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tv   Power Lunch  CNBC  December 27, 2016 1:00pm-3:01pm EST

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acquisitions. i like these as growth stories going forward. >> you think we get the santa claus rally or already have it? >> i think you already had it. we're hovering and if we get 20,000, maybe. but it is going to be interesting if we get there before 17. >> good stuff. see you tomorrow. all of you as well. "power" starts now. the dow continues its march to 20,000. will we breakthrough the milestone this hour? stick around to find out. plus, we're hitting the malls to get a post holiday shopping check. retail, forget athleisure, why bathleisure is the new trend. we'll explain. "power lunch" starts now. i'm brian sullivan. the trend in the last week and a half continues. stocks just can't seem to come unstuck. we're at 19,956. up 23 points. bathleisure or not. the biggest leaders, cisco
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systems, apple and merck. nike bringing up the rear. down half a percent. tyler, i can see you perfectly, baby. >> that sounds good. welcome, everybody. i'm tyler mathisen. welcome back interest a long weekend. here's what else is happening this hour on a busy tuesday. u.s. safety regulators investigating ford fusion and mercury milan sedans from the 2009 to 2011 model years. issue, possible brake problems. home prices jumping sharply in october with the case-shiller home price index up a big 5.6%. and the conference board says consumer confidence is at its highest level in 15 years. >> two big hours ahead, let's talk the march to dow 20,000 and bring in mark muscini and larry mcdonald. larry, listen, dow 20,000, we'll hit it, maybe today, maybe tomorrow, maybe next year, maybe
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in 2020, who knows. but we're going to hit it at some point. let's move past that. optimism among investors is at a nine-year high. that sounds really good until you get into the complacency argument. what is your thoughts on the markets and the overwhelming sense of bullishness now? >> well, it is more about we have a model at the bear traps report that measures crowded trades and because the entire street, entire street was negative on trump coming into the election, we had a 60 day period where it is really an epic rebalancing where the entire street, most portfolio managers had to rebalance their portfolios, so the short bond trade is extremely crowded. long financials is extremely crowded. and emerging markets, you've got almost 20% of emerging capitals out of the -- >> the question is, larry, i agree with everything you said,
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did that end, though, about eight or nine trading sessions ago because i think the technical term is squat and we haven't done it. >> i think what it sets up for is almost a costanza trade going into 2017. you went into the opposite of what wall street is telling you to do. be long bonds, long emerging markets, and especially on the bond side, and long gold minors. that's what this -- this is an opportunity, crowded trades present an opportunity for you. >> you want long bonds. that means,laar is going to wea. do you see that point of view as well to be contrarian, 2017? >> i have a very near term view that i share that opinion with, but beyond that, no, not necessarily. i have a harder time coming 90 points. i think what we're going to confront in january is really with things.
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one investors who give into performance had to be long to try to squeeze out every basis point they could out of this year's returns, starting to take a knee in january. and secondly, the deferment of capital gains in hopes that perhaps the capital gains are treated more favorably in 2017 than 16 could lead to tax loss selling and therefore i think what we're likely to see is pressure on equity prices, the market is overbid at this juncture, most sentiment surveys are extremely optimistic. i look for 4% to 6% pullback, opportunistic in terms of moving money into the market at those levels and some of those aforementioned sectors have been overheated, ripe for a pullback, but at the same time, i want to be long over the balance of 2017. >> i want to probe a little more on your call being long bonds. if i've been long bonds in the past 60 days. i'm licking some wounds. what exactly are you sort of hinging that prediction on, number one? number two, there are lots of
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different ways to be in bonds. which ways are you proposing? >> utilities, for example, high dividend players, the tlt. there is a number of -- one thing is for sure, tyler, when the trades get this crowded, it doesn't take much at all to have -- when there is too many people on one side of the boat, doesn't take much to move a very crowded trade toward the other side of the boat. in other words, the situation with china, the dollar's move has been vicious, trump has been let's say pretty hostile toward china. so you have a chance of maybe a little faster devaluation coming to the new year. also, as your guest just mentioned, most people are -- have not taken gains because if you have -- say you're sitting and a million bucks of gains, why would you sell stocks now? wait until january, wait for a better tax situation and then your gains throughout 2018 when you pay the tax.
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so bottom line is, january could be a real reversion to the mean in terms of bonds. >> you think that as people sell stock market gains or gains that they had anywhere else, probably not selling many bonds that had gained right now, but that that money would get repatriated into those securities? >> yeah, well, in other words, yeah, sell stocks, you buy bonds, bonds have just had over the last, like you said, tyler, over the last six, seven weeks, one of the most vicious periods in the history of treasuries. and now all these fears of china selling bonds. i think that presents an opportunity on the long side. >> mark, still like some of the consumer facing names, name like coach? how did the holiday shopping season shape up for coach? >> i think reasonably well. still going through a transformation. talking about a company that used to sell through the big box retailers, the macy's of the worlds and so on.
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it is shrinking its store base, paying down debt and repackaging itself as a more fluent shopping experience than one that got diluted by having its name and its symbol on every walk of life in the clothing lines. so i don't look through so much this particular christmas season as much as what holds for coach ahead and in the meantime, you get about a 3.8% dividend yield. tough to find a high dividend payout among the consumer discretionary stocks i think will stand to benefit through the strength of the consumer. >> thank you very much, mark and larry. let's check in with bob on the floor of the new york stock exchange. what's going on? >> we're getting there, slowly but surely. dow is price weighted. good to point out what stocks are impacting the dow, how they're moving forward or holding it back. look at the big movers. dow up 23, 24 points because of four stocks now. goldman sachs and apple, they're about 7 points.
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ibm and merck, four points more. there is eight for the two of them. 16 and 8 is 24. that's why the dow is up 24 points. in the meantime, most of the rest of the dow is on the flat side. there is a few holding it back. so boeing, down there, fractionally, that's about five points on the dow in the other direction. negatively. travelers maybe two. nike, procter & gamble, flat line. only four, maybe five stocks i would sabo iy boeing -- it is important that the final phase of the 20,000 is the trump rally and largely financials. talked about goldman sachs, 25% of the dow move since the election is goldman. jpmorgan adds another few points as well. united health had a good move up. there is a third financial stock, travelers. at the same time, the low volatility names, big stars earlier in the year have all
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been laggards here. coach, johnson & johnson and procter & gamble. recently, they have come to the floor of this rotation is what is causing the dow to move sideways. back to you. >> all right, thank you, bob. we got a news aalert here in the bond market now. two notes up for auction, rick santelli is all over the auction at the cme. >> it is not a great time for an auction. between the holidays. but when you add in a two your note and the fed tightening in december, may do it three more times in 2017, maybe that explains the grade d as in dog plus. d plus. we auctioned off 26 billion two-year notes yield at the auction, 1.28. that was the only good part. that price in line with the issue. here is where it went awry. 2.44 bid to cover. weakest since christmas 2008. 32.7 on the indirects, compared to a ten auction average of 43. that was the weakest since july of this year. and 9.3 on directs, 10 auction
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average 16. weakest since january of 2015. a little over a year which means primary dealers took more than normal than they did at 58%. tough week, maybe the long maturities, 5s and 7s. tomorrow and thursday may go better. tyler, back to you. >> rick, thank you very much. sad news, folks, to report out of hollywood. actress carrie fisher has died at the age of 60, best known of course as princess leia in the "star wars" movies. but she appeared in numerous other films. as you may know over the weekend she suffered a heart attack on a flight from london to los angeles. happened on friday. fisher came from a showbiz family, the daughter of actress debbie reynolds and singer ed i w eddie fisher. carrie fisher died at the age of 60. she had a great career and our sympathies to her family and friends. we'll be right back.
