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tv   Power Lunch  CNBC  July 25, 2018 1:00pm-3:00pm EDT

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>> an all favorite, qualcomm today is the day they decide whether china approves the deal or not if they don't approve it, qualcomm will buy back 30 billion shares. >> you own it. >> i've owned it for a long time. that does it for us. "power lunch" begins now i'm melissa lee. president trump minutes away from meeting with european commission president gene-claude juncker. another flood of earnings numbers coming in strong but lots of warnings about rising costs on potential tariff impacts. what it means for the markets, straight ahead. check out this red-hot mystery stock. it is up double-digits just this hour and more than 90% this year will it keep delivering? we will ask the ceo. "power lunch" starts right now welcome to "power lunch. the dow is under pressure but
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it's well off of its lows. would be higher if not for boeing the s&p 500 and the nasdaq are both higher. the industrials lower my 32 points, the s&p is higher by 8.5 and the nasdaq, strongest performer in terms of percentages a gain of 50 points. today marks six months to the day that the dow and s&p 500 last set record highs. tech and real estate are the best performing sectors. s&p sector higher by 1%. gm shares are tanking. coca-cola moving higher. more on both of those straight ahead. gm is off 7% bill. >> yikes i'm bill griffeth. we begin this hour in d.c. as melissa mentioned, president trump is minutes away from sitting down with european commissioner juncker they have been butting heads before can this meeting produce a break-through on trade kayla tausche is at the white
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house for us right now. >> reporter: bill, the two sides have traded very harsh words very recently, the president last week calling the european union a foe and refreshing those thoughts of new tariffs on autos coming into the u.s. th europe is preparing a new retaliation list of its own. the president on twitter in the last 24 hours very vocal on trade, lamenting the impact that retaliation has already had on the farming community and agricultural america and also having some words for his critics, lamenting pressure that he's getting from some people to end these disputes more quickly. he said this on twitter, saying that people are snipping at his heels and that the effect that has is actually detrimental. when you have people snipping at your heels during a negotiation, it will only take longer to make a deal and the deal will never be as good as it could have been
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with unity negotiations are going really well, be cool. the end result will be worth it. one member of the president's trade team, mick mulvaney, acknowledged that as a free trade advocate he'd been on the losing argument here at the white house but losing at the highest levels but he pointed to one tweet in particular from the president that made him optimistic about the outlook for today. >> he tweeted out something he said at the g-7 that i don't think everybody picked up on, which is the europeans are coming in town today happy to talk to them about our trade policies here's what it is. zero tariffs, zero tariff barriers, zero subsidies who wants in on that is that a nonmarket-based system is that a protectionist system that's true free trade and that's what we're trying to get to. >> in about 30 minutes' time we'll see those two leaders sitting down followed by an expanded bilateral with advisers
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and delegations from each side we'll see how that goes and whether it produces anything tangible for investors. >> that's what we're watching for. thank you, kayla so while the president is pushing ahead with his trade agenda, some are taking aim at the president's tariffs. >> a tariff is a tax so we have a policy now that is taxing the american consumer and then bailing out u.s. farmers with welfare i don't get it i don't agree with it. >> he by the way is retiring from congress in the fall and is expressing concern about a number of other issues, particularly executive power >> i think that donald trump has too much power and i think that congress needs to reassert their authority. last i read the constitution, it's congress that has authority over tariffs, it's congress that
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has authority over trade, and we ought to take some of that back. >> here to weigh in on trade, tariffs and more is arthur brooks, president of the american enterprise institute. we call it aei for short, host of the new podcast "the arthur brooks show" and a long-time guest on cnbc. >> good to be with you. >> there are many former members of aei at the white house and the president is pushing tariffs. does aei believe in tariffs? >> well, we're a think tank which means we have academic freedom. we're like a university except where everybody loves america. >> but your message is not getting through there, obviously. >> what is the message >> the message that our scholars in general have, and in particular to our economists as well, this is a specious argument that the administration is making, that tariffs are in fact taxes and a trade war is bad for anything when you work for an administration, you do what you have to do but those of us at
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headquarters aei are not in agreement. >> the president and his advisers believe this is necessary to push back against china. what is your viewpoint of the way china has performed throughout all of this >> china has gotten away with more than it should have for a long time. i believe the obama administration should have been much tougher just as the trump administration should about things like intellectual property, the theft, so forth but a trade war is not the way to go. it hurts the poor, it hurts american manufacturers, hurts american farmers and is bad for relations around the world. >> how do you make that omlette if you don't break eggs? >> the way not to do it is put general tariffs on everything. the thing is to find out who is doing the theft of intellectual property and demand they take action >> company by company? >> exactly, company by company, because we actually have a lot of information about who's misbehaving. >> so advisers to the president actually believe, a lot of them,
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total war, right not only are we going to do tariffs, we're going to go after them militarily and go after them in every single way we can because that's the only way to get them to change. >> i don't believe it. i don't think that's the right way to do it not to mention the fact you may not be worth it. you don't get everything you want in international negotiations the fact that we don't like everything we get doesn't mean we need total war with china there are a lot of cases where people are simply too much collateral damage to american business, american farmers and american citizens. >> but it's not just china highlighting today with the european commission president there, charges have been made the european union has been unfair as well you can argue nafta wasn't the best deal we ever struck with canada and mexico. maybe you disagree with the president's tactics, but what about his objective of trying to further the course of free trade in the world >> if basically what we're saying is the way to get free trade is by making trade not
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free it's a little bit inconsistent that's not exactly the way things work, not to mention the fact that you don't always get what you want in these negotiations and what's most specious is the argument that everybody is giving us this raw deal for two reasons. if you look at the net tariff rate the united states imposes, it's higher than that of canada. so the idea that canada is giving us a raw deal is not true. >> how do you get that number? >> the work of our economic policy division at aei, you do a blended weighted tariff on all goods and services that doesn't mean that all goods have exactly the same. >> right. >> some goods have higher tariffs because of the way negotiations have gone in the past should we renegotiate? always, constantly we should always look for a better deal, but a trade war not the way to go. >> where do we fit in with the eu and china. >> it's about equal. china is a little bit higher different economists measure it in different ways, but the idea that somehow they're putting on
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all these tariffs and we're not is simply incorrect, not to mention the fact it's not as if when we have a trade imbalance with another country we're getting nothing for us the president keeps saying they're ripping us off that's ridiculous. we actually get goods in chan exchange for the money we pay. and the reason is because we have a capital account surplus because there's foreign direct investment investment in american capital markets because we are the greatest country in the world to invest in. okay, you don't want a trade imbalance, cut off everybody's ability to invest in the united states done. >> you've got to be the thousandth person on cnbc to have made that argument. hundreds and hundreds of people have probably made that point to the president and he's got an obsession with trade deficits. >> he doesn't build it. >> we're going to build the wall and put the face on that wall of every person that said that. >> we've got to keep fighting. >> do you expect anything to happen today >> it's hard to say. one of the things you can't
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underestimate the ability of the president of the united states, to do things that other people haven't done there's brinksmanship, nothing will never happen. with trump, you never know. >> he's staying with us for the hour, folks, arthur brooks. i'm going to say $36 billion in five-year notes went up for auction a little while ago how did it look today, rick? >> you know, it's been a long time since i've given a good grade for an auction a minus, apple minus $36 billion five years the dutch auction yield 2.815. definitely lower than where the one issued was trading lower yield, higher price. higher price is good when you're selling something like the u.s. treasury let's go through the internals $2.61 bid to cover the best since may of 2017 67.2, 67.2 on skbrekindirects. also the best since '17 in september. the only lightweight was direct
