Skip to main content

tv   Power Lunch  CNBC  December 6, 2016 1:00pm-3:01pm EST

1:00 pm
financial names. this is going to be a theme going into the end of the year. >> baker hughes into the thursday analyst meeting with ge. >> stay with the financials, the too fast -- too far, too fast. >> jamie dimon, most important thing is basically signaled to us we're on pause in the market at these levels. >> get the chair back now. >> anytime. >> "power" starts now. i'm melissa lee. here's what's on the menu. art of the tweet, how donald trump is changing the way business gets done in d.c. rise of the robots. could amazon's latest plan put americans out of work. we'll talk about this and much more with michael louis, who joins us straight ahead. "power lunch" starts right now. donald trump's comments on boeing not hitting the stock market that much. boeing stock is down today. that's helping keep the dow's gains muted from continuing its recent rally.
1:01 pm
goldman sachs, though, continues to be good as gold. goldman sachs shares are now 30% in just one month. that is not all. if you own marriott, citigroup or united airlines, pat yourself on the back, they're all hitting new 52 week or multiyore highs today. tyler? >> welcome, everybody. here's what else is happening at this hour. the supreme court cracking down on insider trading, setting tougher rules on what is and is not illegal. the full details on that straight ahead. separately, the high court ruling in favor of samsung in its patent dispute with apple. and european regulators clearing microsoft's $26 billion bid for linkedin with some conditions. melissa? >> donald trump once again up ending the relationship between big business and washington, firing off this tweet. boeing is building a brand-new 747 air force one for future presidents, but costs are out of control. more than $4 billion.
1:02 pm
cancel order! that tweet sending boeing shares lower immediately and minutes after that, the president-elect backing up that tweet with some on camera comments from trump tower. we'll get to all of that in a moment. first to john harwood with new details on trump's investment portfolio. >> first of all, one of the questions that came up on our transition call with trump aides after he made the tweet and the statement today was what about donald trump's stock in boeing, which he previously reported on a disclosure statement that he had filed, when he ran for president. the answer was that donald trump sold all of his stock and i confirmed this later with transition officials, not just his boeing stock, but all of the individual stocks he held back in june. that was after he had become the presumptive republican nominee. so that is a signal that he is trying to avoid some of the narrow conflicts with respect to stock ownership, though obviously many business
1:03 pm
conflicts that he's got around the world and in the united states as a result of his own organization that run by his children and himself. now, donald trump made the statement about boeing in that tweet this morning. he followed it up by walking down to the trump tower and talking to the press pool. here's how he explained it. >> the plan is totally out of control. over $4 billion for air force one program. and i think it is ridiculous. i think boeing is doing a little bit of a number. we want boeing to make a lot of money, but not that much money. okay, thank you. >> now there are two things in the news environment that are relevant to the statement that the president-elect made today. first of all, the washington post published a report today about the prevalence of a waste at the pentagon and the fact that the pentagon had done a study that they buried about the extent of administrative waste at the pentagon.
1:04 pm
the second thing is that donald trump's tweet came 22 minutes after the chicago tribune published a story in which boeing executives were expressing concern about donald trump's trade policies. so this raises the possibility that donald trump saw that story or aides to him saw that story, and expressed a view about boeing after that. now, don't know if there is a connection between those two events, but if there are, you can bet that a lot of corporations are going to be concerned, guys, about what they say publicly and how the president-elect may respond in ways this affect their stock valuations and other business interests as a result of things that they say or policy concerns they express. >> all right, john. john harwood from outside of trump tower. we're getting fresh comments, meanwhile, from the white house on boeing. to phil lebeau. >> these are from the current white house, just a few minutes ago, representative from the white house says some of the
1:05 pm
statistics that have been cited by trump on air force one don't appear to reflect arrangements between boeing and the department of defense. the representative for the white house also says americans would expect that future presidents would benefit from upgrades to air force one. what is interesting here is that we have yet to hear from the department of defense officially. we do know from looking at the budget and we confirmed this with a producer for nbc news who was talking with an air force representative, in washington, looking at the budget, that the budget for these air force ones that are being developed, $2.7 billion for the first two years. it is not hard to see why it can get to $4 billion after that. but that's the number that we know as far as what has been approved by the air force budget, but officially we have not heard from the department of defense in terms of what is this contract and how much are they putting aside for the future air force ones. >> all right, phil, thank you very much. we'll see you in a bit. boeing is really just the latest
1:06 pm
company to fall into the cross hairs of the president-elect. donald trump has singled out other big companies like ford, amazon, and the parent company of carrier. united technologies. jim cramer did speak exclusively with utx ceo greg hayes about getting the call from donald trump. >> well, no secret. i got a call from president-elect trump a couple of weeks ago. >> before thanksgiving. >> yeah, about a week before thanksgiving. and he simply said, look, greg, i need you to relook at the decision to close the indianapolis group of carrier. when all that happens, you're going to be printing money, but i need you to relook at your decision to close the factory in indiana. >> here to help us through what we're calling the art of the tweet this hour, the washington post craig whitlock, he co-wrote the big investigation story into
1:07 pm
pentagon waste. it is worth reading. and michael louis, author of the new book the undoing project, it is also highly worth reading. the book looks at how people make decisions based on fear rather than rational thought. welcome to you both. michael, always great to have you here. you've written in this book about two of the most interesting psychologists, economists of our era. daniel conman. we'll get to that more in a minute. let me start with you, if i might, craig. sum up the results of your story today as best you can, and who or why did this massive study of waste in the pentagon get spiked? who spiked it and why? >> so the story that i did in today's post with my colleague bob woodward, spent a while looking at an internal study that the pentagon commissioned
1:08 pm
that found that they could save an estimated $125 billion over five years just by cutting back on administrative overhang. this is -- sounds kind of boring, but these are a lot of desk jobs in the department of defense, people dealing with human resources, with property management, buying stuff. these are the people who are supporting the 1.3 million active duty troops with business functions, except at the pentagon it is an enormous staggering number of people. more than 1 million people hold these kind of jobs. the pentagon collected all this internal data they had to pry it out of the hands of all these different defense agencies and the armed forces that finally pinpointed the number of people these jobs and how much it was costing. and the recommendation was that they could save $125 billion over five years. now, after that, what happened is senior leaders at the department of defense were worried that this number was far more than they expected.
1:09 pm
and they were worried if congress found out they could save that much money, without cutting weapons programs, troops or things like that, that they might actually cut the defense budget instead of giving them more money. the pentagon has been clamoring for more money for its programs for the past few years. so they essentially buried this report and any public discussion of it, which is what our story played out today, the pentagon was promoting this study as a way to save money. when it came back, much more bigger numbers than they expected, they silenced internal and external discussion about this, took a report off one of their websites, and the data behind it, which is sort of the crown jewels of it, they kept that secret, classified or confidential and even -- we weren't able to get our handss n the data itself. >> your story did not mention the $4 billion boeing contract that the president-elect
1:10 pm
referred to. didn't mention that specifically did it? >> that's right. all the waste we were talking about, again, these are business overhead functions. not weapons programs. or things like that. the pentagon has a long history of expensive toilet seats and wrenches and people complain about the cost of aircraft and ships, like trump was today. but that's a whole other kettle of fish. that's a whole other area that usually gets more scrutiny. what we're talking about are more just the back offish functions. >> michael lewis, brian sullivan. your new book is called the undoing project, which maybe is a very appropriate title right now because it does appear that the president-elect is undoing in certain ways the norm, the way things get done, the way you communicate. what do you make of what you've seen in the last two weeks? >> you know, it has been very tempting to filter the whole trump phenomenon.