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welcome back. christmas may be over, but the giving continues. the giving back of gifts that is. and the rueturn race is make ita busy time for the shippers. morgan brennan is live with that story. >> hope you had had a good holiday weekend. let's start with amazon. amazon says that this holiday
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season it shipped more than 1 billion items worldwide. its peak shipping day, december 19th. some of those items will get sent back. that's because analysts estimate about a third of all online purchases do get returned. that's made services that collect process and resell unwanted gifts sought after. that's why fedex acquired jenco and u.p.s. announced an investment in optoro last week. it is a tiny fraction of the overall peak season volume. but it is one that is growing at a double digit rate. returns aren't just a growing business for the parcel carriers. returns have become crucial for retailers as they try to get consumers into the stores with those unwanted gifts. that's a dynamic that drives foot traffic and sets the stage for a more profitable exchange and some additional purchases.
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so that's because many consumers once they're in the store, are much more willing to open their wallets when they see steep markdowns, we're talking 70% that retailers are offering including many retailers on the strip here in herald square, including macy's behind me. >> morgan, thank you. morgan brennan. it was utter mall madness at several malls this weekend. look at these fights that broke out in malls in new jersey, ohio and tennessee. it is nuts. some resulted in minor injuries and evacuations. here to speak about this is john niffen. i look at the video like that and never -- it makes me never want to step foot in a mall. is this a black i'll feye for t retail industry? >> it is a terrible, tragic incident. we have seen isolated incident like these over the past few
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ye years. we spoke with mall developers about this. you have retail, omni channel, e-commerce. there is all different ways that consumers deal with it, that retailers deal with it. but the physical activity goof going to a mall is still important to consumers today. >> the idea of returning to the store, you can buy online and return to the store and that may make you return something and then buy something that is on sale now. how important is that to these retailers and who has the most at stake? >> you have to be an omni channel retailer. if you sell online, you get 23 cents back, she said 30, 35. anywhere in that range. let's call it 25 cents back you have 75 cent sale. if you have buy online, pick up in store, return to store you get $1.07 in sale, another 30 cents or so to the sales of people that came in to do something else there. if you're not an omni channel player, you're losing. if you are, it is still a lower
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return business to be online. so it is really hard to make that math all work. >> these fights, let's be clear, these fights have been going on forever. this is more cell phone cameras now. there were fights over cabbage patch kids in the early 1980s, people grabbing them and whatever. so let's move past that. one thing we talked about for a couple of years is the impact of housing and car sales on retailers. if you look at existing home sales, up 15% year over year, prices are up. if you're buying a car, put a couple of thousand dollars down. our housing and car sales stealing billions of dollars away from traditional retailers like macy's. >> i wish that was all that was stealing dollars away. housing and cars steal dollars away, trips are stealing dollars away, all the experiential stuff is stealing dollars away. sales are probably fine nationwide. isi said they think sales could be up 5%.
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not 5% up among my companies. we saw bigger penetration and bigger growth online and pretty flat brick and mortar. the money is going other places. >> dana, you and jan agree on a couple, disagree on a couple. among the ones you agree on are pink and foot locker. what did they do right this time around? >> i think what you saw out of pink is they basically had new product, they had very compelling deals, the stores were all set up nicely, and the category overall is trending well. when you look at foot locker, all nut sneakers out there, look at how foot locker and their appeal of 12 to 24-year-old males, they're the urban culture store. >> you say lulu was a winner. >> it was not in my notes. >> i know. >> i'm not pushing lulu.
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i'm down on athleisure. they're doing a nice job of what they're doing. i think the category -- >> don't do it. tyler. >> i was reading over the weekend my issue of "glamour" here. >> you're always up to date. >> it says here, jan, right here, forget about athleisure, bathleisure is the new thing. and i guess this is the idea that -- i guess mostly women would go out wearing robes and fancy slippers. >> i read that article. it is only women. not talking about guys. and nobody is going to do that. a handful of people in manhattan at a party -- >> you're wrong. you've been on a flight to vegas from newark, bathleisure has been a trend for decades. >> been in there. >> if bathleisure is a trend, that's good for victoria's secret. they sell robes -- >> exactly. >> and dial soap. >> good stuff, man. i'm telling you. bathleisure. >> is ross store still an amazing company in.
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>> if you went off the mall and walked across street, you saw the people shopping at ross, at tjmax and various divisions. being across the street was good this year. >> you say it wasn't just about handbags, but there is a winner and loser. why is coach a winner and kors a losser. >> coach has new items out there. they have done very well with rexy, the dinosaur. their 1941 collection seems to be resonating. we think about handbags, stronger this year than last year, coach is leading innovation. kors is in the midst, doing well with the smartwatches but continuing to be in the midst of accelerating newness in their handbag area. coach is ahead and had two quarters of solid brick and mortar comps. >> i have to say, i had kors on my list of the ones that didn't do well, i didn't have coach,
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but i think they did well. i never buy anything in the stores when i'm shopping. and i bought one of those dinosaur bags. that's going well. >> i told you, it is a must have. >> a must have. >> you have to check it out. >> dinosaur bags? >> they look like little dinosaurs. >> they're adorable. >> what kind? >> they have various. i bought a stegosaurus. >> thank you, dana. >> i'm waiting for mathleisure. >> that's always in, brian. >> just co-sign on the bottom line. >> richard marx making headlines last week for helping to subdue an unruly passenger on the flight. today, we have a big update. richard marx back in the headlines when "power lunch" returns. no matter howthe markets change. at t. rowerice... our disciplined approa remains. al markets m be unceain... t yocan feel experiencen ournven around the world.
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when news broke that singer richard marx helped subdue an unruly passenger, we learned two things. number one, mark was married to daisy fuentes. second, that at least those korean air flight attendants on that flight had no idea how to use a stun gun. well, now that is going to change. no, not the marriage. happy apparently. korean airlines announcing it is now training crew members on how to use a stun gun in a, quote, fast and efficient manner. airline is changing its guidelines allowing flight staff to use stun guns readily, not just in so-called grave
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situations. also, carrier says it will have at least one male crew member on duty for every single flight. guys, comments? >> well -- >> i'm still shocked he's married to daisy fuentes. days later. >> not as shocked as those tasers. >> taser, by the way, is up 1.4% today. >> remember we had the story of the guy that stood up and yelled all that nasty stuff and we suggested that somebody should have helped him sit back down. and everybody was, like, you're a vigilante. richard marx is a vigilante and i love t good for you, richard marx, on both accounts. tell daisy fuentes i said hello. >> let's -- >> to a market flash. susan lee. >> home building stocks are higher today. strong monthly data showing that home prices are closing in and close to all time highs and that's due to the low demand out there. names like toll brothers, dr
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horton, lennar, pultegroup. >> thank you. dow 20,000 watch continues. will we get there? the uphill battle president-elect could face for his cabinet picks.