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bidders at 8.7%, just a bit belong the ten auction average of 10% other than that, this was a stellar auction, and maybe it shows us a little bit about what's going on. many believe maybe the yield curve is about where it needs to be maybe one or two more raises however you want to slice it, investors being more comfortable with a short maturity like five-year notes is very interesting, especially in front of friday's gdp release that could be a market mover. if it's strong and rates go up, you're not going to be very happy with regard to buying this auction. melissa lee, back to you. a big day for auto earnings. general motors and fiat chrysler reporting before the bill, ford after the close. analysts tempering expectations after the companies took down full-year guide anxious. phil lebeau joins us with the latest. >> what's interesting is that the companies that we've heard from, fiat chrysler and general motors expect higher costs to
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continue for some time let's start off with general motors it cut its full year earnings guidance going down to $6 per share. $6.30 to $6.60 was the previous guidance a lot coming in terms of raw materials, steel and aluminum. here is the cfo of general motors talking with us earlier today on "squawk box." >> we have seen an escalation of commodity prices across the spectrum of commodities, including steel and aluminum, that has been driven by market forces >> now let's talk about fiat chrysler because it has also lord its guide anxious 2018, revenue growth down 5% to 8% earnings growth is also lower than previously guided and the china tariff impact, that's what they're noticing at fiat chrysler. what is interesting with both of these companies is that they're not seeing any slowdown in demand there's still plenty of people out there who want to buy either a new jeep or a ram truck,
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whatever the model might be. so the demand is there it will be interesting to see what ford has to say when it reports earnings later today after the close of trading we will hear and talk with bob shanks, the cfo of ford. guys, these costs going up, it all comes back to tariffs. steel and aluminum tariffs, that has pushed up costs for the entire industry. >> something we're going to talk about throughout the whole show as we expect jean-claude juncker. fiat chrysler announcing the death of their former head, sergio marchionne. >> he was a giant in the industry the new ceo held a moment of silence on the earnings conference call. we've heard from a number of ceos the leader of daimler said the auto industry has lost a real giant. many of us have lost a very dear
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frejd. marry barra, general motors ceo, sergio created a remarkable legacy in the automotive industry and bill ford, chairman of the ford motor company, says his extraordinary leadership, candor and passion for the industry will be missed by everyone who knew him guys, i know we say this every once in a while that somebody is a giant of a particular industry in this case, it was not hyperbo hyperbole, it really is true about sergio marchionne and the legacy he leaves behind. >> he was so young. >> thanks, phil. we're just past the halfway mark on earnings the biggest week this season the numbers have been strong, but rising costs have some market watchers concerned. and this liquor store in san jose, california, just made one lucky customer a multimillionaire last night. does the liquor store get a percentage or just $100,000 flat that's not fair. we'll talk about that half a
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billion dollar mega millions lotto and tell you how much the winner is going to take home. >> there's only one fair in life, bill, it's the state fair. >> we have much more of the american enterprise institute president, arthur brooks, and get all his thoughts on the things we're wrestling with on "pou "power lunch." [phone ringing] need a change of scenery? the kayak price forecast tool tells you whether to wait or book your flight now. so you can be confident you're getting the best price. giddyup! kayak. search one and done. stop fearing your alarm clock... with new*! zzzquil pure zzzs. a drug-free blend of botanicals with melatonin ...that supports your natural sleep cycle... you can seize the morning. new! zzzquil pure zzzs.
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off by 45 points we are past the halfway of the biggest week of earnings season and rising costs are beginning to emerge as a major theme and weighing on some of the major stau stocks bob pisani joins us with more details. >> two major themes. if you're caught in the crosshairs of rising costs and a stronger dollar, you've got problems several companies the last few days talking about higher costs. general motors, whirlpool, illinois tool works, kimberly-clark even coca-cola talked about higher costs that stock is trading to the upside here's the other thing we learned. not all raised guidance is the same normally the market loves that ingersoll-rand, they're up but boeing raised revenue guidance, northrop raised earnings guidance at&t all these talks are down
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the ange the answer is it's not all the same here's the problem boeing is up 17% this year that's not good enough just talking about slightly higher revenues. we knew back in april that the earnings were going to be okay they didn't change the earnings guidance and that's why it's down today at&t, they talked about earnings in the high 350 range. i'm sorry, they have given guidance for 350 way back in april. that's not good enough either. the market is not impressed with that that's why we're trading down. again, not all guidance is exactly the same still, earnings have been good overall. many, many companies beating expectations more. look how close we are from new highs. the nasdaq is there, the s&p is 1.5% the equal weight s&p, all 500 the same wait, they're only 2.9% from a historic high look at the mid cap. new home sales, terrible numbers overall.
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look at those home builders all down see the great article about why home builders are having a tough time. so rising costs have been a major fallout from the global trade battle will it put a dent in this market rally joining us right now, joe duran and tim courtney joe, at this point, jerome powell said last week it's still early to assess the impact that the tariffs will have on our economy and so forth at this juncture, is it too early for companies to be pleading tariffs or is it just an excuse right now? >> it's an excuse because they're really not material yet. there is obviously in the steel industry and very targeted areas an impact. i think what companies are doing now, it's a great time to prepare people for worse outcomes, so right now while the president might be taking a tough line, most of his cabinet
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is taking a very pro-trade position so we don't know if it's posturing or real. if it is real, it will have serious impacts. you see it already in inflation, little hints of it with all of the earnings that we're hearing. we're seeing it with the dollar rally and we're certainly seeing it in interest rates in the last week >> tim, what do you think? is it real and how -- if it goes on much longer, when does it become a real problem for the market, do you think >> it's something that the market really hasn't priced in it's one of the reasons why volatility has picked up so much is the overall valuation of the u.s. market has moved higher without any kind of expectation of bad news coming in. the rising costs and margin compression is something that the market has been concerned with for many years and so that is a risk and these tariffs are risks. but on the other side, the good thing that we can take away is companies, while that margin compression has been a risk,
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margins keep on expanding and the fear has been they're going to shrink back down to more normal long-term averages. they haven't we found in many ways producers have been able to continue to come out with supplies surprisingly and keep prices down so you've got risk there it's currently not priced in and that's causing volatility. but fundamentally, things are relatively strong and margins are good. >> let's say that this trade dispute continues the way it's going right now and the way more tariffs are imposed. to the point that it's an actual concern, not a stated concern. what would you say on where you should be in the market or where you should not be? do you not want to be in manufacturers because of the concern of tariffs do you not want to be in hardware companies for technology because you're concerned about the backlash from china where do you go? >> well, the companies -- the
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market is telling you where to be small cap, mid cap, they're more u.s. focused the knock on effects is what happens to the dollar. being more u.s. based right now is an advantage. even though certain economies are growing faster we also are getting all the benefits of the cap eex ex expansion, because of the tax relief act that will continue for some time now. so u.s. companies will continue to take advantage of it. you want to take advantage of being in the industrials too, because while they might be affected, the ones that are mostly in the u.s. are still doing great. as interest rates continue to go up, financials will be an advantage position as well so the markets are telling you where to be and it's very broad based. again, if it goes on and becomes real and expands, there will be no winners so that's the downside of all of
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this >> joe, tim, thank you both for joining us today appreciate it. >> thank you let's take a look at this chart. it's our mystery chart what a doozy this one is it's up more than 90% this year. here's a hint, the ceo came up with this idea when they got tired of the same old pizza. we will reveal what this is in just a moment. >> i know, i know! >> you showoff >> plus one lottery ticket customer got the shock of his or her life in san jose last night, but another shock is still to come the tax bill we'll tell you how much of that half a bli tilonhey won will go to uncle sam stay tuned the line between work and life hasn't just blurred. it's gone. that's why you need someone behind you. not just a card. an entire support system.
