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tv   Power Lunch  CNBC  December 10, 2018 1:00pm-3:00pm EST

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aal. we talked about it based on that question during the show we had unusual activity just last week friday they were buying the upside calls. i think this one goes higher >> ever been on a flying that was not extremely full from american >> buying people off flights >> great stuff guys thanks so much. "power lunch" starts right now >> thank you very much i'm tyler mathison welcome to "power lunch" stocks are stage a come back a number of factors driving the volatility today and we'll break it down for you. apple one of the stocks helping this afternoon's rebound but a major setback for it's iphones over in china. goldman sachs cutting its outlook for rate hikes and one of the world's biggest hedge fundtitans says he doesn't expect any in 2019 what the smart money sees and how he is betting on i want as "power lunch" begins right now
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welcome to "power lunch" i'm kelly evans. we're well off the loss. the do you was down 500 points falling below 24,000 for the first time since late june joining the s&p 500 and the nasdaq in that correction territory the russell 2000 small caps edging closer to that down almost 20% from their recent highs. oil sinking again and taking the energy names down with it. it's the worse performing sector in today's selloff look at apache leading the decliners. financial sector approaching those bear market levels down 27% from their most recent highs. let's get straight to the big stories that's driving today's move josh lipton is in san francisco on apple's latest troubles and
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eamon javers in d.c. on what's worrying washington. bob, you get to go first >> reporter: thanks very much. oil and banks have been a major problem for a while, all throughout the last couple of weeks. apple in the middle of the day, we had a four, five, close to $6 move in apple just about 40 minutes or so ago. guys on "halftime report" talked about technicals and oversold conditions stock did move gives you and idea of how difficult the market is right now, trying to figure out what's the right direction for to it take for the moment. they see apple as a bit oversold the important thing is in the middle of the day two other events, brexit and technical matters. theresa may talked about delaying the brexit vote early this morning markets took a leg lower on that news then we broke below to october lows that was 2603 or so. that was a little past 11:00 the markets, again, dropped another 10 points or so on the
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s&p 500. you got brexit, technical levels let me show you the s&p because we're in a range between 2,600, 2630 was the closing to 2800 in the last couple of months and today we broke below that. texas do matter when they are big important technical numbers like we saw today. people ask me why is brexit an issue. why does it matter we're here in the united states. u.s. companies are very unsure of the business impact 40% of s&p 500 sales outside of the united states, important thing is how do you model earnings if you're not sure what the impact of your business will be they want more information how it will impact their business with brexit but we don't know what brexit will look like it crates problems for u.s. stocks finally, the big sector, the big problems are bank stocks every major center bank, region bank, regions, bb and t, doesn't matter all sitting new 52 week
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loss in some cases multi-year loss >> goldman is back to its lowest since november of 2016 after the election thank you, bob he talked about brexit let's get more on that british prime minister theresa may delaying the vote because it doesn't have enough support. wolf has more out of london. >> reporter: how are you doing prime minister theresa may has delayed what has been billed as a make-or-break final vote in her brexit plan. it had been slated to take place tomorrow >> if we went ahead and held the vote tomorrow the deal would be rejected by a significant margin we will, therefore, defer the vote scheduled for tomorrow. and not proceed to divide the house at this time >> reporter: a few other things we learned in the last hour or so that she doesn't have to hold the rescheduled vote until as late as 21st of january. she will travel to brussels to
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renegotiate terms something people are skeptical she can secure anything significant on there was widespread dismay from mps, the fact that they have unilaterally by the government been denied their chance to vote on her deal in the next 24 hours. now prime minister may won't have to face that particular vote tomorrow. she may in the coming days have to face a different type of vote, a vote confidence in her premiership. could it come about in two possible ways. she could see her own conservative mps trigger a vote in her leadership of her party, or much more significant the leader of the opposition labour party could submit a full vote of no confidence, motion in her entire government which would have much bigger repercussions the scottish nationalist party said they would vote with labour if that did occur. sterling has hit a 20 month low inextra day today. it's off those loss. the weakness we're seeing in the pound coming from two reasons.
