Skip to main content

tv   Power Lunch  CNBC  December 21, 2016 1:00pm-3:01pm EST

1:00 pm
points, the slimmest since december 30th of -- >> nobody wants to be the one. nobody wants to be the -- >> nobody wants to be that -- don't say that guy. exactly. >> good stuff. thanks. thank you. happy holidays. "power" starts now. i'm melissa lee. as tom petty put it, the waiting is the hardest part, we're all waiting for dow 20 k. 39 points away. drugs are killing the buzz. merck and pfizer, biggest losers now. a breakout this hour. stick around to find out. i'm brian sullivan. proof that even the losers get lucky sometimes. coming up, a heck of a year, we'll highlight the three dow stocks that really stood out to us for a variety of reasons. we're calling them your dow stocking stuffers. here's a clue. think blue, think yellow, and think gold. those names ahead. plus, why this could be the
1:01 pm
absolute best time to sell your house. we're going to explain as "power lunch" begins right now. welcome, everybody, to "power lunch." here is the stat of the day. the dow has been at a 37-point trading range today. that is the narrowest in almost three years. let's get straight to bob pisani on the floor of the new york stock exchange. bob, 20k, what happened to it? >> well, two things, one, volume is drying up as everybody heads into the holiday weekend. the other is, we're trendless now. the leadership groups aren't there and not enough new ones coming to the floor. the market is in good shape. look at the dow leadership. a few of the oil stocks, chevron at a 52-week high. boeing is up, but not other industrials like ge, apple is up, but not other techs like intel. see what i mean? trendless here. look at the laggards here. you don't have goldman leading. you don't have jpmorgan, the two biggest names.
1:02 pm
you don't have any help from some of the consumer names or some of the drug names at all. so, again, a little trendless, but we're in good shape. here is the dow since the election. up 9%. this year the dow is up 14%. a good number, normal to pause right here. the most important stock, i said this yesterday, since the election, goldman, 24% of the dow rally. 400 points of the 1600 point rally in the dow due to goldman sachs here. what is the state of the market, the same for the last couple of days. we essentially topped out last wednesday there is no stock for sale. no big blocks being offered saying get out, i'm going to lighten up before the end of the year, nobody is doing that. everybody waiting for the dow to -- the markets to drop 5% so they can buy more. that's why i say the trend remains up. so instead of selling off, the market simply rotates and goes sideways and the problem here, guys, is we're not getting new leadership. everything is just kind of going sideways right now. still in good shape, though.
1:03 pm
pa back to you. >> it will happen. we hope you're right. whether we hit it today, tomorrow or next year, the big question remains, what is the smartest move for your money now, whenever we hit it. a lot of stocks are higher this year. so, do you sell them, take some profit or continue to ride the same trades in the next year? jim paulson and jack abelin are here with year end big money advice. this is where you say, a, 20,000 doesn't matter that much and, b, december 31st is just another date on the calendar. we get all those things. happy new year and happy holidays to you both. jim, do you think what worked this year will be the same stocks and sectors that work next year? >> i think for a good part of the year, that's -- i'm on that side of the trade. i think we might continue to be driven by renewal of optimism, brian, brought on from a lot of different forces including reacceleration of u.s. and
1:04 pm
global growth, reacceleration of earnings, moving the world away from zero interest rates, normalizing monetary policy. and a pro business new administration. i think that's going to continue to drive stock prices higher, bond yields higher, and also the more cyclical sectors. at least for a good part of the year. we may run into trouble and we may have a correction at some point next year from higher yields and higher inflation, but i think it comes from higher levels than we are today. >> jack, we had so many people on saying that the tax environment next year could be much more beneficial, so if you've got capital gains, take them next year, how do you think about that? you also have to believe that the capital gains treatment is going to be so good next year, it is going to offset any potential downside we could see just from stocks pulling back come the new year? >> i think that, you know, anyone inclined to take this environment, which i would call more of a hope environment, you
1:05 pm
know, we were not letting facts get in the way of this rally, and push some of these profits into next year, where right now, you know, candidate trump had proposed a 20% capital gains tax, where it is right now. if you align that with ryan's legislative proposals, they're calling for 15. so at worst it is the same. you push it into next year. and perhaps rotate into something that has been -- that is cheap that could benefit once q4 earnings come out and that would be the european large caps, even the japanese large caps that would benefit from weaker currency and a boost in export growth. >> is there anything, jack, to the idea that despite a lot of the negative headlines, let's not forget, you've got -- we had three different terror attacks the other day, we have the oldest bank in the world, important bank in italy,
1:06 pm
effectively failing and going to need a major bailout. europe is in the dumps. do you find any comfort in the fact that global markets have actually held up reasonably well? >> yeah, i mean, i think that, you know, even if you look at the depths of the depression, what we found was na the only entities making money and continuing to print money were corporate entities. governments can't do that. they don't make money. they can try to tax, but, you know, if no one is making money or if individuals aren't making money, then they can't raise money. so, yeah, i think that the global players, the ones that are entrenched in the global supply chain, ones that have seen their currencies now decline 12% in the last couple of months, should get a boost. now, i will say for those investors that are worried about translating those gains back into u.s. dollars, you can
1:07 pm
always buy european hedged equities. i think dbef is an exchange traded fund where you can own european equities, and hedge the currency all at the same time. >> you also like international stocks. you also -- you like small caps. i wanted to really focus on this. we're just about 12 points away from the record high on the russell 2000 here. and theoretically, small caps are the secretarier thy sector benefit the most. how much higher do you think we could do? have you done the back of the envelope analysis of how much a reduction in corporate taxes could mean to the eps of russell 2000 companies or small caps? >> yeah, i haven't done the direct calculation on it, but i do think there would be big beneficiaries of that. some of that is in the stock price already, melissa. i think the biggest thing i'm focused on for small caps is the -- they went through a prolonged period of underperformance. probably underowned in a lot of portfolios. and i think the big thing for small caps for me is reinflation
1:08 pm
in the world with inflation -- disinflation being the dominant force. it benefits larger companies. reinflation, small and midcap can companies have much greater operating leverage, it results to less competitive top line pricing. and i think we're going to see that with prices sort of reaccelerating in the second half of this recovery. that's going to benefit smaller stock earnings performance and lead to better outperformance by the stocks i think over the poll. >> you also say, jim, in terms of your predictions for 2017, i guess we're in that business at this time of year, that the dollar will decline and that's going to be one of the surprises of 2017. what is a catalyst for that? >> well, if you look back, melissa, to 1970, we had five previous recoveries and every time the fed funds rate has been increased, the dollar has come down. and every one of those recoveries. and i think that's what's going
1:09 pm
to happen again here is the fed gets in the game, starts lifting rates, i think the dollar will come down. the reason is -- you got to look at why the fed lifts rates. inflation is becoming a concern. and inflation rising inflation is typically a major destructive force for the u.s. dollar and i think as we go into next year, we're going to fiend out the fed is behind the curve and wage inflation and consumer price inflation, even commodities are doing fairly well. and i think the dollar is going to trade off on that, that could create a lot of portfolio readjustment because there is very few players. >> let me take the other side of that. >> i think -- i'll tend to agree with jim on rising fed funds rates. keep in mind, it is real rates that determine currency prices and we have got this global slush of capital, especially in markets now where central banks are just, you know, pedal to the medal easing with very low rates, low inflation. my sense is that i could see a
1:10 pm
flow of currency back into u.s. dollar assets as our interest rates are incrementally more attractive. that could keep the dollar higher than we want and could stymie some of our growth plans. so that's something we want to pay attention to. and one that could undermine, for example, an emerging market bet. that, you know, we currently have and want to, you know, really see how that plays out next year. >> guys, thank you for your time. jim, jack. a check of the bond market. rick santelli at the cme. >> listen, jack said look for capital flows in the u.s. i think that's the home run phrase for 2017. look at one week of tens, getting smaller and smaller and smaller in the range. but not coming off its high yield range. highest in september of 2014. hey, let's look at barclays charts. let's look at investment grade for one month. that spread narrowed seven basis points. let's look at high yield, also barclay's chart. that is narrowed 59 basis
1:11 pm
points. narrowing isn't a bad thing. usually if markets are kind of flashing yellow, you look for credit spreads to widen. very, very orderly, and finally,ier to dafinally, year to date of the dollar index, it isn't moving a lot today, but it closed last year at 98.63, shy of 4.5%. and the low of the year was 92.5. so it really has come a long way. we want to continue to monitor how it treats this 104 area, if it can climb above that. pay particularly close ait engs attention to the euro currency. let's get you caught up on a few other headlines. nike shares doing pretty well after posting an earnings beat. company reporting to strong results in europe and china. also today amgen upping its dividend. meantime, everybody seems to be buying an rv. winnebago reporting a quarterly profit of 42 cents a share. that was 11 cents above the
1:12 pm
consensus estimate. pandora's chief operating officer leaving the company. the second high level executive to leave pandora in a month. that stock is down. monster beverage getting an upgrade at jeffries from a buy to a hold. firm says monster will avoid most of the negative impact of the stronger u.s. dollar. fedex is not delivering on earnings. shares falling as a result. should you buy on the dip? and why now could be the absolute best time to list your house. we'll explain. why some farmers out west already have a beef with the president-elect. that's all coming your way on "power lunch."