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[ding] a single winner in san jose, california, will claim the mega millions jackpot, but how much of that money does he or she actually get to take home? robert frank is here with all the numbers. >> as a headline, it was a huge number, $522 million, the fifth largest payout in the game's history, won with a single ticket yet to be claimed the amount of cash the winner will take home is a tiny fraction of that so the payout can be a one-time lump sum or annual payout. almost everyone takes the one-time payout, as they should. in this case the one-time would be $308 million of that $522 then you have to pay taxes the top tax rate 37% so that's $114 million unfortunately the winner bought
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that ticket in the highest taxed state in the country, california their top tax rate is 13.3%. so the california tax bill alone is another $41 million so the total tax bill for this was $155 million, cutting that 308 down to $153 million but that's still enough to buy the most expensive home in the area in which they bought the ticket, scott mcneeley's mansion. it has its own pizza room, and more you could still have enough to fill the 60-car garage. >> what is a pizza room? >> come on, arthur. >> i don't have one. i'm deprived >> do they have an oven in there? >> it's a giant oven pizza stones, big area to eat the pizza. >> the electric bill on those
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pizza ovens is huge. do they run it 24 hours a day? >> you're paying $100 million for a house, you don't have to worry about the pizza oven. >> it's worth it to buy a lottery ticket if all you're going to get is $153 million. >> if the reason you're buying a lottery ticket is to get a pizza room, maybe your priorities aren't in order. >> he talked about california being the highest income tax in the country. do you believe in this process that those states will see fewer people, people are leaving those states and going to places like florida? >> we're still seeing that california, phenomenal i spent a lot of time in california there's a good reason to live there. the weather is great, the people are nice but you see a ton of migration to states that do have lower tax rates. >> they just did a study in california of the past three tax changes and its effect on the millionaire population and they found people do move out but most of those people who move from california is because of the high housing costs in
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california to lower housing. the actual rich don't move nearly as much as people think now, this s.a.l.t. change could be a game changer. but based on previous tax increases in california, very little movement among the rich plus, they create new millionaires, not just the lottery but silicon valley and hollywood, that actually net gain of millionaires in california in the past ten years has been huge. >> i bet the guy who bought the ticket wishes he would have gone over to nevada and bought the ticket. >> that would have been smart. >> arthur, you just had an article this week addressing this issue you say u.s. manufacturing is alive and well >> we have an economist mark perry from the university of michigan and he opened my eyes to something we've been talking about the death of manufacturering for a long time. we talk about it on cnbc frequently the truth ismanufacturing is now at $2 trillion, its highest dollar level ever in the
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american economy it's just down as a percentage of the american economy because its growth rate has been lower than general economic growth the employment is way down because of robotics, because of the way employment is going. >> we conflate manufacturing with manufacturing jobs. >> the key thing to remember is there are a lot of good manufacturing jobs coming back to the united states what they require is a lot of skills the biggest problem that we have in this country today is not a lack of jobs, it's a lack of skills that's a huge -- that's a challenge, that's a moral challenge for the country. if you actually have good skills in high and advanced flexible manufacturing, you can get a very high-paid job in most parts of the country. >> is president trump's sledgehammer bringing a lot of those jobs back? >> it's hard to say. what you'll find in rural areas, the main thing that's holding people back is not a lack of jobs, because they which hadon'e the skills to fill the 6.6
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unfilled jobs. we have an education reform crisis we need more vocational and technical training in this country. >> maybe more charter schools. >> more vocational schools, more apprenticeships, more trade schools. >> you mentioned high-paying manufacturing jobs what's that? >> it can easily start at more than $20 an hour and we see these -- they require real skills, of course. they actually require training. >> like what >> if you're working -- >> an advanced manufacturing. >> if you're making razor blades, for example. what is that that's blue collar labor like you think about it from your father or grandfather's generation these are guys in white suits in highly immaculate environments that are highly skilled. by the way, they didn't go to college because they didn't need to and that's an important thing to keep in mind. we have a college for all mentality that's not serving the american economy very well. >> and people get overcredentialed for jobs they
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don't need and then they end up in debt. >> if we had high school guidance counselors and a culture pushing people into trade schools, you could become a skilled welder in 8 to 14 months we have 500,000 unfilled welding jobs they start at $50,000 a year it doesn't take very long. it takes a lot of skill and hard work but more than anything else it takes creativity and imagination on the part of the leadership. >> part of the problem is geographic dislocation maybe they're in the wrong states. >> you move when there's opportunity to be move you put your stuff on your back and go my family moved every generation one step ahead of the law. it was just -- until we hit the west coast and had to stop. >> bill moved. >> where did you move from, bill >> i came from california. i moved from california to new jersey i once ran into legendary sports writer jim murray and he said where did you go i went to new jersey
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he said what did you do, lose a bet? >> you won the bet, you're at cnbc. >> you won the lottery, bill. >> it keeps on giving. >> arthur is with us for the whole hour. coca-cola higher on the back of its earnings but the ceo warning about the rising price eritluminum prices whe may go from here, next. , with! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. saves you time and money. make it simple. make it ship sticks.
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with pg&e in the sierras. and i'm an arborist since the onset of the drought, more than 129 million trees have died in california. pg&e prunes and removes over a million trees every year to ensure that hazardous trees can't impact power lines. and since the onset of the drought we've doubled our efforts. i grew up in the forests out in this area and honestly it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future.
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hello, everyone, i'm sue herera here's your cnbc news update for this hour. drone footage of properties outside athens shows the extent of the damage to that region in the aftermath of the deadliest fires to hit greece innic ini n decades. rescue crews continue to search for those missing. flooding continues in laos after a dam collapsed there. 24 were killed with scores more missing. rescue teams from china and thailand are headed to the area. a united nations report says nearly 1,500 people have been evacuated and thousands more lost their homes back here at home, firefighters in hershey, pennsylvania, are going
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door-to-door to evacuate residents from their flooded homes. the rescuers are reporting waist-deep water that flooded the first floors of several homes. hershey park has been closed. and the european space agency successfully launching four satellites to complete the continent's own global navigation system. it used its most powerful rocket for the launch you are up to date melissa, i will send it back to you. >> thank you very much, sue. coca-cola shares are higher on its earnings beat the company's ceo on cnbc today earlier weighing in on rising costs because of tariffs. >> the general cost imports, the tariffs on the metals, it's one of many factors, caused us to go out in the middle of the year with our bottling partners and announce the price increase, which is pretty unusual. it was the right thing to do for the business for the long term we're not a primary direct exact from some of the tariffs but of
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course it flows through supply chain in all sorts of different ways and ultimately that will have to pass through >> let's bring in nick modi, analyst with rbc capital markets who had coke as one of his top stock picks for the second half of the year. the stock was up 8% and then it's up again today. what are investors most excited about in this quarter? the organic revenue growth for the year >> if you think about coke, they have challenged to grow their top line for a number of years since james quincy has taken over, you've seen the top line steadily improve 5% organic growth is pretty remarkable in this environment. >> where else will you find this growth and i'm also wondering, what areas are most concerned about also, because even though the rising costs are an indirect cost to hem, indirect impact, you know, we heard from gm, for instance, that a bulk of their rising costs or the $1 billion extra they're seeing is from
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currency exposure. >> it's a funny thing. historically when currencies go against coke they have to lower numbers. this is one of the few times where numbers are actually going up so i think this shows that this is a very new company than what we're normally accustomed to they have a much more aggressive tact at cost cutting and are navigating the environment much better what worries me is just geopolitical issues. you had a trucker strike in brazil, you have turmoil in the east, a sugar tax in south africa those small, discreet issues can add up so those are what i worry about when it comes to coca-cola. >> is this your best idea in the sector >> it's my favorite mega cap idea coke has been our preferred mega cap name for the last year >> you're asking about diet coke on the conference call, nik. what are you worried about there? >> diet coke has been under a lot of pressure and the trends
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have been very good. what i was trying to understand from the management team, is this really just distribution, new products getting put into the retail outlets or is this a function of consumers coming back -- >> are we talking about the new flavors? >> they have relaunched new flavors in slim cans i guess we're seeing new consumers are coming into the franchise and even old consumers are coming back to diet coke so that's a positive sign. >> i've tried them, i like them. >> they have some pretty neat flavors. >> lime ginger. >> and now they're going into the uk. >> i just like the slim cans i can't drink a whole can of coke anymore >> nik, thanks. >> thanks for having me. my turn. check out our mystery chart. here we go again this stock soaring today, as a matter of fact, an eye-popping 190% over the past year. we told you that this company was started when the founder was tired of the sail ome old pizzae were eating.