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good day, i'm scott wapner. here is your cnbc news update. carrie fisher who rocketed to fame at the age of 19 when she played princess leia in the first "star wars" movie has died. fisher apparently suffered a heart attack friday aboard a plane. she was 60. argentina's former president is accused of corruption in an indictment revealed today. in jakarta, the christian governor is accused ofsulting i. today, judges say the trial can go ahead. in houston, nba rookie onaraku tossed in his free throws
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underhanded, as it was done years go. that's our cnbc news update at this hour. back to you. >> a little rick barry action. let's get a check on your market as the dow -- march to 20,000. still getting used to this. >> i think they look good. >> very nice. >> very distinguished. >> nicest thing you ever said to me. also the only nice thing you've ever said to me. >> that's not true. maybe almost true, but not true. >> the dow is at 19,961. the march to 20,000 appears to be on pause. well off the session highs with the dow now 40 points away. it is worth noting the nasdaq getting a record high earlier in the day, but since has pulled back. >> a check on what is happening in the bond market on the back of the two year auction. mr. santelli at the cme. >> if you look at intraday of two, maybe spiked up, what, three quarters of a basis point. that's a scaling issue. going nowhere quickly, we had
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the auction. if you look at a two year note, man a better time frame is since the beginning of november. you can clearly see that we're hovering along the top, but 129.5 high yield close from december 15th seems pretty safe today. elusive as 20,000 for the dow, intraday of 10s, not going anywhere really quickly, little better volume than some anticipated. its high yield was a whisker under 260. same day, december 15th. dollar index, close to testing the high close, 103.29. it is a bit away, though. its high price, 103.14, made on the 29th of -- excuse me, the 20th of december. many think it may cut through that level before the dow cuts through 20,000. melissa lee, back to you. rick, thank you. let's talk about the push to dow 20,000. 20,000, we're on watch, but
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you're worried about the rise in the dollar. we're already at almost 14-year highs on the dixie. at what point could it threaten stocks? >> it threatens gdp more immediately, melissa. we did some regression analysis. and when you have seen this kind of a spike in the dollar historically, if it stays at these levels it trims about 90 basis points off of perspective gdp growth. why? because it affects the trade balance and our stuff gets to be more expensive for people overseas that want to buy it and make their stuff cheaper, so we end up buying more stuff than we sell and affects the trade balance. when does that get into stocks? we have to wait and see. it affects multinationals, in different ways and that's where we see the s&p 500 and the dow jones industrial t looks like we have momentum to get through 20,000. i follow a wall street analyst named tyler mathisen who says december 30th is the day.
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seems as good as any for me. >> i want to know how the rising dollar is going to affect the beautiful lemon cakes that you send to so many of us for the holidays, michael. that's what is really the issue on the table for me. if the dollar -- there are so many moving parts here. the dollar, a possible border tax that would replace some of the corporate tax, there is trade issues that the new administration may bring to the table. >> rising interest rates, higher -- >> so set that aside, is 2017 a year, maybe, all other things being equal, to shy away from big multinationals and look at more domestically oriented small and midcaps. >> why the domestic companies, which are a lot of small and midcap companies have done very well because they seem to be more protected from a lot of the
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trade pressures, particularly some sort of trade war heats up with china or elsewhere. and it is more predictable. i think if you look at a number of the valuations, though, they're not outrageous. and given a tax cut and big corporate tax cut or repatriation of money overseas, there is stuff in trump proposals that could be very good for some of these companies. so it is always tough to tell. did anyone at the end of 2015 think we would have a 13% year or 14% year wherever we are here in 2016? probably not. and particularly we started out with a big down draft. it seems to me that you shouldn't bet against the stock market, particularly when you have an administration promising more money. >> michael, brian, i'll give you a quiz then. are people buying stocks the last 45 days because of trump, because the gop trifecta or because of the economy getting better or maybe all of the
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above? assigning too much of this to the president-elect. >> trying to discern and parse the emotional swing of the market and this one has been emotional because other than dollar and interest rates in oil prices, if you point to those dollar interest rates oil prices, all negatives. the market has gone up anyway. this has been an emotional move. >> i disagree a little bit on oil. i think that $100 a barrel is negative. but 55 bucks a barrel maybe is a good thing for equities, is it not? we need the oil companies, energy companies to participate and 45, 35 bucks a barrel, they're not going to do that. >> no, but we're getting the wrong way, brian. i hesitate to argue with you because i think that the glass is at least 20 iq points. i don't know -- >> to 80, thank you. >> look, we got to the higher oil the wrong way. had the higher oil prices been driven by demand, then, yes, i
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think that that would have been more bullish. but because it is just sort of the consortium of opec and oil producing companies saying we'll cut back on supply, it is artificial, not demand driven, it is another tax on consumer and business, not as bullish about that. it is more of a head wind. >> in terms of tech, is that the place to be in 2017? we hit a new intraday record high in the nasdaq today as we were all watching 20,000 on the dow. >> i know. mae west said too much of a good thing -- i think we ought to celebrate the new highs. this is fru maee market capital at its best. i think that the markets here are still climbing a wall of worry, so is tech. and it seems that perhaps immigration fears and those have been a lost the fears that have been hitting the tech stocks. if -- it is all about the workers and the hb 1 visas.
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if those tech employees won't be affected as much, then a lot of tech, particularly names like microsoft and google, both of which i own, i think still look good and reasonable at these levels. >> michael, thank you. good to see you. >> happy new year. >> same to you. love the lemon cake. we have talked about where stocks could be headed. let's talk about the economy more broadly. our next guest thinks the fed in 2017 needs to be like traders this week and just take it a little easy. let's bring in alan mckeechin at navy federal credit union, the largest credit union serving all five armed services branches. welcome. glad to have you with us. >> you are doing a lot of advertising. does that come out of your paycheck, or what? >> we just want to make sure that all of our potential members are aware of us and know they can -- that we do serve all
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five branches in the dod and they can join us. >> very effective, very effective ads by the way, particularly partial to the one where the navy sailor is getting married. very cute. let's talk about two things. i want to start with your view on business spending. in 2017. if i'm reading you right, you think that maybe businesses will hold back a little bit and that little bit of juice in the cocktail may not be as pronounced as some expect. they will hold back because they want to take a wait and see as to what actually gets passed in terms of tax, depression, et cetera. >> that's correct. incoming administration has some pretty ambitious plans. we are potentially looking at one of the most significant tax code overhauls in a generation. and businesses, very likely that businesses are going to wait and see exactly what gets through
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because right at this point we really don't know what is going to get through. though president-elect trump coming in with republican majority increases the odds that he'll get more and not less. >> let's talk about growth, something that is obviously a hot debated topic. the last two quarters of this year have been pretty good. so there is obviously a bit of a tailwind behind the economy now. what is your prediction for next year and your thinking about not just what the fed may do, but what maybe they should do. >> well, looking forward to next year again, 2017, we have got a lot of things going in the right direction. closing out 2016 on a strong note, housing with employment, obviously that was enough to get the fed to raise rates up a second increase. as far as what the fed needs to
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be doing, i fully expect the fed will continue to wait and see. they're going to continue to be as they say data dependent. if the economy continues to progress according to their forecast, then i guess we all have seen that they anticipate two to three -- the dot plot shows three increases in 2017. as far as what i think they should do, my personal feeling is that they have handled it right so far, they have -- they don't have a lot of room for error here. when you have short-term interest rates at 50 basis points, your toolbox for dealing with the setback in the economy is looking pretty bare right now. >> there seem to be a huge question in real estate now. we had a massive jump in home sales. is this burst of home sales a
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shorter term phenomenon driven by people sensing higher rates and flooding in now, stealing from the future? >> i think it is a continuation of a current -- little bit of both. let me start off by saying a continuation of a trend, some of the analysis i've done shows that home sales have been on very firm footing, this is a fundamentally stronger real estate market than we saw in 2004, 2005. what we have seen to deal with it, the short-term effect, a jump in mortgage applications for purchases, right around the time rates started to head up, particularly right after the election. these are people i believe that were looking to buy in early 2017, but decided, hey, we might want to get on this and get started. you're seeing some of that out of fear that rates may be going higher. i think this is a -- i think this is a continuation of a solid trend that has some more upward room -- more upward
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direction to go. >> a real pleasure to get you on, continue with the commercials that tyler loves. happy new year. see you soon. >> thank you for having me. to politics, and money. they do tend to go together. could the wealth of donald trump's cabinet actually create problems for them during the confirmation process? john harwood with that angle of the story from washington. >> the wealth factors into the issue because donald trump ran as a blue collar populist favoring candidate, and he's appointed a bunch of very wealthy people to office, but there are other dimensions of that as well. let's run through some of the high profile confirmations that he faces difficulty on. one of them is rex tillerson. rex tillerson, of course, very highly paid ceo, somebody who is close to vladimir putin, received an order of membership. that will be an issue in his confirmation. so will the fact that he heads a
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major oil company, and interestingly though, international climate diplomacy is less going to be a factor because rex tiller eerson is somebody who has expressed belief in climate change and support for the paris climate agreement. now you've got steve mnuchin, another wealthy executive, former goldman sachs, democrats will throw in donald trump's face the idea he said in the campaign that other people he was running against were under the control of goldman sachs. he's appointing a goldman sachs alum to head his treasury department. i expect steve mnuchin to be confi confirmed. then you have somebody like tom price, not a billionaire, not a rich guy, a physician, appointed to be the head of health and human services. now, tom price's issue is he's favored big changes to medicare which is the middle class retirement health program, those are changes that are shared in support by paul ryan, the house speaker, but donald trump said in the campaign he wasn't going to touch medicare.