1:13 pm
1:14 pm
1:15 pm
welcome back. president-elect trump, golf club, mar-a-lago. he's meeting with some key people, you can see the video there through the window. a couple of folks. shares of fedex are lower after the company missed earnings estimates. morgan brennan is here with more on fedex's quarter. >> so if you look at shares of fedex, they're falling, down 2.5%, pulling the broader transports average lower as well today. earning s grew. fedex has been scrambling to
1:16 pm
expand its capacity to handle the avalanche of e-commerce packages. so that played out in the ground segment with average daily package volumes jumping 5% last quarter, but margins falling 2.5 percentage points, two dozen facilities came online and as the company struggled to recruit workers ahead of the holiday rush. that's a dynamic expected in ground, again this quarter as fedex handles a record number of peak season packages with on time deliveries at record levels. and despite a bigger than usual spike in last minute demand this week. so basically, this is a potentially good problem to have. we have fedex benefitting from e-commerce, but having to apply billions of dollars into the network to keep up with that. also worth noting, it is pushing some retail customers to pay higher prices and even turned some of those customers away that wouldn't last quarter. for that reason, many analysts are arguing the outterm outlook remains strong and the dip could
1:17 pm
be potential buys for the stock. >> thank you, morgan. fedex might be down right now, but it had a nice run this year, up 30%. could this dip be a buying opportunity for investors? let's bring in brandon galenski. great to have you with us. is this a smart move. i get where why fedex may be turning away retail customers now. could that give the leg up to u.p.s. who might capture the customers and try to keep them? >> thank you for having us on and happy holidays. i think fedex spent a lot of capital, we talked about this before on the show. they have quite a bit of e-commerce growth in the system. i think the post office is nearing capacity as well. if you look at your letter carrier in your neighborhood, you'll see those postal vehicles are filled with amazon packages right now. i think we're seeing the natural progression here, we're hit something scale on capacity and seeing pricing initiatives at fedex. and relative to u.p.s., you know, there is some fear that maybe market share spills over,
1:18 pm
fedex gets more aggressive on pricing. don't forget, fedex has been outspending u.p.s. on relative basis by 2 to 1 on capex. we're seeing that incremental capacity result in higher growth rates versus u.p.s. >> when does the pressure abate? when we get to the low point in operating margins and see that turn for fedex, where you can see that spending on the ground. >> we're hoping that it is now, because the growing margin has grown from the high teens down to about 10% in 2q. that was the negative point for wall street investors. but they are growing their physical infrastructure capacity this year. we guessed at about 10% to 15%. added four big hubs. as we get volume coming through that, a little better pricing action, the company is guiding the higher margins and i think we can see that coming through the model too. >> you got this very -- not you, but the market has this very simplistic view of fedex and u.p.s., which is, hey, online commerce is growing, somebody
1:19 pm
has got to deliver the packages, therefore buy fedex and forget about it. is that a dumb way to look at it or something really to that sort of peter lynchian type view? >> at a high level, that's why we're very bullish in the shares of fedex. e-commerce is driving a shift in supply chains. the package networks are benefiting from this. but it is a little simplistic. you're delivering a package to your house, that's a lot more cost inefficient for fedex and u.p.s. that driver has to go to your house and deliver one package versus coming to a building here in manhattan and delivering 20 or 30. so there is some cost pressure here. but i think, again, as we see capacity limits reached across all three of the big networks in the u.s., we'll see more of these pricing initiatives in the future, i would think. >> does fedex deserve the premium it trades relative to u.p.s.? >> i would argue now that fedex is trading at a significant discount to u.p.s. the capital returns are lower, the cash flow is lower, but that cash flow is going into the capital investments, that is resulted in higher growth.
1:20 pm
think in the long run, fedex is an attractive stock. >> brandon, thanks for joining us. >> thank you. still ahead, we return to sectoromics. a look at the material sector and some of the standout stocks within it. when a passenger turned violent, guess who was there, singer richard marx, right there waiting for him. >> i don't know that song. >> wherever you go, whatever you do, i will be right there waiting for you. the story behind the video that catapulted the '80s pop star back into the spotlight. a high school girlfriend story in there somewhere. we're back after this. oh at cognizant, we're helping today's leading manufacturers make things that think and do, automatically. imagine that. a world of new digital products and services
1:21 pm
all working together for you. can i borrow the car when it's back? get ready. because we're helping leading companies lead with digital.
1:22 pm
1:23 pm
welcome back to "power lunch." a lawsuit filed by the small town of carneys point, new jersey, alleging that dupont included a local factory known as chambers works in the assets spun off to the new company known as kamores to avoid a more than $1 billion bill to clean up a secentury's worth of pollutio. they say it released over 100 million pounds of toxic chemicals in the water and ground from the late 19th century until the early 1970s. shares fell sharply on this news. were down as much as 33%, dupon shares appear unaffected by the news. materials had a decent run
1:24 pm
in 2016, but some standout stocks within the sector. landon downey has the sectoromics. >> the severals sector has not been a real standout this year, coming in the middle, up 16% year to date. still, looking at the materials industry groups, three out of four posted double digit gains this year. so the real standouts, metals and mining industry group. driven by free port mcmoran, with 110% surge in 2016. followed by newmont mining, the largest gold producing company, gaining 76%. and those gains come despite being down 23% in the last three months. rounding out the group, nucor, up 55% this year. another group that has had a great run in 2016, construction materials up 46%. and fueling much of that gain is martin marietta, surging 65%.