1:11 pm
what they studied is the flaws and intuitive judgment. the appeal to his supporters is appeal to pure intuitive judgment. so the -- so it has been interesting. what do i make of it? well, one of the great lessons is the world is a far more uncertain place than people like to think and they do things to make it seem more certain for themselves than it is. and they shouldn't do this. at least mistakes. i suspect he's the master of this. but it is very -- the -- the doing project title refers to what they were working on when they broke up. it was how people undo tragedies, they were trying to -- trying to describe how the human imagination works. and they showed the -- the limits to the human imagination. it follows rules.
1:12 pm
these limits are being tested by the president-elect. it is very hard to imagine what he's going to do next. so unpredictable. >> they were disrupters for sure and trump is clearly the same sort. he's a disruptive influence in the way he thinks about things. one of the other elements of the book and of their story is how much more powerful as a decision-making tool, i guess, or variable, fear is than opportunity. in other words, people will make decisions very powerfully when they are afraid. and my sense is that there are a lot of business leaders in fortune 500 companies right now that are very, very afraid of being called out by the president and will make business decisions based on that fear, right or wrong. your thought? >> well, you know, i can't disagree with that. i don't know. if you're them, you're sitting there worried about the next tweet?
1:13 pm
on the other hand, these things are going to have diminishing returns. at some point when he's called out the 80th company, people are going to cease to be listening to it. i wonder, i do wonder if trump's going to find that the amount of trouble it causes for him every time he tweets unexpectedly about something. once he's in office. it is just not worth it. but for -- sure, for now, you don't want to be the first one called out in the class. but if you're the 80th one, nobody cares anymore. everybody has been called out. >> well, actually, it seems like united technologies ceo greg hayes got off pretty well. considering he got a bunch of tax incentives in order to keep the jobs in the state of indiana, and right now he's off the radar, that's not such a bad deal to be the first one called out in class. i want to turn back to you. your story points to the pentagon and all the waste going on and you juxtapose that with the tweet here and donald trump is reversing it. there is no blame or no finger
1:14 pm
pointed back at the government for spending that reported $4 billion. it is boeing. we want you to make a lot of money, we don't want you to make a lot -- it is an interesting -- after you are saying that the pentagon is sort of defensive about the potential waste that they have got going on, he's not even pointing the finger at the government. >> well i'm not sure i agree with that entirely. >> okay. >> he said cancel the project, cancel the contract. the government and the air force signed the contract. and so i think it is both he's looking at. i'm sure he's being critical -- boeing will take what it can, but the government is the one that has signed the contract. just a little bit updated figures there, trump said, you know, $4 billion for the program. he's actually pretty close to that. people have been trying to add things up and the air force squarely about seeing what it is going to cost. if you look at the department of defense budget documents, you add in the development cost, the
1:15 pm
procurement cost over the next several years, you're looking at it right now, a projection of $4 billion to develop and build and buy those two air force one planes. now, in defense of the air force, these are not just 747s. these are planes that would be used as an airborne command post for the commander in chief. somewhere where he needs to be able to direct nuclear war if necessary. vis-a-vis able to withstand military attack with, you know, electromagnetic shields and things like this, so this is no ordinary airplane. they're only building two of them. unlike boeing when they build 757s, they build hundreds or thousands. you can recoup your development costs. you're talking about two unique air care here. they're going to be more expensive. what is the cost? >> thanks a lot. and michael is going to stay with us.
1:16 pm
i think that bigger issue here, guys, we're talking about this in our meeting, to what extent is mr. trump going to insert himself in the u.s. government into the affairs of private business? and is the government effectively seeking a board seat at every single company in the united states by saying, what we want to say and we want to say how much you charge for things, we want to say on x, y and z. >> he's going after two dow components. >> defense contractors. >> if you want to win a fight, you knock out the biggest guy first. generally, right? and then the little guys might scatter off. go after the big guys -- >> machiavellian move. set an example. >> i have no idea. maybe that's -- maybe there's not that much thought put into it. i have no idea. >> let's get to dom chu for a news alert. >> we're watching shares of a couple of major advertising type
1:17 pm
agen agencies. if you look at the charts, over the course of the past 15, 20 minutes or so, sharp spike lower. we recovered a lot of those losses right now. however, this is all on the heels of a wall street journal dow jones report saying that the justice department according to people familiar is investigating whether advertising agencies inappropriately steerd busine ls at the expense of independent film or independent commercial producing studios. the story does not cite any specific companies by name, just the idea that this could be happ happening. those two stocks reacting to this bit of news. back over to you. >> watching the names as well. thank you. grocery stores with no checkout lines. no checkout at all. that is the vision behind amazon's new amazon go venture. but is the byproduct of go something that jobs are going to go away.
1:18 pm
the company's latest move getting slammed by the new york post and sending shares higher. with no people, make a lot of money. what does the stock go from here? that part of the story straight ahead on "power lunch." ♪ ♪ get up to $2500 customer cash on select 2016 and 2017 models for these terms. see your lexus dealer.
1:19 pm
1:20 pm
welcome back. amazon getting lots of buzz after they will test grocery stores without checkout lines. it is set to open next year. here's how it works. customers logon into an app and go shopping. as they shop, the amazon go technology detects when products
1:21 pm
are taken from or returned to the shelves. and keeps track of them in a virtual cart. when the customer is done, all they have to do is leave the store. amazon charges them. some are calling the experiment a jobs killer. we'll dive into that later on. for now, let's talk about that this could mean to amazon. eddie roomia, always a pleasure to speak with you. how does this fit into the overall strategy for amazon to first of all increase the footprint and also potentially have this sort of software, which they could possibly sell to other retailers in the future. >> amazon is all about making things easy for the consumer. the one touch purchase and now bringing that to grocery and convenience items. we think this is a big deal. we think amazon has been focused on working on a store footprint, store plan. started with bookstores. doing this convenience store, we think they'll do grocery pickup. it is clear that for them to have a big push in the grocery that the consumer wants that
1:22 pm
physical presence. we think this is a big part of it. >> recently kroger just came out, lowered the forecast once again because of food deflation. the implication here is that amazon can offset that pressure by taking out the labor component of that. is that the way you think about this, about amazon go specifically? >> that's a component of it. but think about the long-term possibilities. what if a consumer rather than having their amazon prime package shipped home could pick it up when they're buying their groceries. lots of different places for amazon to save, labor is part of it. as they embed more consumers, i think there are benefits they can unlock that other retailers may not be able to. >> the grocery business is notoriously thin margin. and this would be a convenient store, little different than a full fledged grocery store. i wonder what the error rate on these devices would be, number one. and at what point does that error rate destroy whatever
1:23 pm
small margin you've got? >> i would just say this, i think amazon is pretty deliberate and it is clear they spend a lot of time focusing on the technology here. this is not just a souped up hotel mini bar fridge. these are serious technologies they have been working on for a long time. certainly some component of error, but the items that it looks like they're selling are some higher margin items. prepared foods, produce, so these inherently have a higher margin and i'm sure with amazon in their focus on technology, they'll make sure this is right out of the gate. >> is there any rifg sk to dona trump coming after amazon? he's mentioned them by name. >> we're assessing that and trying to understand. but clearly this is one of the most innovative retailers and companies we look at. i'm sure there is a difference between what he's willing to say politically and what he's going to implement for some of these companies. >> ed, we're leaving it there, thank you. >> thank you. >> on deck, let's change gears totally.
1:24 pm
why everybody in shanghai is going gaga over these two little furry fellas. we'll have total pandermonium coming up.
1:25 pm
1:26 pm
two pandas, very furry little babies. visitors got a chance to see giant twin panda cubs this weekend. according to the breeders, the brothers, very active, but the
1:27 pm
sister likes to lounge around a little more. the park launched a public campaign to name the two. those names will be announced ahead of the 2017 spring festival which falls on january 28th. any suggestions? i say that those pandas should be named tyler and melissa. >> if people are going gaga over them, why doesn't one be name d lady and one gaga. >> they were born that way. >> they were. >> oh. >> oh, man, you're good. you're fast. >> or very bad. >> fast. you lose me. that was good. >> anyway. >> all righty. >> melissa, no name suggestions? >> no. >> she'll come pack wiback with >> has to be a chinese name. >> major crackdown on insider trading. the supreme court ruling on the matter for the first time in two decades. we'll tell you what it means for wall street, and your money straight ahead.
