tv Power Lunch CNBC May 3, 2019 2:00pm-3:00pm EDT
the obvious alternative. >> so more awareness is great. >> you're trying, good to see you. karen firestone. that does it for "the exchange." i'll join tyler and melissa for "power lunch" which begins right now. thank you, kelly we'll see you in just a moment i'm melissa lee with tyler mathisen new at 2:00. the american economy firing on all cylinders. job growth blowing out expectations is the economy at risk though of overheating and could rate hikes be back on amazon shares are rallying warren buffett says he's been buying the stock, so why now we'll head live to berkshire hathaway move over uber what could the next ipo be and mean for investors start-ups staying private for longer "power lunch" starts right now >> thank you, melissa. welcome everybody to "power lunch. i'm tyler mathisen
glad you could join us on a rather chilly friday here in the new york area. stocks are rallying on the back of the strong jobs report this morning. we're sitting near session highs. look at the dow industrials up 3/4 of a percentage point. biggest gain since april 23rd. yields on the 2 year note and the benchmark 10 year bouncing off their session lows for more on the market reaction to that jobs report from earlier today, let's go to bob pisani at the new york stock exchange. hey, bob. >> reporter: hello, friend so let's review where we were today. last few days have been rocky because nobody down here is quite sure the direction the fed wanted to take us in terms of interest rates then we get the jobs report today. the market has essentially lev stated itself into now believing at least the federal reserve is not going to be our enemy and there's the potential they may even be our friend by cutting rates down the road. why? because the jobs report was strong but at the same time, the wage inflation numbers were only very moderate. that's the sort of purpose
situation everybody wanted and now convinced themselves, okay, the fed is not going to be a real impediment going forward. look at what's going on this week the yield curve, bank stocks have outperformed. just a little bit of a surprise. we've seen this week at the same time, we see commodity stocks have a very, very rough week. oil topped out we've seen some of these other commodity names. oil stocks, noble energy, apache, the metals name had a rough week like freeport and other material names, particularly, coal stocks like peabody had a tough time as well some winners and losers this week back to you. >> bob, thanks very much bob pisani the unemployment rate falling to the lowest level in 50 years last month. does the strong jobs report make the fed likely to raise rates in the near future? steve liesman joins us now steve? >> reporter: yeah, a super strong jobs report, kelly, but not a super strong reaction from
beneficials. here at the hoover institution annual monetary policy conference another one coming up and three speak publicly no one is especially worried about a tight job market or overheating economy. the fed president jussie just on a few moments ago on cnbc, says, fed policy is well calibrated. 2 to 2.5% and more towards the upside this year because the data has gotten a little better but she sees the economy in a good place richard of the vice chair for monetary policy said the fed can afford to be patient, data dependent. the funds a range of neutral and the unemployment rate is not far from the neutral rate. that's important because it went down to 3.6 and he said, it's not too far from where it ought to be. one guy who's maybe not so patient is jim he doesn't want to lower rates right now but he thinks the fed might be actually too tight right here >> i think we're a little tight
on the funds rate, not too much, but a little bit tight i think the global safe real interest rate short-term is about zero if you add the 2% inflation target to that, you get to 2%, we're at 240 it sounds a little bit tight to me >> reporter: so kelly, we keep looking up to the sky around here and we look for hawks but we can't find anything but doves when we look up there. >> why do you think that is, steve? >> reporter: i mean, i think they feel like we're in an okay place. i think they're ready to let -- we've talked about this for a while now. to let it ride a little bit. i think they feel pretty good about where fiscal policy is right now, that maybe it is adding some supplies they've got the productivity number in their favor and they're not seeing the inflation, so nobody wants to get infro front of this train ad say it's going too fast. >> the markets love that message. see you in a bit mike pence on cnbc earlier weighing in on the economy and taking aim at the fed.
