to be done to address income inequality. modern monetary theory backed by bernie sanders and aoc, alexandria ocasio-cortez, is inevitable john harwood sat down with one of the democratic contenders about the future of capitalism john >> kelly, ray dalio's comments reflect discontent with the modern economy within both parties among voters and i asked amy klobuchar, running for the
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democratic nomination how much she thinks capitalism has to change. >> america has always thrived on entrepreneurship and new ideas and also, by the way, people coming in from other countries with new ideas and that has been what's made our country so strong. and so i do support capitalism but not unbridled capitalism you have always had checks and balances. >> with the views that amy klobuchar was expressing there, she is trying to position herself as one of the moderates in the democratic race she's not calling for a revolution and not calling for a wealth tax or 70% income tax rate as aoc has talked about but she's got joe biden, the former vice president in the way and when i asked her about how she was going to convince people to vote for her instead of biden, she gently laid that age issue on the table saying, i'm the candidate for our times. >> john, thank you
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john harwood in washington for us a huge day for burgers as beyond meat soars in the market debut and after the bell, get erhi yesults from shake shack. evytngou need before that report drops coming up on "power lunch. -driverless cars... -all ground personnel... ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. you mighyour joints...ng, for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials
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beyond meat began trading today with shares jumping around 170% not bad. shake shack's earnings after the bell shares have been sizzling. 36% this year with the company rapidly expanding domestically and abroad can shake shack hook up another good quarter way siefd fries joining us is nicole regan managing director and senior research analyst at piper jaffray. she's bullish. she's overweight the rest of the stock with a price target of $59 a share. great to have you with us. you say that shake shack is undervalued right now and i'm wondering what sort of multiple you think it should be what sort of premium have it be? >> it should have a massive premium to the industry. the first is its iconic nature there's really scarcity value of these types of companies that are liquid enough to invest in and have this kind of runway for growth the second reason that's really
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overlooked by investors is 1/3 of their portfolio is asset light. they don't actually own what they build internationally they just support those businesses >> so they have a model right now that a lot of other fast food quick serve restaurants have been trying to embrace, which is, right, to off-load sort of that burden by franchising. they've already sort of got that system in place. what are you looking for in this quarter tonight after the bell >> we're looking for flow through. we're looking for flat comp but we don't take percentages to the bank we take dollars. and this is a massive auv story with massive profitability and flow thru. so we're looking for the dollar profitability and we're looking for that to be up year over year >> nicole, what do you make of beyond meat's trading today? this is one of the biggest openings we've seen in the last decade basically >> i think options like this are very exciting for consumers. i always get asked the question about eating healthy, and i think a lot of the time eating
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healthy happens at home. but it's interesting to see demand like that because it shows us what consumers want and we see a lot of those things in our surveys from time to time. but with we bring that back to shake shack i would say that meat, meat and potatoes and certainly burgers and fries are the staple of our economy and when consumers want that they want the iconic juicy shake shack burger >> shake shack, does it have a portobello burger or something like that? can you see just by the demand for beyond meat the consumer demand for this sort of product that this should be a menu item on a menu like a shake shack >> absolutely. even burger king is testing something similar. and if they're doing it, then everybody else should. and the option is important for the veto vote. salads definitely work and even shakes work in that regard but those are two of the things that are actually going to help shake shack in terms of menu innovation, number one, and then also doing delivery this year as well, number two
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>> what's your second pick after shake shack, nicole? i'm curious. >> second pick, chipotle and after that chipotle. and after that, chipotle >> wow sow you really like chipotle so you like the stocks that trade at a high premium to their peers or their so-called peers at this point. the market can support that -- >> well, absolutely. we're in this interesting but crazy point in the restaurant cycle. it's all about consolidation and the massive amount of m&a has left us with 30% fewer stocks there's not as many investable options. that's where we get part of the valuation support from when it comes to chipotle, it's also a recovery story and a contrarian story rolled into one which the part that absolutely fascinates me about chipotle is despite the run the stock has had 63% of the sell side ratings are still hold and sell. >> and it's up 68% over the past year by the way, nicole, why didn't
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mcdonald's or burger king use its r&d budgets to come out with something like beyond meat or the impossible burger? >> i think that they have, you know, core customer in america really wants the cheeseburger and fries when they go out to eat. a lot of that healthy eating is happening at home. now, that might change but the markets admittedly are just growing very, very fast but they're really small dollar amounts. and you think about mcdonald's, it probably makes more sense for them to make the technology investment that they made and how suggestive selling in some more of the current product to the huge customer base that they do have. >> nicole, thank you nicole miller regan, piper jaffray. >> but don't go anywhere check please is next
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it's a good day for noah syndergaard, who just pitched a complete shutout for the mets today, then hit the solo home run for them to win 1-0. he is the first mets player to ever pull that off congrats to him. >> something's going well for him at least we've got to talk about beyond meat because kelly's obsessed with it for one. >> it's extraordinary. i've never had the product but this open is unbelievable. >> you might be wondering what do we compare this to? you can't compare it to tyson or
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food companies that would be unfair we talked to leslie picker about this last night on "fast money" and she said sources are showing high growth disruptive retail and consumer companies are the comparables. fresh pet, canada goose and shake shack. think about the consumer bands that are really disruptive beyond meat might fit that >> there are going to be so many more companies like this >> thanks for watching "power. >> "closing bell" starts right now. >> it does indeed. it's the final hour of trade i'm wilfred frost. >> and i'm sara eisen. the federal reserve's message to the market former fed governor daniel terullo will join to us discuss what next steps the fed should take >> fake meat real returns we'll tell you what's behind beyond meat's wild first day of trading. >> and after the bell breaking earnings news from cbs, activision, expedia, and more. we'll tell you the key numbers to watch in each of those reports. "closing bell" starts right now.

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