1:25 pm
that supplies crushed stone, sand and gravel to the construction industry. and with nearly half of its business directly tied to infrastructure, the north carolina based company saw an additional 12% boost, post election, thanks to president-elect trump's campaign pledges to rebuild u.s. infrastructure. back over to you. >> landon with sectoromics, thank you. now to a story involving a grammy winning pop star, his famous wife and violent passenger on a recent flight. '8 s pop crooner richard marx sprang into action and helped subdue a man who began attacking fellow passengers and flight attendants on a recent flight from vietnam to south korea. his wife, daisy fuentes, documented the whole thing. the flight and the drama lasted four hours. the plane did land safely. passenger was detained. marx tweeting later, no big hero move at all. just did what i hope anybody would do in the same situation. he also tweeted the crew had no idea how to handle the
1:26 pm
passenger. big story, congratulations to richard marx and the other passengers. to me the biggest headline is that richard marx is married to daisy fuentes. >> why was that a surprise? richard marx is a star in his own right in his time. when he sang that song, that god dedicated to you by your -- >> whatever you do i'll be right there waiting for you. >> the big headline out of the story, brian had a crush on daisy fuentes. >> who didn't? she was, a, she was on mtv, a gee vei vijsr veejay, congratulations to richard marx. >> for being married to daisy fuentes. >> vigilante. still ahead, our picks for the top dow stocks this year. should you be stuffing your stockings with them this holiday season as we take a break. look at the big board, now about 48 points away from dow 20,000.
1:27 pm
"power lunch" will be right back. 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? the value of capital is to create,
1:28 pm
not just wealth, but things that matter. morgan stanley
1:29 pm
1:30 pm
hi, everyone. i'm sue herera. here is your cnbc news update for this hour. german police released a picture of anis amri, the man suspected of being the driver of the truck that killed 12 people at the berlin christmas marketplace. german authorities are also offering a reward of up to 105,000 u.s. dollars for his capture. they say he was under covert surveillance for several months this year. newt gingrich says president-elect donald trump is no longer interested in his rallying cry, drain the swamp. gingrich says trump now says it was a cute slogan, but doesn't want to use it anymore. trump transition spokesman jason miller says they are still going to change the way business is done in washington. goldman sachs has been ordered to pay a civil penalty to settle charges of interest
1:31 pm
rate manipulation over a five-year period. fine imposed by the commodity futures trading commission. cuteness alert. cheetah sextuplets born earlier this year. taking a stroll outside for the first time at a zoo in the netherlands. the four females and two males were born in september. it is a rare event. but not for the mom, apparently. it is the second time in two tries that she delivered six little cheetahs. everybody go awww. that's the news update. back to you, brian. >> brian has no heart. >> no heart. >> they're cheetahs. why, because it wasn't a panda? >> you had no -- >> sue, you bring us a sloth video and we got something. >> see, look at that. oh. there you go. >> here come the hyenas. got to go. appreciate it. now a news alert.
1:32 pm
>> hey, brian. more changes at viacom, reuters reporting that long time viacom executive doug herzog who overseas comedy central and mtv, he is going to be leaving the company. that's according to sources, reuters reporting. we reached out to viacom. they have not yet given us a comment. but this would be not unexpected in the wake of bob bakhash, who was interim ceo, being named permanent ceo and the decision that viacom and cbs are no longer going to be exploring a recombination, something that the national amusements sumner red stone's company had been pursuing. it appears there are changes in the works overseeing viacom's key cable networks, mtv, vh1, logo tv, comedy central, all under doug herzog, who is reportedly going to be leaving the company. back over to you. >> julia boorstin, thank you. and look who has joined the "power lunch" team today.
1:33 pm
hi, how are you? >> nice to be back with you. >> great to see you. >> a little late because my son got kneed in the head in gym class, right over the ear there. i think it is a little bit of a badge of honor, now he thinks he's in the nfl concussion protocol and his favorite person on earth is eli manning. >> is he questionable or probable for tomorrow's recess? >> i think he's probable for the christmas party later today. >> put him in my lineup? >> put him in your lineup. >> i'm glad he's okay. >> nice to be back. >> did you hear about this? the dow is just a stone's throw away from 20,000 as it has been for the better part of a week. so this major milestone got us thinking about some surprising stocks that got us here. we're going to call these our dow 2016 stocking stuffers. three names that really stood out to us this year for different reasons. one of our picks, probably my personal pick ibm. shares of big blue ending the year even bigger. stock up 21% so far this year. the question is, is ibm a good
1:34 pm
buy for your money? joe friese joins us now. joe, listen, it has been a great year for the folks at ibm, kind of a surprise year. i noticed that the core business does continue to decline, but decline at a slower rate, cloud is on its way up. what is your view going forward on ibm? >> yes, so ultimately what we think ibm needs to do is produce sustainable growth. and we don't have that growth rate or that inflexion point that you pointed out, really happening until 2017. once that sustainable growth is established, assuming it is, then the multiples should come with it. what you accurately pointed out is that the strategic imperatives, about 40% of revenue, they're growing 16%. the real problem is the other 16% of revenue declining 9%. so if eerither grow faster or t core business declines at a lower rate, then you might see that inflexion point sooner. i think the move in the stock
1:35 pm
this yore was basically based on the fact that the valuation has been fairly compelling and as you said, you know, the market is at an all time high. not based on fundamentals because earnings have been revised down. >> we talk about a lot of companies, particularly retailers and big importers that may get whacked on the u.s. dollar. currency has helped ibm. we continue to see the dollar strengthening, most major world currencies. could currencies be the driver that gives it another leg up next year? >> well, currency is a nonoperational thing. and i think the investment base is very focused on the fundamentals. and ultimately they have to produce organic growth, not just growth through acquisitions, they're turning the portfolio over. look at the multiples, 12 times forward, when you get back to this particular level, it is sustainable organic growth. no one can control fx.
1:36 pm
acquisitions, you can did a lot of acquisitions. for the ship to turn, you have to see that sustainable organic growth rate. >> does it make a difference if ibm is able to take cash from abroad, bring it back here to the united states? do you think it may be more likely it could do maybe more transformational acquisition that could move the needle faster for that turn? >> yeah, cash repatriation, lower taxes, the trump bump, those are all things that could be positives. we have yet to see them, you know, in actual numbers and in actual legislation. so i think at this point it still prudent to look at that fundamental core organic growth rate and look for it to turn. there are other things that could be a positive at well. the immigration, some of the outsourcing other companies in the outsourcing space use h1bs. that could be a positive at well a lot of stocks we cover are moving off the trump bump, but that's not fundamentals.
1:37 pm
and sustainable organic fundamental growth drives this stock from here. >> joe, we are going to leave it there. thank you very much for joining us to talk about ibm. >> thank you. happy holidays. next up, another big standout this year, goldman sachs. it is up 33% in 2016 with most of those gains coming after the election. jeff hart covers goldman. joins us on the cnbc news line. great to speak with you. >> good afternoon. >> the run after the election is undeniable. i'm wondering, do you think the street put in their estimates and put into the quarter the fact that perhaps trading revenue could be much, much stronger this quarter after the election, sort of a -- like the post brexit bump we saw across the banks? >> no, i don't think that's reflected in the fourth quarter estimates. i think people are kind of figuring up 15% trading revenue on a year over year basis off the lows, pretty weak fourth quarter of last year. to the extent things have been better november into december, then even that, i think there is the potential for some upside there in the fourth quarter.