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all of these things are issues facing the new trump team. democrats have got 48 votes in the senate. if they hold theirs together, they get three republicans to stop some of the nominees and i'm sure that one of them is go -- likely to go down given some of the opposition on these various fronts. >> john, thank you. john harwood in d.c. for us. still ahead, keeping jobs in america, one of the pillars of the trump presidency is one of the must haves for our next guest. his strategy for making that happen straight ahead. check out the dow here. we're up by 28 points right now. we're 38 point s s away from 20,000. the nasdaq, it hit a new record high in today's session.
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speculation if trump's tough
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talk will boost manufacturing in america. many calling on ford to bring their manufacturing back to the united states. let's welcome in a man working to build a new kind of car company, right here in the united states, paul elio of elio motors joining us now. been a while. we had your cars here outside of cnbc a couple of years ago. thanks for rejoining us again. as a guy that wants to create a lot of jobs in the united states in louisiana to be specific, does anything that you've heard from the president-elect make you happy, make you frustrated, make you nervous? >> yeah. i think overall commitment to making things here again is critical. one of my biggest concerns for our country is we had a negative trade deficit for the last 20 years, right. so for 240 consecutive months we have gotten poor as a nation. we have to manufacture things in this country between. and more importantly manufacture and export and we can certainly do that with elio motors.
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our commitment to making things here, we're targeting 90% north american content and some wins, hyundai is agreeing to build our seat. we have several other stories like that. so i think if you're committed to doing it it can be done. the other thing is -- >> how about this, paul? how about this? can you get everything you need here? you just referenced the seats. we get that. there is a lot of things that go into your car, smaller than a normal car, but a lot of components, can you get everything you need made here? is there stuff, say, listen, i love america, but i can't get this widget -- we don't make it here? >> there is a few things that we have to go offshore. we're targeting 90% north american content. last time at 87%. i don't know we make it, because i don't think that number will shift a lot. but we'll target 90%. but like our audio, our audio is
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is acem bld sesembled in the u.. we have a lot of north american content but not 100%. >> so, paul, you founded the company in 2009 and one car, a p-5 introduced at the l.a. auto show in november 2015. i'm curious, between those points in time and today, were there things involved in the regulatory climate, in just the economic climate that prevented you from accelerating the rollout of your cars? is there something that will change under a president trump that is beneficial for your company? >> so most of that period was surrounding fund-raising, right? and, yeah, i think our capital markets are broke for projects like elio. i think we have overcome that with the 63,000 reservations we proved the marketi exists in a large way. i don't know if you cut the
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pressatt oppenheimer agreed. >> how fast are you burning through the capital you raised? >> well, we're a startup. we raise it and spend it. and until we're in production, you raise it and spend it. raise it for a purpose, right? >> when are you in production. you created 1500 jobs directly, 1500 indirect jobs over 18,000 support jobs. are these when you're fully up and running at full capacity or what can we expect in the coming year as you are expecting to roll out the cars on the road in 2018? >> correct. so we go from first salable vehicle to full capacity, 1,000 vehicles per day over a six month period. so the 1500 jobs in shreveport and additional 1500 jobs over
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that six-month period. >> if i had my name on a reservation, i'll get that car in 2018? >> yes. >> thank you. good to see you. >> thank you. on deck, the big wall street calls you need to hear today. hegaga, what'd you got ? this bad boy is a mo tding desk so that can my tring platrm wrevei go. you kn that inkorsm seamoh, soy customoss studies will go the? anywhere want go! nc youplatform on any device wi. only at aritrad
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time for street talk. we kick it off with biogen. friday approval, the groundbreaking therapy for spinal muscular atrophy. the timing was sooner than expected and the label is about as broad as could be hoped for. raymond james thinks it is shaping up to be one of most important launches of 2017. the analyst wonders if there is significant upside to estimates, but for now, continues to recommend buying shares. >> you don't want to take sides in business, but this is one of those diseases that is so bad. >> terrible. >> you hope biogen wins and helps a bunch of people. stock number two, tesaro, not the refinery this is also a biotech. bumping the target to 151 from 133. the stock was above the 133
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level. highest sell side target on the street today, under 10% total return. the company has two prescription drug user fee active events including recently getting priority review for an ovarian cancer treatment. they have got a new trial opening in january on that. there is concern about competition from clovis oncology in the space. fdr is positive and picking up earnings estimates. >> very heavy biotech presence in street talk today. next stock is portola pharma. 2017 could be a pistol year, raising the price target from 29 to 20. credit suisse saying given the fast track designation support the drug has in the community, it is raising probability of success for the drug to 65% from 40%. the news came out during the trading session. late in the trading session on friday. see something pairing of the
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gains here. >> and people probably snickering saying the stock is down today. to melissa's point, a one day pair back of big gains there. final stock, premiere inc. sun trust raising estimates on the small cap call of the day. charlotte based health care data company. the company made after crunching numbers appears that premiere brought to companies that make both strategic and financial sense. add that with the company likely to make deals. net cash position at the end of next year. the average target, $37 a share. stock sat 31.5. almost everybody out there sees an upside. it is three minutes before the hour. and the next one has become lately the most important trading time of the day. will we get a 2:00 p.m. lift and
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might it push the dow above that level we have been talking about. we're 40 points away.