eamon javers is live from the white house. eamon? >> melissa, that's right i sat down with the vice president earlier this morning just next door in the eisenhower executive office building. he said something interesting. remember, this is an administration not shy about telling the fed what it wants the fed to do in terms of cutting interest rates but also said he wants the fed to consider reversing its dual mandate and going with just a single mandate here's what he said. >> back when i was in congress, we had a whole debate about the dual mandate of the federal reserve and it might be time for us to consider that again. the fact that the fed looks at full employment and monetary policy and inflation, and instead, by just looking at inflation, you make clear, there's no inflation happening here the economy is roaring this is exactly the time not only to not raise interest rates but we ought to consider cutting them >> reporter: so the idea there from the vice president is that reframe the dual mandate to a
single mandate, looking at the idea of inflation, leaving aside the question of employment that would give the fed in this situation the opportunity to really lower rates he argues that would make the economy really take off even more than it is right now. interesting, philosophical on the fed and not sure on the china trade deal for next week the trade deal in this region, north america and mexico, i asked him whether or not they have the votes he said they're working on it. we'll see whether they can get that passed up on capitol hill, guys. >> thank you very much strong jobs report fueling, obviously, today's rally. more on what it may mean for investors and to do that, cnbc contributor ron insana joe duran, ceo and founding partner with united capital and may be rejoined by our steve liesman. at the risk, ron, of sounding like i am gushing, could the economy be any better than this?
>> it could always be a little better hotter yes. could it be? >> hotter doesn't mean better necessarily. >> it could mean more inflation or something like that i hesitate to use the goldilocks descriptor but right now, it's pretty close you're at full employment, no inflationary pressures, more jobs than workers. it's a nice position to be in. i think a lot of it had to do with the fed pulling back at the end of last year and not moving forward with this interest rate increases and obviously, look, you have to give the president his due. some of the policies may have a salutary effect on the economy we are where we are and you get the credit and the blame when you're sitting at the top. >> same question for you, joe duran. does it get any better than this >> yes, of course. it can get better, but not something that we should rationally expect. i think what we see so far this year, an overreaction at the end of last year, the fed course correcting, and the fed basically saying, we're not going to do that again and so they're going to be careful and not a lot of
reasons, again, i think valuations look a little frothy here we're at 17 times forward earnings so we're back where we were prior to that 20% correction, that brief one we had at the end of last year but the fed is in a different position and so, again, i think things look great. europe and the rest of the world is much slower if they start to recover, that would be the dream scenario for me we start to see the rest of the world catch up, that would automatically raise rates because the u.s. rates are so low because compared to the rest of the world, growing a lot quicker. but that would be the thing that's missing that global growth that i think, that kicks in for the rest of the year we're in great shape. >> but goldilocks here in the u.s., ron, pretty darn good. and when you take a look at the message of the markets in today's session, the growth is back on. the tech trade on. outperforming the s&p 500 right now. the very cyclical sectors like consumer discretionary up. is that the trade to be in at this point with this goldilocks
scenario >> we've talked about the quality trade before i think that's important if the dollar continues to appreciate against overseas currencies, you probably do have to gravitate back towards small caps stocks because domestic rather than overseas exposure so that's a logical trade if to weaken, you could go overseas and stay with the emerging market type of economies. you do need china though, to quicken the pace of growth if we want to see kind of a complete synchronization in global growth >> chinese market couldn't be hotter >> still down 50% from 2015 or thereabouts, rebounded nicely since november of last year, up about 30% off the lows so yeah, as much as they're growing reportedly 6.5% maybe not quickly as they can and some of the stimulus maybe not effective there as it is here. >> joe duran, you mentioned the valuation and we're at 17 times now and that's where we were before the sell-off but the fact we've gone back to those levels
confirmation that that's a place the market is comfortable being, whether it's because of low interest rates or other factors today? >> yeah, i think it's a fair reflection of how we think the economy is doing i think, you know, when we are sitting at this level, there's a lot of stocks still significantly below their peaks including the russell 2000 i totally agree with ron dollar keeps going up. people's interest will go back to small caps and what typically happens and leads the next leg up is that a lot of the things that have not participated, health care hasn't done well, financials haven't done that well you'll see the market now, the money broad map, index continues to go higher but maybe a different group of leaders because of the change in the way the economy is growing but earnings really a pleasant surprise so i think you'll start seeing ratcheting up of earnings, especially if the dollar can just hold steady and the rest of the world finds the sea legs, then we're in really good shape for the rest of the year >> steve liesman, real quick.