1:38 pm
otherwise, the fourth quarter seems to be playing out as expected. i think what goldman is moving on is the outlook for 2017 and 2018. >> in terms of interest rates or in terms of deregulation primarily? are we moving at -- in other words on the curve that is in fact steepening or on the promise of deregulation? >> for goldman, unlike some banks to do traditional lending, i think it is a combination of promise or potential for deregulation. or less regulatory head winds. but also for acceleration in ap growth. i don't want to oversimplify things. when i look back, the highest correlation i get for capital markets related revenue is to gdp. if gdp is picked off, that tends to be a good thing. >> goldman, as you know, is seen as one of the banks that could be positioned to benefit the most from deregulation because they were dinged when the industry got very regulated
1:39 pm
after the financial crisis. only a benefit if it goes back to more risk taking. do you see that -- the current business model changing because of deregulation? >> it would be nice. it would be good for goldman if something like the volcker rule is repealed. i don't see that happening. but what i think is a real possibility is the implementation or the day to day interaction with regulators, could become maybe a little more cooperative, less combative. you look at something like the volcker rule, there is 15 metrics these guys have to meet every day to prove they're not proprietary trading. you're afraid to trip up, because it can be regulatory. what if you were given a two-day window, missed a day, back in line the next day, you would be okay. that would economically make more sense to contribute more capital at trading desks. could provide some revenue ta tailwi tailwinds, even if volcker snaz pla
1:40 pm
stays in place. three stocking stuffers this hour. caterpillar, maybe the single biggest shock stock of the year. despite everybody being negative on the name. it has soared. the average analyst price target is now 6 bucks below the current price. that shows you how unloved cat has been. brian covers cat for his firm. good to see you. >> thank you. >> even though this stock is up, let's see how much for the year to date, about 38%, you reman a bit of a skeptic because you say the fundamentals stink, resources stink, energy and transportation is down, china is improving but not really blowing things away. and you think the price has gotten high. >> yes. exactly. now, the fundamentals have stunk for a while. in terms of the stock itself, we started to tell people to trade in the low 80s with the trump rally, here we are in the mid-90s.
1:41 pm
here's what i would point out. the stock is 22% away from its all time high. that all time high was set at a time when construction was doing well, resources was rocking, locomotive deliveries were high and people were talking about $10 a share of earnings power at peak and adding plant. at this juncture, i need three levers to work for this stock to materially go up. we might get one over the next, say, two years, because on the infrastructure side, it is going to be about a third to 40% of the company. we have to have an inauguration, there is going to be some political arguing, at the earliest, at the earliest, it would be the second half of next year before you had an infrastructure bill passed. and then someone has to figure out where to stick a shovel in the ground. so there is a lot out there, a lot of good news has been put into this stock. >> so, you also -- the company has also, you know, been cautious, right? and they have got a new ceo coming in.
1:42 pm
>> well, let's put it this way, the old ceo paid about $9 billion for, you know, it at peak. really retiring early, being replaced by an insider. and to say they have been cautious is true, but they still had to take their guidance down. you had estimates coming down and in 2017 is looking to be lower than 2016. >> that's what i mean. in other words, they themselves are not out there banging the drum that business is great. they're pulling their estimates down. >> correct. >> right. so that's not the most bullish of signals, if the can company itself is not raising estimates. >> are there some good structural changes coming assuming that change in corporate tax rate, more infrastructure spending, certainly. but it also depends what you pay for the stock. by the way, january of this
1:43 pm
year, we were saying, hey, the stock is a great value, things stink, it is at $60. nothing has changed in the fundamentals except for the fact that they have continued to worsen, and the stock has gone from 60 to 95. that's when you say merry christmas, or happy holidays and take the money and go buy something else even for yourself. >> merry christmas, happy holidays. >> likewise. >> appreciate you being with us. to florida to donald trump. live look at the president-elect at his estate, mar-a-lago. we're going to listen in to see if he makes some comments. >> you know my plans all along. 100% correct. what is happening -- anyway, mice to ha nice to have you here. >> have you talked to president obama at all, sir? >> two days ago, but not since. >> your comments about the --
1:44 pm
attack in berlin being against christians, do you think this might -- >> say it again, what? >> your -- the attack in berlin being against -- an attack against christians. >> who said that? when was that said? >> i think -- i believe you said it at a press release. so wondering how this might affect relations -- >> it is an attack on humanity. that is that's what it is. it is an attack on humanity and it's got to be stopped. thank you. >> all right, there you saw the president-elect, a little difficult to hear, guys. i think i made out most of it. you know, let's see here. basically asked about his plans, which he kind of responded, you know my plans, really no changes. he was then asked if he had spoken with president obama, he said, yes, he said maybe two days ago. and then asked about the attacks in berlin. and whether or not it would change some sort of relationship and he said this was an attack, quote, on humanity.
1:45 pm
the best i could gather from that. it was not really set up for television. all right. there you go. a lot of activity. something else happens, we'll bring you back to there. with the year almost in the books, get your checkbook ready for the new year. will housing be your best investment in 2017? coming up, we're going home for the holidays with our housing playbook. "power lunch" is back in two.
1:46 pm
1:47 pm
2016 almost in the books. so how can you make money in the new year? we're breaking down the sector. diana olick has your 2017 playbook for housing. >> the housing market was on a tear this year, sales in construction surging ahead. but 2017 will see big changes. home sales will slow. don't get me wrong there is plenty of demand for homes, but listings continue to drop and mortgage rates are starting to
1:48 pm
rise. younger potential buyers may want to get out of those pricey rentals, but with affordability weakening, they may just not have the means. mortgage rates will rise. mortgage rates spiked after the presidential election, and the gains will continue. albeit at a more moderate pace. a potentially stronger economy and job growth are fueling the rates, but will not be enough to counter the higher costs, especially for first time buyers of getting a loan. on the other hand, if the president-elect does make a big move into banking deregulation, it could get easier to get a mortgage. mortgage is more expensive, but more available. home prices will cool. the spike in mortgage rates has already made homes more expensive for buyers, so sellers may have to come down a bit if they want to get that fast offer. tight supply has been pushing prices higher, far faster than income growth and in a lot of markets, prices are becoming unsustainable. they're unlikely to drop, but the gains should shrink. if only that were true for
1:49 pm
rents, which continue to push through the roof. some bright news, though, for the high end rental market. in cities like washington, d.c., even in san francisco, high end rents are easing up a little bit. we're seeing a lot more luxury supply come on to the market. if you're in the middle of the rent range, you're not going it get much relief, but if you're in a very expensive rental, that's good news, right? back to you guys. >> thank you very much. anybody who knows me and knows my history in housing is that i have absolutely perfect awful timing. i can't ever get it right. on the buy side or the sell side. tell me why now is a great time potentially to list your house for sale. >> it seems incredibly counterintuitive, right? nobody wraps a house up in paper, puts a bow on it and gives it to someone for christmas. but apparently if you put your house on the market in december, it is going to sell a lot faster than it will at other times of the year. here's why. in december, you have a lot more
1:50 pm
serious buyers out there. nobody wants to be shopping in the snow and the bad weather, so if they are shopping for a home, it is because they have a job transfer change, they moved to a new city, maybe having triplets, a reason they need to get into a home now. plus, there are so few homes on the mark net december because nobody likes to list that if you have your house on the market, you're guaranteeing to get every potential buyer walking through your house because there nothing else to look at. so we actually saw right in this area a couple of homes that had been sitting on the market for a couple of months went under contract in the past two weeks. >> i guess, too, rising interest rates are growing some sellers and buys near the market because they want to get in before rates get away from them. >> yeah. i mean, there is always that emotional, oh, my god, rates are going up. i better jump in. if you weren't buying a house -- if you were shopping around, weren't sure, you say, maybe i better jump in now, i have a house i might like, i'll do it. we didn't see that in november,
1:51 pm
remember, we saw november sales were reported this morning. they were basically flat. that would have been people out shopping in september and october for the november closing. so we'll see in january and february more if those rising interest rates, get a little bump at the beginning, but then they hit your pocketbook, you can only afford what you can afford. come march and april, if rates continue higher, we could see a hit on sales, a hit on affordability. >> thank you very much. diana olick in washington. on deck, some opportunity not on housing, just for you. the four big wall street calls you need to hear about today. called street talk. and it is next.
1:52 pm
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?
1:53 pm
tap into the knowledge of other traders on thinkorswim. only at td ameritrade. generosity is its oyou can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good.