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here's another clue. like deep dish pizza, this company was born in chicago. we'lreal tl vehe name and talk to the ceo of the mystery company, next. you might take something for your heart... or joints. but do you take something for your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life.
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we're getting headlines from president trump's meeting with the head of the eu meeting kayla tausche is at the white house. >> reporter: we are just getting some headlines out of this pool spray between the president of the united states and the president of the european union. according to the headlines that have just hit the wires, the president of the united states says that he hopes to work out a fair trade deal with europe, but that at a minimum, that needs to be a reciprocal deal as for the eu, its president, jean-claude juncker says the u.s. and the eu are allies and need to work together. there's a need to focus on reducing tariffs, not increasing them president trump called him a very smart and tough man as the two kick off what is just about
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a 15-minute meeting before the two sides meet with an expanded delegation to talk about economic issues at greatest length and potential paths forward, if in fact there are any at this moment >> thank you very much kayla tausche with the latest on that meeting. >> they said all those things publicly i wonder what they'll say in that 15-minute private meeting, though >> who knows who knows what's actually going on. >> should the goal be a dollar-for-dollar trade balance? >> no. you should never have a dollar-for-dollar trade balance in the same way that you shouldn't have a dollar-for-dollar capital account balance. >> the headlines on this meeting was that they probably wouldn't get along. the thing about jean-claude juncker, they have so many leaders and very little leadership, but he is described as somebody that a lot of people just really like like i said see the two of them -- >> getting along. >> getting along just fine. >> there's a problem, though he said yesterday what president
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trump had claimed was stupid he called it stupid. president trump bears a grudge apparently never forgets. >> no, for sure. >> so that was probably a bad entrance on his part before he talks to president trump >> all right we'll see if we get more headlines, because it is time to reveal our mystery chart grubhub. who knew shares of the food delivery company soaring double digits on record second-quarter earnings the stock is on pace for its best daily performance just since february here for a "power lunch" exclusive, we welcome matt maloney, the ceo and co-founder of grubhub who founded the company because he was tired of the pizza he was having to eat matt, thanks for joining us, congratulations. as people around here know, i love to cook i don't get this whole trend of people getting food delivered wherever they are. but i guess the convenience factor but you saw an increase of 70% in subscriber growth in this
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quarter. where did that come from what happened? >> thanks for having me on this show you know what, the industry is massive. so it's about by conservative estimates $200 billion in annual food spent in takeout and delivery just in the united states right now it's hard to show that $20 billion of that is going through online that's us, everyone else in our industry, the major players, the pizza huts, the domino's, and so there's a significant transition from online, that $180 billion annually -- i'm sorry, from offline to online. what we have positioned ourselves very uniquely to take a significant portion of that growth so that's really why you're seeing so much growth in our stock right now. >> how much of that was acquisitions you made acquisitions as well. is that how you're picking up a lot of subscribers or is it organic as well? >> it's mostly organic we had the highest number of new
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diners in any quarter ever in the second quarter and what's insane is the second quarter is generally much slower than the first quarter you think about delivery and you think about cold weather, you think about snow, you think about tv back-to-school. so in the spring when people generally like to go to their cafes, we see depression in the growth numbers, but we did not see that >> sorry, matt, hold on one second we just wanting to get to this the president meeting with the european union chief here's the playback. >> he's a man that i've gotten to know very well. he's a very smart man and a very tough man and he represents his people well and the countries well and we want to have a fair trade deal and we're looking to have a fair trade deal and hopefully we can work something out over the years the united states has been losing hundreds of billions of dollars with the european union and we just want it to be a level playing field for our farmers, for our manufacturers, for everybody
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and we also want a big beneficiary to be the european union so we think it can be good for everybody and that's what we're here to discuss. mr. president, thank you very much for coming. thank you. >> my pleasure i wanted to thank you for inviting us to the white house we are close allies, not enemies. we have to work together we represent half of the world trade. so i think that we have to talk to each other and not at another and that's what we do today. i think that we should focus on reducing tariffs that's what we have had to do. that's our job. >> i agree if we could have no tariffs and no barriers and no subsidies, the united states would be extremely pleased. we have many countries, we won't say european union, we have many
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countries where they have massive barriers and massive tariffs and we have to follow. you could call it retaliation, but i'd rather just say that we want reciprocal. so whether it's with european union or it has to be reciprocal in nature at a minimum. we're working on that. i think we're making tremendous striechltdz we're doi strides. we're doing very well with mexico, with a lot of countries right now. but this is something as jean-claude said, together as a unit, we make up actually more than 50% of the world trade. that's a big number. that's a big number. so we expect something very positive to take blaise. but you will be the piers to know thank you all very much. appreciate it. >> thank you, very much. >> thank you, everybody. thank you, very much thank you, everybody
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thank you. >> keep going. >> the press desperately trying to ask questions there and today the president was not biting sometimes he does, that's why we hung with it there for a second. there he was with the president of the european commission jean-claude juncker who has come here to talk about trade the president is threatening 25% tariffs. this new phrase entered the president's vernacular since the g7 in canada, no tariffs, no subsidy, no barriers do you believe he wants that >> it's hard to say. it would be hard to say if we got it it's almost impossible in any real estate time it would come about. it would take years and years and years. >> even on the occupation part, where we subs dice agriculture >> etching, we subsidize energy, parts of our technology sector we subsidize all kind of stuff we have trade barriers like crazy. we have asim pled trick trade
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barriers. >> what if we start over again, clean slate no, barriers anywhere what would happen in >> there will be dislocation in our economy. some industries would fold up. some industries would lose their whole market some industries would move country to company >> isn't that happening anyway >> in point of fact, it would be high for the occupation. we have a high level of education in general, that's what we should be going for, if the president were in earnest on that, we should all stand up and cheer? >> what do you say to the people that argue that that ruined the manufacturing sector of the occupation and led to the loss of jobs over the last 30 years in a way that wasn't expected when you look at the textile industry the furniture industry. so did it lead to instability here in the united states? >> people do lose their jobs this is the key. this idea that somehow we could institute some sort of trade policy where nobody is ever affected is insane, in a dynamic economy and capitalism, that's
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not the case however, that itself not a problem with trade that's not a problem with an open and globalized economy. it's a lack of imagination, where we don't trade anybody, we have work force development. we give up on people and give them welfare we have whole sections of the country and say they're lost to the future see, that's the problem, we should not have to prove between modernization and helping people adjust to the economy. we should be able to do both we're american, let's say. >> let's go to the ceo matt looney and founder of grubhub. >> i was reading an article that said by 2030, we can see the end of kitchens as we know it in homes. maybe people will be getting food delivered from what they called central kitchens. you are a middle man in all of this have you ever shot about being the man and cooking the food you deliver at the same time >> no, we like to be a partner for the restaurants and help
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them build their billions. what you are saying, that's actually a reality in many parts of manhattan right now there is a joke people use their ovens for storage, because there are so many restaurant options around your home i don't think kitchens will ever really go away we do see americans relying more and more on their local restaurants, whether that's going out to each more often or having a meal kit in their home. >> have meal kits impacted your business at all? >> no, i think i said before the am pickup and livery spent in the u.s., that's migrating online so you are seeing tremendous growth in our sector we're the leader we created the whole category. we continue to push the boundaries now so we're in a great place to receive a significant amount of that offline to online transition >> when do i get to actually see the food moving through the street like i can see with dominos. >> an uber car
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>> yes there is this big gap. >> why do you need to see snit >> i want to know. >> how long will it take, c'mon, bill >> can you track your food open our app right now. when we're delivering the food, we show you the icon where your meal is on its way in. until restaurants start putting small cameras inside your ovens, i don't think you will see the food prepared. >> in terms of data on customers, what data do you check, if any? what do you do with that data? is there that value component to the billiousiness of grubhub investors aren't looking at right now? >> it's a significant amount of da that. we run over 4,000 orders per day. we know the popular dishes in every neighborhood of service. i'm sorry? >> what is everybody buying? i'm sorry, finish mellissa's question sorry. >> oh. okay no, so we can see what people order. we can see what the trending dishes r. we can tell you what is is most popular in south
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beach versus west hollywood versus -- >> what do you do with that? >> what we do, we bring that back and show it to your neighbor, we show the aggregate favorite by restaurant, by dish. you can go in and browse through our selection. we have 85,000 restaurants it's hard to specifically find the one you want you can say i feel like sushi. we can drill down and say this is the most popular sushi dish item out of all the sushi restaurants that deliver in your city we can help people thiepd i find their next favorite dish we bring it back to the personalization shi want what the caruso-cabrera's had last night. >> i couldn't follow my food two days ago on seamless, like it was at the restaurant. >> you are really upset about that that, aren't you? >> yes >> i want to know what this does to scott mcnealy's pizza room. >> values it for sure. >> matt malone y from grubhub,
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thank you on your continued success. thank you for joining us. facebook is hitting fresh all time highs today, this ahead of the earnings report out today. we will tell you what is wenghe growth. the second hour begins on the other side of this break it's all yours. wow! record time. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. get ready, because we're helping leading companies see it- and see it through-with digital. jimmy's gotten used to his whole yup, he's gone noseblind. odors. he thinks it smells fine, but his mom smells this... luckily for all your hard-to-wash fabrics... ...there's febreze fabric refresher. febreze doesn't just mask, it eliminates odors you've...