>> in respect to earnings, since they were looking for down 2.5% in the first quarter and came in flat, that was a very low bar to clear. in respect to valuations -- >> if earnings came in better by 2%, i mean, that's better than expected negative >> i'm saying the bar was considerably lower than it was a year ago and so they were still beating tough comps, i get that but going back to the 1980s, if you subtract the rate of inflation for the number 20, depending on your measure, it's an old rule of thumb one we've forgotten about but may help explain what's happening right now. >> do you agree with joe about leadership changing in the market >> i'm not sure how much you want to get behind health care it's an interesting contrarian trade but there are some political issues out there in the future that may constrain that group >> indeed. steve liesman has rejoined us.
you said that, out there, the hoover institution conference, folks you're talking to are not particularly worried about the tight job market, economy overheating or seem to be worried overly about inflation is there anything that any of them are worried about >> reporter: you know, there's some stuff about the corporate bond market they've talked about in the past. there is, by the way, pretty much an agreement, not to not go along with your question but some of the overseas risks have also dissipated. there's a sense that the market kind of had it wrong in december when it was so certain about a recession. that said, jim also pointed out something that, you know, if you put up a 10 year, a chart of the 10 year going back to, say, the fall, 75 basis points of easing that's happened to the economy since, over the last five or six months i think that's significant in that the fed's change of policy has helped the economy
it's eased off quite a bit there's that chart right there and you can see it was 350, 330, somewhere in there back in november or so and it's come off quite a bit. so there's not a lot of concern. there's a sense that they have the luxury of waiting to figure out what the right way to go is, tyler, and they're not in a particular hurry to do anything. >> may i, for one second i don't know if we have the time what steve says is true, but the issue of the overreaction in the fourth quarter to the recession, they were looking for the fed to tighten three or four times this year the european bank or bank of japan or china to start tightening >> yeah, but ron -- >> go ahead. >> rob, the issue is that the economy didn't weaken as much as anybody thought and there's no way that any of that policy stuff that's -- yeah, but that's not the point. the point is no way that any of the change in policy had an effect on first quarter growth or even growth today
i think the economy is the thing that didn't underperform the the markmarket was expecting weakness it's not expected anymore. >> i just think one thing that's helpful for everybody, the fed not dropping rates, keeping things steady keeps them powder if things go sideways at some point. so the talk of them proactively dropping rates, it's comforting to me, the fed has room to give, if necessary and so, again, there's no reason for them to drop rates and it's comforting for them to know, we've got things we can do now because we've got rates more normalized i think it's a really good thing for us to be in this place. >> joe duran, thank you so much and ron insana and steve liesman, as always, thank you. shares of amazon higher by 3% today on news that berkshire hathaway buying the stock. becky quick is live in omaha with the details hey, becky. >> reporter: hey, melissa. good to see you guys buffet surprised the market in recent years with willingness to move into technology stocks.