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in part because of a no deal brexit but tonight much more because of the overall weakness in prime minister theresa may's premiership and the uncertainty that brings. >> as far as markets are concerned, if she loses the job, is that the concern, or is it the fact this is now delayed and you have to watch to see whether labour or somebody else comes up with a different strategy. what is most important for investors as we watch this play out? >> reporter: both factors weighing on risk assets in the united kingdom today more the fact of uncertainty around the possibility that theresa may is ousted two way there's one that would lead a change of leader in the conservative party and therefore changing government without a general election or a much bigger risk if the labour party tabled a motion of no confidence in the government and they were to lose that over the next couple of weeks you could see a general election and the delays that leads to and the possible change of government adding on
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certainty certainly weighing on the british pound and other uk risk assets. >> sounds pretty rowdy behind you as well. evening time in london it's been quite a day for everyone thank you. now goldman sachs cut its outlook for rate hikes for 2019. steve liesman is reporting the probability of this december rate hike is just down to 68%. four month low there are no rate hikes priced in to the market now for 2019 all this after billionaire investor had this to say >> one thing that i would say is there's a high probability that this hike will be, assuming they hike, will be one, last for a long time. >> you don't think they will hike in 2019 >> no, i don't think they will hike in 2019 >> really? by the way, the market still expects them to hike in 2019 >> there's 20 basis points
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there's not that much priced in. i don't think they will hike, no >> will december be the last hike for a while let's bring in our advisors. welcome to you both. do you think that's what's going on with the market today, hearing what was said deciding maybe rate hikes aren't in the cards for next year. is that why we rallied >> i think after we saw in terms what the bond market did last week, you know, we're only a week or four or five days away from this changing again and the market, it's been incredibly humbling to be bullish. really has so the true test of a person is how they handle adversity not success. anybody can be happy when the markets are going up and momentum goes in both directions unfortunately we're dealing with a market, kelly that has nothing to do with fundamentals, has everything to do with news floss. >> it's always like that in the
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sense that news flows pushes it out. >> nor the last 12 months we've been a bullet point society in terms of investing it's humbling being bullish. sometimes the screens are green and sometimes red. there's a lot of red to deal with when there's a lot of red to deal with you default the fundamentals the economy still looks good earnings still look good risk assets, i despise that comment. equities we believe are the place to be and u.s. equities in particular guess what u.s. equities are on sale. the more fundamental you are the more that you believe that the stock market is a market of stocks and stop looking at etfs only, it will outperform like the banks -- again a generational opportunity banks are not going away u.s. financials especially the big ones so we believe this day too will pass and, again, we're five days away from good market performance and talk about rate hikes again next year. that's all that is >> isn't there some fundamental basis for what the market is
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doing? in other words, the market looks forward and maybe what it's seeing in its forward look is slowing profit growth and a slowing economy that would mean that it doesn't deserve the price it had been commanding earlier. >> i grie with brian that the united states is the best place to be and you should be overweight u.s i think what people may be getting wrong is that the global growth backdrop, china, for example, as well as eurozone is decelerating when you look at it from gdp, china is 20% larger than the united states. so as demand shifts lower there ordecelerates. >> the u.s. economy is decelerating >> overall the u.s. economy is month rately l lly -- moderately
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decelerating >> it brings it to those rate hikes. you think we got a couple more >> one in december and they are conditional based off of financial conditions we've been saying that all along that financial conditions will sway the fed to stop we think they will pause, potentially will don't reduce their balance sheet moderately but wait and see how the overall global system takes a reaction >> one more question mark. >> one more question mark. >> two points. first of all moving 2.5% to 1.75 is not a recession the market is acting like a recession. no recession, number one number two, to push back on tyler. the market's discounting mechanism has been broken for about 24 to 36 months. we've reacted so much to what's happening. we're not looking forward. we're so worried about keeping our seat >> everyone is sitting around charts of jobless claims and say look it's ticking up
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>> we're so macro oriented we forgot,000 pick stocks >> you're right at looking at companies but we're looking at whether the macro is slowing down >> you just walked yourself into a trap macro investing is looking backward >> it's not not. >> yes, it is. >> it's slowing down that's going to have a meani meaningful effect on expectations >> my only point is this if we're talking about the federal reserve not hiking because the economy is fine and no expectations only concern if we're slowing everyone gets concerned. >> i think chad is spot on the issue is that investors are still so focused on global synchronized growth. this is about america and growth will come from america not from markets. >> do you care about what the "wall street journal" pointed out this morning which is the
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idea that people are not coming in to buy the dips, the delines? do you care about that it is a non-event for you? and the only other times that has happened has been eritrea in the middle of or at the start of a bear market. >> i remember back post the tech wreck and during the tech wreck it was about buy the dip until it wasn't buy the dip any more that was the bottom. we need to see these type of fence -- we need to see a fundamental leader this has nothing to do with the fundamentals we're closer to that today than last week. >> you want to move up the quality spectrum you want to be in high quality rising dividend type of companies here in the united states you want to shy away from the em, political risk, business political risk, now is starting to dampen the market multiple. >> brian thinks this is a generational buying opportunity
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in the banks we mentioned goldman sachs is at a two year low, giving back all the gains after trump was elected. do you agree >> i believe you have to follow the yield curve. i'm not so bold to go out and say it's a generational buying opportunity. >> be bold >> if the yield curve steepens then you follow the data points and start to overweight it >> thanks guys very much great to see you both. all right. a selloff on the street once again today. but we're well off the loss. this could be the third time in four days the dow has dropped 500 points intraday, 24 of the 30 dow stocks. yeah that's not quite right i would say it's 20 of the 30 right now are lower. apple with a huge intraday reversal what's behind that move. we got the apple and other stories. stay with "power lunch". ♪ there's no place like home ♪
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argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪ welcome back to "power lunch" stocks are well off the session lows this morning. the dow was down more than 500 points apple one of the names driving it lower and now helping the rebound of the stock today hitting some key levels amid a dispute with qualcomm that may impact their sales in china. >> reporter: so, kelly, as you saw there, apple is edging
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higher we're well off session lows for that stock, battling its way back to the flat line. in dispute here is the impact from this qualcomm news that we got this morning qualcomm in its fight with apple now says it did core this victory that a chinese court ruled that apple infringed on two qualcomm patents and issued preliminary injunctions against the import and sale of seven older iphone models in that country. qualcomm saying apple continues to benefit from our intellectual property while refusing to compensate us. qualcomm stock heading higher. apple is disputing the scope of that band saying it actually only applies to iphones that run on an older operating system that all iphones running its newer software, ios 12 remain on sale in china. apple saying we'll pursue all our legal openings through the courts that ruling is part of that ongoing nasty legal fight
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between the two tech giants that started two years ago overly sensing fees that qualcomm charges. back to you. apple stock is still down 17% over the past month. joining us now to discuss is tom forte. thank you. nice to see you. how material is this decision out of the chinese court today with respect to apple and its prospects? >> generally speaking the pressure on apple, the reason it's down 17% the last month is concerns on unit sales for the iphone now, yes, this does pertain, this qualcomm situation to apple unit sales but you're looking at older generation devices and you have apple officially suggesting that they are still selling all their phones in china today. but generally speaking the pressure on shares has been from concerns on weak unit sales for the iphone we think that's overdone to the extent that the company raised
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the average selling point. this gives them flexibility still. >> so this injunction or prohibition of sale only affects older generation phones, not software that's in current phones >> my understanding is the article i read suggested that it gets you to the 10 as far as the recent iphone, so the last lineup included the 10s, 10s max and r apple is on record saying they are still selling older devices in china >> it includes the 10, includes 28 which is a popular version still just not that 10x or the xr or whatever it's called >> it excludes this year's new line of device from apple. >> apple and qualcomm are going at it but people are wondering whether apple in china will be going at it.