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i'm michelle caruso-cabrera, here's what's on the power wlunch menu, the president is meeting with jean-claude juncker trying to hammer out a trade deal they want a tariff on imported cars we will be live at the white house. plus the trade war fears are being felt gm is slashing its outlook because of rising steel and alluminum costs. inadvisors are hitting the brakes on the stock. facebook stock is hitting an all time high. should you buy the stock ahead of the numbers "power lunch" starts right now we welcome you back to "power lunch" a mixed day the dow is in the red. we're off session lows you can blame boeing for the
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most part the s&p 500 and nasdaq are higher today marks exactly six months to the day the dow and s&p last set record highs it's been pretty much sideways since then we will check out free earnings movers this hour 3m and ups is higher polaris is taking a hit. we head to washington, we are live with the latest kayla. >> reporter: melissa, currently there is an extended bilateral meeting going on between the u.s. and the european union the treasury secretary from the u.s. the commissioner on trade from the eu a whole host of leaders from both sides of the table here will be hashing out the issues they have been going head-to-head on in the last several months just about 15 minutes ago, president trump wrapped up a bilateral meeting with his counterpart of the eu, jean-claude juncker. in that very short meeting, a
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brief portion of it was shown to press. the press is allowed in the room to essentially film that we heard from the euese leader, essentially the two groups are allies as opposed to the president who said they were foes last week and need to talk about lowering tariff, not increasing tariffs it was president trump that talked about a prospect for a possible fair and reciprocal trade deal listen to what he said >> if we can have no tariffs, no barriers, no subsidies the occupation would be extremely pleased. we have many countries, we won't say european union we have many countries where they have massive barriers and they have massive tariffs and we have to follow and you could call it retaliation, but i'd rather just say that we want reciprocal. >> reporter: the president calling for no tariffs, no barriers, no subsidy, despite the fact that yesterday the administration rolled out a $12
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billion subsidy program for the agricultural industry, which has been targeted by retaliation from the likes of europe so interesting to see the president talk on both sides of that issue in just the last 24 hours. we'll see if we get anything out of today's meeting, certainly administration official versus set expectations very low. but as larry kudlow the president's chief economic adviser said earlier this morning, perhaps because those expectations are set so low, you could get a surprise, back to you. >> thank you for more on the president's meeting with the european union chief, let's bring in the president and ceo of the atlanta council and contributor, arthur brooks president of aei is with us he's posted a new podcast, the arthur brooks show you are welcome, arthur. >> thank you >> fred, a key focus for mr. juncker coming to the white house is trying to head off these auto tariffs that the president has threatened do you expect any movement on
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that where do you think that will go eventually >> i think we will get an indication coming out of this meeting. whether the president is ready to turn the corner with european allies, foes, whatever you want to call them, and i'd be looking for three things first of all what gets said about auto tariffs you are right, junckers main mission in coming here is to head those off >> that would make the trade war a lot deeper the second possibility, he's got a couple suggestion he is carrying in his pocket one would be lowering auto tariffs to zero under wto rules, you couldn't do that just bilaterally. so he's carrying a suggestion for a flurl lateral, that's what the europeans are calling it, agreement including japanese, south koreans, others. the second possibility would be lowering, with the intention of lowering all industrial goods tariffs to zero. he's got that. not as proposals, but as suggestions that might move us
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off the deepening of tariffs track and then turning it around then that, the reason i like these ideas it would then put you in a position to work with your allies and put more pressure on china. >> fred, can jean-claude juncker actually promise any of that i ask in the following context, he was very involved in the greek financial crisis he showed up in greece talked to the greece leadership. he promised them all kind of things he went back to the real leaders, the people that have been elected angela merkel, she's still around guess what he offered wasn't the deal, how much power does he have has it changed at all since then >> are you right not a lot. he represents 28 countries heels got to get them all on the same page. what we do know from the french leader is there is no negotiation on all, any of this unless president trump backs off the steam and alluminum tariffs and the threat of auto tariffs his words were, you don't want to do this with a gun pointed at our head we do know that.
