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tv   Power Lunch  CNBC  January 25, 2018 1:00pm-3:00pm EST

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time for final trades. joe. >> texas banks, gm t emerging markets. >> power lunch and the president begins right now >> and welcome to special edition of power lunch i'm melissa lee along with brian sul owe van. breaking news with wide ranking one on one with trump, economic growth, and so much more in that conversation. >> we'll get to that in a moment right now your money and markets are surging. up now the dow is up 157 points. s&p and nasdaq are up not quite as much, but that is yet another record high for the markets and your money, tyler. >> we have two hours of jam packed hour lunch coming right up but let's start with michelle
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caruso-cabrera in davos. and she is with the man who just finished up with president trump "squawk" joe kernan. michelle >> yes, that's right thanks so much tyler i am here with joe wrapped up extensive interview with president know a lot of things you talked about. give us some of the highlights. >> mr. trump comes to davos. what would be anyone's first question i wanted to know here you are coming into the bastion of elitist and everything else. how are you going to sell the american first agenda to the crowd we have here in davos? >> when i decided to come to davos, i didn't think in terms of elite es or globalist i thought in terms of lots of people who want to invest lots of money and all coming ba can to the united states they are coming back to america. and i thought of it much more in those terms. after i said that i was going, there were massive stories about the elite and the globalists and
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everything else. it's not about that. it's about coming to america and investing your money, creating jobs, companies coming in. we are setting records every day and every week you see anticipate with $350 billion most people thought $350 million. and i spoke with tim cook. you remember my campaign i used to say i won't consider this great unless anticipapple comes. but so many companies are coming in. >> his a rival herrival here to was like a celebrity these are presidents and bi billionaires and he walks into the room and they are taking pictures and so interested. >> a lot of people excellented
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on that on the way over i saw prime minister trudeau and netanyahu. someone must be there because you see the crowd. but it is nothing, nothing like is around trump. almost the waters are almost parting as he's walking through which is crazy. >> which is it so ironic, because a lot of the americans complain about him and his agenda. >> it's part of the phenomena though with everything involved i would say you don't need to be, you know, a trump fan to stop and -- >> and want to look. >> and, yeah, want to look, especially over here i mentioned it to the president, there is optimism here this year almost without exception from every ceo. >> yes. >> and many mr. point out the global growth but just as many are pointing out tax reform and deregulation and not just the ceos from the united states. it's a different feel here in
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davos. >> nervous about trade did you and he talk about that >> we talked about trade and i was a little surprised this a lot of talk about trade. one of the most pressing issues about corporate america, and listen to this. >> i like bilateral because when you have a problem you terminate. when you are in many countries like 12, you don't have the same option but somebody asked me the other day would i do ttp here's my answer i'll give you a big answer i would do ttp if we had a better deal. we had a horrible deal nafta is a horrible deal and i tell stadiums full of people. >> are you reopening it? >> i always say this i would do ttp if we could do a better deal the way the deal was structured was terrible if we do a better deal i would
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be open to ttp. >> that's interesting. would you -- >> are you surprised to hear me say that >> a little. >> it was a bad deal. >> maybe nafta, maybe not nafta, can you give me any indication which way you are leaning? a lot of the ceos on here, they all seem to acknowledge that it's 30 years later, and there is a lot of changes that make a lot of sense but to not abandon the deal. >> we have a trade deficit with mexico. >> right. >> mexico. $71 billion a year right. we have a trade deficit with canada of substantial amount of money, i have a number, but we keep arguing i won't tell you it's $17 million. we have a trade deficit with canada we have a massive trade deficit with mexico. we have to do something. we can't continue to do this. >> are you leaning towards staying in >> i've always said during the
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campaign and which you've noticed and said, which i have appreciated, i've full fiduciary a lot of what i said i've only been here a year i maybe have another four years. we'll see. we have $71 billion trade deficit with mexico. we have to do something. we can't do that will it be negotiated? we are trying right now with the whole group. i think we have a good chance but we'll see what happens. >> so that's the headline of the story of your interview today. he would consider a multi lateral trade agreement. that's a big change. >> we have a better chance of getting a ttp deal with this guy than with the democratic candidate. >> yeah, it's amazing. >> hillary or bernie sanders. >> that's one of the frustrating things to here from all the globalists oh, he pulled out of ttp. >> it was not going to happen no
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matter who won the presidency. >> sounds like to me i'm in dave os, a lot of the players are heerks i'm ready to talk ttp would you be surprised now if there was a reengagement there i don't know but i did think it certainly seemed like bilateral was going to be the way that this president operated but he surprise as lot and you are in davos, you know, we are all feeling global here. >> when in rome. >> exactly aren't we all feeling. >> i think some of the guys in studio have questions for you. >> great yeah >> got to see some of it i guess? >> yeah, we watched on internal feed i thought it was very, very interesting. and he's got a very good economic story to tell, it would seem to me, joe. sometimes it gets obscured by some of the other things some of the rhetoric some of the other coverage here. but pointed out the growth trajectory and he looks ahead to the first quarter, i guess first quarter gd pshlp numbers, or ma
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fourth, and looking for 3% growth which no one i don't think a year ago really expected would be a sustainable number. he thinks it can go even higher. >> and you still have a lot of people that may have invested interest in this not seeing 3% growth but saying not a single mainstream economist that says it's possible given that population isn't growing and too hard to increase productivity. but we had jamie diamond on who said will you please stop talking about bitcoin so much. but what he did say was he put the forehandle on possibility for one of the quarters in 2018. he said possible 4 and i said president trump that jamie diamond actually said that 4% was possible. i think feds are 3.4 right now and last quarter was the hurricane quarter still above. so i think people might be under estimating and it's not necessarily just donald trump it's the united states economy when it's unfettered and talk to her.
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you've written pages and pages about what can happen when you unleash private sector. >> he certainly kept coming back to the idea l he said it several times. in parts of the interview that he thought that the deregulation initiatives that he's undertaken. >> this is big. >> have been really critical, maybe heaven bigger than the tax changes that he's made. >> tyler, without, almost without exception, people that you wouldn't necessarily -- well, i guess once howard shultz does something makes president look good, we know people are coming around. but almost every ceo has said positive things about tax reform. >> even some of the ceos i know did not vote for donald trump. >> for sure. hands down. >> and michelle, as you know, first off, ttp, for people don't know what that is, trans pacific partnership, 12 countries, trade
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deal representing 40% of the global output. they considered that nafta in disguise because it featured canada and mexico, but that component complicated i think michelle for president who has basically said nafta is a bad deal if nafta is a bad deal he would almost have to automatically put the trans pacific partnership in that bad deal box as he said he did with joe. >> yeah. brian, remember when people said, you know, talking about china, if you get out of ttp, that's what china wants, puts them in the seat so here he is over here and dealing with china maybe you do drop the ttp card maybe we won't do that and maybe that's a signal to china maybe we are ready to do multi lateral day. >> it is leverage. >> by the way, joe, did you nicely remind the president that there are some networks that are
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talking about the stock market every time he tweets that out, no one is mentioning the dow i said mr. president -- >> yes, i did. and he loves the network loves to watch in the morning. i think he's, you no he, some of his tv habits have been leaked as well. he might switch around or have a couple of screens. but he mentioned a couple of things that indicated to me he's a viewer from time to time and i requested a tweet for you. >> your interview, he better. >> well, yeah. >> thanks for nothing. >> you are going out on a limb there with the tweets. it could be dangerous. >> actually for the first time ever i had some people do it i don't want the aggravation. >> you don't want the president to tweet the interview >> yeah, i do, 46 million. >> yeah, phil talking about production to the u.s. and got hundreds of thousands of views
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immediately in the first two minutes. but joe back to trade. because trump is self proclaimed stock market president does he acknowledge if he pulls out of nafta probably insert some volatility to the market to the down side? >> i think he probably is aware of some steps that might not be as friendly to the stock market. i think in his mind he thinks that he's pretty important to the stock market in that you remember, brian ross, i don't think he's back on tv yet. is he? >> i don't watch that network. >> sfanyway, that was the bigget volatility we saw. you were covering it that day. >> yeah. >> about 450 point swing when it looked like there was something preelection on russia. and i don't think that's a totally just humorous to think
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donald trump might think he's the key man insurance for the stock market here. >> well, he has done very important things for the american business community. cut taxes and deregulation. >> almost 50% from november, from november 8th. and anything that's not flat or down 10% is in the face of all that. >> you know what we have to do, we have to play our coverage the day before the election. >> right and throw a few newspapers. >> and how bad it was going to be. >> i remember the people by name because one person called me a jack ast. >> shocked. >> that was the first time ever. not. probably. >> good job, dude. thanks for staying late for us. >> thank you you're welcome my pleasure. >> tlanghanks. >> you can see his entire interview with the president, that is tomorrow on "squawk box
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6:00 a.m. eastern time see the whole thing the interview with the president. >> let's get more reaction to interview with the president joining us now economic reporter steve, we don't know a whole lot. we'll see the rest of it tomorrow morning we have read the transcript so we know but we don't want to take too much of the thunder the trans pacific partnership, obscure, got a lot of attention, i doubt most of our viewers have read the eight or nine hundred pages of it. do you believe ultimately it would be a positive, maybe a lever against china's growing power? >> yeah, they do and the thing they also believe, which is kind of the general view there in davos when it comes to why do we like big trade deals and not bilateral? because the evidence shows that the size of the network multiplies the gains to those who are in it. if you have two guys with a deal, it's a good thing.