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and welcome back to the second hour of "power lunch." i'm brian sullivan with melissa and tyler. two hours now until the closing bell. stocks moving higher but off the session highs. the dow off 40 points from the big number you heard about. we're soaring more than 1600 points since the election. up about 9%. but we have stalled since then. the dow first closed up, back on december 13th. ancient. >> ancient. 10 sessions ago. >> early december. >> this is america. we want it now. apple, merck and goldman sachs the wbiggest dow gainers now. >> check out some of the movers this how the nasdaq hitting an all time record electroday hiin. boeing a big drag on the dow. iran sealed a deal to buy 80 boeing jets for half the announced price. and new data showing home prices
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on the rise. check out the home builders. all higher today. >> on this mostly green day, let's check in with bob pisani. >> getting close. let's look at the stocks moving the dow. not on a percentage basis, impact basis. dow is price weighted. so the higher priced stocks tend to move more on a point basis and more of an influence. the highest priced stock and far and away the biggest influence this quarter and since the election and this month, that's about 7 points on the dow. apple is another roughly 7 points on the dow and ibm and merck and 3m, throw in 11 points on the dow. add it all together, that's how you get 25 points up in the dow. most of the rest of the dow on the flat side. a few of them are modestly down. melissa mentioned boeing down, home depot, nike, procter. these are modest moves because of the percentage moves, point moves. together, probably 10, 12 points
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on the dow on the downside. remember, dow is price weighted here. so look what is lifting the dow this month. the dow moved 841 points in the month of december. goldman sachs is responsible for about 160 points, about 21% of the reason the dow is up is just one stock. this is why i tell you the big companies, the big priced companies really move these indexes around, travelers is responsible for about 8% of the move, 3m, boeing and apple, another 6%. you put it altogether, these five dow stocks, five out of 30, are almost half of the reason that the dow is up 840 points. the dow outperformed everything. dow is up 9% since the election. the s&p is only up 6%. again, this is because of the difference of the way the indexes are weighted. the financials have had a huge impact in the dow. and they have dragged that index
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up to outperform the s&p 500. this goes to the politics of index construction. back to you. >> thank you very much. our next guest's active fund is up 11% on calls driven, he says, by his own unique strategy. here now is ryan caldwell. ryan, welcome, good to have you with us. i hope i pronounced it correctly. what is this strategy that you use and i gather it is a bit of a hybrid of two sort of strands of investment thinking that many of our viewer would be familiar with. explain it. >> absolutely. thank you for having me. our process is what we call quant quantummental. we're looking to combine quantitative factors, many things you all talk about with your guests and viewers daily, beta, smart beta and factors. combining those things in a way that helps make fundamental
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research smarter and more disciplined and far less prone to behavioral errors like narrative fallacy and storytelling. i think about it this way. our quantitative process helps us understand what game the market wants to play and fundamentally we have to go find the right players to play that game. >> so where does this lead you in terms of the kinds of holdings you have in your portfolio and what you do, maybe start by, you know, as of your latest reporting period, tell us about the three largest holdings in your fund. >> well, it is -- as you know, tyler, been a really interesting year. and it has been a year that has been defined by a pretty violent style rotation. earlier in the year, growth and defensiveness was the order of the day. a lot of reasons for that. we have seen, you know, three or four different iterations over the course of the year where value, global cyclicals and small cap have turned themselves
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into leadership, which is doesn't tend to be normal in one calendar year. and so, again, our fund has gone through those maturations, being very defensive earlier in the year, and then really having to rotate through the middle of the year and that's taken us to places like japanese financials, so the top of our holdings you would see something like sumitomo, names like baidu and names like ibm. >> let me ask another question. sort of two in one if you don't mind. what is your annual turnover rate? how long do you typically hold a stock. that's question one. question two, forgive me, when there is a conflict between the fundamental side of your equation and the quantitative side, who wins? how do you resolve it? >> two great questions. our holding period, we tend to optimize around 12 to 24 month holding periods. this has been a very unique
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year. just because the speed at which the market rotated at a very defensive posturing into much more aggressive posturing. this is a year where our holdings did turn over -- >> all about posturing here on tv. go ahead, continue. >> so that, of course, is sort of driven turnover. to your second question what do we do when we have conflict, the answer lies here in that the quantitative is nonpredictive. so that's really where fundamental analysis has to take over and judgment is critically important because the -- where it can't predict the future, can't change, it can't predict when managements change their minds, and do things that you weren't anticipating or policymakers. so that really becomes a fundamental judgment override when the two start to conflict. >> so, ryan, i'm curious, did your model pick up prior to the election, the change in sentiment that would have happened if donald trump were elected president? wall street had called it wrong.
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they said if trump is going to be elected, then the s&p will decline 15%. they had crazy predictions out there which turned out to not be true. did your model pick that up prior to the election or did it notice that afterwards and sort of ride the momentum at that point? >> yeah, melissa, so our models again would have had no way to predict presidential outcomes. but what our models were telling us was just how cheap value was relative to defensives and growth. and so our models were really pushing us to be value investors, really starting in february and then further emphasis post brexit back in july and then even through september. so we were value global cyclical investors before the election. and then obviously the election has been steroids for that trade, if you will, post as the world decided that early cycle is really the place to be positioned now. but, again, all our work was
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really telling us is that value is extremely cheap relative to growth, and you wanted to be positioned that way. >> ryan, thanks so much. have a happy new year. >> you too. happy new year, guys. >> ryan caldwell. the dow at 9% since the presidential election. emerging markets have plunged. will this continue into 2017 and are emerging markets a good investment? let's bring in david reedle of reedle research group. good to see you. >> thank you. >> key to the emerging markets is the direction of the dollar. you say the dollar's rise is going to abate. why? >> well, we really think that once people start to realize the implications of trump's plan heavy deficit spending, infrastructure, military, tax cuts, that the enthusiasm for u.s. dollar assets will decline somewhat. we don't need the dollar to adjust downward dramatically, just have it stop going up and that will give the emerging markets room to breathe in 2017. >> is it game over for emerging
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market investors? >> not necessarily. they have demographics on their side. a lot are big commodity exporters, so countries like brazil and russia that are big oil exporters. places like indonesia, thermal coal. if inflation trends establish themselves, some commodity emerging export markets could do very well. >> how do you think about china at this point with the threat of a looming trade war out there? do you favor chinese companies focused on the domestic market in china? >> i think those are going to be the ones that have the best success in an inflationary environment in 2017. those strong brand names locally that are serving the growing domestic demand, consumer demand in china will do well. enough growth to outpace inflation and strong brand names that allow them to put through price increases as inflation picks up. >> the eem is the biggest. it is the most liquid and probably the most commonly sided of the emerging market etfs? do you like it?
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we're talking about china. nine of the top ten holdings in this etf are china, korea or taiwan. heavily exposed to tech and asia. got a south african country thrown in there for good measure. is this the best way to invest in emerging markets? >> it depends what your horizon is and what your sophistication is. if you're willing to go into local markets and can buy companies listed in hong kong, that's a better with a i to construway to construct your portfolio. you're doubling down on this currency trade as well. if you can buy local shares, that's a better way to customize your portfolio. >> they want to sell it one way. is it an emerging market etf or is it a heavy china technology etf with a little bit of other stuff thrown in? >> it is really an emerging market etf. it reflects the relative weightings that people put on the different emerging markets. a brazil component in there, had heavy asia component as there
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should be given the importance of asia. >> if you look at the performance of the fxi, it has been just terrible. what turns that around? is that all concern about possible trade war? >> i don't think so. it is a combination of concern about a trade war and strength of the u.s. dollar. those are the two big things. fxi is a great example of what you were talking about before, an index that people need to understand if they're buying it because that is very heavy chinese banks. and chinese energy companies, both very state owned. i think you would be better off in hong kong with the hong kong china enterprises index or hsi itself, the hang seng index. >> we'll leave it there, thank you. >> thank you. >> jam packed hour of "power lunch" coming up, another high profile twitter account hacked. we'll dig into that. can alexa help solve a murder? if you own one of the amazon devices, you want to listen to this story. plus, what technology stock should be red hot next year?