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that's one message he won't be able to budge on on the others, i think he has enough consensus he knows the other european leaders would be willing to move in a direction on tariffs the president by raising the spectre, non-tariff barriers and subsidies. >> that will be hard for a number of individuals. you have to cut out agriculture to get anywhere near that. they would be willing with industrial goods so he doesn't have a lot of power. if he can walk away with the trajectory with the negotiating deal, that would be success. >> we were talking earlier, joking about the civil, how civil juncker and trump seem to be during that photo opportunities there. we know how pointed the rhetoric has become we have forgotten how to disagree anymore haven't we >> well, this is the one of the biggest problems in politics today, people aren't just angry, they're contemptuous with one another. it makes it impossible to have
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conversations. we talk everything on "power lunch," everything from your thanksgiving table to on social media is getting worse and worse and worse. i think we have to dedicate ourselves to disagrees less, but better >> how do you do that? >> i'm dedicated to this new show we can all be a part >> can you put an end to the name call something there are so many names that get thrown out it's just very, very frustrating. >> it's also the anonymity with social media is really really destructive. the other thing psychologists call contempt. we're in the habit of treating each other with contempt anger is no problem. there the a lot of research that shows anger and divorce are not correlated but contempt is for the course that's basically, mockery, dismiss am, eye rolling. >> we are looking for that the fall mood is outrage >> contempt, absolutely contempt we want to be a part of the solution to the problem. here's the deal, next time somebody on social media or real life treats you with contempt. that's your opportunity to
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answer with some sort of kindness >> is that the answer? >> are you called a figure, too, everybody is watching us, they will have an opportunity to do this, we can be a part of the solution in this country >> very good >> so great to see you i got to go, fred. i'm sorry, we never have enough time on live television. >> i was going to disagree in a more are you main way with president trump over this. >> we don't have time for that kind of stuff. we want vis i it havitriol. thank you for joining us. today's big earnings report, domenic chu joins us >> michelle, no vitriol open our side the markets are turning around we are seeing a little optimism brought back to what's happening with the overall stockmarket you see facebook earnings on after the bell as we talk about trade, in that discussion you guys were having. it is something a lot of companies are addressing in
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their conference calls handful have done so as well general dynamics, they are up right now. they did talk about trade. they don't think it will have a huge amount of impact for them they are factoring for it. not something that they're terribly concerned about for right now. it will have a hit not as much. take another stock here, coca-cola is also addressing the trade and tariff sides as well they are saying they will see impact from ilull number and steam, of course, chance are a big part of that process coca-cola addressing that issue as well, boeing saying during their conference call, they did look at the trade issue as well, trade is not, it's something they are addressing with governmenting all across the world right now. the conversations continue it's not something they are going to terribly kind of go delve into at this point they're trying to figure things out on a location by location basis. one last one here is general motors those shares move in as well,
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yes, there was an earnings report they talked abld trade as well, steel and alum name weighing in for them so a lot of them, held lisa, are weighing in on this, we'll see if those after the bell have anything to say as well. >> don chu, thanks. meantime, let's dig deeper into boeing. we have a founding martier from mellious research. let's start off with autos colin, what did you make of that $1 billion cost gm is outlining? do you think that was a conservative do you think that was kitchen sink what's your take >> i mean i was a bit surprised by how large the number was, particularly for the fx impacts. with ethought they were a little overserved for the commodity costs. it seems they were surprising sincer that costs in south america were pretty low. i thought it would be a stronger empact from reality. >> we got a chance to talk to the cfo on "squawk box" this morning. i asked him specifically about that $1 billion, if the tariffs
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were lifted off of steel and alluminum, whether or not there would be a guidance raised do you think they want a stand gives them some cushion? is there hope? >> there is only two quarters left in the year i hit the sets them up to be -- i think it's a good move on their part to set it at a high price, set the bar, move things down by the ends of the year, it's possible steel prices might soften a bit >> we are seeing a ford share sell-off in sympathy it's down by about 3% right now. what sort of extrapolation do you make from gm and its outlining of its costs going up? >> yeah, obviously, it's a cautious read. i think ford has been a bit more careful in its guidance. they already guide to about 1. billion in fx commodity. i think they had good cushion into that number i think they have a pretty good cost opportunity going forward i think there is a little more room it's definitely more cautious as you head with gm and chrysler
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guiding down for the year. >> colin, thank you. ubs. now to boeing. carter of mellious joins us. hey, carter. >> hey >> do we see evidence that trade barriers and issues are driving the costs of boeing higher >> not in any material fashion right. i mean this is an industry that's got global supply chains. it's a big global customer bails. this is a debate and an argument that boeing is going to get wrapped up in as the nation's largest exporter to date, we're not seeing a material impact of any significance on the underlying health of the business >> why do you think that is when we seem to be hearingb from other companies that are complaining about hiring costs when it comes to steel and alluminum, et cetera, for example? >> yeah, look, boeing, a lot of the input costs of boeing will face contractually agreed to with the customers so they can pass that along to customers. the concern is there is something related to you know
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global travel trends and we haven't seen that yet. that's the rick that you worry about. it wasn't a big feature of boeing's quarter that was much more about the underlying performance of the business and short term versus long term. >> why is the stock off? they argue the guidance was higher than what people were expecting and yet it's the same guidance they've had for a long time, this market is really looking for, you got to be better than you said you were going to be? >> yeah, i think they are to be completely honest. i think there is a lot of focus when you say what did i learn this quarter, what did that teach me in this quarter i think you have to say what is in these underlying results for the business what does it teach you about the future i realize people are focused on the charge boeing took in the tanker program which will not allow them to raise the full year guidance. if you from inthat out and say what is boeing's airplane business doing from a profitability stand point? they have a 13.3% margin
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how good is that it averaged 7% for 50 years, up until today the highest quarter you have seen is 11. . already 13.3 on adjusted basis next year the mix gets better, absorption gets better you know, so they're talking about a mid-teens margin by the end of the decade. they are very much on track to do that. when you see that margin expansion in a company this large, that is a powerful if i recall and investment feed >> kevin o'leary has talked about that on cnbc thanks, carter, good to have you on >> good to be here. coming up, an attack on iran is likely to be a cyber attack why the man that wrote that report joins us ahead. why today could be the most important day for biogen in years. we have all the details ahead. a rising tensions and rising dollars, a wall of worry for companies. congoupofoansfor yr rtli mi up.
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so, if we said gm and coke both raising concerns about rising costs but their earnings report, it seems like the wall of worry is getting higher you have rising dollar, rising interest rates, how should investors balance all of these risks? joining us to talk about this wall of worry, the senior fixed income portfolio manager at morgan stanley investment
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management good to see you both thank you for joining us today >> thank you >> jack, i mean, we were talking earlier about whether the tariff concerns are an excuse right now. but they are a real concern when you are worried about rising costs right now. right? >> oh, they are. absolutely i think one of the things i finds remarkable is 66% of the american people believe tariffs are the right way to go ealso believe half the american population doesn't under the blowback that could come along with tariffs should that trickle through, many of these pro tariff americ americans are going to be disillusioned. >> we are citing rising rates a concern on that waumg of worry a couple days ago, we had a report from reuters saying the
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doj might back off of easing money policies we saw the reaction. it was sharp, it was swift >> that yield curve stiffened considerably is this a concern of yours >> no, i don't think so. i think this is a oneoff it happened off the bank of japan rumored announcement, if you will they didn't really announce anything the thought is they mayese up on yield curve which is the defact o at ten basis points. with japan they have been easing policy for a long time, all their i they're doing is loosening their belt to eat more for longer the fact that they're allowing, they may allow interest rates to rise yet we don't know yet. >> that tells us they are trying to direct credit to the real economy, stimulate some growth >> that might mean ten year yields in japan have to go from 10 to 1525 basis points. this is not start of a trends.
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>> we saw reaction trends in the u.s. it was sharp even with the small easing up on the stimulus. >> japan is a global anchor rate right. like u.s., europe, japan >> right >> so when those rates go up, it's important the point is, is this a new trend to move higher is this a policy to move rates much higher in japan >> no. this is a one off thing. ten-year yields in the u.s. adjusted ten points basis higher from a week ago. i don't think it's a big deal. i think it's hard to get materially above 3% for any period of time >> jack, rising rates, rising cost was all these rises are indicative of a stronger economy. so are we worrying about the wrong things here? >> well, not necessarily generally, rising prices, rising yields are emblematic of an economy that's the latest in the business cycle i would tend to agree, though, i think as long as the boj and ecb
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continues this ped am to the medal monetary policy, i don't see the ten-year rate rising higher keep in minds the ten-year rate is 2-and-a-half percent rates higher than the german bouillon. which would suggest to make an investor ambivalent or equal the dollar would have to drop about 28% against the euro of the next ten years. so that's probably not likely. so that's why there is so much more demands for u.s. treasuries in the ten year given that the alternative rates are so low so i'm not expecting a big ratchet up in ten-year treasury. in fact, i argue that if we do invert, which i expect we will, it's not necessarily a signal of recession. i think it's just because the curve is so distorted. >> very good jack ablin, jim, thank you for joining us >> thank you major credit cashed companikick
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earnings after the bell today. what to watch for and how to what to watch for and how to trade that stock next.irline sis to find the best flight for me. so i'm more than confident. how's your family? kayak. search one and done.