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if there is four guys with a deal, then you multiply those possibilities. and so the idea of bigger networks is better i'd say this advisedly because i'm not sure that the president is this calculating when it comes to these issues, it certainly has a feel of being off the cuff but that said, there is a possibility here of a nixon goes to china when it comes to the trade issue. here is a guy who has governed way from the other side on this free trade issue and has really stunned the world and the global consensus on trade now, that gives him a certain authority, gives him a certain checkbook with which to come to the deal and say, you know what, i'm willing to give on xy and z. again, i don't know if it's fair to say that the president is as calculating and thinking about it but the idea that ttp could be back on the table in a way that's done from a person that is seen as more protectionist is
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pro tensionally, can i put under quotes, underline that word, potentially good news. >> ryan, your reaction to is that are bilateral deals the way we'll see this administration go and when i was listening to him talk about nafta, he ended that quote that we just ran on a rather more positive note. it was like we'll see. we are trying to save it and renegotiate it rather than scrap it so it seemed like maybe a greater openness on both ttp and nafta to multi lateral. >> well, certainly everything that we've heard during the trump presidency has suggested that he would be seeking to pursue those bilateral deals and indeed even this morning he met with theresa may, u.k. prime minister and talked about a trade deal between those two countries. so these comments do surprise me but what doesn't surprise me is trump is taking conciliatory
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tone with davos. he knows they disagree with him on other issues. they are quite fond of his domestic agenda in terms of the tax cuts and deregulation. so i think he's trying to be conciliatory on the trade. and wasn't helped by steve mnuchin comments from yesterday when the u.s. might be in favor of weak dollar and that got international push back. so i think trump is trying to diffuse that but whether any policy paradigm shift comes from it remains to be seen, i think. >> i think there is one other thing worth mentioning which is not this year, but next year or the year after, if the trump idea here that massively cutting the economy, cutting taxes leads to higher growth in the u.s. economy and the world, it is going to dramatically upset the davos consensus over
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there. not that they don't think deregulation is good or that the idea of lower taxes can be better but if he makes his change and ends up having the effects that are planned, it's going to change a lot of minds out there about the right direction. >> what they can do in their own countries? >> in terms of what right thing to do in economic convention and their own countries. >> ryan, we know what is it real economically and what is real when it comes to our viewers pocket books can be different things your nation leaving the european union, right, they agreed germany is starting to see more protectionism in its own borders. now the ttp did get approved by 11 other countries in it, our congress pointed out rejected it out of hand. but you have to admit that trade, while in a textbook sounds good and is probably good for a lot of people, there is a view among the british, many people in america, perhaps some
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germans, maybe some chinese, maybe some japanese, that it is not good for them personally, because capital flows towards the cost is the least and jobs may get lost right? that is a part of the trump mo, which is, yeah, in principle it's good but you lost your job and i'm going to stick up for you. simply as that. >> i would push back a little bit on experience of the u.k because both sides in referendum was arguing over who was more pro free trade and a lot was exiting that but you are right a big part of the trump message there have been losers from open dploe ball trade. this has been something that's been part of the u.k. -- u.s. political debate since ross perot run for president. and undoubtedly those views do proliferate in particular areas of the country while i think the trump agenda is pushing on in terms of trying to bring investment back to the u.s., lowering corporate tax
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rates and deregulating, he's trying to show as well, yes, while trade and migration policy can affect growth, there are many more tools in government's locker that can affect growth in ha much more dramatic way. and i think if trump can get that growth rate upto 3, 4% over the coming years, that it really will upset the consensus who believe that trade is the key and overwhelming issue of his presidency. >> all right gentlemen, thank you very much ryan, steve, appreciate it. >> american airlines taking a stock lower today with other airlines as worry a price war could be joipg now joining us from fort worth texas. phil. >> reporter: let me bring in chairman of the american airlines you know the concern out there that we could see a huge push to add capacity because your
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competit competitor united said they are adding moreover the next three years. what's your take >> first of all, thanks for coming out here. a lot of your colleagues are in davos and you are hanging out here we appreciate that first off, i can speak about our growth but i know this industry has been tran formed as we look at growth opportunities we see some. but always within our strategic competitive assets our hub system that's what's happened in this transformation is you've seen industry mature to the point while still intensely competitive, you have three global hub carriers, and lower cost that provide competition. but those of us hub carriers, when our growth comes in and out of our hubs, it creates productivity i think in the old days they see growth, they say here comes fare
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wars this tends to be better productivity to our customers. >> but certain markets where united has said we did the ground to delta, and we'll go back in. and natural inclination for investors will say at least margins will get squeezed, because when they come back they have to win over customers how confident are you that your margins will not be squeezed >> certainly some markets they have growth in their hubs. that make sense in some of those markets. it means those markets are still profitable for us. but there are markets like that for us we'll add some they'll add some some of the things that happens as it matures. but maturity around what has become a much more rational sort of structure in terms of long-term competitiveness. >> and you remember the old days. >> i do. >> america west, u.s. air where you had so many different airlines where fare wars could
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break out. are you fairly confident we won't see a fare war >> again, who knows what's going to happen with faers what i know is unlike the past, which i think our investors are worried about, when you saw growth in excess of demand growth, what that was was airlines trying to in the best time trying to steal shares from someone else while you had these good times which has led to more bad times. and we have some investors that still think that's what's happening. and the point i'm trying to make is that's not what's happening here these are airlines that have real strategic assets and making them stronger and not trying to drive in hand out of markets but rather make sure they are serving their markets as well as they possibly can. >> and you heard hunter kay on the call analyst feels like maybe we are the end of the growth cycle airline stocks. you disagree tell me why you disagree >> well, again, we still are
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value proposition. that investors can't seem to come to grips with if you look at mutt paltiples ty are well below what other sectors are. and i believe that's because people think we'll figure out a way to screw that up i don't think that's the case. weave proven that and continue to prove that. and as that happens we'll see multiple expansion. >> doug parker, chairman of american airlines. and the other stocks are under pressure not as much as yesterday let's see how this shakes out over the next few weeks and months. >> thank you very much the america first president goes to davos what will he say to the community when he gives his big speech tonight he spoke to cnbc earlier today more reaction to his interview with joe kernan. and you can tcwah the full interview 6:00 a.m. beginning on
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welcome back to power lunch. president trump speaking with our own joe kernen at davos. the big head line saying he would do ttp, that's the trans
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pacific partnership, if he could make a better deal now more on the trump effect at davos, like the market is on fire again, with special counsel, former chair of economic advisers in the clinton adviser, and theresa whitmore who oversees. welcome to power lunch. >> thank you. >> so much concern about trade here at davos. if the president were to consider doing a multi lateral deal like the trans pacific partnership, do you think that would be good news >> i think the trans pacific partnership was good news for the world economy. i think it was actually a very good deal. i think the american business community supported the deal i supported the deal the notion of being able to negotiate a better deal, i would like to know what that is. he also called it a worst deal or one of the worst deals ever that is not how the business community felt about it. so the second thing i would say,
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because i did listen to his comments, is he started with a general notion he prefers bilateral trade agreements by the way, his measure whether a trade agreement is good or not is whether the u.s. runs a trade surplus. okay, that is not a measure of whether a trade agreement is good or not. >> yeah, we have that discussion a lot with larry who is very frustrated about that. >> yes. >> i would say the ttp would never happy no matter who won the presidency, right? >> i don't know. i don't know walking away, this is why i say this, i think, maybe we shouldn't replay history. but i do believe there was a notion in mind to sort of work through, look at the ttp, and make some adjustments. so would it have passed or not i don't know what i do know is day after election the first thing president did is walk away, no negotiation. so i don't know. but i'll also go to nafta because he talks about nav tachlt again he sales it's the worst deal ever. the american business community,
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the manufacturing community and the agricultural community don't agree with him they want nafta. and it is very scary to them when he says we'll have to negotiate a better deal. or i don't know. that's what he said. or i don't know. that is a threat that i'll tear apart nafta if i don't get something better what for the u.s. trade balance with mexico or canada that is not measure of a good trade deal. >> theresa, your portfolio must be bigger this year compared to last year. >> sure. >> the market when it comes to retirements and pensions in washington state, things are better than a year ago. >> they are. but we always worry a little bit about the current success, in seeds of future recession. so i think one of the things about being a long who zion investor you take the good news with a little bit of worry in terms of what will follow that so obviously this week has been wonderful to hear the enthusiasm by the corporations.