1:28 pm
losing your hair is no fun and no one wants to be bald but there is hope. getting my hair back was the best thing that ever happened to me. i'm happy with the way i look now. i'm very excited about my hair. i feel beautiful. i love my hair. [ male announcer ] hair club offers all proven hair loss solutions backed by our commitment to satisfaction guaranteed. if you're not 100% satisfied with the solution you choose, hair club will apply the purchase price to another proven hair loss solution or transplant more hair at no charge. it was the best thing i've ever done. it looks good on me. [ male announcer ] call in the next five minutes to get your free brochure at no obligation.
1:29 pm
it will tell you everything you need to know about your hair-loss problem and it's free if you call now. i am more pleased than what i had even imagined. i at least look, i would say, five years younger. i'm 52 and i look better now than i did when i was in my 40s. i feel great. [ male announcer ] and that's not all. the first 100 people who call will also receive $250 off any hair loss solution from hair club. call now!
1:30 pm
hi, everybody. i'm sue herera. german chancellor angela merkel
1:31 pm
won a new two year term as germany's main conservative party. it is the springboard for her run for a fourth term as chancellor in next year's elections. secretary of state john kerry attending his final foreign ministers meeting at nato headquarters in brussels. he met with nato chief jens stoltenberg and turkey's foreign minister, saying nato and the european union are moving forward on deepening cooperation. poland's supreme court upholding an earlier verdict that filmmaker roman polanski cannot be extradited to the u.s. over a 1977 child sex conviction. that brings a definitive end to the case. and some irs refunds are going to be delayed until mid-february including those for the millions of americans who claim the earned income tax credit or the additional child tax credit. the february 15th date is a congressionally approved change aimed at battling tax refund
1:32 pm
fraud. you're up to date. that's the news update this hour. melissa, i think -- thank you for the panda fix, first of all. >> i know. aren't they cute in. >> they're so cute. maybe cute and cuddly. i don't know. >> oh. great idea. >> may be the same in mandarin, though. i'm not sure. >> it is better than brian's original suggestion, which was lunch and dinner. i don't know what he was getting at with that. >> i don't know what he was getting at with either, but don't mess with cute and cuddly. >> no evidence i said that on air. may have been said during a commercial break -- >> sources close to the situation. >> a little grim humor. i love pandas. >> i think cute and cuddly. thank you. >> thank you, sue herera. for the first time in two decades, the u.s. supreme court has ruled on insider trading, making it easier to prosecute people accused of profiting from confidential information. hampton pearson is live in washington with the details. >> this was a unanimous
1:33 pm
decision, a quick decision and really a clear win for prosecutors. and here's why. the justice ruling that sharing corporate secrets with friends or relatives is illegal, even if the insider providing that tip doesn't receive anything of value in return. upholding a chicago man's conviction in the process. now the court rejected arguments that insider trading prosecutions should be limited, only to those who make secret profits from revealing confidential data. in recent years, lower courts sent mixed signals on what that standard should be. two years ago, a new york appeals court overturned the cop viks of two hedge fund managers based on a very narrow definition of insider trading. u.s. attorney preet bhara had to drop other insider trading cases. a statement reads in part, in the swiftly decided decision, the court stood up for common sense and affirmed what we have
1:34 pm
been arguing from the outset, that the law prohibits insiders from advantaging their friends and relatives at the expense of the trading public. now a source familiar with some of those new york cases tells cnbc that it is unlikely that any of those dismissed prosecutions will be revived. primarily due to procedural and statute limitations that have gone by. tyler? >> hampton, thank you very much. michael lewis is back with us. you've been a student of trading for much of your life. get your quick flash reactions to this ruling from the high court. >> that's an exaggeration. this is a quixotic view but i thought insider trading is a great distraction. when things go bad on wall street, the one thing that prosecutors know how to prosecute is insider trading. look for insider trading. very little to do with the problems that for example led to the financial crisis and led to
1:35 pm
messing our political lives. i don't get to -- i don't get worked up about it in first place, this doesn't interest me all that much. >> let's talk about a topic i think does interest you based on your work on the big short and large -- and others and that is the transparency or lack of it in the financial system. i was thinking back eight years ago, the economy was in a very, very different place, in the middle innings of what happened then in 2008 and 2009. do you think the system has been shored up? a lot of talk about rolling back dodd frank and so forth. are we better off than we were eight years ago? >> better off in some ways. the banks are a lot less leveraged. that's a very, very, very big deal. i'm watching the incoming trump administration, that's the thing that terrifies me is that they -- they're not going to -- they're going to reduce the capital requirements in banks.
1:36 pm
because there will be pressure on them to do it. already seemed to be interested in rolling back the volcker rule. which also makes me very uncomfortable, because essentially what you got is government backed institutions being able to roll the bones into the marketplace. it -- it is, like, the things go well, traders keep the money, and if things go badly, it becomes a taxpayer's problem. and this, you know, this kind of weird socialism for elite wall street guys is what got us into the politics we have today. i am just -- i'm amazed watching what is going on with the trump people that they have -- campaigned, very justifiably, saying that, you know, in a way the elites -- the elites had -- had -- the economy was rigged. two systems. one for guys on wall street, one
1:37 pm
for the rich and one for everybody else and he was going to come and fix this. he seems instead to be trying to restore the inequities that existed before the financial crisis. >> why do you say that? >> the talk about rolling back the dodd frank provisions and the talk about weakening the volcker rule. it is hard to know. predicting what he's going to do i know is a stupid thing. like predicting where the stock market will be tomorrow. you're watching, i think, something with a large random component there. this is not -- i don't think this is like some well thought out strategy. it is like, you never know what he's going to do next. if you try to tell a story about it, that predicts where he's going to go, i think you end up looking like a fool. so i wasn so i won't do that. too much regulation on banks, and one of the problems -- one of the problem regulations they have identified is a prohibition on proprietary trading.
1:38 pm
i don't really see why deposit -- institutions that benefit from deposit insurance should be allowed to speculate in the marketplace. >> let me ask you one final question. you've written beautifully about quirky characters, the trader in big short, the general manager of the oakland a's or an obscure left tackle in the pros, the two psychologists, economists you wrote about were quirky characters. >> unbelievably quirky characters. >> what is the most interesting thing you learned about them or from them that you applied in your own life? >> so really almost too many to list. can i give you two quick ones. one is a fun one. amos diversky had this ability to look at his mail, didn't want to open it, he would toss it in the garbage can and had a what
1:39 pm
can they do to me rule. i'm going to throw the stuff away. and he has -- he had advice for anybody who wanted to get out of anything they were doing that they didn't want to be doing. like being in a board meeting or tv show. he said, don't worry about making up an excuse fork not being there, just get up and start walking and it is amazing how quickly your mind will formulate the words as to why you have to leave. that may come in handy at some parties. but the thing -- one thing that say little deeper, that comes from danny conman, but their work, they were very -- they were attune to the fact that people didn't think statistically. and they trained israeli fighter pilots in the israeli air force and watched the way when pilot instructors, they would -- they would come to the conclusion that criticism worked and praise didn't. when a guy made a good maneuver, they praised him, he got worse. and when he made a bad maneuver
1:40 pm
in the plane, they criticized him and got better. they pointed out this is just regression in the mean, there say mean level of performance and the guy is good or especially bad, he'll revert to that. in my life, what i found raising my kids or coaching kids that -- there is a natural tendency, life tends to suggest to you that when you're teaching, the criticism is the way to go. because of regression. and what i -- so what i -- it caused me to be a lot slower to criticize and a lot more generous with praise. >> all righty. very helpful. very interesting. the book -- was it diversky who reinvented the game rules for monopoly. >> i don't think so. but he's perfectly capable -- >> didn't he say i was bored by it and i want to do a new way to do it? >> oh, no, this is darryl morey, the general manager of the houston rockets.