1:54 pm
can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. every day we dig through piles of wall street research, new computer searches, to find some of the most -- some of the most interesting stock recommendations for you, called street talk this is it. >> first up, stifle nicholas downgrading procter & gamble to 86 bucks. anticipating a modest improvement in underlying sales growth through 2017. but negative movement. the stronger u.s. dollar and continued geopolitical
1:55 pm
uncertainty may make procter & gamble range bound. >> they have been range bound for a couple of years. may of 2013, nearly an $82 stock. now $84 and change. you wonder how long people hold on. all right. second stock, newell, added to the franchise picks list. there are multiple ways to win in the stock. they like the valuation, they say some of the triggers are underappreciated, especially in acceleration of sales. the analyst thinks there may be some portfolio rationalization, sell some stuff off. here is interesting, $63 target on the stock, but says there is a plausible $83 bull case in the longer term. that would be 80% upside on 83. >> jetblue, downgrade over at raymond james. seeing pressure because of capacity growth and new market expansion. that will keep shares range bound near term. benefits beyond that include cabin restyling, pushed out, very fancy, pushed out by nine
1:56 pm
months. valuation remains reasonable, even with 9% spike we have seen in the past month. it is a laggard, compared to its airline peers. >> done well this month, only one airline has done better this month, that's -- >> hawaiian. >> right. how did you know that? >> the best performing airline stock. >> she also lives in hawaii, secretly, she doesn't tell anybody. >> yeah, i come every day to englewood cliffs. phil lebeau taught us that. >> unbelievable on time rating. >> it is always 80 degrees and beautiful. no offense. last stock. profina, it is an ireland based biotech. beginning with a buy rating at $75 target, that's about 40% upside. the analyst says it could have the first fda approved drug for a blood disorder, still early. phase two trials ongoing.
1:57 pm
nine analysts cover it. an average target price of $73. stock is at 52. >> blood disorder, mean it is a disorder that is rare and affects few people. >> drugs that are by themselves. profina, small cap. did you know that? >> no. >> thanks for teaching me, brian. >> you're welcome, melissa. tyler? >> one stock, folks, that lost all of its fizz this year. that was the include. the name and the whether you should get in now. that is still ahead. and it is becoming the most important time of the trading day. will we get that 2:00 p.m. lift and will it push the dow above 20,000? we're about 40 some points shy of it right now. is my headquar. this is where i trade and manage my portfolio.
1:58 pm
since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit to see what adding futures can do for you.
1:59 pm
2:00 pm
welcome to the second hour of "power lunch." here's what we're watching at this hour. the dow's march to 20,000, in a stall phase now. we are close. struggling to get there right now. oil slowing at this hour.
2:01 pm
but it did hit its highest level in four years earlier. why has coca-cola gone so flat. one of two dow stocks, only two, in the red this year. >> we have actually been stuck in a very narrow trading range today, but some stocks on the move at this hour. southwestern energy, monster beverage, cabot oil and gas, three stocks leading the s&p 500 up by 4% and 7%. twitter down 5%. the company's chief technology officer is leaving the company after five years. more on that. allergan up 2%. buying life sell. it is the 12th deal this year. goldman sachs has been the single biggest driver to dow 20,000. or 19,98. the stock is up nearly 50% just since october 1st. but keep this in mind, goldman has not even a public company, with a dow hitting 10,000 for first time. dominic chu joining us with some of the major changes between dow 10k and dow almost 20k.
2:02 pm
>> like a slow grind higher. it just goes to show you what the dow looked like today versus what it looked like back then. let's take you into the time capsule and back in time versus now. if you look at some of the notable components and some notable companies that were added to the dow since 10 ,000, since march of 1999, had basically nike. we talk about that stock, the other stock besides coca-cola in the red this year in the dow. goldman sachs, public company, wasn't back then. united health, apple, home depot, microsoft, blue chips in their industries. and the reason why they are part of the dow today. look at the notable deletions from the dow back then, remember a time when it wasn't that long ago, at&t was one of the big telecoms in that particular index. also, company known as philip morris, which is now altria, alcoa broken up now to two separate businesses, but hp up at one point, gm, citigroup.
2:03 pm
so, yes, they're still around but they weren't part of the dow today as they were back then. what we didn't put on that chart was some of the other names have gone by the way side that we don't talk about very much anymore because they're not there. eastman kodak, dow component in 1999. big chemical company called union carbide, later bought by dow, part of the dow back then. and sears roebuck, retailing giant of its time, not there today. different complexion, different look what the it was like in 19. we have gone up and down so many times between then and 2009 basically. >> like a rest stop on i-95, you never want to stop there, but you have to. that's dow 10,000. >> pass it going south. >> that's your only option. they took out at&t because it broke up and got smaller. at&t today is bigger than it was
2:04 pm
even in inflation adjusted market cap than it was when they took it out for being too small. >> international paper was back then. it was a different look, different feeling back in 1999 than it is today. much more tech heavy. >> all right, thanks. investors have racked up decent gains this year. dow up 15%. s&p 500 up about 11%. who would have thought in the middle of february we would be looking at those kind of numbers. one with a one way to boost your portfolio, what are they? welcome to both of you. >> great to be with you. >> fantastic. david, i see you don't think that it is time to get particularly defensive. but your stock selections now are moving away from large megacap, kind of dow stocks were we talking about, and more toward midcap. why? >> it has been a great rally for small and midcap off the february 11th lows.
2:05 pm
small cap value, up 50% and still legs to go, i think in that space. always opportunity, but my key for 2017, still staying offensive, what stocks didn't run strong this year. what stocks are more in that midcap small cap market cap range. and importantly, good operators, good free cash flow generators, couple of names quickly, hologic, sold their blood testing business for a billion and a half. they're a great free cash flow generator, new management. and i think this is a company that is operating in midcap space where the cash flow is still growing quite healthy at 10% or better. masonite, not very sexy, but a door company, both residential and commercial, even better free cash flow growth, doubling over the next year. and consumer free cash flow or consumer incomes continue to grow, particularly now for middle class and i think that's a stock that also hasn't run this year that is a good
2:06 pm
operating company. and finally, marathon petroleum, which runs the gamut from refining to pipeline to retail via speedway gas stations, we know there is an activist shareholder involved. so i think the company is right sizing itself. and all three of the stocks didn't run this year, which makes me want to think about owning a them more in 2017. >> oil, doors and we got medical. i see that you think that the movement in the ten year u.s. treasury is really a critical thing to watch. it has come up a lot. where do you think we are in that cycle, and why do you think it is so important to watch it in 2017? >> look, this market the last couple of years has been a declare yourself market. if -- back up six months or so, four or five months ago, if you could have told mehta rates were going to go to 2.5 from 1.5 or conversely from 1.5 to 50 basis
2:07 pm
points, i would have been able to tell you which sectors would win. we had this big trump rally, backup in rates, reflation trade has been going on. you either believe that's going to continue in 2017, you think that the stimulus that trump is bringing and the republican sweep will continue to bring will do a lot for the global economy or you're going to think we're going to roll back over and go to zero interest rates. that's the knife edge we're on. we think that this is a real change. we hope, we believe it is. that this trade will continue. so it is really about the ten year, about what kind of economic dynamism is going on in the united states globally. we think the wind is behind the back at the moment and we think the market will do pretty well. we're looking for things that are more cyclical, i guess. >> i want to get to your stock picks as well. but i assume you think that this move in the interest rates is going to continue. is there a point at which it
2:08 pm
begins to take some of the heat out of a hot market? yeah, it is going to. we talk about this a lot internally. the dynamic is that it is different going from 4% rates to 6% than 1% to 3% rates. there is a different dynamic. the reason rates are at all time lows was because there was a lack of economic life and activity. i think so, you know, that -- by having rates move back up, it is a goodl a good signal that there is economic dynamism. >> not just trying to forecast interest rates which is certainly treacherous, but the combination of what are interest rates doing and what is inflation doing. and with inflation rates at 2% or less, that's still a positive backdrop to credit on the debt side, versus treasuries, more corporates, also, equities and that's the key. not just more interest rates, but the combination of interest rates headed higher, still on the backdrop of low inflation.