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welcome back to "power lunch." it is time for trading nation. let's look at credit card stocks charging higher, visa and master card visa one of the best dow stocks of 2018. so do you buy them matt, sloss berg is with bk asset management matt, how do the carts look? would you chase them at this point? >> to be honest, they're getting very over bought you look at the rsi chart, the relative strength chart on these two stocks on a daily, weekly and monthly chart, they're quite over bought the monthly chart on visa that's well above 80. master card, it's above 92 that's the highest it's ever been it's the most overbought it's been that doesn't mean they aren't good fundamentals. they will go higher from here.
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i will buy them on weakness rather than chasing them up here >> obviously, that i have strong busy models. is eight play on what the consumer will do >> they are the true dim tal cash of our present right now. there is nothing but a bright future going forward, they don't carry interest rate risks, they simply collect money on view as you see the secular trend right now, not just in the u.s., across the world is for more and more transactions to become digital. we even now have many retail stores that don't take cash at this point i think the trends are so powerful their mote is so huge you can't figure out where the top is and the bottom on the near term, if it comes in, i'd buy more. long term they're some of the best stocks in the digital universe >> a long-term lover of credit cards, thank you
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for more follow us on 26th at trading nation bill, over to you. >> thank you very much now to kayla tausche on capitol hill. >> reporter: they are trying to erect barriers to get the president to come down on his terror threat. this comes from lamar alexander, a republican from tennessee, two states home to quite a bit of auto manufacturing they are imposing legislation effectively to delay auto tariffs the president might put into effect or try to put into effect this is on top of existing legislation that senators corker and toomey, two republicans, have put forward that essentially requires congress to put tariffs the executive branch
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puts in place on a national security basis there are now two efforts ongoing on the senate side of capitol hill to try to reestablish authority on trade for wro congress as many republicans can continuing to do with tariffs. >> kayla, thank you very much. you questioned how much authorities juncker has in his dealings with the tariffs. how much authority does the president have pushing back on the auto tariff possibilities, on the $12 billion for farmers and on and on >> he's very at odds with this particular issue we have a lot more to discuss oincluding are the yierniairanis about to cyber attack the occupation that's a discussion coming up. you always pay your insurance on time.
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xfinity xfi, simple, easy, awesome. hello, everyone, i'm sue herrera. here is your cnbc nulsz update at this hour a tral judge blocking president trump's lawsuit that refuses him from profiting from foreign governments at his washington, d.c. hotel the monuments clause prohibits elected officials from receiving gift or benefits from foreign governments without congressional approval. former gymnastics doctor larry nasser, who was convicted of sexual assault is filing an appeal the reason, he claims the judge in one of his trials made up her mind to convict him before court proceedings began. chinese president xi jinping attending the annual bricks summit in south african.
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he says the world faces a choice between cooperation and confrontation in remarks critical of the escalating u.s. tariffs. and a huge buried lake of salty water appears to be hiding below the surface of mars, raising the possibility of finding life on the planet the discovery is based on observations by a european spacecraft it has generated scientists that long sought to prove that it is present on mars. >> astronauts can take spf with them because they will be on the beach. >> there you go. beach front property >> how do you they know the lake is salty with observations from a spacecraft >> that's a good question i believe they can see the salt crystallines >> if you shine light at it the refraction will be different >> i don't know.
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>> we have become the discovery channel. >> we are obviously not the discovery channel. >> clearly we're not >> michelle is on line one >> thank you >> the market is closing for the day. let's go to dom chu. >> mellissa, you know what you can touch and count are barrels of oil that's what's driving crude prices today because official government weekly inventory data showed a draw of 6.1 million barrels of crude oil, on average analysts were looking for a 2.3 million barrel there there you can see wti crude pushing towards that $stept mark brent crude 73.96 as well, gasoline stockpiles fell by around that 2.3 million barrel mark analysts were looking for 713,000 barrels in terms of a draw there so that's what you see in terms of accrued prices. now we will try to find out what they say on friday
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>> that will be the next data point. over to you. >> thank you very much, dom chu. speaking of oil, tensions between the u.s. and iran rise over concerns of a real threat of a cyber attack. our next guest says major risk factors can affect markets good to have you here. >> thank you >> the dust up earlier this week between president trump and president rahani of iran, you put out a photo. toward the very ends you say there is a much overlooked issue of iranian cyber capabilities and what they can do to us repeat here what you have written tore folks what is the concern about iranian cyber capabilities >> the concern is they're good at it. people don't really have their arms around it maybe they're on ends, first rate, intellectual and scientific community they've learned a lot from the russians they're looking for ways to retaliation symmetrically. we have to get our hands out of
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the sand and deal with this thing. >> so they can do what to us >> to the u.s. they could attack u.s. corporates they could attack u.s. financial markets. turning off the lights, interfering with software/hardware. they could conceivably begin to tamper with u.s. critical infrastructure, dams, power plants, though that's less, less -- we knowless about that. even investments >> so sorry, this is cable sue herrera has breaking news, sue. >> reporter: this comes from the white house the white house is now saying that the president is delaying the proposed next meeting with russian president vladimir putin until 2019. they are citing the special counsel mueller's probe. this is a quote from ambassador john bolton. he says, quote the president believes the next bilateral meeting with president putin should take place after the russia witch hunt is over. so we have agreed it will be
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after the 1st of the year. so basically they are postponin this next meeting. it will be interesting to see what else comes out of the statement from mr. bolton. that's from the ambassador moments ago, the white house announcing the president has decided to delay the next meeting with russia's president until 2019 back to you guys >> sue, thank you very much. >> i was going to talk about that >> i mean what do you make of it first of all and should he be coming to washington >> i think that the president is wise to put this off after helsinki there is a hurricane going on in this town and bringing vladimir putin here right now would be a mistake. i think it's good to air out the dirty laundry if there is any on mueller and deal with vladimir putin when it's well time to deal with vladded. >> >> especially as you sa i the russians are training the iranians when it comes to cyber capabilities, ight >> the russians are doing a lot of things we should not like from ukraine to syria, to iran
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it's not time to make nace-nice with mr. putin quite yet let's wait until the election, start anew next year when we have all the facts >> i will zay sound naive, you say how good they are, hey, we're good at this too we're not just going to roll over if we're talking about this publicly, i would think we are thinking about it in the back rooms as well and preparing for it and protecting against it, aren't we? >> that's a real good question so when i talked to the people the real cyber gurus, they think that the russians, in particular, are probably about as good as we are or little better at cyber. now, that's a tie. it's not really a tie. we're much more connected to the internet we do smart cities everything is hooked up to the web. that's not true in russia. it's not really true in iran maybe we're equally good we're much more vulnerable and the math doesn't work on that. >> assuming iran has this
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arsenal chicago have they launched a cyber attack on a corporation. what are some of the capabilities that we should be watching very closely? smr we think they've hit saudi arabia pretty well, a number of firms. they can do it we should be watching for as this u.s.-iran war of words heats up, we should harden and we should watch out for attacks on u.s. companies and on the markets. i think this is a potentially relatively think or freeway, the koreans do it the iranians do it, unless they leave persian letters on their cyber attacks it will be tough it's a way to get back at us they're not necessarily facing a military conflict. which also might happen. >> wow a lot of ifs. cliff, thanks so much for the warnings from the dwrur asia group. >> we are heading into peak
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hurricane season yes, i must be going on vacation toon it comes after power outages utilities are working to keep power lines on and a behind the scenes look at how they are doing. that jackie deangelis is live in charlotte, north carolina with that story. >> reporter: good afternoon, picture hurricane matthew back in 2016. power outages that lasted roughly six days those could be cut in half three days due to control rooms like this one. duke energy calls this the "star wars" room it looks like something you might see in a movie but it's actually a control center and it monitors power transmission it does it in real time investment in smart tower technology is happening across the industry analysts estimate a growth rate of 9% a year that's because the technology allows utilities to be more efficient in pinpointing problems and fixing them it's not just for storms and out annuals. duke says it's helping them fepdz off cyber attacks too.