1:41 pm
yes. but i think that's who you're thinking about. >> michael, thanks again for spending time with us. >> sure. >> the new book is called "the undoing project: a friendship that changed our minds." great to be with you. let's welcome in bill grows of janus capital. were you able to hear the michael lewis interview just now? >> yeah, i read everything michael lewis has written. he even interviewed me in pimco for the big short. but i think he found we weren't short enough. i love his writing. >> before we get into the content and your ideas right now, i want to ask you, you're a self-made billionaire, built up a firm for years, you had to make a number of crucial decisions, many are correct. that's why you are where you are. how do you make decisions? >> well, i make decisions based upon a longer term view. i think if you make decisions on the short-term, that emotion,
1:42 pm
you know, gets injected into the equation and that you're a human being, all of us are human beings and to the extent that emotion rules, but, you know, it is going to be 50/50 type of decision to the extent that a long-term factual 30,000 foot view is determining, then you have a better chance of succeeding. >> with that in mind, i know you may not want to wade into politics, what do you make of donald trump's comments on boeing and his call of united technology technologies carrier. >> i think they're very unusual, but to a certain extent, that's probably why it was elected. i don't think that he would necessarily follow through, nor congress, or perhaps even the supreme court would allow him to follow through. but it is good to get a breath of -- a strong wind, put it that way. he's got a strong wind. i didn't vote for him, but i think some of the things he's
1:43 pm
doing are interesting because they're anti-establishment and that's what voters wanted. >> some people may think they're anti-trade. and in certain ways. listen, you can do what you want. i know you've invested in mexico. you invested in brazil, certainly some of the countries have come under fire, may come under fire. have you had to change the way that you invest from a stock and/or bond perspective since the election? >> yeah, i think so. anybody that hasn't really has been visiting mars as opposed to planet earth. no doubt that many aspects of trump's agenda are good for stocks and bad for bonds. and that wasn't the case before the election. talking about tax cuts, deregulation, fiscal stimulus, et cetera. i think longer term, that's what you asked 30 seconds ago, longer term investors have to consider the negatives of trump's anti-globalization ideas which may restrict trade and negatively affect corporate
1:44 pm
profits, in addition to strong dollar is now weighing heavily on globalized corporations. not a perfectly one sided deal. certainly bonds have gone into the red as opposed to the green. and stocks are just reverse. >> i know we have breaking news about a deal. i'll get to that in a minute. got to cut you short. final question. you also surprised us lately with calls on deals, basically. precision cast parts and others from the equity side, linked in. are you an increasing buyer of equities? >> well, increasing buyer of the deals like linkedin. came out today, a done deal, will close out next week, i talked on your program about it. was it worth it, a lot of money, 4% to 5% on six month basis, 8% to 10% on a 12 month basis. certain situations are relatively secure. and highly probable. and so i think an 8% to 10%
1:45 pm
return on linked in was not a bad idea. >> not at all. got to cut it short today. the breaking news, we'll see you soon. we appreciate everybody to read your investment outlook. thank you. >> thank you. to john harwood at trump tower, news alert. >> we just had the second major corporate ceo walk into trump tower for a meeting where the president-elect is conducting his transition. the first was rex tillerson of exxonmobil believed to be a candidate for secretary of state. just now, masayoshi's son has arrived for a meeting. he's raising a massive investment fund. this is someone who invested in sprint, tried to engineer a merger with t-mobile. that was turned down by the obama administration. what is going to be the antitrust policy of the new trump administration? we don't know yet. that may be what the meetings are about. but his son just arrived a few moments ago inside trump tower
1:46 pm
for the meetings. >> john harwood, thank you for keeping us abreast of the situation there on the ground. meantime, shares of sage therapeutics higher today, receiving fda approval -- an abbreviated fda path for a drug that could become a game changer for postpartum depression. ♪ today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant.
1:47 pm
our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪
1:48 pm
welcome back. we have breaking news regarding alaska air and its proposed merger with virgin america. it has been approved as part of a consent agreement filed with the department of justice. essentially alaska air is going to have to agree to certain changes in terms of its code share agreement with american
1:49 pm
airlines. we won't get into all of the changes there. but they will have to stop offering some of the code share flights that they share with american airlines as part of this agreement, basically you know,0 how this work if you hav american and alaska flight, they can book people on the same plane and in both market that flight. that will be changing under this agreement. but, again, virgin america and alaska air, this merger is getting approval after this consent agreement from the department of justice. >> phil la beau, thank you. up next, our interview with the ceo of sage therapeutics, that stock is higher by 5.5%. first, rick santelli for the bond report. >> 24 hour chart of ten year note yields tells you everything you need to know. pretty much been a tight sideways range here, but do keep in mind as we ahovhover around only had one close higher, last thursday.
1:50 pm
dollar index reversing three day slide, look at mid-november start to this chart. you see it is turning up again. much of that the euro currency running out of gas, post renzi rally. finally, a two month chart at tens minus twos. it steepened a lot. two-year chart reveals even though it steepened a lot, dramatic flattening that was the precursor. "power lunch" will return in a couple of minutes. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim.
1:51 pm
only at td ameritrade.
1:52 pm
1:53 pm
shares of sage therapeutics up 6%. the drug was developed successfully this will be the first fda approved treatment for post partum depression. joining us live is jeff jonas, the ceo of sage. analysts are wondering how much do they pull forward the launch of this particular drug for treatment of post partum. >> thanks for having me today. we're very excited about the new data we may be able to present and this new expedited pathway for sage. the data we presented to the agency has allowed us under the breakthrough designation to
1:54 pm
accelerate the development and probably over conventional pathway may have saved one to two years already. >> what would that launch date be then? >> it is too early to speculate. phase three program is enrolling now in 50 sites. going to expand that to europe, because we received prime designation for the drug as well. and we expect to have top line data sometime next year. >> at the same time, expecting data for the same compound, sage 547, for the treatment of a rare epilepsy, correct? >> that's correct. >> it is under development for the most severe form of epilepsy. it kills or causes disorders. disability in two-thirds of the patients. that drug should report out. >> that's thankfully a small group of people that are afflicted with this depression obviously not so much, very widespread. hate to talk about it in a business way. that's what we do. how large is your potential addressable market?
1:55 pm
>> there are no approved therapies. it probably occurs up to 8,000 women a year and two-thirds about 70% of those women will have moderate to severe postpartum depression we think may qualify for treatment. >> why don't conventional antidepressants work. >> ssris are currently the standard of care with cognitive behavioral therapy. >> why does this do better? >> we think the biology of postpartum depression differs from major depressive disorder. >> the causes are different. >> we think the causes are different, yes. >> you made clear that the time to market is sometime off in the future. are you hoping that the drug pricing environment is just going to cool down by the time you hit the market? is that a concern here as you're portion money into developing and testing the drugs that, you know, congress, somebody could
1:56 pm
just tweet something and that's the end. >> somebody. >> could be anybody, honestly. could be anybody. >> i'm restraining myself. >> please don't. national television and it is live. >> we have been very excited by the data. we'll be thoughtful about pricing. we often said we don't think the exorbitant pricing model is sustainable. we'll wait to see what the phase three data shows. but we think the value this ahead aadds could be very important. >> the stocks are telling us -- >> the stocks clearly responded to the results of the election. all i can say is an innovator company, the access to capital is enhanced. our ability to do research is enhanced when the stock market is better. >> so you're hoping yes? >> i hope so, yes. >> jeff, thanks a lot for coming by. appreciate it. jeff jone oas. still ahead on the "power lunch" menu, burritos and apples, apple, watch sales on
1:57 pm
track. apples and burritos.