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is this in any way china is saying this is tit for tat you arrest one of our top executives, we'll rule in qualcomm's favor >> the chinese government understands well the importance of apple in china when you think about all the chinese people that are employed by apple so, i do think there could be a response in the chinese, from the chinese government as it pertained to the huawei cfo but have a hard time directing it directly at apple given the importance of apple to china >> thank you very much we appreciate it let's keep an eye on the stock market we have a sell off as well this afternoon after a sharp rebound from the lows so far this morning. dow still down 133 nasdaq has turn positive we'll go over some of the concerns weighing on the markets including fears about the economy. we'll tell you what small business owners are seeing
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how is the latest d.c. drama affecting these markets. the president arinsechg for a new chief of staff and what it means for your money is next on "power lunch". like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing. because your investments deserve the full story. t. rowe price. invest with confidence. so, the whole world is talking about ai. big, bold promises like... it'll find life on mars! but here's the thing. you don't live on mars. (beep) you build wind turbines. supply car parts to thousands of cities. answer millions of customer calls a year. like this one: no, i didn't order this. it's terrifying. and that's why you work with watson. hello. it knows your industry, protects your insights, and works with tools you already use.
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and works with tools you already use. whai tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information. read it carefully. >> welcome back. another example that sentiment on the economy is turning a bit. decline in small business confidence kate rogers has the survey monkey poll. >> reporter: optimism snalk dip. small business poll going from 62 to 59 that was led in small declines
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in positivity on tax, trade and hiring if you take a look at this next year, optimism has been steady hitting that record high 60 twice this year in q1 and q3 for the first time in six quarters business outlook has declined going from 58 to 55% of respondents saying business conditions are good. despite this, the number is still up 11% year-over-year. views on trade have also now shifted 16% of business owners say they are expecting a positive impact here from the trump administration's policies. that's a new low for the survey. 28% say they are expecting a negative impact. outlooks also vary depending on if the business owners did business with china. one fifth of respondents say they do business with china mostly in imports and that group was two times as likely to expect a negative impact from the trump administration's trade policies back over to you >> i understand there's a little bit of a softening there this morning we got some pretty
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encouraging news 7 million jobs remain opening in this country, up 2 million from back during the recession and 7 million openings compared to 6 million people who are unemployed what are you hearing are they saying they are short of workers >> that's something that's coming up in the monthly polling and in our data. about 18% of small business owners say they had roles that were open and not able to fill for at least three months. that's up from 16% they said they are doing everything from raising wages, some are relaxing their policies around drug testing, prior criminal records helping to pay off student debt also they are getting creative and trying to fill those roles but certain lie impacting them and maybe even helping to lower that optimism a little bit. >> thank you very much it's interesting whether it's housing or on the jobs front you're wondering if the slowing is happening because the economy is weakening or the economy is so strong. there's not enough people. >> not enough people who are
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qualified for those jobs if they are dipping into the employment pool and taking, loosening their standards, i guess it's a good problem to have >> it is a good problem to have. >> all right tensions bubbling with china again today. apple loses a court decision over there robert lighthizer talking tough. is there a reason to believe a deal can be reached with china in the 80 days remaining until the administration's trade deadline "power lunch" will tackle that and more when we return.
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breaking news on apple and "mad money" jim cramer >> apple just told me they filed a request for reconsideration with the court it's the first step in appealing the preliminary injunction >> in china. >> very unusual, issued a preliminary injunction on two patents. interestingly enough the patents that i learned were really for ios 11 which they are not selling. they are selling the 12 right now and 12 sales went on all weekend after this injunction came out
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so we can't understand what power injunction has we do know apple is appealing it i don't want to call it a rogue court because theoretical in our world, the communists control the courts it's pretty much making clear if you sold apple on this, probably a mistake. i would point out that -- i will point out that april headline a nice turn during halftime, during the halftime show a lot of it was consensus of people saying enough is enough that's usually not enough to keep people from cutting price targets whatever we just meant, you had that great observation when europe closed the market went up. this is a fluid situation. apple is well aware but not aware initially because they never presented in front of the court. >> this is a big part of the weakness this morning. apple is part of the dow probably 20%, 25% of the selloff. now things have turned around
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and people don't have to panic about apple's future in china. are you concerned that china might retaliate? >> you have to be concerned because the idea because they are a big employer they won cut the nose off to spite their face they will and willingly and have in the past. apple is a huge manufacturer over there whatever it takes, so to speak it's a malcolm x situation whatever it takes. i i feel apple will always be concerneder and should be concerned. but as far as qualcomm there are other better reasons to sell than a qualcomm victory in an obscure court. in a regional court. >> over patents that pertain to systems they are not selling >> and patents found invalidated. qualcomm insists they are talking with apple apple says there hasn't been any talks since september. this is very controversial and fluid situation. i point out, you should sell
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apple because you think sales are slowing so dramatically the estimates will be cut. but i think that's why the stock fell from to 30 to 160 >> down 26% this quarter this is the worst quarter for apple since the financial crisis >> now you're starting to think -- if it is a consumer products story, you're not paying for the service revenue stream any more. you're getting that for free didn't mean to interrupt your show welcome back because you're fabulous >> thank you but, no. just going back to the apple issue with qualcomm, we've talked about this for years. for years this has been a shakedown, not between these two companies but qualcomm shares were leading the s&p this morning on the back of this. does it come to the u.s. if this is not just about china, take china out of it do investors in apple have to be concerned about more injunctions in this country. >> i think you have a very hard upcoming court case in our
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country. qualcomm versus apple and there will be from what i can tell no talks. they want to go to trial typically both sides want to go to trial i'm not sure i think you have it more from qualcomm they both feel they are very aggrieved and this was out completely from left field >> was apple aware that this was in front of the chinese court? >> this is why it worries me we think china was rule of law not only did apple did not present their case but was unaware this injunction was being sought it's equivalent of trying to get, i'm from philadelphia i can pick on my own area. there's a wenmore court that struck down the largest company in the world from being able to sell apple iphones let's put it in perspective.