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for us as investor, we like it when what i call the value creators, which are the corporation, when they are positive, because we have to extract value from what they create so in lots of conversations with ceos this week, that makes you optimistic one thing that doesworry us is valuations all-time high across all of our asset classes so as we happen to reinvest, returns come to us, reinvesting a very high valuations and that worries us a bit. >> can you go to cash to wait for better valuations or no. >> we have chosen not to but basically we stay fully invested through all market cycles so really matter ex-he extending horizon out and not reacting when a recession hits or when there
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there is a correction other than rebalancing but basically staying very disciplined and not run scared if there is a correction basically not too get euphoric. >> so the ceo says i've been coming for nine years, this is the best mood i've seen anyone else martin says i've been coming for 30 years yes best move since i've seen since 2006 which would be a bad sign. are we too ebb u atlanta >> i think we have to look at the situation, 2006, 7, 8 coming people were worried about the capital markets and risks and overvaluations, they were worried, worried, worried. then we have the no longed recession. u.s. comes out of the recession
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first. and komgs outcomes out in terms expansion the hard work was done by the obama administration. you count the months of expansion, it started in june 2009. >> tax cut is going to help? >> i'm going to go to the tax cut. because i was for a corporate tax cut. i remain for a corporate tach c tax cut. the obama administration was talking about this there want agreement it would be deficit enhancing tax cut. it would be revenue neutral. what's wrong with the tax cut is it's not that we need it we did need a lower corporate tax rate i'm in favor of territory alt bringing money back from the rest of the world. i am not in favor of creating a massive increase in the projected deficit. nor in doing the tax cut in such a way as exacerbate inequality of the united states so i'm for the corporate tax cut. and i understand that it will encourage additional investment
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by u.s. companies. by the way, one of the things the president said very clearly and i heard it also today from the secretary of labor, we are open for business. they want a huge in flow of foreign investment and you know what will help that, the lower dollar you know we have a treasury secretary now saying i am for a low dollar what a low dollar does, we'll get exports from that, also get inflation. >> and also get a bigger trade deficit when we have more investment here, right >> yeah, this is all interesting. and, yes, exactly. but, yes, corporate tax cut is, and deregulation, both big positives for the corporate community. i'm not surprised at euphoria. >> so lovely to have you both here thanks for joining us in davos, switzerland. >> back to you. >> if you can't beat them, join them nba realizes people bet on games so now it wants to take a cut out of the action. we'll ekxplain how that works.
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company ceo is about to join us. stay with us on power lunch with ethan allen. ♪when sundown pales the sky i want to hide a while behind your smile ah, but i may as well try and catch the wind♪ our mission is to make off-shore wind one of the principle new sources of energy. not every bank is willing to get involved in a "first of its kind" project. citi saw the promise of clean energy. we're polluting the air less. businesses and homes can rely on a steady source of power. this will be the first of many off-shore wind farms in the u.s. ♪for standing in your heart is where i want to be
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i'm group of senators met last night to discuss immigration. >> well, we have a deadline, and that's really important. we all intend to meet the deadline we had a very good meeting i think there is probably 25 or 30 senators there on bipartisan basis and everyone is committed to reaching a solution. >> fda advisory panel ruled phillip morris should not be able to claim tobacco decease 8-0 one ab exception manmade global ka catastrophe,
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doomsday clock, i don't know about you guys, but that gives me some anxiety. >> yeah, furniture company here sitting here, why should i buy a couch when we are all dead he litter said at least we'd be comfortable. that's what he said. >> markets across the board. volatile session do you is up 206 at one point. now we are only up 150 points but we did have a swing on the dow. either way, folks, dow is record highs. 401(k)s and any other number set that you have probably winning boeing and united technologies leading the way. boeing, who else materials and health care the best performing on the sectors.
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>> next guest has good read talking about furniture ethan allen. shares sharply lower second quarter earnings down major marketing campaign to boost traffic. here with exclusive with ceo fa ruk always a pleasure to have you with us. >> yes, it is. >> and talk about tax reform and tax cuts that are in the offing. what's concerning i think about this for a lot of wall street analyst community is that your orders, there is a written order decline of 6%. can you fill us in, give us the context of this, and what you are actually seeing right now? >> yes, keeping things in per spec i ha perspective, our sales
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delivered. our operating earnings is about 8.8% is among the highest. we produced fair amount of cash. we are debt free and, yes, the timing of written business can vary from month to month. you can have an impact in december you can make it up in january. >> so what specifically was behind the 6% decline? because even though you have a the lo of those very positive metrics, they are focusing on that, focusing on the fact that doesn't sync up? >> we have increase in backlog we make 70% of our products in our own workshops. and september last year, we were awarded fairly large contract with the u.s. state department and an according to this contract said you have to ship in 60 days and new product it impacted our
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ability to make products that we had sold to our customers. because, keep in mind, 65% of everything we sell is made to order in our plants. >> right. >> so from that perspective, we had to also be careful how much we advertise in that kind of an environment. because in our business, we, customer expectations are very important. >> if we don't deliver it on time we can mess up. so we decided hold up advertising which had to some degree impact on our traffic in design centers less traffic. >> so cascade effect from the state department >> but now talking about this quarter. and yesterday we had earnings we now feel comfortable that our offerings are in good shape. that our manufacturing is better and we are going to increase our advertising by 33%. >> so you think that will help
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turn around what had been a 2% dechain decline in sales in retail >> yes. >> you think advertising will flip that. and what are you looking for for 2018 in terms of sales growth? >> obviously the top line is very, very important and i think that by spending, i would not spend 33% more in advertising unless we felt comfortable that our offering ares ingrate shape and talent is there and manufacturing is in good position, i feel comfortable that's why i'm spending the money. >> what's doing in on did yohon had production delays. is that fixed? >> yes, because the election, they accepted him for a week, and we also had hurricanes and floods.