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we'll find out. we're all over the markets, till today be the day that we hit dow 20,000. melissa is shaking her head. i tend to agree. we're back after this miles per hour. traveling 0 to win, every millisecond tters both on the track anthousands of milesway. withheelp of at& redullracing cl formation about every inch of the car om virtually here. brakes aetting warm. confmed,iel you need to cool youbrakes. dersod, ake as back 2 icks. givi thethe ility to have speed & precn. becae no o knows & like at&t if you'rgog to wish, wishig ae lexus demb to rememeer salesvent get up to $20 stomer cash on e your lexus deale7 modelsorhese terms.
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. another black eye for twitter. a tweet was sent falsely claiming that britney spears had
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died. the account of bob dylan sent out a tweet saying rest in peace, britney spears. it is more bad pr for twitter. twitter stock is down 27% this year. >> that's terrible. >> what, the 27% or the -- >> both. >> both are bad. >> i think everything on twitter, you know, you take with a grain of salt these days. >> absolutely. >> twitter's biggest problem and i've been critical for a long time, unlike snapchat -- snapchat is fun. it is light. you send a picture to your kids of dog face. twitter has gotten serious. that's the biggest thing that it needs to overcome. >> twitter gets mean very quick. >> very fasnasty people on twit. if you don't want to say it to someone's face, don't say it on twitter. that's the basic rule of thumb. >> that's genius. >> don't tweet after a cocktail or two. that's another good one. >> or only tweet after a
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cocktail or two. because we may read the tweets about you, best to have a cocktail or two in you prior to reading the notifications. the nasdaq hitting a new all time high today, irrespective of twitter as problems. technology is the best performing sector of the day. as we close out the year, let's look at who might be the big tech winners in 2017. james chalkbalk is a tech analyst. before we get to your winners, i was going to say is there any hope for twitter. that's a loaded question. you're neutral on it. what is the outlook for the aforementioned twitter? >> we want to be positive on twitter. >> everybody does. >> we like the service. but it is hard to defend this day after day. the hacks, put that aside, because everyone can get hacked and security measures need to be ramped. last week, we had the whole metrics, over inflation on the video and overbilling of
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customers issue. you talk with the advertisers and the agencies, the confidence there is eroding. so while we could potentially have a rosier picture, because of the trump phenomenon, and improvements they're making to on boarding, they have a dual ceo and management turnover and doesn't end. >> i don't want to be piling on twitter, i also like the service as very much as a human being, as a journalist. however, let's get to that issue, you got to make money. and if you're an advertising firm, you want two things. you want people to see your stuff. that's it. but, b, you need to be able to control your message. that's what all advertisers do. here is our company, and here is how we look. isn't twitter's biggest problem is that people hijack themes and memes and companies and companies are saying, you know what, we can't control it, we're out of here. >> that is a problem. absolutely. and then you have to look at the
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fact that there is no ambition or intention for verification. one of the reasons that we advocated for twitter to be acquired was the fact that they would have the ability and the leverage to verify accounts by taking a revenue hit short-term to build on the long-term potential of the business. so that's going to continue to be an issue. and, look, we can keep going on and on about it. but the use for growth needs to come back. over the near term, fourth quarter for the december quarter could be the first ever revenue decline for twitter. so stay tuned for that. >> i'm curious whether or not you're surprised that a couple of big cap names in your coverage, amazon and alphabet, haven't done better, they haven't ridden the train of the belief in growth which should lift all boats and the stocks are flat since the election. >> i'm surprised on alphabet, not as surprised on amazon. alphabet, look, not only are they attractive valuationwise,
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but they're finally starting to hit their stride when it comes to mobile, when it comes to programmatic. they're doing some fascinate things when it comes to optimizing for machine learning, and the whole voice based search based paradigm. the valuation is there. on amazon, i think there is a disconnect and i think i could extend that comment to facebook as well. a disconnect between the buy side expectations and what reality can be for the companies because as it relates to amazon, you have an ever rising who hope that the wheels will keep on turning indefinitely when it comes to aws. what we're seeing is potential pricing pressure there that could need to -- lead to a t temporary dip. >> are you worried that the snap ipo will drain dollars away from facebook or google or other companies you cover? the atm effect when it did hit the public markets next year?
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>> yeah. you to be the point right from me, from my notes here. the snapchat ipo is something that people really need to consider because this is a company i think that is poised for outside gains above the lofty expectations that they have been communicating. through the press. when we talk to advertisers and think about the transition of analog to digital dollars from television, we think there are two companies poised to capture that snapchat and google through youtube. as those dollars move over, i think you're going to see a diminished relative performance from facebook but i think you'll see the companies as a source of funds because where is the outperformance going to come from? not as many growth levers left anymore. so look for the upside to come from snapchat. >> take the conversation away from your investment brain and put it on your personal -- what is the one website, one app, one
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use that you just couldn't be without? what is the one? >> twitter. ironically enough. i get to curate my feed, follow personalities like yourself -- >> i'm boring. i don't tweet much. keep talking. >> to be able to keep up to speed with what is happening with complete real time relevancy. and get to keep in touch with the brands that i like. >> interesting. >> but like i said, it is an ironic answer. >> yeah. >> but then it is just the distribution feed, guys. that's all it is. it is a pr news wire type service. it has value, but it probably doesn't have value at 10 or 12 or 15 times earnings. if all you're doing -- even, james, you're a self-side analyst, we're journalists, we're in the room -- we run into
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the room with the bullhorn, yell, and then dip our heads back out. most people don't have that luxury. for the average person, i think, what is a megaphone. >> i love to do this, i'm going to use one of his favorite words, curates, it curates. >> merry christmas to you. you dig in now. >> it curates stuff, right? >> apple news now. >> yeah. >> right -- >> james, thanks. >> all right, thank you. >> happy new year. >> happy new year. >> see you on twitter. >> thank you. >> this interview will go viral. the best holiday season ever in large part thanks to the various alexa devices. the company sold millions of them and people use them for such tasks as mixing drinks or babing cookies. can it also help solve a murder? there is a case in bentonville, ark, where a houseguest was found dead in a hot tub. this is true. the owner is accused of killing him. police are asking for the echo
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in the house on the chance that maybe it heard something relevant to the case. the prosecutor in the case telling nbc news that amazon declined to turn over the records. i would imagine this is going to be the first manufacture suy of where -- >> the victim's name wasn't alexa, was it? >> your theory is that alexa only listens when you say alexa? our theory is that alexa is always listening -- >> let's be clear. unfortunate the way we're finding this out. this took two week. now we're going to learn whether or not this device is listening all the time because it is if the police subpoena this and amazon is forced to turn it over. by the way, if it didn't record stuff all the time, what exactly would the police be looking for? the hot tub is going to be outside. alexa would presumably be inside. >> maybe they brought alexa out. maybe they're using alexa as a speaker at the time also. >> correct.
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>> maybe the perpetrator asked alexa a question, what do i do now? maybe that's what they're going after. i don't know. >> it could occur because -- >> what do i do now that there is a dead body in my hot tub? >> how do i get the candlestick from the library to the dining room, colonel mustard. >> i don't know. >> interesting to see. >> we had people on christmas eve night, and my wife, one of her producers, is named alexa. she was standing next to the echo talking about alexa and alexa was having a real seizure because every other word out of joe's mouth was alexa said this and alexa would say, can i help you. >> this is some sort of weird space, sign continuum. >> boom. we know amazon was a holiday winner, murder case aside. which other retail stocks were winners and which got coal in their stockings? plus, the good, the bad and the ugly.