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>> jim, thanks >> i want a miami miracle analogy somewhere, jim you saw from the game yesterday, that run, maybe that's it. >> they decided to let dallas win. that's the apple-qualcomm. qualcomm got in without apple. >> love action this weekend. jim, thank you very much and now to consttessa brewer >> migrants were detained by border patrol officers thousands are currently living in crowded tents in tijuana after a long journey through mexico and those tired of waiting and resorted to crossing illegally. russian anti-aircraft missile systems have been spotted in crimea. their presence highlights the
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escalating tensions between russia and the ukraine in the wake of a naval clash last month. a lawyer from james whitey bull gur says he plans to sue the government over his prison killing. he was beaten to death in october hours after he was transferred to a west virginia prison >> atlanta soccer fans braving the cold and rain to cheer on their championship team. the first championship for the city since the braves won the 1995 world series and you know atlanta can be paralyzed when there's snow so the fact that so many people turn out when it was so cold that's notable they've gone really soccer crazy down in atlanta since that team went there in the new stadium. a real success story contessa, thank you. among the wishs weighing on stocks turmoil in d.c. as the president tries to replace his chief of staff and concerns
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about trade as robert lighthizer takes a hard-line on china he's one tough cookie. eamon javers is live at the white house. >> reporter: i'm one tough cookie or he's one tough cookie. >> both of you you're a soft centered guy >> reporter: john kelly, the outgoing now chief of staff at the white house is here at the white house today. i am told. preside over the senior staff meeting just this morning. there was some question about whether he would come in to work today but he's here and running things now the question is who is going to succeed him. nick ayers had been presumed the successor but he took his name out of the running over the weekend. here a couple of people that have been mentioned in the media as powelly replacements. i'll just show you that chart and tell you, officials here at the white house laugh at lists like this. really nobody has any idea at this point who will be the next chief of staff mark meadows from north carolina, he did issue a statement today suggesting that
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it would be his great anthony are the white house chief of staff. clearly not shutting the door on possibility. other officials have given varying degrees of interest. meadows said serving as chief of staff is an incredible honor the president has a long list of qualified candidates and he'll make the best selection. meadows putting his hat in the ring with that statement all of that is to say we don't know where the president will land for chief of staff. much different political landscape going into 2019 with democrats up in charge on capitol hill, ramping up a number of investigations and oversight into this white house, much more contentious atmosphere heading in to the 2020 re-elect effort as well a lot here for the president to consider robert lighthizer whose name you just saw on that list was on television yesterday, underscoring the administration's points that if the negotiations with china don't bear some fruit by march 1st this administration is prepared to put tariffs in
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place. additional tariffs in place on china. so that threat not going away. meanwhile the negotiations continue behind-the-scenes we'll see if they bear any fruit you under that very tight timeline that the white house has now set. how much of a risk is washington policy to investors let's ask dan clifton. welcome. >> thank you for having me back. great to see you kelly welcome back >> first of all before i get into the sort of personnel drama down there what do you think is going on with the economy. a lot of people saying the umph from tax cuts, repatriation all of that is petering out. >> a lot of people said the tack cut wasn't going to create growth it created growth. now they are saying it's wearing out. in 2003 a similar tax cut that we used for reference, we had a slow down in month seven through nine of 2.5% right where we are right now we went back up to the rate in the quarter after.