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>> we apologize for breaking news we want to listen to president trump speaking with business leaders in davos. >> forging networks and so on. so i'm very happy and pleased with infrastructure focus. >> thanks very much. i appreciate it. >> so thank you, mr. president for inviting all of us i'm the president of the volvo group. >> volvo. >> and other things proud owners of mack trucks. >> which is 100% made in the u.s. >> absolutely. america is 100% made in united states as well as well as our production equipment in pennsylvania, as a matter of fact, in virginia, so we are primarily focused on east coast. now running the biggest investment program in our company's history in the united states. >> how much will you be
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investing? >> for the time being, $2 billion u.s. dollars but on that specific program but we have a big very good talented future. infrastructure and transportation, autonomous. >> that's great. absolutely we'll be doing a lot of that that's excellent i asked the question before when i heard valolvo and i know they own mac truck. what's the difference in price and you said >> i was not going to comment. >> he said they are both great but mac truck is about 15% more. very good. thank you for that in investment in the u.s $2 billion is great. thank you very much. >> mr. president i represent the adidas team. america is single base country grown 30% in the u.s and some of the most famous is
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starting out of u.s. building one of the most thought of shoes in the world and opened a fully automated show manufacturing plant in the georgia and atlanta. >> great job. >> i'm the ceo of fire, in the company known as company that was formerly the s print company. so working heavily on the national icon in the u.s making good progress and hope to close this transaction 2018 so should be imminent. >> so what percentage of your company is aspirin >> aspirin is 1.1, just about 1.1 billion euro so $1.4 billion price. >> it's relatively small percentage >> it's relatively small but one of the brands around for 120 years. very profitable. and i think you take it as well. >> i do.
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i take one a day i generally, i should say i only take bayer one aspirin a day. so far it's been working it's a great company so are you going to be investing in the u.s.? >> yes, we are we will consolidate most of our activities into the monsanto head quarters. we'll invest about $16 billion. >> $16 billion >> and 60 percent out of that in the u.s. >> thank you very much that's really great. thank you. >> hbc you know well. >> i do. >> in u.s. began in 1865 largest foreign bank in the u.s. we have business balance sheets
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of $2.6 trillion. >> that's right. >> we work in 70 countries and have a market cap around $250 billion. commitment to the u.s. we have a very strong business here. and a business that will continue to grow. >> and you founded one of the most successful businesses in china. that is a big statement. did you you did a great job. so honor to have you you did a fantastic job. i know everything about you. >> thank you, mr. president. >> few people have done what you've done. congratulations. >> thank you. >> chairman and ceo of an oil and gas company, fourth largest in the world we are in the u.s. 7,000 people we do almost everything in your country. we produce oil we export. we are making big discovery in the gulf of mexico produce gas in texas we are investing in l and g plant in louisiana to export gas
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from the u.s. >> good. >> what we are deciding to invest in the petro chemicals in texas, being plant there, creating 1,500 jobs. we have 7,000 people in your country. >> so fourth in the world. >> yeah, fourth largest in the world and third by reserves, more than $10 billion reserves but we invest about the $15 billion each year. and at least $1 billion as average in the u.s and of course u.s. we share evolution. it's a great business case, because we come and even we will do more with your tax reform. >> it's a great company. >> and we are also invested with you. maybe you disagree, but in sort of business in the u.s. company,
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we are the measuring power in california company, so we are heavily invested more in more than $2 billion to develop solar in the u.s. >> and we'll we'll rebuild thats that whole thing is going to get rebuilt now, the solar panels. you'll see a big difference. but that's very good you're very happy about it >> yes, i'm happy. there is competition, as you know >> competition >> yes >> that's what we wanted you have done a great job. thank you. >> thank you, mr. president. >> appreciate it >> mr. president, thank you for the invitation we are strongly localized in the u.s. in elevated engineering automotive 85% is already localized very proud we have all of the elevators in the freedom tower, our big pride. over six years in that one, and the other thing is we have 3,000
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apprenticeships for young people each and every year. >> so otis, compared to the size of what you do >> similar in size >> a big company >> because years ago, we have acquired dover and this made us quite strong there. >> that's great. great product. i have used your product, as you know great product. thank you very much. >> thank you, mr. president. thank you for the invitation it's an honor. i'm the ceo. accounts for oil and gas coming from norway, the region in norway president of the u.s. for 30 years now, substantial investments over the years so we're engaged in onshore, offshore, extensive training business, and also new ones. solar and wind, actually so quite sizable business. not as big yet, but we're working on it. so we're growing and increasing
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our production we are in three areas, onshore, increasing to eight fields offshore, 300,000 plus barrels a day. currently growing to around 400,000. it's our second biggest location outside of the norwegian spot. so we are growing in terms of production and in terms of investment so i would like to congratulate you. like many others here, on the tax reform i think that is really good news for all of us here, but also for the oil and gas and our industry i just mentioned, oil and gas is also heavily regulated business. so you're thinking on what you're doing on regulations is good >> becoming energy self-sufficient very rapidly we're just about hitting that mark as you know, we're opening up a lot of different places in the u.s. including the plants that you're building a lot of places are opening that
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would never even have conceived of them. a lot of things are happening. thank you. great job you have done. >> mr. president, thank you very much for the honor of being here i'm ceo of novartis. we focus on innovative medicines, generics as well as eye care today, we have about 22,000 employees in the u.s. across 21 sites. we invest about $14 billion every year into the united states including $3.5 billion in research, it's one of our key markets and also key places where we drive innovation. and we're really pleased with the tax reform, but also very pleased with the great progress being made at fda. we believe you have a great leadership team there and they're doing all the right things to accelerate innovation and access >> scott is great and alex is great. you know alex is just starting he's highly respected. so that's fantastic. scott gottlieb as you know, a star. >> he is a star. i think his vision for tobacco and trying to improve and reduce
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the use of tobacco around the world is very inspiring. >> very good thank you very much. >> mr. president, thank you very much for having me tonight i serve the people of abb. we are a business in more than 100 countries of the world, but we have made the last eight years the u.s. an investment focus. we have deployed $13 billion of capital and bought some iconic brands in the u.s. a motor company, and we trust now in the process of closing the transaction to acquire ge industrial solutions a fantastic business in terms of install base it needs a little investment in terms of technology. >> did you get the right price a good price you always get a good price. i know who i deal with he always gets a good price. that's good. >> altogether, we have today now including the ge transaction, we have 26,000 people in the u.s. in more than 60 sites. nicely spread out all over the u.s.
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we have the classic copper and iron activities, the motors, and just last week, we spent an entire executive committee team time in silicon valley because there we have an a.i. and robotics center that we firmly intend to invest significantly to support the u.s. in the next level of industrialization >> one year write-off. big difference, right? that's probably the biggest sleeper in the whole tax bill. >> absolutely. >> thank you, great job. good luck with the ge purchase >> thank you >> read about it sounds good. you'll be just fine. go ahead >> mr. president, thank you very much for the invitation. i'm the ceo of anheuser-busch. your company >> yes >> business in more than 50 countries around the world sell beer in more than 100 countries. number one global beer brand is budweiser out of st. louis we started there in 1852 and have been in the beer business for more than 600 years. our belgium business dates back
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and our biggest market is the u.s. where we employ 18,000 people, and we announced last year a program thou 2020 to billion dollar investment in our fucements in the u.s >> that's good thank you very much. that's fantastic >> i would like to thank you first of all for having me, and also for spurring on all this growth because these are all my customers. >> i know. >> it's kind of amazing to have all your customers talking about adding jobs and growing their business and it's just a real tribute to the momentum that you have created in the global economy. so i thank you very much sap is the leading enterprise software company we have 90,000 people around the world. in the united states, we're quickly approaching 25,000 it's the fastest growing region of the world, especially in jobs i'm very proud to share with you that when you think about the army and navy, and the missions
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they run to protect the world, they run on s.a.p. and when you think about the vice president in the state of indiana, for example, solving infant mortality issues and things like that, we were working hand in glove with him as well. it's a real honor, and thank you for having me. and we look forward to helping in any way we can. >> you have got a really spectacular job. i guess pretty much at the table is your customer that's not so bad. >> exactly >> i want to congratulate you. >> thank you, mr. president. >> so i want to thank everybody. really, you have done incredible work incredible jobs. these are some of the great companies of the world many of the great companies of the world. and congratulations. and now we'll talk, and thank you very much. appreciate it. thank you very much. thank you all very much. >> thank you, guys
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>> thank you very much, everybody. >> president trump having dinner with ceos of 15 of the largest european companies you know the names, nokia, adidas, .a.p., stat oil, companies from france, germany, the uk, norway, sweden bill mcdermott was sitting to his right. he's an american but the ceo of a european company, s.a.p. all of them at pains and willing to tem him how much they have invested in the united states. how much they would like to invest in the united states, to the degree, how big the business is of the united states for them, and at one point, making a joke, perhaps, at the expense of general electric to bill mcdermott when he said, excuse me, to the ceo of abb, when he said, oh, yeah good luck with that ge purchase. so a little bit of humor there stock market humor
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guys, brian, back to you by the way, that dinner happening in this building just like 20 feet from here >> peek your head in see what happens michelle, thank you. listen, bair is there. the big german company they're buying, you pointed this out in the break, they're trying to buy monsanto here in the u.s. so i wonder if the ceo will have a private moment with the president about any deal making. faruk is still with us here. i appreciate your patience, sir, listening. let's say you meet -- you're in a dinner here with the president. you get one question to president trump. what would it be >> i will -- >> only one. >> i know. >> don't make it six parts >> it's one part this is the 86th year of our manufacturing in vermont that's where we came from. and my question would be, we must do everything possible to maintain manufacturing in the united states. you're doing a lot of good things, but what else,
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mr. president, are the next steps? >> thank you for your patience we appreciate it >> how much of your product is made in the u.s. >> about over 60%, we have 85 locations in china, we are one of the few people shipping our products from the u.s. to china. and also, i would like to say, thank you, mr. president, the tax reform, this quarter, our earnings were up 35% 35%. part of greatly as a result of the tax changes. we are one of the few companies that pay 37% taxes so this -- this fiscal year, we'll still play close to 30%. next fiscal year, about 35%. it's a difference. this is a difference in terms of being competitive or not being competitive. so all of these things are very, very important >> thank you >> always good to be here. >> and we welcome you to the second hour of "power lunch. let's get a check on the markets. volatile day for stocks.