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welcome back to "power lunch." time for the good, the bad and the ugly. let's take the good, invidia.
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the best performing stock in the s&p 500 for the day. but also for the year. it is up 250% in 2016. it is up 6.25% today. on to the bad here, alexion, the anti-invidia, biggest loser on the s&p 500 today. and one of the worst performers of the year. it is down 34%. take a look at this, ugly day for seattle genetics, halting the trial of a leukemia drug after four patient deaths. the stock is down 16%. "power lunch" will be right back. what do you think? you're going toh, wish big athe lexumb toou think? remeeres event get up to $2500 customer cason wish big athe select 2016 an2017 models for these tms. see lexusealer.
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i'm scott wapner. here is your cnbc news update. turkey's president erdogan says he has evidence that coalition forces led by the united states are supporting isis in turkish militant syria. he told a new s conference he hs pictures and video making that support very clear. egg prices are up 30% for consumers in south korea as the year of the rooster dawns. an outbreak of bird flu forcing officials to kill 20 million birds by tomorrow, including one third of the country's egg laying hens. a security camera caught thieves smashing a window of a
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fur store, running in and running out with the high priced fur coats. caught on camera, but not caught by the cops. in a sydney zoo, a koala named sydney gives birth to a second baby and just emerged from his mother's pouch. three or four months with her before he is on his own. that's our cnbc news update. back to you. >> thank you. we're 90 minutes away from the closing bell. 40 points away from 20,000. the oil market is closing for the day. to jackie deangelis at the cnbc energy desk. >> it was an impressive session for oil prices, reaching an intraday high $54.10. low volume today, but some positions squaring certainly happening here. there is positive momentum in this trade. a lot of support given the fact that we see the dollar index trading back over 103. we closed just under the $54 mark, a sell over that level would have been more crucial. but right now, crude is nearing the positive sentiment that we're seeing in the equity
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market. there is still optimism about the opec deal which will be supposedly implemented on sunday. and a lost reasons traders think we could get over the hump, get to 55. back to you. the s&p 500 has rallied 6.5% just since the election. but infrastructure related stocks have done better. deirdre bosa has more. >> building and construction stocks have been rising. perhaps less known are infrastructure tech companies that make things like smart power grids and intelligent water systems. they also stand to benefit if we see a big building boom in the u.s., so these stocks make up the smart grids index, risen 9% since trump won the election. we pulled out some of of the bigger cap names in this basket,
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those worth a billion dollars or more in market cap and found the outperformers. flow serve, a supplier of industrial and environmental machinery like pumps and valves. gained more than 15% since november 8th. badger meter surged 17%. cubic corp., it not only provides smart services to the transportation industry, but the defense market as well. an industry where the president-elect has promised to cut costs. like the big building and construction stocks these smart grid companies may stand to lose if trump does not deliver on his big infrastructure plan. whether you buy into the hype or not, the smart grids index is one way to play the infrastructure trump trade. back over to you. >> thank you very much. if retail etfs are indication the holiday shopping season is a big success, the spider s&p retail and the vectors retail both trading higher today and amazon also on the march up 1.7% this
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afternoon. after the online giant said it shipped more than a billion items over the past few weeks alone. that was an all time record and five times last yarear's sales. who were the big winners? let's take amazon off the table and presume they were one of the big winners, winners in retail as you see it. >> so even in the context of am zo azon we're talking dollars and sales. the holiday season, buying products, buying gifts. all they think about is the dollar that goes to the company to buy the gift. still comes out of the cost. the profitability is important as well. the way we're looking at this is right now the winners to us are the companies that don't have to play in that promotional warfare. the reality is for the past several years, q4 has been a promotional war. the companies that don't have to play that can generate their sales without doing that win.
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and the way we -- >> lulu is one of them. there was a big sale the other day there. i didn't get it when i -- >> i heard. not firsthand experience. >> but they don't discount. >> always sales in stores, uh-uh can find things if you go through the treasure hunt, to another point. in lulu, ulta another, and the off pricers. we hear about the off pricers. the way we view this, they don't have to fight their promos based on other players. you can buy a sweater at 40% off, that's a competitive advantage. >> this has surging holiday sales. i don't want to discount our segment, but i spoke with a couple of retail people, some friends, some colleagues, they said things weren't good. >> i think what we heard was the beginning of november was slow, then started hearing holiday upticking and then beyond that, right now, we're in this period which feels a like a lull. i've seen the headline on the back end when people return you get things coming back.
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i would be inclined to agree. >> not surging holiday sales. slumping holiday sales. to be clear. >> there are certain companies, amazon, which we won't talk about, certain companies and big companies that are seeing the sales. >> amazon wins. does that mean walmart, best buy, those guys are losing? can everybody win along with amazon in the categories where there is direct competition? >> you can win against amazon. i think the three companies that you just talked about have the potential to win a war with amazon from a pure retail perspective. we have said this for a few weeks now, couple of months, amazon has won the online retail battle. it is still 9%, 10% of retail sales. walmart sells -- amazon's online product sales about 75 billion. so you put them in that context, walmart can win the retail battle.
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best buy can win the battle for its category when you combine brick and mortar with online. you look at the brick and mortar retailers, you have to recognize that 90% of the sales done in the sales, even if they're performing well. maybe it is 88, 85. they have massive brick and mortar networks and they have been doing it. this is a test case this holiday. rome wasn't built in a day and this doesn't happen overnight. and it costs a lot of money to do this. and they're all investing. >> you follow the credits -- >> yes. >> are any of these companies in danger from a credit point of view? any of the ones you follow? >> no. >> not talking about walmart and amazon, but are there retailers that we would know that are in trouble in terms of -- >> i would call out claire's, one of the lowest rated retailers we have in the moody's retail portfolio. claire's reengineered the balance sheet. not sure if it gives it enough
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room. an issue with respect to store traffic. the best thing claire's probably has going right now is the relationship with trooys "r" us. toys "r" us cleared the runway on maturities -- >> company had a lot of debt for a long time. >> still does. but it did an exchange over the summer that cleared the decks. >> in the cluster of retailers, are there one or two are facing existential threats and might not be here in one year, two years from now? and if so, who are they? >> i was going to agree with that point. it has been very hard to kill a retailer. let's call it the cluster i look at, cash rich and generally debt free. there is a whole group that is able to hold their owns and even in tough times they weather it. that changed. you've seen several liquidations, several bankruptcies and now in this new
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norm -- you've seen a lot some the sporting goods category, different ones within the apparel category. if you have no sign that this is going to come back this is structural, and the mall apparel retailers or that sporting goods dynamic has changed, it is hard to say i'll wait for next turn and that cash flow becomes important. you players off the mall, they have some ease on their p & ls. the end of the third quarter, every retailer came out and said this is the best inventory position we had in three and a half years and we're talking about nonsurging sales, inventories that are going to be higher than we probably thought they would be. >> gentlemen, we have to leave it there. >> thanks. >> president obama meeting with shinzo abe in hawaii. what do china's recent actions mean for both countries? that story is next on "power lunch."