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we permanently lowered tax rates, incentivized companies and i believe they will make investments. trade is a head wind if you're creating uncertainty around trade -- >> so when people show you the chart with jobless claims ticking up over the last four weeks or so, you know you look at the numbers as much as anybody. does that give you pause is that because of trade is that going to push us into some kind of slow down >> reporter: the tariffs that could come into effect in 2019 is about $120 billion. that mean it would wipe out all the fiscal stimulus and basically put us back at 2.2%, 2.3% growth rate of gdp. the market are pricing in slower economic growth. you need lot bigger slow down moving forward to get another leg down from here and that's really what the key circumstances. how much are we slowing? any positive upside surprise
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would be very, very good for the stock market right now >> i think you made a really important point. we had a lot of people on who said the effect of the tax cuts are ebbing i always scratched my head i heard that i get that there was a jolt in 2018 because this was the first year of them and you went from 35% on the corporate rate down to 21, 22. but it's not as though those tax cuts go away in 2019 the effects and the investment write offs you can get which has not come through in a big way yet, those are still going to be in place let me ask you as you look at all the things that are out there, brexit, china trade, nafta, and the fact that it may not sail through congress as quickly as some people think, where does the possibility of a 2019 constitutional crisis fit is it in play there at all
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running in the background like an operating system? is it a nonfactor? >> it's starting to be more and more of our clients questions to us the report that came out on friday night on the michael cohen sentencing memorandum basically said the southern district of new york will go after donald trump on campaign finance violation. so we're going to have a huge debate, tyler. we'll be debating whether a president could be indicted. we'll be debating whether the president made that payment to hide it from his wife or to win an election. who really knows what the answer to those questions are and that's problem in the market how do you handicap that how do you handicap china trade. how do you handicap brexit the book ends are so wide. what will happen for the next couple of months as market pressure bultsds those book ends start to come in at least on china and brexit but on impeachment it's more difficult. >> we won't know on that one we have to see what happens. maybe in the meantime one final
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point is that the president is looking towards 2020, depending on whatever happens between now and then he is thinking about fiscal policies is he thinking about what will help keep this economy growing >> kelly, the president understands every piece of bad information that those tariffs can have on the economy. the s&p 500 rallies this year because presidents love to prime the pump he'll cut a deal on the budget for defense spending and nondefense spending. you see it in defense stocks today. at the same time you'll see him come up with a china trade deal. the consensus is not expecting that's the biggest tax cut the president can provide and it doesn't need an act of congress. may not be 90 days, might be 120, 150 days but you feel that deal is coming >> dow continuing its come back markets down 125 i feel better already. >> more than in half almost a third of the loss vanished >> ten years now since one of the biggest financial crimes
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ever, bernie madoff for operating a massive fraud. he's serving a life sentence in prison and scott cohen is one of the very few journalists to go inside that prison and speak with the man hseimlf scott joins us next.
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>> welcome back. ten years ago bernie madoff confessed to his sons that his $65 billion hedge fund was nothing but a giant ponzi scheme the ripple effects of the scam of the century continue to this day. scott cohen led our mad yoff coverage back then >> are we safer today bernie madoff himself is marking this tenth anniversary quietly we believe at the medium security prison in butler, north carolina where he turn 80 this
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spring now nine and a half years into a 150 year prison sentence a few years ago i spontaneity surreal two hours with bernie madoff behind bars to hear bernie madoff tell it, running a giant ponzi scheme was stressful even before he got caught life in prison was kind of a respite. kind of like being in the army he told me in 2013, only you're not worried about getting killed madoff's lead defense attorney is still in touch with his most famous client. >> he's doing okay for 80 years old. there's a respect from the prison population. i think he's got that. it's prison. but it's not the max >> reporter: one person doesn't want to hear from madoff, mark lit was madoff's lead federal prosecutors. >> i don't people who are
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psychologic psychological liars shouldn't be given a soapbox. i looked around the room and there were pictures of his boats on the wall and they were all named the same what is that i saw that it was a sculpture of a wood screw and it all of a sudden hit me. that here i was, the prospective investor surrounded by bull and getting screwed. but i didn't know it >> reporter: he has never spoken publicly about the case until now. we got more from him and other key players, more about my one-on-one time with bernie and we'll hear from victims. it's on a special ""american greed" podcast series. >> fascinating see you tomorrow to the bond market now rick santelli is tracking the
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action for us. where are we now >> yields are up a little bit on alma tony stewa all maturities there's something quite important on tens. notice the low right at 2.82 three times in a row we want to pay close attention to that. if you look at the chart beginning in august of this year you'll see on the left side that was a last significant low before the double top. what's going on with the dollar index today is huge? keep in mind when all volatility was hitting markets in october and november the dollar index was moving high or holding if you look at that two day chart you'll see how big of a day it's having today. open the chart up a bit and you would see we're darn close to the contract highs going back to 2017, june to be exact at 9754 only about a quarter of a cent away pound versus dollar hovering at the lowest level since april of
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2017 ftse 100 it was down a little less than .9 of 1%, it's still hovering at the lowest level you see on this chart since november of 2016. tyler, back to you rick, thank you very much. stores selling off but they are well off the worst levels of the day. just down now about 80 points. the dow could be headed for its biggest four-day drop in three and a half years we'll see as the numbers change before your eyes concerns about the economy, one fear weighing on stocks but with two weeks to go until christmas day, will the holiday shopper prove the economic doubters wrong? or are concerned consumers cutting back as well we'll talk retail when power lunch returns.
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♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪ mom. ♪ just 14 days until christmas. two weeks from tomorrow. will the stock market volatility the past several weeks spoil the high expectations out there? joining us to discuss is the founder and ceo of proforma.