names we all know at this point. talking about ibm, oracle and apple. these are all names that he has been willing to embrace and step into, at least for a while with some of these names. but today, we've been talking about another big technology name that berkshire hathaway moved into, only this time, not warren buffett himself calling the shots on these shares of amazon he told us in a couple of weeks, a13f filing. two of the investment managers came in earlier this decade and managed $13 billion in their portfolios went out of his way to say that so the markets don't see the headlines that berkshire is buying this and assume it's buffet this is todd or ted and make sure he was clear with that. this is normally not a place where you do a lot of talk about technology but this time around, we have been talking to people this morning about all kinds of technology news. earlier today on squawk box, we were joined by the likes of sue decker, a berkshire hathaway board member and ceo of grafter and founder of a new social
media company called rafter and talked to alexis as well, coming for the second time. venture capitalist and the co-founder of reddit and then joined by don graham, the chairman of graham holdings. he's also the former board member of facebook and he's known mark zuckerberg since he was 20 years old and a harvard student. he knows facebook very well. he also happens to know washington very well and when it comes down to technology and the regulation that you're going to be seeing from washington, he thinks that you could be seeing some real regulation coming from dc >> i think the best thing that google and facebook have going for them is that not much actually gets done in washington but those companies have competito competitors. those competitors are chinese. and if facebook and google are hobbled by regulations, the rest
of the world leadership in tech is going to be handed to chinese companies and i don't think that will be very good for your privacy. >> reporter: folks, we are, again, at the berkshire hathaway annual meeting it doesn't actually take place until tomorrow but as you can see, if you look around, shareholders are here and in force. they are making their way through the floor here there are more than half of the almost 80 berkshire companies that are represented here. people are here because, well, they come out for the full weekend here they're looking around and starting to buy some things here that's the crowds you see even a day before this annual shareholders' meeting actually starts i'll send it back to you but a little later, we'll join you with the ceo of dairy queen. their booth located just down that direction. >> i'm glad that the acme brick is behind you. i feel like every year, you're on a "power lunch" and the acme brick, it feels very comforting to see the brick again >> reporter: it's like old home. >> yep, yep. becky, see you later and don't
miss the big interview with warren buffett on monday at 6:00 to 9:00 a.m. on squawk box. $100 billion ipo, yes, $100 billion for its so-called vision fund what would the fund buy if it had even more money to spend we'll discuss that and continue to watch markets as the strong jobs report was this morning you see the s&p up almost a full percent, trying to eke out a gain for the week. gh tg the sector leadinus hieroday when "power lunch" returns. when you rent from national... it's kind of like playing your own version of best ball. because here, you can choose any car in the aisle, even if it's a better car class than the one you reserved. so no matter what, you're guaranteed to have a perfect drive. [laughter]
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access netflix, prime video, youtube and more, all with the sound of your voice. click, call or visit a store today. the ipo market may get another big boost. softbank is considering an ipo of $100 billion investment fund. the softbank vision fund has an impressive portfolio also considering further fund raising. here to break it down can liz hoffton and our own jon fortt and liz, fascinating piece it sounds like a money grab. not only considering this ipo the vision fund but also, fund raising or wanting to fund raise for a second vision fund how big could this become? >> softbank raised almost $100 billion two years and said, that's too much money.
they'll never be able to spend it they spent it and now looking for more he has a ravenous appetite to do deals and throwing money all around the world at a breakneck speed and out at this point. looking for options. ipo, retail is one of them >> you use the term throwing money around and write in your piece he was in china, had several deals and basically committed several billions of dollars that softbank doesn't currently have because it spent the money for the vision fund. what's your sense as to the discipline in which they apply all this money it is a lot of money is there that much opportunity out there? >> look, discipline has always been the question about softbank, anyone spending at that kind of pace. he gave 20 minutes after meeting him and turned into a multibillion stake in alibaba. we haven't seen the end of the game yet and of course, you have
to wonder, retail is always the last in line for these opportunities so if that's where their fund raising plan is headed, you have to worry a little bit. >> what's his batting average? >> i don't know, but, look, they've been marking up a lot of their own investments so far, right? so early into wework, and increasing valuations. they haven't seen a ton of validation from the either public markets or sales yet. they did flip their stake in flipcart to walmart at quite a large mark-up with a position in nvidia, a public stock that did very well. they've got a bunch of ipos down the pike uber will come shortly and in slack. wework earlier this year and so it will be remain to be seen but early in some things but also been, they haven't been afraid to put in money at pretty rich valuations. >> where does that leave the public who might have a chance to invest in a piece of this fund >> i call this the first sign of the tech stock apocalypse.