2:09 pm
not like we saw in past periods where the fed was still having to play catch-up because of too much stimulation, that's what gets treacherous for equity investors. >> the last word, thank you very much. appreciate it. mike, happy holidays, appreciate you being with us. >> thank you, you too. the dow has rallied 1600 points since donald trump was elected president. much of that on hopes for economic growth. but has the stock market gotten ahead of itself. an eternal question that steve liesman is looking at for us. >> looking at one way to evaluate stocks. what is the total value of all of the equities in the u.s. economy, relative to the size of the economy itself? some call it the buffett indicator because the oracle of omaha mentioned it as one of the gauges he watches for figuring out stock values.
2:10 pm
here we go, guys. there say nice narrative in this. the current value of all stocks, 135% of gdp. about about double the long run average back to the 1920s. if you take it since 2000, it has run 100. about 35 percentage points over value there. there is the nice tale of the tape. 29, came back down, hit bottom in 42. trading sideways until things take off in the 1990s and take off they did, surging to 183%, call that the mother of all bubbles there. and now, you know, the previous guys talked about interest rates, talked about the outlook for growth, all of that. you can make up your mind if you think it is overvalued. one more chart, since november, $1.6 trillion added to the market cap of the wilshire 5,000. the index up.
2:11 pm
the dow 30 up thanks to gina and chris. the index up 8.9%. so analysts say the key to the gains is whether the economy delivers real greth owth or jus inflation. >> what are some of the caveats. look at the chart, you see the average percentage over time is 63%. you see the chart looks bifurcated in terms of the modern times. looks like if you broke it up, the average would be much higher from the 80s on versus the past. >> i think you answer your own question, a pre-1990 number that was useful and post-1990 level. a lot of volatility post 1990. you bounced around the number i calculated is 100% would be the average since that period of time when you look at if you factor in that big down draft of 2009. an era of declining interest rates. an era of very high corporate
2:12 pm
profitability. when you look at corporate profits, the whole economy,ly the way, also, foreign earnings get put into that market cap as well. it is not like it is not fair to calculate that. foreign growth it reflects back on u.s. growth. >> the only thing -- this is excellent. only thing i would say as a possible other caveat, there is fewer stock, fewer shares available by that are than -- we had companies get merged, buybacks galore. >> dividends too. if they're kicking off more dividen dividends, a great value there. something to keep in mind as we get further and further from -- or closer to what the productive capacity is of the economy, which is measured in gdp. >> i think it is fair to say that the united states right now is -- the exception of frontier markets that are soaring somewhere, the shining star of global investing. >> and economic growth as well
2:13 pm
when it comes to developed markets as well, not to mention the challenges for the emerging markets. you have to be careful that what the market is trading on to some extent is delivered and get the growth numbers to justify the current valuations. that's why as i said in my 2017 predictions, congress will be more -- than the fed engaging what is going to happen. every leak out of congress is going to trump and don't mean that -- trump every pronouncement of a fed official. all that stuff will be critical for gauging whether or not the market gets the number that it is trading on right now. >> kind of what we were talking about last week on the fed day, how important will the fed be? now there will be another player in the game in a big way. >> like 528 of them too. >> yeah. >> exactly. good stuff. thank you. 2017 may not be the year where we all get driven around in self-driving cars, but what are the trends we'll see in the
2:14 pm
auto industry and how can you make money off of them. there a reason why golf is a swarm weather sport. a golf fail coming up. d a winter weather emergency... announcer: soon, insurance companies won't pay for damages, that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims, into one focused on prevention with predictive analytics... helping them proactively protect the things that matter most. get ready. because we're helping leading companies lead with digital.
2:15 pm
2:16 pm
welcome back to "power lunch." 2016, a wild year for the market. what trends do you need to watch next year? phil lebeau has his 2017 playbook for the auto sector. buckle up and get ready for the auto industry to hit the gas on
2:17 pm
new technology in the next year. that will drive three big stories behind the wheel in 2017. first, new autonomous drive systems will mean more of us taking our hands off the wheel. tesla, gm and other automakers will roll out features next year, where more cars will do the driving for short periods of time. but automakers will stress, drivers remain in control. a fully autonomous drive car, we're still years from seeing that expand beyond limited testing. second, in 2017, we'll find out if america embraces lower priced electric cars. the chevy bolt, with a range over 200 miles, will be sold all of next year, starting on the west coast. meanwhile, tesla's model 3 is scheduled to be delivered late in 2017. let's see if there are strong sales for two models that will be priced under $40,000. third, america's love affair with trucks and suvs will stay red hot in 2017.
2:18 pm
right now, almost 60% of the vehicles sold are trucks and suvs. that will continue next year, especially if gas prices stay in check. and if the economy remains strong, we could see record auto sales next year. one question for investors, how much will automakers have to spend in terms of incentives in order to keep sales rising or above the 17 million mark? we'll get a good indication of that in january and february, two of the slowest months of the year. that's usually we see the automakers say we have to beef up the incentives here. >> what is going on with hyundai in. >> he's out. he's fired. he was in charge, almost exactly three years, december 27th of 2013 when he was announced as the next ceo. essentially he was not meeting internal sales goals. what is interesting, tyler, is
2:19 pm
that hyundai sales this year up 2.1% of the united states. the market overall is flat. so there is growth, just not as much growth as hyundai executives in south korea would like to see. >> all right, phil, thank you very much. well, after this year's election, the u.s. auto industry could see a major resurgence. look at the three major automakers year to date, ford, fiat chrysler trading lower, gm trading higher by 8%. you see at the end of the chart from november, after the election, they have all been trading higher on hopes after president-elect trump's victory. what are some of the other trends we might see down the road in 2017? let's bring in brian johnson. what accounts for the turn? >> i think mainly the idea that we write about that sar could be stronger longer. and importantly the idea that at least the downside could be two
2:20 pm
to three years down the road instead of just next year. a lot of investors didn't want to own auto stocks going into 2017, worried about a cyclical downturn. >> okay, so they weren't willing to own gm and ford, so a year or so -- a year plus ahead of what they thought would be peak autos they started abandoning, but now that it pushed out, they're willing to own the stock? isn't that a major change in investor sentiment? >> major change. and other things that are still some positive, some could be negative. we would expect some sort of deal to be reached where u.s. auto employment could increase as a percent of the value -- that would be a cost head wind. on the other hand, could be accompanied by reduction in the longer term cafe goals and reduction in the corporate as we all have been talking about. that would be in that positive.
2:21 pm
>> why ccan you walk us through? how will it impact the auto industry and how much of a help could that be for the auto parts makers? >> for the oems, they still got to spend on their ev development and r&d. especially because the regulations in europe and china are increasingly tight. what it does mean and this is really more next decade, we caution, they wouldn't necessarily have to incent sales to meet what they view as arbitrary ev goals. bi big political question is what happens to the separate epa sanction. for the parts maker, if you're making internal combustion engine, parts and transmission, this is good news for you. >> how much is this good news for the automakers themselves? >> the automakers, it is, you know, frankly not going to move their bottom line in the next
2:22 pm
couple of years. it is really more preventing in their minds a hockey stick, which everyone debates around 2021, to 2025. >> we'll leave it there. thank you for joining us today. if you're just tuning in, we're on dow 20,000 watch. in fact, we're, what -- are you starting to motion to me or something? 37 points away from dow 20,000 right now. >> what i was doing was mouthing why don't you make it happen? >> if i could, with the snap of my fingers, brian -- >> just for you. >> don't underestimate yourself. one footwear -- wait for this one. one footwear stock is feeling the agony of defeat. defeat. >> we all get that. plus, remember the bold crook who literally walked off with a million and a half dollars in gold from the back of an unattended armored car? yeah. well, there is a new development in the case. we're going to break it when "power lunch" returns.