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welcome. good to have you here. we talk about the wealth effect. it's basically the idea that when stocks are rising and people feel richer, they feel better about going out and spending >> uh-oh >> the last two months, the opposite has happened. do you think that that decline in the wealth effect or reversal is going to have any effect on what's going on at stores? >> i don't think it will have an impact on holiday. while 50% of households own stocks, the majority are not looking at their portfolios daily. as disappointing as that might be >> thank goodness. >> i think there's a lagged effect people tend to think of the disruptions as temporary until they start to see their statements >> implicit in what she says is that far more important are two things job security, and wages are going up >> right and when you look at the impact that's having on the lower end
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consumer, it's favorable the lower end consumer drives a lot of holiday spending in our view families really plan for christmas. there's always a christmas we've had years where there's been disaster, the recession, et cetera, and holiday spending has a tendency to hold up pretty well at the low end. the upper end is a different animal where you've got thes a separational high-end shopper that may be feeling the pinch now and say you know what? maybe i'm going to contract a little bit this year and not spend what i thought i would >> that was just after -- they had a nice quarter 7% -- not that that tells you everything you need to know, but so much back and forth we've had over the high end and the impact of losing the chinese consumer what do you guys think is going on overall is the u.s. consumer in good shape? >> i think so. i really do. tyler's points, unemployment is low. wages are going up amazon $15 minimum wage. walmart and target have done the same thing there are a lot of tail winds
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factoring into retail. we've had a really good year for retail some of the stock prices haven't behaved that way i'm a fixed income guy i like operating income. we're seeing significant operating income growth among a good set of retailers. >> who has mo and who doesn't have momentum? >> the momentum is broad i think some of the numbers we saw out of reporting season target, tjx, ulta, they didn't perfect, but the sales numbers were quite strong. i think there's a lot of concern out there about flow through, and the model has changed. if you are selling -- >> what does flow through mean >> earnings flow through >> sales were strong earnings maybe not as strong as people anticipated or the flow through weren't as high. the model has changed. when you have an e-commerce business, it doesn't leverage. it doesn't leverage your store expense. there are direct expens that ti
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back that are high to charlie's point, a dollar at the low end, a dollar earned is a dollar spent that's not the case at the high end. the high end is not spend everything they have the low end absolutely is. when wages increase, it does impact retail. >> quickly, your favorite name here for people into christmas >> walmart i've said it for many, many years. i think walmart sets the tone for holiday spending in the u.s. >> i still remember the garth brooks box set back in the day that was -- let me tell you. that was the best walmart christmas of all time. >> liz, thank you very much. liz dunn and charlie o shea. in front of your eyes here, a host of global issues weigh on the market still including apple over in china. jim cramer just reporting on the latest developments there. plus the uk in turmoil because theresa may or may not get a brexit deal. and we have those huge protests in paris the international issues that
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are costing you money coming up "wencluh"
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here's what's on the menu. fears starting to make its way
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into the wall street's predictions. we're breaking it all down small caps, big losses the russell underperforming this month and this quarter will it recover in 2019? we'll ask about the opportunities. plus why one technician says stocks can't rally until more fear pops up in the market and trade tensions, apple sales restricted in china. huawei's cfo arrested and we look at the major issues impacting your money right now "power lunch" begins right now welcome, everybody, to "power lunch". big reversal for the markets the dow had been down more than 500 points we're now slightly in the red but only by a third of a percent. the nasdaq up 25 points. up by a third of a percent energy, financials, real estate, those are the lagging stocks
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jpmorgan, intel and microsoft are the top dogs right now the defense sector seeing nice gains today. north throb rallying we have all of today's action covered for you bob is watching the market volatility steve is here to break down how fearful economists are about 2019 we are live in london with the latest on the brexit vote. let's kick off with bob. >> thank you a lot of cross currents in the markets. brexit, technical levels and talk about apple let me show you the s&p action in intraday. we started in positive territory but we drift lower within the first half hour. you saw that then we heard about the vote being delayed in parliament over in london. market drifted lower on that
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then we broke below the october lows that was 26 .03 after 11:00 eastern time the market took another lag down about 10 pounds. then there was a rebound apple was important. that happened around 12:30 eastern time we had josh and the gang at halftime talking about important technical sides. we saw the markets move notably. apple moved up on that a little bit of everything we had positives throughout the last week or so. the markets chose not to pay a lot of attention to the fed's telegraphing fewer rate hikes. the emphasis has been very much on the negatives there are them out there that's slowing growth numbers china slower japanese gdp a little bit lower. mixed signals on trade and a lot of disagreement in the trump administration over the direction. the brexit, and the x factor is the mueller investigation to what is the president in more
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political jeopardy that might hurt the stock market. a lot of debate. not clear where it's going to go energy stocks, bank stocks, new lows across the board on many of the big emergency names. oil down about a dollar. every day the major bank stocks for the last week have hit new lows you're seeingba bank of america citi, all of them at 52-week lows including the big regional banks. go down the list, 15 or 20 of them, new lows >> bob, thank you. market volatility has investors and economists feeling the fear factor as we make the turn toward the end of '18, the beginning of '19 the vix is up more than 67%. how worried are economists about 2019 steve is here with answers >> i got to say some of the economic commentary i read over
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the weekend turned more pessimistic, partly in response to changing fundamental. it's partly in response to the market selloff morgan stanley writes the effect of the late cycle excesses that built up during qe are beginning to come to a head in corporate credit fundamentals. the market selloff creates its own reality. one jpmorgan recession indicator, it counts a 21% chance of a recession next year, but the indicator jumps to a 36% number when you include market signals like the stock selloff and the flat yield curve some economists push back on how much of a slowdown to effect jpmorgan writes while we recognize that risks are skewed to the downside of our 2019 forecast, we don't see as high a risk of recession as the markets imply. the fed has long expected a 2019 slowdown and beyond. here's the september forecast for gdp, but the idea of a slowing dates back to long
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before many in the markets were concerned about it but the fed, it could mark down next year by a bit more, and amid the uncertainty, look for the fed to slow down on rate hikes until the fight between the bearish market and the bullish economist is decided >> interesting it is going to be interesting next week. not maybe so much to see what they do, but to see what they say at that press conference >> and what they forecast. if you look at what's happening probabilities, the market has wiped out the chance of a rate hike next year >> nothing is above 50%. >> take a look here. and what's so interesting about this is first of all we were fully priced no, about a 60% probability chance of a march rate hike, and then we had a high probability of a second hike coming in either june or july or august that's gone. both of those two percentages on the right-hand side side of your screen are for a single hike in 2019 the change in sentiment has been