this is terrifying because softbank kind of on its own caused this inflation in valuations as pretty staggering and the private market has a way of kind of self-validating where if the next round is bigger than the last round, then the people in the last round must have been smart. i don't think we've ever seen, in the modern era, kind of post-internet. the kind of impact that one firm has had on start-ups at large. so the idea behind the vision fund was supposed to be, they'll make these generational bets on technology that's going to change entire industries that just needs patient capital to give them runway but then have to solve that to investors if hadn't done that in the first place, a lot of these companies would have gone public earlier to begin with and would have been disciplined now they're like a bunch of college students living off of mom and dad finding themselves when they get cut off, what happens? we don't know. >> the next question, dooeeirdr why go public when you have
potentially hundreds of billions of dollars sloshing around that he wants to deploy >> to be frank, the public markets, private markets, excuse me, have been sloshing with cash and softbank has been a big part of that. you see companies like lyft go public at a valuation of $20 billion. uber potentially more than $90 billion. there's a lot of ordinary investors interested in these companies but have no way of getting into them until they hit public markets so a vision fund ipo could essentially be a way for ordinary ma and pa investors to get into some of these hot tech names. a later stage because softbank, that's a stage where they cut these checks but at least get a piece of them before they go public and we see what happened to lyft, a very anticipated name, just to fall in the subsequent week. that's one way but i also understand what john is saying in that softbank has given these companies more reason to stay
private for longer. >> and liz in terms of the second fund potentially that vision could raise, the structure of it would be interesting and could actually allow institutions and pension funds, right, to a get a piece of the action. >> that's the idea the largest pools of capital out there that softbank has been unable to touch are the traditional asset managers, public pensions, gone for very big checks from middle eastern governments for the most part. some smaller checks from companies like apple and qualcomm that masa knows very well and close to softbank as a phone company soch so they'll need to court the traditional pools of capital out there that they haven't been able to yet. i don't know there's another $1 hurricane michael billion on e $1$00 billion out there. >> thank you for joining us. fascinating conversation liz hoffman and our own deirdre bosa shares ramping up. the company aims for more money.
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welcome back to "power lunch. i'm michael santoli at the new york stock exchange. tesla shares revving higher after increasing the size of its capital offerings to nearly $3 billion. so is the stock making a u-turn after a sharp drop this year craig johnson of piper jaffray, your trading nation team today craig, this stock for a better part of two years had been in a trading range kind of fell below that range, not that long ago making an effort to get back into it. how is that set up for you >> mike, as i look at the chart here, yes, you're correct. it's been a long term trading range. down trend since december of 2018 we need to confirm the lower end of the range and reverse that down trend so until we get a price of 273,
i'm not interested in the stock. i also included in our chart short interest and that short interest level has been rising here and that's where a lot of investors are speculating to break the lower end of the range but from my perspective, i want to see the downturn reversal as they've been wrong in the past. >> boris, if they get $3 million, it seems to perhaps answer some of the critics who say that, you know, that's going to be a problem. the cash burn. how do you see it? >> they still have a cash burn i think it's a very speck thula at this point. they've stopped buying the tesla dream but the tesla reality which is all about sales and execution and that's where the company is not producing as well as i think the market wants to see. certainly failed in q1 guiding higher to q2 and see if that indeed will be the case but overall facing execution
problems and then competition problems especially from bw which i think is really going to ramp up the business all the ice makers going into the ev business but bw, i think especially a lot of problems on the horizon and i don't think the stock is a long-term buy and much more speculative than it's worth. we could see a serious short squeeze here but seen every short squeeze gets reversed in the downside i think that's exactly what's going to happen here. >> all right, yeah, it continues to be a battleground we'll see how it flplays out. for more "trading nation," head to our web site or our web site. melissa, hand it back to you. >> thank you, michael santoli, ahead on "power lunch," jobs, the economy and foxconn's big investment in wisconsin. former governor scott walker weighs in and plus, he'll head back to berkshire hathaway ceo of dairy queen joining us and green ahead on "power
lunch. >> the latest from "trading nation" tradingnation.cnbc.com >> you don't have to fear the fed. if you're a long-term investor, don't let a fed announcement derail long-term investing plan but a short-term trader, may consider waiting until after a fed announcement before taking on any new positions i'm randy frerk d hw is the better place for traders. internet that puts you in charge.