2:23 pm
2:24 pm
2:25 pm
welcome back to "power lunch." time for the good, the bad and the ugly in today's trade. we kick it off with the good.
2:26 pm
invensense soaring, agreed to be bought by a japanese company tdk for $1.3 billion. on to the bad, shares of accenture down by 5%, posting revenues below estimates and cutting full year guidance. it is an ugly day for finish line, wider than expected loss here, worse than expected sales. the company calls the latest quarter disappointing and that's sending shares lower by 10%. >> an important update for you now. remember this guy, he stole an 86 pound bucket of gold flakes worth $1.5 million. did it off the back of an armored truck in the city here. police have identified him, but haven't caught him yet. they say his name is julio nivello and believe he's in the los angeles area now. the theft happened back in september, in manhattan. nypd released the video last month, leading to multiple tips. he apparently goes under several aliases as well. after pulling this off, may have
2:27 pm
gone to florida, but now they think he's in l.a. there he goes. on video. watch him. he's starting to move fast there. >> gold fingers. >> gold fingers. >> gold five finger discount. that should be the guy's name. did he drive to l.a. with a trunk full of gold. >> a bucket of gold. >> who would have thought to check the bucket? >> fair point. >> she's on the case. >> the rest of the dow is rallying to new highs. coca-cola shares have been flat. can this stock pop in 2017? we're going to take you somewhere that we have never gone before for today's oil close. >> never? we're going to explain after the break. generosity is its own form of power.
2:28 pm
2:29 pm
2:30 pm
you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. hi, everybody. i'm sue herera. here is your news update. preparations under way to fully reopen aleppo's international airport. this after syria claimed full control of surrounding areas. the airport has been crippled by ongoing fighting in the besieged city. peruvian police say a bus carrying officers to a work assignment plunged down a cliff in the andies killing 12. another 13 officers were injured
2:31 pm
in the predawn accident. the cause of that accident is now under investigation. american forces fired rockets at isis positions in mosul on tuesday. video shows four volleys of air to ground rockets being set off. don't try this, at all. check out this guy. you can see him -- there he is. he swung at a golf ball on a frozen lake in sweden. instead of hitting the ball, he hit the ice, he slips, he falls through in the freezing water. he's okay, though, he was quickly pulled out by his friends, so much for frozen golf. he's one lucky guy. >> yeah. >> that's the news update at this hour. >> why do you feel like you need to hit an ice t ball. >> my guess is glug may have been involved. >> probably was. yes. >> swedish alcoholic wine and, sue, can i add something to your
2:32 pm
report, if you're going to do that, be a good golf, see where he hit the ice, six inches behind the ball. >> a divot. >> exactly. >> he's no kernen. >> which is why i think he was having a little -- missed the ball completely. >> there he goes. >> love it. >> the feet. >> the ball is still there. >> the ball is still there, you're right. the ball is floating and he's sinking. >> thank you very much. >> you got it. >> probably jesper parnevik or something. today we unveil the brand-new energy desk in the newsroom. we're happy you're rejoining us here in the frozen confines of englewood cliff. >> let's talk about where oil closed for the day, down 75
2:33 pm
cents. we turn negative in the session when we got the kept of energy inventory report. we got a surprise build, nobody was expecting. that's when the movement turned south. a build not seasonal for this year still can be explained away. there is some shifting they do for tax purposes, don't move supplies around. and that's what traders are pointing to. inside the department of energy report, we looked at production figures here in the united states. we have gone up to 8.8 million barrels a day from 8.4 in august. so that's one of the things you need to watch as we head into the new year what u.s. production does. and in terms of head winds, the dollar index is going to contribute to downside momentum or curb the upside potential. oil traders are watching dow 20k. with equities taking a breathe, crude also taking a little bit of a break today. back to you. >> thank you very much. welcome home. one component of the dow that failed to fizz in 2016 is coca-cola. after a surge in the first
2:34 pm
quarter, the stock hitting for the new year downer inially 3% on the year. let's bring in tim seymour, fast money trader. welcome. you say interestingly that coke is not pepsi, but there may be a little bit of mcdonald's in it. what do you mean? >> james quincy is in are take a tr -- undertaking a transition at the company. the csd business, carbonated soft drink business, has major not just cyclical but structural head winds to it the company needs to remake itself. the refranchising, coming up with new relationships with their franchisees, selling off their bottlers. this is all very positive and part of what an iconic brand does. >> so is there something more that you would identify that they should do, that mr. quincy as a new ceo should do? is there an acquisition that they could consider that might
2:35 pm
help them? >> the monster transaction is one that people expect them to enhance and take a bigger piece. there are other places in the stable drinks, also in the water space, in the vitamin drinks. even in juices. i think outside of soft drinks which as we just talked about is really the place that the company on some level is trying to hold the old brand, but move into the new. i think there is more innovation here than people think. this is like turning an ocean liner. this has been going on for a long time. in the meantime, i think investors need to understand the valuation is interesting, and this company is still returning almost 8% over the last five years. >> why do you see inonovation that others aren't? >> part of this is becoming more efficient. i would say they're using technology, using ways to have better openex and taking a three gm approach to how they're taking a big giant machine and trying to become more nimble. when it comes to how they're
2:36 pm
running their business, they are becoming more innovative. they're dealing with fewer moving parts. i think in latin america we have a number of places where they can continue to grow, especially in the pure fide water and places where -- >> you say you're long the stock. how long are you willing to wait? >> i've been long for almost two years. it get backs to do i believe in management? coca-cola has a brand that, to me, is probably underlevered. things that they can do with their assets. i'm comfortable, comfortable at this valuation, pays you 3% dividend yield. that was a reason for the stock trading to highs. pulled off 11% from there. it is not a bad entry point here. >> all right. tim, thanks. >> thank you, tyler. >> by the way, i have to throw something very quickly out. we have a viewer named matt good win, my hero. he said to us that the coca-cola chart was so depressing.
2:37 pm
>> so depressing. >> just as bad as brian. >> so depressing. >> so depressing. >> it is so depressing. >> more twitter troubles, we'll bring you the latest. and some ranchers have a beef with the president-elect's plan to leave nafta. jane wells is live. >> down on the farm they're having a cow over falling prices. er that going it talk farmers, trade and trumponomics when the ladies join me after the break.
2:38 pm
i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)
2:39 pm
i won't. incr...think it wouldotection in a pwork, but it does.dn't... it's called always discreet for bladder leaks, the super... ...absorbent core turns liquid to gel. i know i'm wearing it but no one else will. always discreet for bladder leaks. 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. 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.
2:40 pm
because no one knows & like at&t. the overall markets rallied strongly since donald trump's win. today, another hack and more executives leaving twitter. yule julia boorstin has more. >> twitter shares are down more than 4% today. down a total of 25% so far this year. this morning another hack of twitter profiles. this time nine of marvel's twitter accounts taken over by r-mine, who says it is testing
2:41 pm
the accounts' security. this after yesterday r-mine hacked into netflix's account, tweeting to the followers, we're just testing your security. these latest hacks come as more high level executives jump ship. just yesterday, the chief technology officer adam math and vp of product, josh mcfarland, both announced they're leaving the company. twitter says it is streamlining and flattening the organization and having engineering prog and design never report directly to ceo jack dorsey. there is no question that dorsey is under huge pressure to fill the growing numbers of holes and
2:42 pm
jump starting twitter's growth and refocus the company on video. >> we have seen a lot of executives come and go from twitter. i know you're in san francisco. you know people at the company and in the industry. what are people saying about the long-term view for twitter? >> well whether or not it can remain a stand alone company, i was talking to some executives who say twitter has a lot of potential whether or not it is ever going to be a company with a hugheser ba user base the siz facebook, probably not. but a lot of the changes that people would like to see are probably very hard to make for the company right in our. i was talking to someone about the number of bots that must be at twitter and something that the company tried to keep under control. a lot of bots, fake accounts and the question of how people use twitter. something people want to have actively engaging or serve a more passive news feed. >> julia, thank you.