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the major indices seeing big swings dow up by six tenths of a per isn't. s&p up a quarter of a percent. take a look at treasuries here the ten-year yield hitting the highest level since 2014 the two-year yield, its highest level since 2008 and of course, the big story, the talk in davos as well as wall street, the dollar continuing to weaken the euro hitting its highest level since 2014 against the green back take a look at the dollar index below 89ate 88.71. >> davos can be sort of a chin stroker, but not this year, ladies and gentlemen there is big news going on over there. we just saw some of it michelle caruso-cabrera is in the thick of it in davos michelle >> yes you just saw president trump just in this very same building having dinner with many of the ceos here who are from europe, and also moments ago, our own
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joe kernen sitting down with a one-on-one interview with president trump. the president clarifying his administration's position on the strength of the dollar >> i think they were taken out of context because i read his exact statement. i tell you where i stand which ultimately is very important. number one, i don't like talking about it because frankly nobody should be talking about it it should be what it is. it should also be based on the strength of the country. we are doing so well our country is becoming so economically strong again. and strong in other ways, too, by the way that the dollar is going to get stronger and stronger. and ultimately, i want to see a strong dollar. >> you can see joe kernen's full interview with president trump tomorrow on "squawk box" at 6:00 a.m. eastern time only on cn bcx >> for reaction on the dollar, trade, trump's visit to davos, we're joined by doug pederson and veteran investment baker
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mark tur sack, now ceo of the nature curvancy. welcome to "power lunch. >> thank you it's great to be here and great to be in davos this week >> because of president trump? >> because of the positiveatize environment here we have positive growth across the globe, but that doesn't mean people aren't looking around the corners. >> they're nervous >> looking at corners, interest rates is one of the topics people are looking at. cyber risk is something we have had a lot of discussions about there's also broader themes of climate change but infrastructure is a new topic that people are talking about globally, and it's one also for the united states having trump here, i think, is very positive. >> why >> because it means he's engaging with the world. it means he's not just staying in the united states and listening to people that are around him the dinner that he just had with the executives i believe is very positive for him to engage in. so i'm very optimistic that getb the cabinet and getting trump out of washington is a good thing. >> mark, what do you think when
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you look at everything that's happened this week here at davos? >> great to be here at davos you have government leaders, business leaders attacking big challenges in a fact-based pragmatic way. it's great i'm glad president trump is here the u.s. needs to be engaged in all of this. i'm an environmentalist now. here at davos, we're attacking environmental problems in a very practical, business-friendly way. doing things that are good for nature, people, and the economy. >> what do you think of the tax cut? >> tax cut, it's fine by our standards. economic growth if it generates economic growth, great that's wonderful we're concerned, though, about slashing budgets and things like science and r&d. that's the underpinning of a strong economy and also a strong environment. and president trump is going to hear a lot about it during his visit to davos >> tax cut has to be good news >> good news for the corporate sector, good for our own company, and great for america i believe that the tax reform is something that is a long in coming, and it is truly bipartisan if you go back in history and look at what
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democrats and republicans have been trying to do over the years. i see it as positive for the economy. in fact, we have revised our economic forecast up by about 30 to 40 basis points up now to 2.8, even maybe up to 3% growth. we have revised our forecast up because of tax reform. >> the american delegation, even before president trump got here, has been, i mean, we have seen them at parties. they have been out you have probably met with some of them. they have started to give hints about what president trump might say tomorrow one of the things we have heard them say, gary koecohn, even ber he left the united states, said america does not mean america alone. >> it's great they're saying that because most of the big problems we're talking about at davos will be better addressed if the world comes together. think about the things we worry about, climate change, protecting water, clean air. these are things that can only be attacked or tackled on a global basis with cooperation. america first is fine when we're thinking about our core
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principles at home, but we have to work well and pragmatically with other countries to get important things done. >> when it comes to trade, i was encouraged to hear slight opening in the trade comments that maybe nafta doesn't need to be scrapped. it can be updated or improved. maybe tpp could be looked at again. this is one of the biggest disappointments from the business community when the new administration came in, was that trade was basically taken off the table, the tpp was scrapped, which we worked on for several years. a little bit of encouragement to hear some slight chance in the language >> can you explain that to me? tpp was never going to get through congress >> but remember, there was a tpa, so if they couldn't move fast enough, they had an opportunity to get it through congress with a fasttrack. >> gentlemen, thank you so much for joining us here this evening. we really appreciate it. we await the president's speech tomorrow >> we're all looking forward to that thank you. >>back to you. >> we'll see you in just a bit thank you very much. >> let's get a check on the markets and your money because
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aside from the president trump interview, there's a lot of stuff going on now the dow industrial average, a bit of a round trip today. still higher, but was up 206 at one point. you might have heard that president trump made his first appearance at the world economic forum in davos, switzerland, and he sat down with joe kernen for a one-on-one interview we're joined by sarah fagan, former white house political director for george w. bush and cnbc editor at large, john harwood. they have only given us tastes i know you have probably seen the full interview, because it will air tomorrow morning on "squawk box. we don't want to give too much away, but what you heard, it sounded like the president repudiating steven mnuchin just a bit, saying we don't want to tog about that, with regard to the dollar >> yes, he was trying to put out that little fire steven mnuchin came out subsequent to his initial statement and said, well, that wasn't a policy change and of course, we want a strong dollar as it reflects u.s.