welcome back, everyone i'm sue herera here's your cnbc news update at this hour. new video this hour of flooding in clarksville, missouri hundreds of volunteers are filling sandbags in the downtown area to protect homes and businesses authorities say this is the worst flooding in this part of missouri in a decade a new report just released by the united nations shows at least 10 million people in north korea suffering from food shortages, coming after one of the worst harvests for north korean farmers in a decade a massive cyclone swept through the east coast of india today, called a grade five storm. that is the most powerful category this is the strongest storm to hit that area since 1999
on a happier note, a fire department in indiana making a big rescue 12 little ducklings were following more across the street when six wound up in a storm drain. the firemen were able to pull off of them out and reunite them with mommy duck sending the duck family back to the pond safe and sound. that's the news update this hour back to you. >> so sweet. >> cute. >> sue herera. the bulls are out today. the nasdaq is leading the way, soaring more than a percent. 1.4% to the exact or 112 points. dow posting biggest gains since april 12th and s&p 500 with the biggest gains in over a month. consumer discretionary the best this month up 1.5% at this hour. surging more than 10%. royal caribbean up more than 3%. jobs report came in strong this morning soaring above wall street expectations and delivering the
lowest unemployment rate since 1969 let's dig deeper into that report and the economy with former wisconsin governor scott walker joining us for a first on cnbc interview welcome. >> good to be with you thanks to be on and a great day when it comes to jobs in wisconsin and across america. >> that is so true what do you think explains the strong growth and the strong productivity and the low inflation we're seeing >> i think it's our faith in the american people and the american employers. give them more of our money back and a massive tax cut in wisconsin. typical taxpayer that's two parents working and two kids at home still in school that family saving over $2500 and even though they may not believe it in the polls, the reality is over 80% of americans saw a tax cut and i think you put more in their hands and the hands of small business owners, they'll put people to work and this jobs report following on last week's good news about gdp growth shows we have an economy
on fire and will only continue to grow the rest of this year. >> do you have a sense for whether interest rates seem too high for this economy? are they too low are they just about right? >> well, i know the vice president and others talked about them being lower i think right now, this economy can operate quite well as it is. certainly, lower interest rates always help along the way but i think it's a strong and vibrant economy. we see here in wisconsin and we see across the country, strong positive news when it comes to manufacturing. higher wages in fields like construction and others. those are good indicators, i believe, that the economy is not only hot but it will continue to grow going forward >> governor, what's happening with foxconn i understand that you, the current governor and foxconn met just yet what's t yesterday. what's the latest? >> terry, the long time of foxconn met with the current governor, tony evers he walked back concerns he had and believes they're on the right track. i said all along, i believe
foxconn will meet or exceed original goal of 13,000 jobs and $10 million worth of capital investment not only the largest economic development project in state history but one of the biggest global and that's a tribute to president trump being at the forefront literally two years ago this week, making the case that foxconn instead in asia, make more things in america and we took the ball and ran in. one of the best places to do business is right here in the state of wisconsin >> in america, that has unfolded, governor, in recent months has been foxconn kind of stepping back from the initial to create the types of jobs it creates or the incomes that will go along with it is that in any way accurate, number one, number two, why has that narrative >> for the last year and a half,
you saw the tractors politically in this state, to me and now the president, hoping something fails to make a political point but i think that's all along been part of the process you've seen in wisconsin. so a lot of misinformation but the foxconn team has consistently said they're committed to the state of wisconsin, to made in the usa and committed to those 13,000 jobs will they tweak things along the way? absolutely they're a company that terry out in the '70s the old knobs on television, into the joystick later on and moved to compact and eventually, obviously, made biggest gains with apple and now state-of-the-art ak technology sharp screens made in america. those are the things he's focused on. >> one more thing on this though it was a foxconn executive who told reuters a couple of months ago maybe it wouldn't be manufacturing jobs but white