1:58 pm
1:59 pm
2:00 pm
and welcome to the second hour of "power lunch." we hope you're enjoying your bmt today. brian, melissa and tyler. boeing getting called out by donald trump, shares of boeing are down. the rest of the dow fighting to continue its recent rally. keep in mind, the dow is up more than 10% just this year. real estate making a little bit of a rare breakout today. oil and gold are both lower. >> big movers, zillow sharing 9%. the real estate website planning a convertible note offering. go daddy up 4%. the company making its biggest acquisition ever buying host europe. nike is down almost 3% right here. the athletic giant getting a downgrade today. >> back to the stock of the day now, shares of boeing back to
2:01 pm
the almost unchanged point after taking a dip at the open this morning. that is because at just before 9:00 eastern time president-elect donald trump tweeted this. boeing is building a brand-new 747 air force one for future presidents. but costs are out of control. more than $4 billion. cancel order. boeing responding to that tweet. phil lebeau joins us with that. >> wasn't just the tweet. it was the fact that donald trump, we have seen him tweet over the last month or so, since he was elected. but we haven't heard him come out and publicly blast a company, well, that changed this morning after he sent out that tweet. he had this to say in the lobby of trump tower about boeing. >> the plane is totally out of control. it is going to be over $4 billion, it is for air force one program. and i think it is ridiculous. i think boeing is doing a little bit of a number. we want boeing to make a lot of money, but not that much money. okay, thank you. >> so what are the numbers
2:02 pm
regarding the new air force one budget? by the way, it is for two 747s to be built while officially the air force one budget is $2.7 billion for the first two years of the program. again, that's even before it is built. the government accounting office has an estimate of $3.2 billion when it is all said and done. that's an estimate from last year. boeing in response to the criticisms from the president-elect says we are currently under contract for $170 million to help determine the capabilities of these complex military aircraft that serve the unique requirements of the president of the united states. we look forward to working with the u.s. air force on subsequent phases of the program, allowing us to deliver the best planes for the president at the best value for the american taxpayer. look at shares of boeing, one interesting side note in this is the fact that former boeing chairman and ceo jim mcnerney just last week on friday was
2:03 pm
named to a panel of business executives, business leaders, who will be advising president-elect trump. sort of interesting. a few days after he was named to the kitchen cabinet of sorts, president-elect trump decided, you know what, not crazy about how boeing is going to be going about building this 747 in terms of the cost. back to you. >> phil, thank you very much. at some point donald trump will have to start flying air force one and give up that plane, the one he uses right now. that plane may be part of the reason trump is concerned about the price tag. robert frank is here to explain. >> one reason that donald trump is pushing back on the cost of that air force one could be that his own plane costs less than one-tenth of air force one. his private 757 200 is known as trump force one. and he's long boasted that it is better than the president's ride. it has got gold seat buckles, gold faucets, gold lighting hardware and a state of the art multimedia system for watching
2:04 pm
more than 1,000 movies. and he loves tv, so live tv anywhere in the world. it has leather custom seats, dyed mr. trump's favorite color and the trump family crest is embroidered on all the sofa seats and cushions. he bought the plane from paul allen in 20 10, trump says he paid about $100 million. but sources close tell me it was less than $50 million. he spent less than $10 million on the renovation and refit. so total cost, under $60 million. compare that to air force one, two planes are expected to cost $1.65 billion, around $830 million per plane, more than 13 times the trump plane. aviation experts say that trump's plane is more luxurious and can hold more passengers. 70 compared to 43 for air force one. air force one is a technology marvel with anti-missile systems, scramblers, massive communications systems. these two aircraft are not
2:05 pm
really comparable. but based on the trump gold standard for private jets, it is no wonder he's demanding a cost cut from boeing. >> let's be clear. i understand there is two issues here. the cost issue, i get that. and donald trump did select a boeing aircraft for his own -- not an airbus or -- but air force one is much more than just a president's plane. it is a mobile command center, should the worst case scenario -- the zombie apocalypse occur. so they're not really equatable. >> not at all. but i know the way trump thinks. spent time with him before this election for many years. and i'm sure he said, what's the plane going to look like. someone gave him the new order. he said, wait a minute, my plane looks much nicer than that. and they're charging how much? that's crazy. a guy from the private sector. >> he's a dealmaker.
2:06 pm
once again, he says i can get a better deal. and dog gone it, i almost said something else, i'm going to go get it. >> and a great deal on the plane from paul allen. that's a huge plane. >> i'll get a better deal from united tech, a better deal from mexico, a better deal from everybody. >> i want to push back a little bit. we used the word negotiation a lot. we think we agree on this, one of the few things we ever agreed on. i don't view this necessarily as negotiation by trump. you don't negotiate by slamming somebody in a one sided way and then waiting for the pushback, do you? >> i don't know about that. >> defend my honor. >> i think in his world, you do start with a punch. >> i'll cancel it. my trump card. >> in his world. that's not what you think of in the negotiation. >> what you normally think of. >> there you go. >> what we normally think doesn't apply to the new president. >> yes. but, look, strong statement, i have no idea it is going to have an impact.
2:07 pm
>> yes. >> what you going to do. an anti-missile system for less, boeing? get that cost down. >> if i become president, i'm going to have a presidential bus and purchase it from willie nelson. >> all right. >> the end. >> thank you, robert. >> of the other stock moving big time, chipotle shares plunging nearly 8%. the fast food chain nervous about hitting its guidance for the year following weak same store sales. let's bring in matt defresco. great to have you with us. we're just about 15 bucks off the 52 week low on chipotle. we know that chipotle is going to unveil a new slate of directors and also know that it and bill ackman, theant visit invest are who has 9.9% stake in the company have basically agreed that bill will have some sort of representation.
2:08 pm
>> i think the premium has always been about its outlook for its future business. certainly that's been tainted. today's comments are causing the reaction today in the stock price. management is clarifying that guidance is very optimistic. and i think people are coming to that realization now and revisiting and rerating the price and the valuation they should put on the shares given what will be another year or two of a turn around phase. so there is a lot of uncertainty out there. i don't know what ackman really can do and what is already coming from one of the most superior restaurant companies out there, and returning to those levels i think is unrealistic. >> do you think the street has underestimated the further customer loss that could be experienced? what was interesting about what steve said today at the conference is that there has been such a laser focus on the new food safety rules that they put in place, that they have lost their focus on cleanliness
2:09 pm
of the restaurants, cleaning the tables, speed of service, and if you are a customer who has been persuaded to, you know what, i'll give chipotle a try, i'll go in there and your experience was not good, you could lose that customer forever. >> great point. and i think you are seeing the service has changed. the prioritization used to be speed, speed, speed. and now it is cleanliness, safety, all good priorities, however, the prior success, the 26% restaurant margins, the 2.6 million in volume per store, those were all indicative of everybody running with the goal of speed. that's gone away as you highlighted. and that's what i think is structurally will be changed forever. competitively, winning back that consumer is very tough too. there is a lot of good competitors out there. >> i hate to use a cheap pun. but is jack-in-the-box eating chipotle's lunch through their -- are they the net winner? where are we going?