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dramatic we are now at or near a low over the past four months for the december probability >> we think it might have had something to do with the market having a better tone throughout the day as people digested that. >> steve, thanks the street predicts a slowdown in 2019 how should investors like you prepare? the head of institutional equity strategy, and barry james is with james investment research two barrys i'm going to begin with mr. banister you have not only a relatively modest price target for the s&p for the year end of this year, but basically the same price target for year end next year and you say that over the next ten years don't expect more than 3% a year compounded on the s&p. explain. >> when you look at the target for this year, we think this is what the fed testing the market and the market hectoring the fed
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looks like the fed really does have to pause and right now they're in a quiet period there's risk there the market's in an air pocket. when you look at next year, we had been seeing global nominal gdp. we also expect the dollar to be a little stronger and certainly harder comparisons that's why our estimate for next year at $168 is well below the street consensus of $174 when you add that, you have a topping out in the market. >> james, let's turn to you. you say there might be the possibility of a near-term bump up in stocks i'd like you to tackle that one first. but you also say to get ready for head winds in 2019 which is pretty close to what barry banister just said >> yes what we see is there's a great deal of pessimism toward the market a number of the things we look at from a sentiment standpoint have turned negative
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they're very negative. it's positive. and we hit lows that we saw back in october or so and we think there could well be a bounce in the market we see a little bit less risk today. as we look forward, though, one of the things we see is we're in transition i was present for the birth of each of my three kids, and my wife will tell you transition was the worst part we think that's what we're seeing today the change that's taking place is going from a growth market, a mania driven market on some of these big internet type stocks to more value oriented to more defensive types of securities, and we saw this in 2000. you can make money you can make money even when the large stocks that had been the big winners are taking a hit so we think that transition is upon us. time to make some changes in our portfolio and maybe do a little buying on some of the things that hold up next year >> it's eyebrow raising to look
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at this quarter. apple is down 26% in the quarter. that's the worst since 2008. tech is down 14.5% also the worst since 2008. some would argue this is the time to actually look at buying some of those names. what would you say >> yes >> one of the -- absolutely. i think of a micron technologies that's trading at a price to earnings of three and earnings are going through the roof they could have a halving of their earnings and only have a p.e. of six. there's great opportunities out there, and picking them up at this juncture, i think, is a good course of action. >> barry banister, you like some of the more defensive sectors. right? >> yoeah. we've been playing the defensives for much of the year. we like the defensive aspect, particularly the ones that weren't overleveraged from
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buybacks first it was the inflation break evens because of oil but also now i expect that real yield, the tips yield to come in and i could see the yield almost inverting at the ten to two, a little more than we've seen. this, again, calls out the fed to slow down or stop, and if they do a quarterly pause, they can do a renewal at the end of march. we'll see where we take it from there. >> barry james, you brought to mind something that all investors should be aware of it's not just micron trading at a low price to earnings multiple look across fang if you want to throw apple in there, it's basically 11 1/2 times. even if you don't, facebook 18 times. google, something like 22 times. barry james, those are arguably bargains for what people typically think of as some of the most overvalued names of the market after the selloff >> what you tend to see in these types of environments where you have companies down over 30 --
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20% over the recent highs, there are good buying opportunities, but they are volatile. we think there's too much volatility >> got it. >> gentlemen, thank you. >> thank you barry banister and barry james. i was waiting for it i know for the you're welcome >> they didn't know which barry we were talking to >> we'll go to london where the brexit deal is dead on approval in the house of commons. what comes next could shake the european union and global markets. protests rocking france over the weekend. can macron salvage his economic agenda he's making comments and retail investors are spooked by the volatile markets. that fear could feed the bears for a ng te loimto come, or will it that's ahead stay with "power lunch". how do we stop london before it destroys us?
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we have to shut it down. stay out of sight until i give you the signal. how will i know? trust me, you'll know. i'm not that subtle. ♪ there's no place likargh!e ♪ i'm trying... ♪
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yippiekiyay. ♪ mom. ♪ theresa may announcing the brexit vote is going to be delayed saying that the current deal did not have the support needed to pass in the house of commons.
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we have the latest >> reporter: theresa may will travel and try to asettlement concessions to improve the deal. something that's expected to be hard in the last hour we've heard from the european counsel president who said, quote, we will not renegotiate the deal, but we are ready to discuss how to facilitate uk ratification. judging by mp's comments, that's unlikely to be enough. they don't want verbal promises. they want changes to the legal texts of the withdrawal bill it's been mps of all parties who have criticized the decision to delay the vote today for example, the labor leader said we don't have a functioning government the scottish national party leader labeling prime minister may's actions as pathetic, cowardice and a member of her own party saying, quote, we
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cannot continue like this. the prime minister must go or quit the british pound falling close to 2% at the session lows. a 20-month low currently down more than 1% >> what is dividing the house of commons on this? what are the sticking points here >> well, there are many lines of division at the moment, tyler, on all sorts of angles of brexit the one that has oddly unified both remainers and levers is the issue of the irish backstop. this is the contingency plan that the eu would have control over and able to put in place if the uk and the eu don't come to a suitable trading environment moving forward and if that happened, it could then cut northern ireland off from the rest of the united kingdom. that's something that remainers don't want it's something that levers don't want, but it's something that the eu has so far insisted in
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the withdrawal text. that's the crucial thing if theresa may removes that, it would be a significant win in the coming days but judging from comments from lots of individual leaders of the eu throughout the last five hours, it seems highly unlikely >> all right thank you so much. once again wilfred frost in london now we are joined to discuss with fred this issue how much is this going to reshape europe, the success theresa may has in pulling this deal off and trying to deal with the i don't knnorthern ireland e >> one of the things we're seeing with the protests in france and what's going on in great britain is that nationalism is populism. sometimes that has an ugly face in the united states its existential in europe.