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strength the president was trying to re-enforce that message. but obviously, this is a very good moment for the president to go to a gathering like davos you've got a strong u.s. economy, strengthening labor market he's got his tax cut, which the audience there, as michelle just illicited in the previous discussion, is a popular thing for corporations in the united states and around the world. so i think this is -- he's taking advantage of tail winds at the moment. >> so sarah, you know, he has -- he talked about the tpp. he talked in what i heard as a more favorable way about solving rather than withdrawing from nafta. did you -- i don't know whether you happened to hear that bite i assume that's what you would like to see. >> yes, it is. i think the entire business community would like to see him soften his rhetoric on trade i mean, look, he deserves some
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credit for socking about the importance of america getting a better and fairer deal i think, you know, what many working class americans have felt some of that is warranted. but at the end of the day, our trade agreements not only help bolster our economy. a lot of times they're done for national security reasons as well you think about pulling out of the transpacific partnership, as you have a growing china, as taking a bigger foot on the world stage, those relationships around china, very important to the united states. >> has the balance of power, sara, in your view, i don't want to say power, but has the balance shifted a little bit now that it looks like north and south korea are getting more friendly in terms of china and how they might feel towards the u.s. as an ally? >> i think these, particularly in that region of the world, you're going to see the relationships shift, and you know, we're having this nice moment in advance of the
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olympics thati suspect that unfortunately is not going to last, but look, here's where donald trump deserves credit you know, he sometimes says the wrong thing and causes uncertainty. but he also does speak strongly. so you take, you know, for example, how he handled the syrian situation you know, this summer, it was swift. it was executed very strongly, and it made the american military, you know, strong and the country strong and other countries do pay attention to that. china pays attention to it certainly other global leaders pay attention to it. i think this is where he deserves more credit than the way barack obama handled things for example. >> i do think there's a danger of a wedge between south korea and the united states. it's a good thing that north korea and south korea are drawing closer, but their interests are not exactly in tandem with ours and to the extent that north korea is able to lure
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concessions out of south korea, economically, in return for some security assurances, that's potentially at odds with u.s. interests. and on nafta, i do think the acid test is going to be, what does he do if these negotiations fail as it appears that they are going to fail. we haven't seen any progress so far. and joe was not able to get the president to say what he was going to do. nobody else has either the president hasn't decided, but we're all going to be watching to see when it gets to the end point of those negotiations in mexico and canada aren't ready to give us a much better deal, budoes he get out or stay in my bet is he stays in. >> joe asked him and what trump said was on nafta, we'll see what happens >> right >> we have a $71 billion a year trade deficit with mexico. we have to do something. we can't have that will it be renegotiated? we're trying right now with bob lighthizer and the whole group
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we'll have a good chance, but we'll see what happens and john, i want to, and sara, you can tie it off, it occurs to me president trump is not broadly popular in europe. to put it mildly but when he goes overseas into these environments, whether it was his earlier trip to saudi arabia and so forth, he seems to do pretty well tonally, getting him out of the bubble of the white house, john, seems to work favorably for him. do you see it that way >> well, any president of the united states is going to get respect and deference from a small group of other counterparties other leaders of governments or leaders of business. so you go to davos and you see that people are eager to see him, and he is enjoying their attention. >> he likes it >> that's right. it's a different thing if you get popular sentiment involved
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so you know, we see the president not going to britain this year because of the concern that there might be large-scale public protests. this is a different environment and a favorable one for him. >> i agree with that >> sara, tie it off. >> he's handled himself on the world stage very well. look, he's a very charming guy people who don't like him often the white house saying wow, i had a different experience than i expected and so i think he does do well in these environments. you know, it's really matters, the policy is what will matter long term, but certainly in the social settings and in speeches, he does a good job of working with other world leaders >> all right, john, sara, thank you very much. >> and here's what's coming up on "power lunch. stocks back in rally mode after a volatile morning can anything, anything, stop this unbreakable, unbeatable, unstoppable market we'll debate that one straight ahead. and caterpillar with a big earnings beat today. can the equipment banker build
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on its success in '18? we'll ask one of the top analysts on the street >> plus, dallas mayor mike rawlings on why amazon should think big when it picks the location of their second headquarters i think he must think dallas is big. wants that company there why wouldn't he? all that and much more on "power lunch. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. partner with pgim. the global investment management businesses of prudential.
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it is a bit of a volatile trading day, but the rally is back on. the dow hitting new highs. here is a kind of staggering statistic. exactly one year ago, exactly a year ago, the dow closed at 20,000 for the first time. we have gained, as you can see there, more than 6,000 points since then how much higher can this seemingly unstoppable rally go let's ask. joining us is five-star fund manager margaret vetrano her large growth cap fund has outperforming the s&p 500. welcome. good to have you with us >> thank you >> why did it work so well last year for growth and do you expect that that could be changing just a bit this year? >> growth was good last year >> growth was good, but if you remember in january, i don't think everybody expected growth to be so good. we had really narrow leadership in the first part of the year. just a few mega cap tech names fast forward to june, july,
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august, september. gdp accelerated. gdp really accelerated and you saw a broadening out of the market you saw a lot of good growth names accelerate in the back half of the year >> where is your portfolio concentrated to the extent it's concentrated tell me what some of your largest holdings are and how long you have held them? >> well, we're long-term investors. our average holding period is three, four years. >> i like that >> we have a lot of technology exposure we have been - >> amazon is number one still, correct? >> amazon. >> and google is number five, alphabet, whatever they call it now. >> they're all in the top ten. microsoft, amazon, even apple are top holdings for us. we have a lot of technology. >> do you worry that everybody has those as their top holdings. they work because everybody like you is buying them, but i worry that you're going to run out of buyers >> yeah, to your point, the performance that we saw in the second half of the year and even into this year has not come from those stocks in fact, we're underweight those
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mega cap tech names in general we own a lot of names like red hat and adobe and spelunk. names you might not necessarily know of, but they have been awesome performers and frankly, i think there is better value than some of the mega cap names in the last six and 12 months. >> consumer discretionary waiting is a big one as well where are you exposseed most because there's such a diversity of subsectors within that? >> amazon is a big one, and also the media names. so disney, comcast, we owned fox. and the tail end of last year, so we had good exposure to that media sector then we talked before about adding names like costco, part of that whole amazon fear that you saw in the back half of last year really created some nice buying opportunities there >> we began the segment by sort of questioning, as we are want to do, what could derail, what could cause a problem here
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if you had to identify the one, two, or three things that could cause the market to slow, what would they be? is it rising wages and the possibility of incipient inflation or something else completely >> you know -- >> what should i keep my eye out for? >> yeah, i think -- >> and tell me when the market rally is going to end, to the day, please. >> i'll send you an e-mail on that day >> a lot of questions. >> i think what's really interesting now is i get nervous like everybody else when you say the market hasn't had a down 3% day for 300 days we all get nervous except the fundamentals are really good if you look at fourth quarter earnings, everybody is very optimistic about what they're seeing tax reform is material unh raised earnings by 16% adobe by 13% you say what are you worried about? i think tax reform probably pushed off that imminent downturn by 6 to 12 months because it's going to add to gd
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prb. if i think about what concerns me, what hiccups could happen, i would say it's the consumer. the consumer is so critical to gdp. employment is low, but we need the consumer to feel good about the economy. >> everything should be coming up roses for the consumer? they have more money in their pocket optimism is high overall >> it is >> unemployment is low what else? >> the consumer is a little more levered than they have been in the past, and gas prices are higher that's a big part of discretionary spending especially for that middle and low-income consumer. >> the other part of that is if the dollar is weak, could we see increased inflation and lack of buyer power on the part of the consumer does that factor in? >> you're getting a little ahead of krur skis in that regard, but we keep thinking about the fed and how they have been reacting with very steady increases i don't see them getting ahead of things in terms of slowing down the economy so i really think we're in a nice sweet spot fundamentally
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right now, but that's the thing i'm worried about. >> do you own vale mountain resorts? >> no. >> you made a ski analogy. i was just asking. >> margaret, thanks. keep up the good work. >> this cat will hunt. caterpillar will pass estimates, continuing its huge rally. why one analyst thinks that run is not even close to being done. ckp e ucbeuswee back in two. but do you take something for your brain. with an ingredient originally found in jellyfish, prevagen is the number one selling brain-health supplement in drug stores nationwide. prevagen. the name to remember.
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another sign today that maybe just maybe retail and retail investing is not dead pivotal research initiating foot locker with a buy and a $65 target they note shares, quote, cratered after weak result last year, but sales comparisons are now a lotedesier and there's some newness coming. builder than oldness it implies 22% upside. dick's sporting goods, dollar general, and lowe's getting love from wall street analysts. by the way, the big retail etf xrt already up 7% this year.
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>> the search for city to host amazon's second headquarters continues. straight ahead, dallas mayor e pe rawlings on why hhos jeff bezos is in a maveric frame of mind. stay tuned ♪ cleaning floors with a mop and bucket is a hassle, meaning you probably don't clean as often as you'd like.