collar jobs in this factory whose hire plans short of what was forecasted are those going to be manufacturing jobs >> long-term, absolutely the fact they might add more high paying engineering jobs along the way is a big bonus for a state like wisconsin but they'll definitely be tens of thousands of jobs, major portions will be in manufacturing and all be within the contract that the state has between wisconsin and foxconn itself. >> governor, before you go, another big source of conflict has been the administration's reported plans to nationalize 5g they've denied this since and said the private sector should lead the way here, but given the importance of this technology and some of the concerns about participating vendors including huawei already, what do you think the right way is to go about it >> it's a real concern, as you mentioned, companies with a chinese connection in terms of security but the answer is not to be more like china to defeat china, to be ahead of the game when it comes to 5g. it's to do what we do in
america. that's to compete. open up the market well ahead of china, south korea and others out there now more than ever, it's a realtime example in venezuela. not only do we see socialism doesn't work but there to nationalize their telecommunication system and now you see maduro shutting down access to things like youtube and the internet and google searches and even access to cell phones that is a real danger when one entity is the nationalized source we shouldn't have that in america, and that's what got us 4g and 5g going forward. >> thank you so much. >> good to be with you. to the bond market we go rick santelli tracks the action at cme hi, rick >> reporter: hi, tyler you know, that was a good employment number and indeed, what did we see? look at two day of twos. really moved higher, yields in the dollar but it didn't last. 237 was a high on twos gave up four basis points. if you look at tens, a weak
chart, you could see barely an upward glide path there and then reached up to 257 and backed off but it's still up 3 basis points on the week if you look at the dollar index, a big rally and since then, in a channel going up we've given up some ground and finally, you know that 112 is bigger than the dollar yen first but then dollar can't stay above 112 and backing off contributing to the weakness in the dollar index. melissa lee, back to you, have a good weekend. >> you too, rick santelli. up next, the sweet spot of warrenuftt ptfio bfe'sorol the ceo of dairy queen when "power lunch" returns. my experience with usaa
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since january 2018 and troy, thank you for taking the time to talk with us today. >> thank you for including us. >> reporter: a lot of different berkshire companies on the floor but yours is probably the one that draws the biggest crowd everybody is over here eating bars and the blizzards of all different types that are up here how many dilly bars? >> just under 29,000 about 7,000 of those are blizzards. we brought our standard oreo, still the number one selling blizzard and our brownie dough, a new portion of the summer blizzard menu. dilly bars and the fudge bars. >> reporter: so we hear all the time the consumer is doing very well what do you see in your stores you guys have 7,000 different locations. how many of those are international? >> we have about 2,000 locations. international and the rest are in the u.s. and canada and we're just over 7,000 locations as you said, so i
think when it comes to consumers, i think they're doing better the challenge is a lot of demands for income whether it's health care or energy or all of the other things and we know that historically, consumers spend about 5% of their disposable income on away from home eating occasions. so within our category, although it's healthy, we have a lot more competitors coming in whether it's existing mature brands with more locations so it continues to be a battle for really flat transactions within the qsr category as well as -- >> is that innovation? you mentioned new brownie batter or brownie dough blizzard that you have is that what brings people in or really the old standards >> i would say it's the total value proposition, becky, that really becomes important in our industry, what is the value proposition mean people want to immediately say it's price price is only one component. i would start with quality and the next piece becomes which is
the innovation, right, you've got to have great products and for us, we want cravable products that people have and come back to but provide a high level of customer service and hospitality as well because in the end, there are so many opportunities for people where they want to spend opportunitie where they want to spend their time, spend their money to get their meals. they're going to go to those place that's give them the very best overall experience. >> you have almost 1,000 locations in china have you seen any blokeback on american brands since the china trade dispute? some brands have done well there. >> fortunately, we have not. and we have three wonderful partners, franchise partners, in china. and they are very in tune with the local markets and with the trends and flavors we've been fortunate that dq has really received not only as -- it's not just a u.s. brand but with almost 1,000 locations and many of those being in fourth and fifth-tier cities now, which has been wonderful, it is really being embraced by the consumer