2:10 pm
>> many places. i would say chipotle, i would say small brands like habit burger, cava grill, el pouro loco, qdoba and lower end fast food guys. food with integrity was originally defined by them and now there are more players in that category. and they're growing very, very fast. >> if your whole brand premise as you point out is food with integrity, and you had a problem that went right to that very issue, it is very hard to put that one back in the box. >> excellent point. you're flying out with these names now, that's great. you can't put it back in the box. jack-in-the-box had a similar issue 20 years ago. but like to your point, jack-in-the-box was never thought of as a food winning at
2:11 pm
the ritt,with integrity, a heal place. they're in a competitive sector now. and they hurt their competitive positioning. i think they need new management in there on a operational side. >> it was a totally different time too, mediawise. >> and twitterwise. >> twitterwise. this flew like a wildfire through social media. the jack-in-the-box scandal in the prehistoric times. >> a sonic boom. >> great words, yes. >> matthew, thank you. >> thank you. >> thank you. >> go grab a burrito. >> from burritos to apples, are they different? apple ceo tim cook saying sales of the apple watch, get this, on fire. they prepared for their best quarter ever. colin gillis, not -- hold on. >> he's one of the great men of industry, so i just want to thank you very much. thank you very much. if you would like to speak to him, you can. but one of the truly great men. thank you. >> thank you. thank you. thank you so much. >> may want to say hello.
2:12 pm
i'll see you soon, okay? >> i don't know. they got to work that out. >> we're looking at live pictures of post meeting between president-elect donald trump and masayoshi's son of softbank -- agreed to invest $50 billion -- >> -- create 50,000 new jobs. we invest into the new startup companies in the united states. >> i don't know who this is, folks, this is the richest man in japan. >> we don't make our proposal. we at softbank, we invest in -- we own sprint. we own -- we invest so many internet companies.
2:13 pm
[ inaudible ] yes, we own 100% of -- we pay $32 billion in cash, just this year. >> what brought you here. >> this is m axasayoshi. softbank agreed to invest in the united states toward businesses, create 50,000 new jobs. he said he would never do this had we, trump, never won the election. softbank is a major investor in numerous tech companies, just this past fall announced $100 billion investment fund would be the largest on the planet along with saudi arabia. so i guess sort of a courting some of this money, could be invested in technology right here in the united states. >> and, again, the document that he had in his hand -- >> what was it -- >> i was doing one of these. we have little monitors to the side of our computers and trying
2:14 pm
to look in. it said softbank and cox con, the massive chinese contract manufacturer that makes among other things the iphone, a lot of reports, you did a quick google scan of alibaba of china and -- renewable power in india, i would love to have gotten a closer look at that. >> was in his card deck. >> i'll speculate here. maybe bring me back into the reservation, donald trump is putting pressure on apple to manufacture iphones or some of them in the united states. one wonders if there is a docume document. that guy you just saw is the chairman of the company and founder and owns the two companies. that's the owner of sprint. one wonders if there is something -- >> which they said, apple has said they would like to bring back some manufacturing into the
2:15 pm
country . here is a way to do it. >> he seemed very eager to show the media what was -- >> on that document. >> trying to hold it up and handshakes and the president-elect went back in the elevator. >> here is an interesting chart also. the intraday chart on t-mobile. t-mobile shares spiked up slightly on the back of him exiting the meet iing with president-elect trump. saw that rise and of course some effort -- >> he was blocked from buying t-mobile by the obama administration. >> sometimes you get lucky in timing and doing a segment on apple right now and colin gillis ready to go. we had to kind of jump out of this, very quickly, before he got into it. the president-elect and -- you're a very good person to have here. we asked you to come on and talk about the apple watch. i say forget the apple watch.
2:16 pm
let's talk about this. do you think there is any chance that apple -- forget about this. in general, do you think there is a chance am brings any manufacturing to the united states. even a couple of thousand voe s phones. >> the key thing i said is apple would be so lucky to have leadership like son. what he's bringing to softbank and the acquisition of arm holdings for 32 billion, i long said that would have been an incredible deal for the type of target that apple should be pursuing with their overseas cash instead of letting it sit there. you want to see true leadership, you can look to see what is happening at softbank. i do believe that some manufacturing may come back to the united states. primarily because of the fact that president-elect donald trump is going to twist apple's arms and to try to get them to bring some of the manufacturing. and there has been reports that fox con and -- is reviewing being able to assemble plants.
2:17 pm
>> i'll put you on the spot a little bit here. if you can't answer it, i get it. have you done any work where we know -- the iphone, if you buy it unlocked is whatever it is, $799, $749, have you done any work where if it is made in america, it would cost 1200, a thousand, $2,000, do we have any idea what -- that's what tim cook will say to the president-elect, i'll move the manufacturing to america, but -- >> the phone will be 1100 bucks. whatever it is. >> the other thing is, they could make a little less money on it. apple does have some very eye popping gross margins. but i need to publish those numbers before i say them first on television. there are some reports out there, but i do think the reality is it would only be a sliver, a percentage of phones that were made that got assembled to the united states. we're talking some amount to merely check the box, like they manufacture now with the
2:18 pm
mcintosh line. >> we want to highlight some stock moves on the back of this meeting. we're seeing sprint shares, there you have them, intraday, move higher by 1.3%. t-mobile shares moved higher on the back of that meeting. perhaps the thought here is softbank agrees to invest in the united states and agrees to create 50 ,000 new jobs and perhaps get a more favorable look in terms of the deal between sprint and t-mobile. we're just interpreting what the stock movements may mean now. but sprint shares are higher by 1.8%. the producer of options action also points out to me that a lot of sprint calls were bought. a lot of optimism about the direction of shares -- of the shares in movement here in sprint. colin, i know you're saying that it is de minimis, but at a time when apple is being questioned and only has a pe of 13, couldn't that hurt the stock and its outlook. would that -- even if it is de
2:19 pm
minimis amount of phones, that means that it is a gross margin weight that we probably have seen definitely, the peak margins for apple. and would you take down your price target. >> plenty of room before it hits there. >> estimates. >> one issue we point to is that china, from multiple metrics, is a major source of risk, both the market itself and the assumption that the chinese market is going to rebound strongly for demand for iphones. both the potential for government intervention and as well as the chinese manufacturers building top tier phones at midtier pricing. >> colin, we'll leave it there. we appreciate, a, your patience and b, your ability to roll with our initial plan, completely being scrapped and thrown out. thank you. >> thank you. >> appreciate that. >> let's get to julia boorstin with a news alert. >> here at the business insider ignition conference, at&t ceo randall stevens saying stevenson saying he believes that the
2:20 pm
upcoming trump presidency will be a good thing for at&t and its rivals. take a listen. >> this is very positive development for our industry. it is positive development just in terms of investment and so forth. if you think about the day of the election, there were five or six key issues at the fcc being shoved through. and they included privacy, how we're to be regulated on privacy. those five or six issues with the exception of zero rating are done, they're gone, okay. and a republican commission are strongly on record against all of those. >> stevenson was also confident that at&t's pending acquisition of time warner will be approved, despite trump having come out against it. he's heading down to d.c. for the senate hearing on that acquisition, which is tomorrow morning. back over to you. >> julia, thank you very much. the dow up 900 points in the
2:21 pm
four weeks since election day. can this trump rally continue? our next guest says yes and has some ideas on how you can make money on it. "power lunch" will be right back.
2:22 pm
2:23 pm
let's recap the big news in the past few minutes after meeting with president-elect trump. softbank ceo, the richest man in
2:24 pm
japan, says he'll invest $50 billion in the u.s. to create jobs. at&t's ceo weighing in and saying that donald trump as president is going to be good for his business. and, of course, boeing, the big news after trump fired off a tweet saying the air force one order from boeing is far too expensive. how should you process all this information in the new trumpian world? let's bring in neil hennessey of the hennessey funds. always good to have you here. >> thank you. >> i think if i were to characterize broadly the feeling of ceos, it is that a trump administration with lower tax rates, fiscal stimulus will be good for the business climate. but there is also another side here. that is that the president has chosen to make examples of specific companies. how do you process that risk if at all into your investment decision-making? >> i think the mood out there right now is this is going to be
2:25 pm
a lot friendlier administration towards business than what we have seen in the last eight years. the head winds are still there, meaning regulations, health care and taxes. if we get any type of relief in one of one of those areas, it will be very good for business, which will be very good for the stock market. so at the end of the day, if you're trying to bet on what you think is going to happen with the trump administration, i think you're crazy. the bottom line here is that the market is in very good shape. so doesn't matter about what is happening. look what the companies did. >> what if i have individual companies that he chooses to target or make an example of, whether it is united technologies or boeing or apple or amazon or nike or -- all of which have lots of far flung overseas manufacturing. >> at the same time, we have seen that for the last eight years. so depends on -- out of the administration, out of washington, are we going to go after health care stocks, energy stocks or companies or whatever.