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i'm contessa brewer. u.s. bade to the united nations nikki haley says the u.s. remains committed to peace between israel and the palestinians she spoke at the u.n. security council meeting today. >> the united states remains deeply committed to helping the israelis and the palestinians reach a historic peace agreement. that brings a better future to both peoples just as we did successfully with the egyptians and the jordanians but we will not chase after a palestinian leadership that lacks what is needed to achieve peace. to get historic results, we need courageous leaders >> the coast guard offloading more than 47,000 pounds of cocaine, worth at least $721 million. that coke was seized in 23 separate raids in the eastern pacific ocean by u.s. and canadian forces. >> a new jersey couple got married in a courthouse bathroom after the groom's mom had an
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asthma attack. sheriff's deputies took her to the woman's room, gave her oxygen, but they realized if they postponed the wedding, they would have to wait 45 days for a new marriage license, so they just held it in the bathroom the groom's mom is fine. here's what i don't understand there's the judge. she left her chambers to come in the bathroom why couldn't they have moved the whole party back to the judge's chambers a very scenic setting, really. memorable. >> but contessa, if they delayed it, they would have had to stall the wedding. >> you're in luck with that pun. i thought that was -- no >> it's awful. >> was it the men's room or women's room >> women's but the guys >> all right my joke stands so does he contessa, thank you. the oil market is closing for the day. tyler, let's go to jackie deangelis. >> that one snuck up on me >> jackie gets to come after
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that joke, brian the commodities boost did continue until the close with crude oil getting well over $66 a barrel now you can see we're closing to $65.50 this week, the story was about the weaker dollar. that's the theme helping boost the energy and metals complex. we gave back a little bit today. the dollar isn't the only factor the saudi energy minister said the iea has failed to put the scale of production increases into context, meaning the demand picture is more optimistic that's something we have been talking about as asea change element all this year, pretty much the market expectation for strong demand this year is offering price support over $60 a barrel, guys back to you. >> thank you very much >> let's get a check on the marke markets. the dow, you have heard this one before, all-time high. volatile session, though, today. it has been a volatile session did i say that before? it's been a volatile session the dow was up 206 points and it dropped to 7, a 200-point swing.
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you can do that math right now, the dow is higher by about .4%. or 116 points there. the s&p 500 just a little bit, about two points, and the nasdaq higher by .09% or six points utilities, health care, they are your sector leaders. real estate and energy are the laggards right now caterpillar having a volatile day. now flat on the session despite a big earnings beat. melissa. >> let's get deeper into the caterpillar earnings with rob, founding partner and analyst he's got a buy rating and $200 price target on cat. great to see you the stock reaction, i mean, tyler was making light of the word volatile, but was very volatile the stock was down by about 3% or so at one point in the morning. what do you make of the volatility was there anything in the report
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you could point to >> no, there wasn't. the results were quite good. cat has a wonderful runway ahead of it with essentially some pent-up demand and the only question is whether they can execute on it, assuming a strong global economy continues they showed every sign of doing that in the quarter and the outlook, so good results >> in terms of the strengths in the quarter, construction. a few weeks back, there was an upgrade of caterpillar we made fun of it a little bit because it seemed like the stock ran up so much and then there was an upgrade part of the upgrade was there was a turn in construction in north america. did we see that? >> we did. it's more than just a turn you have construction activity, which is coming up past prior peaks. also, for whatever reason, you have had construction equipment sales very weak for a number of years. as you age out the machines that are running from the prior peak in the housing bubble, you get the combination of replacement plus growth, and it can be really powerful. we're seeing that. >> one thing that may be underappreciated, i would be
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interested in what your opinion is in terms of the impact of tax reform on cat. it's not just buying new equipment, but i believe it's also used equipment. is it rentals? i think there's an additional boost that cat could see thanks to tax reform. >> a number of boosts. you get depreciation, people able to write it off, and that's always a positive for demand for the companies, you get the potential for more levelized global playing field on tax. that's always good and generally speaking, tax analysts is coming on top of a very hot economy it's a synchronized global economy for the first time in a long time. more fuel on the fire. >> thas was a company, rob, that two years ago, this is a very -- state the obvious, a very cyclical company two, three years ago, it was a dog of the dow now, it is the king of the cats. what did they do right >> well, they have done a couple things right two or three years ago, it's interesting they had been and still are the longest and worst
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revenue downturn in all of cat's history, and really, probably including the great depression for whatever reason, mining bubble that popped and oil and gas bubble that popped, they happen to be quite low since they start today come out of this, they have their production systems working they have capital to actually manufacture the product that's coming back, and there's a lot of pent-up demand. they spent a lot of years working on trying to get the business capacatized and with a process that should deliver good results. >> good blocking and tackles, fundamentals >> yeah. >> at what point should we be concerned cat is too expensive relative to itself or its peers. >> their revenues are more depressed. we had a good recovery in north america. we have not had that in cat on construction north america, in euro europe, latin america. china is barely coming up. it's all been depressed. what we have thought people have missed on cat is how far down the revenues have come and how
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much they have to recover. >> we're going to leave it there. thank you so much. well, they say that everything is bigger in texas. and dallas, hoping that amazon thinks big when it picks the next location for the second headquarters so let's bring in scott cohen, who is with the dallas mayor, mike rawlings. >> scott >> hey, brian. we have been traveling to a lot of these 20 finalist cities and we'll keep doing that. this a place to get a lot of mayors in one place. among them, mike rawlings, the 61st mayor of dallas at the u.s. conference of mayors winter meeting. people are talking, you and your other finalists here, about amazon what are they saying >> comparing notes obviou obviously, this is a big get for any of the cities. some are a little ambivalent because they know how big it is, they would love to have it what are the incentives going to be but it's like a poker game with everybody keeping their cards like this. >> you don't seem as worried about how big it is, number one,
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because it's texas but also about the incentives and the potential bidding war? >> bring it on one of the reasons they should come is we know growth we're growing faster than any metro area in the united states. they have grown fast, so we can digest that growth it's going to be cheaper for them not only cost of building but cost of doing business, cost of living so the shareholders are going to win better, and we're so easy to be -- we can fly to either coast and back in the same day, any place in the world >> you haven't said publicly what you're offering most of the cities have not. amazon, as we know, is trying to make this more confidential in the second round what do you say to your taxpayers who want to make sure you're not giving away the store? >> our taxpayers are kind of excited about this they know this could take our city to the next level we've got a great technology base of employees. and those folks would love to have amazon as an option for it. we're going to be a great thing
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for the shareholder, not just for governmental incentives but really the cost of doing business overall so a net-net, it may not cost us as much as a big city where the cost of doing business is so high >> let's talk a little about the attributes and some of the disadvantages as well in dallas. we have been doing report cards on the 20 cities >> give me one >> we give you a b-minus overall. not bad. certainly compared to the competition. where we ding you is the stable business friendly environment, clearly texas is stable. but -- business friendly, but the economy has run into hiccups with the oil prices -- >> not in dallas not dallas you're looking at texas. dallas only a tenth of our gdp is energy. through that energy slump that's coming back now, we blew through that nobody has grown faster, created more jobs this last year and for the last four or five years. i think the grade needs to go up on that aspect
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>> we also ding you on talent, not because you don't have the people, but because there have been issues and we have highlighted this in our america's top states for business study about quality of life, health care, inclusiveness. what do you say to that, particularly looking at some of the competition. >> first of all, we have a lot of technology employees. most than austin, almost as much as seattle out there second is that we have a quality of life that's great we're a blue city in a red state. on the lgbt index, we got 100 this year for the last couple three years. all this talent is coming to dallas yeah, there are some concerns at the state level, but we're working through that to make sure that we're going to be business friendly at the state level too. >> you have come out of business you were a ceo, the ceo of pizza hut. what do you think of the way amazon is approaching this from a business standpoint and also as a big city mayor? >> if it's only on the business side, i give them an "a.
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this is very methodical. they're a data-based company they want to make sure they get it when they see dallas' score against everybody else's, they're going to give us that. from a pr standpoint, you're talking about amazon, i'm talking about amazon, so they're getting those rating points if you will in the media world, as well, so very clever i want to make sure that what they're asking, they really want and if they are, i feel pretty confident if there's some other, they want to be close to europe because of eastern time zone or something like that, maybe that's a different situation >> we'll see how it plays out. >> going to be interesting >> mike rawlings, the mayor of dallas guys, back to you. >> all right, scott. thank you very much. scott cohn reporting from the mayor's conference in d.c. let's go one more time to michelle cariceo cabrera in davos. >> going to be at least two more times, i'm sorry, tyler. straight udhead, we're talking to thomas derosa about what big
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changes in tax reform, health care, and regulation mean to his business he's the largest owner of health care real estate in the world.