there as well. but we have to make sure we have our flavors and products that are right for that market. >> i want to thank you for your time by the way, bring these over i want to get a look at these. melissa, i'll send it back to you. but i have one of these and you don't. >> the bounie dough? that's the one i was eyeing. >> oh, boy >> by the way, becky, troy was saying he sells this many of those at this time, blizzards. how much do they cost? >> yeah, how much -- are they a dollar or $2 >> $2 for the blizzard and a dollar for the novelties >> okay. 29,000 of them it adds up pretty quickly. there you go, guys i'm trying to make you jealous >> thank you, becky. appreciate it. >> beck qi quick and troy bader. and again, don't miss becky's big interview with warren buffett monday morning starting at 6:00 a.m. >> typical berkshire
>> she needs to keep the chocolate away from the lovely white dress. >> drugs to treat migraines were supposed to be big business, but so far they're just a big pain for the drug companies we'll talk about that next plus a big day mob on cnbc from the sohn investment conference this year's presenters including david nhn,eior tim ferris and more we'll be live all day from that event in new york city we'll be right bac i was working the same job for a few years. i had a degree and some experience but no career. i opened the careerbuilder app and found an awesome job at a company i love. it even built a resume for me with skills i didn't know i had. i applied with a tap. and i start on monday. careerbuilder. work can work.
. drugs to treat migraines were supposed to be a boon for the pharmaceutical companies but so far they are causing a lot of headaches. meg tirrell has that story hi, meg. >> this is a market that analysts peg as much as 15 to 20 billion dollars in peak annual sales. it's a new group of drugs in amgen and novartis, eli lilly and teva which aims to prevent migraines but results and first quarter earnings have been a little painful amgen and novartis were the first to market their drug called amovig. it drew $59 million in first quarter sales missing wall street's expectation of at least $80 million. teva and lilly which have similar drugs on the market reported sales of 20 million and $14 million respectively but that's not because patients aren't taking the drugs. amgen reported this week that 200,000 people had been treated with emovig. what is the problem? price wars
these drugs all have a sticker price of just less than $7,000 a year but canter fitzgerald's alethia young estimates they're being discounted 30% to 40% and they're not going to be the only three on the market for long alder has a competitor on the horizon as does botox maker allerg allergan a lot of expectations but first quarter sales a bit of a headache >> so price competition. imagine that >> it's actually working >> in the ugdr market. meg, thank you very much meg tirrell. >> check please is next. [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.
check, please. >> welcome back. it's time for "check, please." no hangover yet for beyond meat. one of the best ipos in recent memory up 160% yesterday. at last check it was also trading up today and it's up 4% it was over 70 now it's 68 and change >> beyond meat bed, bath & beyond meat i guess. is that a merger i spent a couple of days at the net net conference in denver and i got to spend some time around the city of denver and colorado. 5,000 people a month are moving into the state of colorado >> my sister one of them >> their unemployment rate is very, very low they are business-friendly we have the governor jared polis on stage with scott cohn, our best states for business guy and that is an economy that is clicking >> is there an industry driving that move? >> well, cannabis is one of them i've got to say, cannabis is one
of them. but it is also a business-friendly climate with a relatively low tax rate, something in the area of 4% is where he wants to take it. he's actually a tax-cutting democrat >> thank you so much for watching "power lunch. have a great weekend >> and "the closing bell" starts right now. see you next week. >> it is the final hour of trade. i'm sara eisen >> and i'm wilfred frost a strong jobs number this morning. we'll talk about itwhat it means for the fed with dallas fed president robert kaplan. >> warren buffett telling cnbc berkshire has been buying amazon we'll discuss whether investors should follow him into that stock. >> and the ipo mania isn't over. soft banc considering an ipo for its vision fund. "closing bell" starts right now. welcome to "the closing bell." we're on recor