2:26 pm
so they withstood this in the past. they'll withstand it in the future. the bottom line is, are they in good financial shape and most companies are in very good financial shape. >> are you saying the rally since election day is not because of investors trading based on what they think will happen, because investors try and trade on what they think will happen, that's crazy, but isn't that in fact what we have seen? from november 8th to date? >> this market in my opinion is different from the standpoint there is no euphoria on the upside. no fear on the downside. those are two things that drive the market one way or another. people are sitting in fixed income products. that's just nutty in my opinion. they should be going to equities. at some point in time they'll go over to equities. >> ten years ago, a long time ago. >> we sougaw the ten year go fr 140 to 240.
2:27 pm
>> they're wondering what rally is cnbc talking about. i'm in bonds and i've gotten burned. thor and brinks. >> if you look at what happened on cybersecurity and you can't do that, can't buy an air stream online. you're going to go see it. that's good. brinks is essentially i like the price of sales, i like -- there is a lot of room for dividend increases, same way with tho th. >> always great to see you. thank you. what's the value of capital? what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods?
2:28 pm
the value of capital is to create, not just wealth, but things that matter. morgan stanley
2:29 pm
2:30 pm
i'm sue herera. here is your cnbc news update at this hour. at his daily briefing, house speaker paul ryan says president-elect trump made the right decision to speak with taiwan's president. >> it is prudent for him to take congratulatory calls. i spoke with the president of taiwan when she was transferring planes in miami a couple of months ago. it is prudent for the president-elect to take
2:31 pm
congratulatory calls. i think there is a lot, much to do about nothing about this. >> the transportation department says the company that built a seattle amphibious duck boat involved in a deadly 2015 collision that killed five people on seattle's aurora bridge has agreed to pay a fine of up to $1 million. the ntsb blamed that crash on a front axle failure that resulted from a manufacturing error. a michigan man is taking the salvation army's red kettle campaign to a whole new level. look at that. that is greg bock, he's living inside the kettle until the salvation army in his community raises $10,000. he says he doesn't know how long he'll be there, but he is confident the community will come through. let's hope sooner rather than later. that's the news update at this hour. i'll send it back to you. >> that is pure michigan. >> yes, it is.
2:32 pm
absolutely. fill the bucket. let him go home. imagine a world without jobs or at least one without millions of service workers. well, you may not have to imagine it. the latest technology from amazon.com that will create a store without humans. except for the customers. what we are going to do about it coming up.
2:33 pm
2:34 pm
2:35 pm
since the election, all the jobs focus on the two ts, trump and trade. long-term it is likely the third t, technology which is going to be the big story. we told you earlier about amazon's new humanless retail store, well, today, new york post calling it the end of jobs on their cover. maybe not much. it is not just amazon, automation, a threat to jobs in many industries, and jim cramer addressed this issue last night, and his exclusive interview with the united technologies ceo. >> to think about when we talked about last week, we'll make $16 million investment in that factory in indianapolis to automate, to drive the cost down, so we can continue to be competitive. now, is it as chep ap as movingo mexico, no. we'll make it competitive. there will be fewer jobs.
2:36 pm
>> so, can anything be done to save jobs from software and automation? martin ford wrote the rise of the robots and joins us with steve liesman. i think greg hayes laid it out plainly, clearly and bluntly. to paraphrase what he said for our audience, very clear. okay, i'm going to keep the jobs here, but guess what, because they're expensive, it is just going to hasten the pace of replacing these men and women with robots and not just them, what do we do if anything about this? >> well, i don't think we can stop it. that's basically correct. it is inevitable. part of capitalism there will be this continuous drive for more efficiency. in this example with amazon, not just about reducing labor costs at all. they have come up with something disruptive. i don't think there is anyone who doesn't hate standing in line at a retail store and they f figured out a way to get rid of the lines. this is not just about
2:37 pm
eliminating jobs, it is going to create enormous advantages for consumers. >> technology also does create plenty of jobs. let's talk about amazon's drone delivery initiative. you see it is going to kill u.p.s., yeah, but maybe the u.p.s. driver goes and pilots the drone. when i look at the automation now, maybe i'm just not smart enough and that's entirely possible, but i can't see, martin, where that job is thus created. can you? >> right, that's the problem. it is true that technology always creates and also destroys jobs and historically created more jobs. but i do think we're getting to the point where the advent of real artificial intelligence, machine learning and so forth. these technologies are beginning to think. taking on cognitive capability. that's different. it is going to have a much more dramatic impact and i think what it leads to is more job
2:38 pm
destruction and less job creation, especially for average typical people that don't necessarily have ph.d.s from m.i.t. and all of that. i think we're very likely to run in a problem in the future where there aren't enough jobs to go around for people to really need it and especially the typical cap capability. >> fewer jobs for noncollege educated americans, that's the story. i enjoy getting hate mail, there is not enough of this going on. if you look at the productivity numbers, productivity in america is flagging, there could be some measurement issues. it is sagging. if you look at the productivity memory lane, what you see is we're running at half the rate the past eight years as we have in the prior eight years. we need actually more automation, you can't look at this in a one-year cycle, two-year cycle or five, more likely a ten-year cycle where jobs are destroyed by automation and come back and you think about any one of these jobs, not every one of them, but many
2:39 pm
which are destroyed, jobs that people don't necessarily want to do and opens up the possibility over time. i want to point something out that wasn't pointed out when president-elect trump was in indiana. you know the indiana unemployment rate is going down. it is below the national average. per capita, income going up. they have lost some jobs there, and lost some jobs to automation, but they have found a way -- and one of the great things is for the government to either get out of the way or find a way to be helpful. one thing it doesn't want to do is pick winners and losers. >> what you're saying, what happens with the carrier plan. >> i didn't say that. you inform inferred that. >> not just that the job exists. there is a -- it is a -- >> there is a hampton inn or comfort inn, i stayed in right off i-80, in ohio, i raced cars in northeastern ohio, right near the lords town assembly plant. if you talk to people there,
2:40 pm
people working the counter when you check in, they say, i used to work in the automotive manufacturing industry making x, now i'm making x minus 40%. the incomes have gone down. i wonder what if when that guy, that check in at the hampton inn is now fully automated, where does he go? what's next? >> that's right. what we're seeing, as you say, manufacturing, good, solid, middle class jobs are disappearing and what we're seeing is lots of job creation in the low wage service sector. fast food, retail, hospitality, and so forth. but those jobs are not going to be there forever. cashier is the second most common occupation in the united states. and the first most common occupation is retail salesperson. you can see how the introduction of this amazon store has the potential to basically devastate both those area. >> retail sales -- >> we are seeing -- >> why can't i find one when i go to a game stop.