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of context because i read his exact statement. i'll tell you where i stand. which ultimately is very important. number one, i don't like talking about it because frankly, nobody should be talking about it it should boo what it is it should also be based on the strength of the country. we're doing so well. our country is becoming so economically strong, and strong in other ways, too, by the way that the dollar is going to get stronger and stronger. ultimately, i want to sea strong dollar >> that was president trump speaking here at davos with our own joe kernen about the weak u.s. dollar which is sitting at three-year lows. reversing its losses today following president trump's comments to joe. trump wrapping up his first day by hosting a dinner with european ceos in this same building and tomorrow the
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president will give the closing keynote speech many expect him to touch on policy issues like u.s. tax reform, deregulation and the more contentious issue of trade. joining me is thomas derosa, the ceo of well tower, a real estate investment trust that specializes in things like seniors housing and assisted living welcome to "power lunch. you were there when the president arrived in the congress center, right >> i was it was electric. i thought beyonce was speaking today. there was such excitement. >> really? >> yes >> that's a big statement in this place, which is filled with, i have said earlier, prime ministers. presidents, billionaires, oligarchs, ceos, to get that kind of reception still amongst people who are used to getting that kind of reception in their home country >> exactly, but i think it's terrific that the u.s. president is here for this convening of world leaders, whether that be politics or government and i think it says that he's
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supporting u.s. business, to the world, and that's a good thing for us >> are you excited about the tax cut? >> well, i think it's going to stimulate the economy, and that's good for my business. we're also structured, and i think the jury is out by at least the public markets whether they think that's good for us. >> one of those famous bond proxies. >> there you go. >> that can suffer with rising interest rates you're ceo of a health care rete when i talk to you, when we're not on camera, i think of you more about health care, not so much about real estate >> so you can think about us as owning a lot of real estate. we own about 1400 properties in the u.s., canada, and the uk all in major metro markets in those three countries. when i talk about the company, i talk about who lives inside those buildings. over 200,000 people live with us 365 days a year, who we take care of 24/7
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they would fit in the category of frail to demented so we're the largest alzheimer's care company and what we do for this population is we keep them in a model of wellness. they are the population that is most at risk for losing the components of wellness in their daily lives. what are those nutrition and hydration, physical mobility, cognitive and social engagement, and safety. >> on that note, your company has come up before because we have talked about a new project that's going up on 56th street in new york city, high-end assisted living. swanky assisted living am i describing it correctly is this the new trend? as more and more people age in the united states, to have very high-quality assisted living for a fee? >> well, what i think you're going to see in new york is the state of the art residential
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care facility for people who fit that category of frail to demented these are people who need to live with 24-hour care what might surprise you, michelle, is that there are only 70, that's 7-0 licensed dementia care beds in manhattan the population of manhattan is a million people who live between 96th street and the battery. >> wow, okay, so you're going to get a lot of demand. >> there's a lot of demand for that because if you're living at home in manhattan with 24-hour care, you're probably paying anywhere between $6,000 to $9,000 a week for 24-hour care in the home. >> got it. there will be demand we wish you luck with that thanks so much for joining us here on "power lunch" in davos >> thank you very much let's get to dom chu for a market flash >> we're watching shares of tesla. as you look at the chart intra
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diday. one of the forces in the sharp movement in the shares is a story on our home page right now talking about possible battery issues with tesla. according to current and former employees, some of the batteries issues that are happening at the giga factory for tesla are maybe going to have an effect on model 3 production, possibly causing delays that's causing the stock price to move lower. again, off the session lows. go to cnbc for the rest of the story. that's the reason why the shares are on the move. back over to you guys. >> thank you very much of course, we're watching earnings closely >> amazon getting a big price target upgrade could the e-tail giant go to $1,800 in 2018 that's straight ahead on "power lunch.
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i've gotta say, i love the new place. oh thanks. yeah, i took your advice and had geico help with renters insurance- it was really easy. easy. that'd be nice. phone: for help with chairs, say "chair." phone: for help with bookcases, say "bookcase." bookcase. i thought this was the dresser? isn't that the bed? phone: i'm sorry, i didn't understand. phone: for help with chairs, say "chair." does this mean we're not going out? book-case. see how easy renters insurance can be at we've been preparing for this day. over the years, paul and i have met regularly with our ameriprise advisor. we plan for everything from retirement to college savings. giving us the ability to add on for an important member of our family. welcome home mom.
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shares of snap snapping today following reports that twitter is working on asnapcha video like feature, that would cut down the process of taking video in a separate camera app before uploading it to twitter the final design of the tool and the timing of its release yet to be determined, twitter has had a nice rally in the past year.
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it is up about 32, almost 33%. sticking with technology, amazon shares up today after da davidson gave the symptom its most bull ishtar get yet, $1800 per share. amazon on pace for its best month in three years let's trade it now with trading nation craig, amazon, i've run out of things to say. i mean, is there anything on the charts that show this thing slowing down at all? it's like the most widely held stock by every fund manager we have on the program now? >> well, brian, i look at this stock and i look at this and i say, it's a great company. i'm not sure it's a fresh money buy or a great stock right now it's very extended you're more than 20% above your 200-day moving average on an rsi. you're also above 70 which suggests it's extended looks very similar to what you'd see back in early 2013, also in
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early 2016 when you get this far extended, usually there's some setback and a healthy correction that took place. i'm not a fresh money buy in this stock today, brian. >> not a fresh money buy, but, you know, mike, we talk about this name. as you point out, jeff bezos may have literally changed the business model when it comes to running a major corporation. do you feel, though, on a free cash flow metric that the valuation is unreasonable in any way? >> yeah. when i look at this $1800 price target from here, i say it's possible i want to put a clause on there, buyer beware and know how you'll get there. let's do math on freecash flow because that's what he manages the business to. we now think free cash flow will grow 30% out to 2019 at its current price, that's a 33 multiple on free cash flow in 2019 at $1800, that's a 43 times free cash flow multiple on 2019 free cash flow.
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it high growth peers like paypal, adobe, sales force, they trade at 25 times. if you buy amazon right here, you're paying quite a premium versus those high-growth peers at $1800 you'll be holding amazon at an extreme premium to some of these other companies. so, buyer beware, anything's possible i, myself, and for our clients, we would not be buying amazon. and we don't think in a year it's going to be very difficult to hold that premium in coming competition. i think you should not buy it and expect it to go to $1800 in the next 12 months. >> not exactly bullish view on amazon thank you very much. for more trading nation go to our website, >> announcer: and now the latest from and a word from our sponsor. >> when markets get volatile, don't be afraid to admit you
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for a free quote today. liberty stands with you™ liberty mutual insurance. we want to call your attention to the dollar. see that major reversal in the dollar index, this after the president told our very own joe kernen that he eventually wants to see a strong dollar he says, by the way, that stronger is going to get
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stronger and stronger and ultimately i want to see a strong dollar. this is a major intraday reversal for the dollar index. >> the president talked about the dollar, trade, ttp and much more with joe kernen a few moments ago. can you see the full interview on -- on "squawk box" tomorrow beginning at 6:00 a.m. eastern time right here on cnbc. michelle. >> check, please. >> we can't wait to see that president trump will be live tomorrow during "squawk box. we want to see that. as part of a collaboration that cnbc has with facebook, i had the opportunity to interview famed cellist yo yo ma and christine lagarde at the imf, yes, at the same time. i asked them what they thought of trump's visit and what they were hoping from him. >> i just hope that president trump is not so surrounded by security that he will effectively not meet anyone. >> i hope he would actually enjoy what davos has to offer, because i think there's so many
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well-meaning people who are really trying to do good things for humanity >> we'll see what he says tomorrow during his speech back to you guys. >> good stuff. >> thanks for watching "power lunch. >> "closing bell" starts right now. ♪ hi, everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange >> i'm bill griffeth as you've heard, the dollar index hitting a fresh multiyear low earlier today, then rallied after president trump told our joe kernen exclusively that he supports a stronger dollar we have the highlights of that interview in a moment. >> he literally said, it's going to get stronger and stronger ultimately i want to see it stronger. >> look at that. >> sure enough. >> amazing. >> the effect playing out.


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