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until she got quickbooks now shsendinvoicessees when theve beeviewed anta-d paid twice asas see how at quickbooks-dot-com. when theve beeviewed welcome back. president obama visiting pearl harbor with japanese prime minister shinzo abe. john harwood is live, not there, but in washington. john? >> wish i was in hawaii, tyler,
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but i'm here in d.c. look, this is a book end to the trip that president obama made to japan in may where he gave a speech at hiroshima, the site of the first nuclear bomb that the united states dropped that helped bring world war ii to a close. now you have shinzo abe not the first japanese prime minister to visit hawaii since the attack on pearl hasher er iharbor in 194 returning that gesture of reconciliation. neither leader apologized for either the pearl harbor attack in the case of prime minister abe or the dropping of the nuclear bomb in the case of president obama and hiroshima, but it is designed to try to heighten good feeling between the two countries and reconcile. we long since reconciled with allies. but gestures like this are significant. today, prime minister abe laid a wreath at the national memorial
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cemetery of the pacific. tomorrow he's expected to visit the uss arizona memorial, which, of course, the uss arizona was ground zero for that attack at pearl harbor. the two countries have been working together in a contemporary way on the trans pacific partnership. that is now under grave threat because president-elect trump indicated he thought it was a bad deal. don't know if that means that it will go away entorely and leave china to try to create a regional trade pact in the pacific, or whether president-elect trump is going to try to renegotiate or change some elements of the deal. we're going to have to watch that. for now, this is a day of good feeling between the american and japanese people. >> john harwood, thank you. one country closely watching the events of pearl harbor will be china. susan lee is here with that story. >> political tension between the two largest economies. often listed by investors as one of the biggest risks investing in the asia pacific.
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an example of that this weekend with the chinese aircraft carrier sailing into the south china sea unannounced. china harbors deal seeded resentment over the war time aggressions which japan has never formally apologized for. the japanese prime minister does not have a close relationship with china's president. it doesn't help that abe is trying it repeal some of the pa pacifist constitution. so this pearl harbor visit has been billed as the first by a sitting japanese prime minister to show remorse. so, if the japanese leader is willing to show and sound more contrite to the americans, abe may be willing to show more remorse to his asian neighbors like china and south crew i korea. japan's prime minister will likely be the last foreign leader that president obama hosts on u.s. soil. and japan's leader has already
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been quick to book end it with the earlier meeting with the incoming president-elect donald trump being the first head of state to have a face to face. it show you how important the relationship is for japan going forward. >> thank you. 2016 was a rough year for biotechs. down 20%. but some of the decline was fear over hillary clinton's tough talk on drug pricing. what will a donald trump presidency mean for the stocks? that's next. [pony nehi what? hey ry oh. at's with the dog-sized horse? i'crazstressed tryg to figure out ts complex trade so iwarren, helme deal.ony,e? t that rightarn? ll, you could t pport from thinwis -app chat. it lets you chat and sha you scre direc wie rson right fro ap so you don't neea a mfortt ny. oh, so what about my motivational meerkat? in-a cha torswim. ly a ametrade.
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the ball is almost set to drop on the new year so cnbc gets out the play book to forecast what may happen with various sectors in 2017. today what is next for health care? here is bertha coombs. >> repealing obama care is easy. the challenge for the trump administration and republicans in 2017 will be coming up with a replacement plan and pulling off a smooth transition. three predictions? first repeal and maintain obama care. republicans will repeal the aca especially the unpopular individual mandate early next year but replacing it could take
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a couple of years. >> in the meantime they will keep obama care subsidies and to prevent a collapse of the market may come up with funding they opposed under obama as a bailout. m&a on pause. with uncertainty surrounding changes to the medicaid and medicare government health programs ensureurs and hospitals will refrain from big mergers and work on partnerships aimed at bringing down costs. which brings us to more pay for value. hospitals are already feeling the pressure. >> next year drug makers, distributors and pharmacy benefit firms will be on the hot seat to deliver lower prices, too. bertha coombs, cnbc business news. health care stocks have taken a beating. take a look at the nasdaq down 19% year to date. what should we expect coming down the pipeline in the new year? will the new president-elect have a heavy impact on the
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sector. let's bring in michael yeand michael king. guys, good to see you. michael king, you are both michaels. michael king, how do you feel about your sector this year compared to six months ago? >>s optimistic. my general attitude is that innovation trumps all. i think our sector has proven itself to have innovation at the forefront. you just saw approved right at the end of the year. and these are the kinds of drugs that the bio tech industry is quite good at and delivers value to patients with significant unmet need. >> that's all great but just picking up a line out of guest notes you can be positive on bio tech innovation. isn't there a difference between
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how you feel about the innovations versus how the stocks can perform and do politics have a role in capping the performance of your sector? >> i do think it is going to be a stock picker's market. you have to try to find companies that have unique, innovative molecules, less competition the better. those can be found in our sector but there is no saying that pricing is under a large degree of duress. >> i want to dive into seattle genetics because that is on one of your best ideas in the small mid cap area. that stock is down about 16% right now after the fda halted a number of trials because of four patient deaths in the cancer drug studies. has everything changed now that that data has been released? >> great question. so seattle genetics we view as a buying opportunity. stock has gone up a lot on the
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data and then a disappointment today took back that rally. so we like it here for a couple of reasons. the pipeline other than that product and the m&a potential on seattle genetics and that is a key theme i'm sure that will be talked about because m&a is a big theme this year. >> i want to under score. you think this dip of 16% in seattle genetics is a buying opportunity here? >> we do think seattle genetics is a buying opportunity. >> is there a stock that you like? people, some of our viewers may have extra money. would you be willing to take a bigger chance than they were in the past? is there a name that you like but you are going to caution, a lot of upside but a lot of down side, as well. kind of a high risk but high reward name? >> we like a number of oncology companies. we spent a lot of time working
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on oncology. there is excellent what i call world class oncology companies, blueprint medicine and kpti. we are also quite fond of loxo. those are basket that your investors might have an interest in diversifying. >> michael ye, i see you like cell gene. why is that atop your list? >> we like the best large cap growth name in 2017. i have the highest conviction in hitting their numbers for '17, possibly raising guidance on '17 and '20. highest conviction on earnings numbers this year and largest pipeline in oncology on all of bio tech. >> thank you. >> radio show on espn, mike and mike. check please is coming up. are you listening, alexa?
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check please is coming up. where is the dow? we are back with more right after this, alexa.
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thhowh, whoa, i got this. st gtaethe check. almost there. i can't ach . you he litoas you avoipicking up the c c. it's what you do. i goth. thanks, dennis! if you want toave fifteen rcenor moreon car , you swch to geico. owwwlph. tis good ispy duck. check please. >> time now for check please. i just learned via the twitter machine that when we say alexa, some people's echoes concern on so you can do something like alexa, why is tyler mathisen so handsome. alexa play billy joel.
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>> and it may be happening right now. >> those people may be getting an answer. >> on the first question they will say i cannot answer that question. >> it's unanswerable, alexa. turn the volume to ten. >> we apologize if your alexa has ordered paper towels. >> my echo is right next to my tv. if my son is not watching the nfl network but is watching his daddy, it has probably just gone off six times. >> alexa, watch daddy. >> i'm watching shares of nvidia at an all-time high. a lot of analysts have turned positive after a massive run over the past year or so. they turned positive. goldman sachs adding to conviction buy list. we made fun of these analysts but this stock keeps going in
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the sweet spot of automotive, ai. >> i like to get my shopping done early. as i went to the malls i noticed the parking lots were not crowded. i can get a spot like i hadn't been able to in prior years. >> thanks for watching. "closing bell" starts now. welcome to "closing bell" i'm kelly evans at the new york stock exchange. >> i'm bill griffith. bringing ground hogs day to broadway in february. >> the movie? bill murray? >> as a stage production, a musical. we are living through that right now. >> it's true. is today the day. >> waiting for dow 20,000. the watch is in full effect as the blue chip average moves closer to that


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