2:41 pm
i get your point. that's exactly right. i think the thing that we focus a tremendous amount on, correctly probably, is enhancing our stem education. i want to suggest something else. i think we need to do that. i also think we need to teach skills. so people actually have salable skills, tailoring, carpeting, plumbing, electricity, masonry, whatever it is. so that people actually know how to do something that has an economic value. some of those skills are going to be harder to disintermediate out. >> i wonder if there is a day where you have 10 million employed people and everybody making all the money and everybody else is on -- >> the factor of the future has a dog and a man in it. the man is there to feed the dog and the dog is there to make sure the man doesn't touch anything. >> not that lazy dog that got beat up by the kangaroo
2:42 pm
yesterday. >> the solution where you go, how do you solve this? >> i don't know if we do. >> i do think we need a guaranteed income, eventually. >> interesting point. >> conversation is not done. thank you. >> thank you. oil falling, holding above 50 bucks a barrel. the next stop is straight ahead. sprint is soaring, pretty much at session highs, higher by 3.25% on the heels of the meeting between the ceo of softbank and the president-elect. "power lunch" will be right back.
2:43 pm
2:44 pm
2:45 pm
president-elect trump looking to scale back energy regulations. can america make itself energy independent? our next guest says there might be a solution but difficult to reach, let's bring in john la forge. great to have you with us. i want to talk about where oil is going after this opec deal. you say na we have seen the highest levels for oil already. >> yeah. you might see 60. but the reality is we're still in this bear supercycle, which i characterize as these 20 year periods where commodities move together as a family, and then what they do is they crash, like we witnessed for the last two or three years, i think sideways
2:46 pm
for another 15, 16, 17 years. we're in that period for oil. and it is all about supply. that's the thing that the investors, the viewers need to know is we often talk demand, but the reason commodity prices go sideways for so long is it is all about supply at this point in the cycle. >> if trump lifts regulations and makes it easier for energy companies to continue to explore, does that hasten that downtrend in oil that we see? >> probably makes it worse in the end, he makes it that much easier for every time price gets to a certain point for oil, about 60. you see production come on. that's precisely what happens typically at this point in the commodities cycle. he's going it make it easier. >> right. in terms of energy independence for the united states, how should we think about that. there has to be fossil fuel component, whether that be oil and coal. we are the saudi arabia of coal, effectively, as well as alternatives. >> the way i would think about
2:47 pm
it, and i have the viewers think about it is oil specifically is pound for pound the best energy source we have. so basically when it comes to storage and the weight of it, it sits at that critical point where it makes a lot of sense to use it still. coal is not that way. so coal isn't going to make much sense for the u.s. to keep moving away from coal. >> we just had our last segment, saudis pay off the majority of population. majority of saudi nationals don't work. they get paid by the government. saudis need higher oil prices is my point. do they still have the power to control the price of oil? >> they do. >> if they do, eventually they have to jack the price up because they got to make more money to pay off the population that basically they are. >> yeah. they have enough control. opec controls about 39%, 40% of what going on in oil. what a lot of people don't understand is even with shale and the u.s. coming to where it is, opec continued to increase and stay the market share the
2:48 pm
entire time. they stayed around 39, 40%. they can control a certain amount. but the saudis don't necessarily want 100, 120, they want to keep the competition -- >> 65 to 85, right? >> precisely. >> gas doesn't go up too much. >> i don't think they can get it to that level, but they'll try. i think you can still see too much production, and the other part, brian, is opec cheats. they all cheat. it is crazy that they're all the source they need, the revenue they need, because of their youth that you talked about, massive youth populations, they have to cheat and that's going to keep the cap on price. >> great to see you. don't worry, america. i know some of you tweeted. street talk is coming up next. y are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders?
2:49 pm
i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack.
2:50 pm
with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.
2:51 pm
. time for street talk. analyst recommendations on stocks. increasing target by $10 to $111 on better outlook for subscriber growth. arguing that rise of ott will drive need to spend big but not much of that has actually happened.
2:52 pm
major distributors are willing to partner with netflix. why is it not a buy? >> who is down with ott? apparently everybody. price line.com piper jaffray beating the drum. they say the stock could hit 2,000 a share. they say current consensus numbers are achievable. surprising point did you know that just 41% of travel bookings are done online? i thought it was like 141%. analysts say if they can hit $119 per share on earnings 17 times that is a $2,000 per share number pr price line.com. >> third stock juneau downgrading to market perform saying they hate the uncertainty. it is one that presented at the hematology conference in san diego yesterday. data presented on the drug was
2:53 pm
last potential market moving for the company this year. data was in line at higher dosages. the possibility of serious adverse events increases and that raises the possibility of the stock to move lower. >> crzo the ticker operate in texas, pennsylvania and ohio. raymond james started with strong buy and $60 target. new tests are going well. analyst does note it is a high risk/reward stock. executives followed at 28.60. probably had options there. ceo hung out with jim cramer and upgraded by another firm a month ago. now for trading nation let's talk about the next move with our trading nation team. matt, these names have been hot, hot, hot.
2:54 pm
can they get hotter or are they topped out? >> they can get a little bit hotter. i think they are at least on a near term basis getting extended. it doesn't mean long term potential is quite good as we go into next year. we have two things that we are following is the deregulation that we are going to see and then hopefully a stronger economy. those are very vague. how much stronger is the economy going to be? and the other thing is the big rise in interest rates. that seems to be topping out to me. we see that. if you look at the tlt treasurely bond etf the last four or five days it has bottomed out early in the day and rallied at the end of the day. that tells me the sellers are getting tired. that should pop a little bit. as bond market pops and treasuries roll over that should get the extended bank stocks to pull back. >> i get the idea higher
2:55 pm
interest rates are good for big and small banks. maybe they make more trading activity. does goldman sachs deserve a 30% gain in 30 days? >> i don't think so. it is all about steepening of the yield curve. the market has gotten way ahead of itself. i think the fed will put the brakes on the notion. the market is under the assumption the fed is all systems go, maybe a rate hike every quarter and maybe once every three or four or five months. the fed could simply raise the rates now in december and then sit for the next six months specifically because they don't want the dollar getting stronger. so if the rates just don't inch up as the market anticipates i think a lot of the bank stocks will give profits back. >> both expressing caution about the big run we have seen in banks and financials. america for more trading nation or the world go to
2:56 pm
tradingnation.cnbc.com. now the latest from trading nation and a word from our sponsor.
2:57 pm
♪ it's been over 100 years since the first stock index was created, as a benchmark for average. ♪ yet a lot of people still build portfolios with strategies that just track the benchmarks. ♪ but investing isn't about achieving average. it's about achieving goals. ♪ and invesco believes doing that today requires the art and expertise of high-conviction investing. ♪ translation?
2:58 pm
why invest in average? if you're going to wish, wish big at the lexus december to remember sales event get up to $2500 customer cash on select 2016 and 2017 models for these terms. see your lexus dealer.
2:59 pm
after softbank's pledge take a look at the impact on shares of sprint in which softbank is an investor. t mobile is worth checking. that stock gain on the back of the meeting perhaps thinking is that a potential deal between the two could be looked at once again and perhaps more favorably this time around. >> then you have to focus on boeing. boeing was the company that was in focus about air force one. boeing shares one down earlier today. they are mildly higher right now. the market shrugging off the trump commentary. >> let's look at the main market. the number is looking very good. another day, another record for the dow if it continues at this pace as you see it is up about 20 points at 19,237. s&p 500 up about a quarter point and nasdaq up about one half of
3:00 pm
one percent as the president-elect makes stock investing great again. >> whatever your political persuasion it has been fantastic for the market. "closing bell" begins not right now but in like four seconds. >> hang around. worth the wait. we want boeing to make a lot of money but not that much money. thank you. >> president-elect donald trump says he doesn't want boeing to make so much money off the new air force one. we have responses from boeing and the white house and a look at how this could impact defense stocks. "closing bell" starts right now. hi and welcome to "closing bell." i'm kelly evans at the new york stock exchange. >> that makes me bill griffith. mr. trump announced a deal with softbank, the ceo

69 Views

info Stream Only

Uploaded by TV Archive on