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all this, of course, comes at a cost of $25 billion investment over the course of a decade, some of that passed onto the consumer critics say there is not enough to benefit the consume tore outweigh the costs the ceo says it's all a delicate balance. >> we are, you know, focused every day not only on the defenses we can put in place, more investment, more oversight, working on our systems in a way to make them less vulnerable also, we focus on recovery i think as we talk about the new devices and technologies we can deploy, we have to think about that within the context of cyber security because we could be increasing risks if we're not particularly vigilant, adding new digital devices to our system. >> reporter: now, duke energy says that about 20% of its customers are on the smart grid. this is up from 14% at the end of 2016. a company targeting has 80% of its commerce on the smart grid
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over the course of the next decade, guys >> jackie, thank you still ahead, facebook investors shrug off the recent scandal the stock keeps hitting record highs. should you buy ahead of earnings that's next. what about him? let's do it. ♪ come on. this summer, add a new member to the family. at the mercedes-benz summer event. lease the glc300 for $429 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.
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welcome back to "power lunch. facebook shares ahead of earnings that come after the bell julia bores sten is in los angeles. julia. >> reporter: well, facebook shares an on track for the best month in a year. despite the cambridge analytica scandal. the question is can it continue? this is the first full quarter since the scandal came out while looking for impact from european privacy regulations, gdpr the company hiring people and investing in technology to improve safety and security on the platform we'll see how much those investments ramp up expenses analysts prompt earnings will grow to $1.72 per share, revenue is expected to grow 43% to $13.4 billion, bombstered by instagram
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as well as a growing advertiser base today's report comes as facebook scandals remain in the spotlight the top lawyer will soon be leaving at the ends of the year. yesterday facebook hosted a reporter call to prevent election interference. so the company wouldn't comment on whether there have been increased attempts to manipulate the mid-term election. guys, back over to you smr julia, thank you joining us is bright white, global head of internet software brian, welcome to the show >> thanks. >> what specific number are we looking at the most? >> i think it's meat and potatoes let's look at revenue. let's look at profits here i think dau is less meaningful if you become mature >> daily average users >> yes we have 12% year over year, sequentially the u.s. is probably flatish, we are modeling europe down for the reasons we spoke about which is gdp. >> are you worried at all on any
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level there could be a decrease in engagement from cambridge analytica, we did not see when they commented there was no impact on engagement >> it's a good point this will not be the optimal quarter because of the head winds from cambridge analytica if you look at revenue, we're modeling up 11% quarter on quarter. the last four years you've seen it up 17% quarter on quarter so i think you know our modem in the street has reflected some of these issues >> and if there is no meaningful decline in engagement because of cambridge analytica, does that give facebook green light it doesn't have to play nice with governments anymore, right they're sort of bulletproof in that regard then >> when i think about facebook here, they are really the jason bourne of the technology industry now everyone is after them department of justice, sec >> tell that to google, by the way. >> facebook slipped to an all time high today.
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>> yeah. >> it's under performed year-to-date it's up 23%. our group is trading 23 times about the growth rate, very attractive so i think all these issues have held back. i think it will not be the quarter that they could have delivered if these weren't issues i think they're trying to play with these governments and improve the platform they have done a lot of work i think long term it will be a much safer more private platform >> in the past, they've warned us that costs will go up >> yes >> they he have more people is that a possibility is that a number that maybe instruments trad disru disrupts trade in. >> all the spending is a rich. i think they've done a good job guiding the street >> is that the cost line >> it will be up at least 50%. >> i think the range is 40 to 60 does that incorporate all the new hires they're making all the measures that they have in place for gdpr and you know app trolling and things like
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that >> everything is involved there. they will hire 20,000 people to monitor this platform up from 10,000 last year that includes outside consultants and what not last year they've guided people on this big uptick in expenses in 2017 and they came in below >> they took down a brazilian news site ahead of the elections down there they're getting ready for the elections, will that have an impact on their business at some point? >> i think all these -- i don't think any one thing will have a material impact. but when you put them altogether that's why we are modeling down sequentially on the edge i think it does have an impact. >> it has a pe multiple according to facts, next year's earnings, 28, is that all right, okay >> i think excash it's 23 times right now. that's way we look at it and i think for a company that's been growing, we talked about over 50% growth is the average the last four years.
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and this year we have 40%. >> i'm sorry, 23 times current the wrong column over the next two years. >> 2019, so, i think 20 -- think about this, if if a company can grow -- this year we have 43%. if it grows 30% in the future, 23 times the highest profit margins i think that is very, very attractive. i think it is cheap for its growth rate. >> thanks, brian. >> take a break here. coming up, bio gen's big day. the company's new alzheimer's drug is showing promise in clinical trials. in just about 90 minutes we will find out more on that and what investors will be looking for when we come back. but the market was up nearly twice as much. that's a tough pill to swallow. exactly. so i started trading. but with everything out there, how do you know what to buy? well, i think my friend victor has just the thing for you. check this out, td ameritrade makes it easier to find the investments
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you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home... and here's the best part... you still own yohome. call now! take control of your retirement today! welcome back. today could be bio gen's biggest day in years. the company is about to give a presentation on the new alzheimer's drug which has shown unprecedented promise in clinical trials. megan terrell is here. >> it was a major surprise earlier this month. the two reported that a mid
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stage clinical trial had met its goal after a year and a half. that is after the trial hadn't met its goal at one year. the announcement added a collective $20 billion to the market values and both stocks have continued to rise. we didn't know how well the drug worked, just that the study met its goal. investors appear to be pegging success with 20% slowing of declines associated with alzheimer's compared with placebo. there is reason to be cautious. the failure rate is unfortunately extremely high including at least nine late stage clinical trial failures over the last decade, a few of which are shown here. many say success today would do two things, increase confidence in later stage alzheimer's drug with results expected in 2020 and bring major support to medicines very understanding of alzheimer's disease itself. by targeting plaques you can actually change the course of the disease. >> the plaques that seem to
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build up in the brain. >> there was an interesting note out a couple of days ago saying that 15% on the score would be fundamentally good data but investors are looking for that 20% number. so if it is lower than 20% it is important to keep in mind that maybe that doesn't necessarily mean the drug is a failure or is not effective. >> that's right. this is a new measure kind of a composite measure. some people are trying to gauge what will be necessary potentially to file for approval. we see numbers ranging from 15% to 25% people are looking for on that scale. people are wondering if it will be broken out to more familiar scales and whether we can compare cross trials that way. >> does that mean people -- their cognitive decline slows, memory doesn't fade as quickly they can continue to walk better longer what are we talking about?
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>> a lot of things are cognitive and functional scores. in terms of cognition it is being able to recall things and think clearly. there are these sort of composite scales of the different measures in alzheimer's. this is early alzheimer's so you don't see the really pronounced effects of the disease like you see in later stages. >> how important is this drug? >> this is a very important drug to bio gen. they have a bigger drug that is more advanced. we are expecting the late stage results in 2020. tomorrow we will have bio gen's ceo on live on squawk box at 7:30 to talk about the results. both of the drugs are very important to the future of bio gen. >> then we have ivan cheung to join us live on power lunch tomorrow. thank you so much. >> check please is next.
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would get 193 million if you won the california lotto. >> glakso smith cline is spending $300 million to mine the data that comes from the 23 and me dna tests. >> i have contributed to that. >> good for you. >> thank you for watching power. it is time for "the closing bell". we have two big news makers joining us live on set. with them we will discuss brexit, trade with china, trade with the eu, the u.s. economy and the dollar. >> a massive day for earnings after the bell results from facebook, ford, visa, qualcomm and more. we will have the


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