2:43 pm
julia boorstin in san francisco. many u.s. companies are hoping for more favorable terms if donald trump walks away from nafta farmers are worried. jane wells went to a place appropriately name d powerly, wyoming. >> they're hanging on my every word hire. big agriculture is criticized for being too dependent on government, price supports or taxpayer subsidized crop insurance. here at the cattle ranch in wyoming, he's suffering from too much of a good thing. there is a glut of just about everything, driving beef and grain prices below. everyone is hoping that the president-elect will not trigger a trade war, not even with nafta. >> prices shouldn't have gotten this low. most of us didn't expect them to get this low.
2:44 pm
but they did. anybody that is watching this would do me a great favor if they go out and buy a steak. >> or two. >> or two. or 10. >> all right. he says his places are down about 50% from a year ago. he's going to have to dip into savings this year. usually he would sell one of these for a thousand dollars. he's getting 500 to $600. i talked to a grain farmer in illinois, he told me, the farm -- you could say trump owes us something. we're waiting to see who he will pick for agriculture secretary. back to you. >> so why have the prices cratered so much in a year's time? that's amazing. >> it has been building for a little over a year. there was a huge drought in the southwest a few years ago, so
2:45 pm
farmers cut back their herds, ranchers in texas, everybody rushed in to start rebuilding their herds. got ahead of themselves. there has been great weather, great beef all over the world, too much beef, not enough people eating it. >> jane wells, thank you. beautiful state. u.s. stock market outperforming europe in 2016. with the big rally here, should you be looking maybe for returns elsewhere next year. best bets from around the globe are coming right up. hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.
2:46 pm
sometino big deal.shing my gums bleed. but my hygienist said, it is a big deal. go pro with crest pro health gum protection. it helps prevent gum bleeding by targeting harmful bacteria on your gums. left untreated, these symptoms could lead to more serious problems including tooth loss. gum crisis averted.
2:47 pm
sounds like a big offer
2:48 pm
every year, rbc puts out a report on their top 30 global picks for the year ahead. while the investment landscape may have changed in the past couple of months, strategists are staying the course and they see that as even more favorable for equity investors. let's get to some of the picks. mark karros joining us now on set. you got 30 names and forgive us the vagaries of tv being we do not have nearly enough time to go through all 30, much less a couple of here. >> i'm alls your. >> big fan. >> like the blood line family. that brings me to your first,
2:49 pm
netflix. why do you remain so optimistic? >> your buddy, mark, is my analyst. i think mark had a great view on the name. >> very bullish. >> bull for a long time on this name. we continue on. the reality is that the u.s. dip that they had on pricing, they raised their price, concern that would be a problem for them. it ended up not being. the stock roared back. one theme this year, one big theme, competitive advantages, companies that in this kind of market where we think, you know, whatever your political stripe, trump will be a benefit to big brands like this and netflix is one of them, pricing, everything else going on with them, the growth, international side, multiple multiples. >> our call has been around three things. one is big competitive global names. our view is domestic play. they don't have some of the things that will be a problem for row tail companies like destination based tax, tariffs, others. this is a name that doesn't have maybe some of the challenges that an apple could have in
2:50 pm
terms of imports, big tech names and part of that sort of group of very attractive, high growth tech names and frankly not that many that aren't going to get exposed to some of the issues that trump may bring to bear. >> one of the top picks in your financials is top epps picks mastercard. when do you think that snaps out and why do you think they have overlooked mathsercard. visa for that matter. >> i think they're potts going to be good plays. we asked every analyst to pick one top name. i think they both both benefits. i think just more on some of the robust run they had immediately. but the reality is mastercard is a name with huge cash flow, again domestic kind of play. don't hurt them.
2:51 pm
and deregulation. >> staying with the financials goldman has gotten all the love, but you guys think sort of mid sized, pittsburgh national corp? pnc bank is the best best? >> i think it absolutely is. certainly the financial transaction names like a mastercard, but if you're looking, and again we pick one name among the banks. this is a big global bank. but doesn't have the complexity of the capital markets. what's unclear is they're a bank. they have estate management. it is a huge benefit to them. you get more than this is going to continue to run. you've seen some of it, but there's still a lot more to to
2:52 pm
go. >> now you have here. i'm just wondering, it's a volatile stock. we tried to do a bill from column a to column by frankly, nobles on. >> announcer:s -- of a different name. this is a name honestly, you know, a big domestic enp play. >> they're human in scoop and stack. huge in oklahoma. >> they're in the right places. accomplice they have some places long-term national gas exposures. that feed into long-term israelis -- this is a good story
2:53 pm
in that context. >> mark, thank you. >> happy holidays. >> we're going to be watching all these stocks. if it's true a watched pot never boils, we may never hit it, because we are all over it coming up on "power lunch."
2:54 pm
2:55 pm
2:56 pm
dao spite being down, it's just a mere 40 points or away from the 20,000 mark. joining us from the nyse is peter costa, president at empire executions, a cnbc contributor and tennessee volunteer fan. good to have you here. >> good to be here. i think there's a huge difference between tennessee and alabama, but there's not a lot of it wouldn't take many to go over that leave. we're just not seeing it. we were expecting it early this morning. we are expecting it sort of yesterday, so i think the markets seems sluggish, and it's really like the push and pull of buyers and sellers right now.
2:57 pm
there's nothing seemingly out there one way or the other to move it. >> yeah. i mean, you know, really it's just a number, actually. it's great theater, but in reality for professionals, it's a number. i think the people watch the s&p a lot more. the dow is good for nbc nightly news, but as far as investing, you really watch the s&p. you know, we're going to go over the 20,000 at some point. it might today. i'm not really sure, because i don't think the closing, we're on the buy side. i haven't seen that yet, but could potentially be tomorrow, maybe friday. peter, great to see you. >> have a merry christmas. >> phil lebeau, news alert. tyler, in just a couple weeks
2:58 pm
after president-elect donald trump sent out a couple tweets, one about boeing and the cost of air force one, as well as about lockheed martin and the f-35 joint strike fighter program. the president-elect is meeting with the ceos of boeing and lockheed martin. just a moment ago the ceo of lockheed was seen entering, and hewson is expected to arrive shortly. it's unclear if it's simply let's talk a bit about the expenses that are incurred by the federal government we'll be following this and let you know if there's something more.
2:59 pm
>> and then the air force one, which is the one that came up a couple weeks ago in the tweet. >> right. both targets says the costs are too high. >> both companies have said, scherr. let's see how we can bring them down. that certainlieses what the difference is. certainly it's -- they're not taking a hard-dime stance here. these are contracts that can be regoated to a certainly extent. >> a bit to the down side for lockhe lockheed. boeing is up about -- >> the ride admiral was
3:00 pm
reportedly seen just a short time ago. >> yeah, we'll be watching the twitter feed for any sort of development. and of course checking in with phil lebeau. here are the headlines, ceos of boeing and lock heeled martin meeting with donald trump right now. thank you for watching "power lunch." >> yeah, "closing bell" starts right now. >> he, everybody. welcome into the "closing bell." >> i'm bill griffeth. we have dusted off -- the doubt is still within a striking distance of that key 20,000 mark. nike and boeing it's pfizer, merck and goldman sachs that are the lag guards among today's trade. we've see if the dow with hit that round number.


info Stream Only

Uploaded by TV Archive on