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you can't pool sovereignty in the european union in a situation where you have so much nationalism and populism i think that's what the vote will come down to in the end in the uk i don't think the eu is going to give much ground probably not enough ground for theresa may to get her parliament vote, and then the question becomes do you have a second referendum months ago i argued with larry kudlow before he was in the white house on this program that i thought ultimately the british would come to their senses and have a second referendum and stay in because it's in their best interest. i wouldn't bet on it, but there's a higher probability >> it's hard to say it's in their interest when half the population said we don't want it whether or not it's going to be messy and cause a near-term financial hit, they said look, this is following on from the european migration crisis and macron suggesting he would give up the frechk sench seat at the.
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to europe. you still think they're going to go ahead and do what you say is the right thing, but plenty of people might think if theresa may doesn't -- >> i've never seen my british friends so shaken. and certainly the public mood has shifted from the original vote on brexit has it shifted enough that the british voters would vote to come in? i don't know but to have a second referendum you would have to have the parliament approve it. and the parliament by a majority would approve a second referendum right now theresa may is saying there will be no second referendum she won't back down on the direction she's taking but members of her party may make that impossible >> shall we go to france >> sure. >> let's go to france. macron in the last few minutes has been giving an address to the nation in which he's dangling lots of tax relief for
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pensioners, indicating he wants to raise wages for government workers and other forms of relief will that quiet the riots? >> well, i thought things would have been quieted last week when he made some similar soundings and moves and they weren't so i think what you've got is the same people who voted for macron because they thought he was going to be a change from the establishment parties. now they're turning against macron because they think he's one of them. because he thinks -- he is for the elites, and he isn't for the people and so the same nationalism, excuse me. the same populism that brought him into power has turned against him. i think he's weakened. now, he's got a long presidential term. you don't have with the parliamently situation a chance where he's going to have a vote of no confidence in recall, but nevertheless, his popularity
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ratings and 'prooufl ratings down so low that it's hard to see how he can come back i don't think he's going to turn around the popular opposition by seeding ground people say if we wish this hard on his reform plans and on everything he wants to do with the economy, why stop now? >> well, fred, to that point, and it goes back a little bit to what we were saying about whether the uk should hold a referendum, people are asking whether a la penn is going to be the next leader of france. if people are disappointed, they'll say then we're going to double down the other way and the same effect would play out in britain if people don't feel like they're given the brexit they wanted. >> i think you're in a situation -- i believe it is an inflection point for the future of the european union. macron was the hope. germany was weakened merkel even though she got the successor as party leader that
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she wanted, her numbers are done from her mishandling of immigration and other issues the old leadership of germany and france doesn't work the way it used to be. macron was giving the most inspiring speeches about the future of europe, but now he has to focus on his own survival there's not a lot he can do in the european cause and that could catch on in other countries as well. you could have more of this sort of nationalist populist anti-eu sentiment, and anti-establishment sentiment >> we're all nodding in agreement. we haven't even asked you about the cold war you're taking the tech out of it, but we'll let you save that for the column and talk to you about that next time >> bye bye well, tile transports on pace for their worst quarter in seven years. tretransports turn it around or ishe more rough road ahead we'll debate that straight ahead on "power lunch" morning sir.
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welcome back to power lunch. time for trading nation. it has been a rough road for the transports now down nearly 10% just this month, names like ups, alaska airlines, fedex and
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american airlines all leading the space lower. fedex also getting a downgrade today. and that stock suffering from a downgrade on track to post the worst december in a decade are transports signaling for trouble for the markets? are any names worth a buy? let's bring in guests to kick it around ari, first, how much should an investor be worried about the weakness in the transports as a market indicator >> questions of a weak dow begs questions about dow theory looking at dow theory, we're not at a sell signal you'd need the industrials and the transports to break below their q1 lows the transports have broken down below the q1 level but you don't get a sell signal as long as the dow signals are up not yet a bear market by dow
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theory definition. within transports. >> the dow is 700 points to play with you're looking at one of the weaker components of the dow transport, ups >> yes stay away from ups broke its seven-year up trend today. and here's -- check this out look at the bottom channel relative to the market as much as it was in that seven-year up trend, it was an underperformer through the advance. now it's breaking down and leading the market lower it's an underperformer on the way up and underperformer on the way down overall poor risk/reward sell ups >> all right erin, is there anything you can find to like in this sector? >> yeah. we want to break it apart, because when transports includes your logistics and air freight companies like ups and airlines and road and rail. those behave pretty differently. particularly when you look at the fundamentals we actually like the airlines. americans is one of the ones that are struggling more
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delta, alaska airlines are two of our absolute favorites. doing well this year and when you look at the growth rates for next year, airlines have an expected earnings growth rate of about 20%. it's double the overall transport expectation. and logistics is one of the worst areas by far so, look, nobody wants to pay for shipping we all want free shipping. those areas are facing margin compression. airlines are doing well and there's global growth. that's one area we find safe >> and at least on paper, those airline stocks look cheap and get a break on the fuel prices maybe something to like there. ear erin, ari, thank you for your time kelly, back to you >> mike, i don't know. you want to do a tease for the special closing bell edition coming up? >> we have only a half hour to prepare. yes. it will be carl, david, and me i know you'll be there to watch.
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>> i will be watching. good stuff let's get a check on the market. the major indexes way off the lows today dow was down more than 500 down 62 right now. the nasdaq is positive by 31 the s&p is only down about 5 tech and communications are the sector leaders for the s&p 500 financials and energy the worst performers within energy marathon oil getting hit the hardest. nvidia, amd and intel leading. perhaps a bit of a turn around let's get over to con tes have a for our news update. >> here's what's happening right now. u.s. business leaders are in poland discussing how their companies tackle climate change in spite of the trump administration's policy of backtracking on accords that fight global warming >> we feel that we are
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continuing to work on that issue, and we haven't given up we continue to talk with the administration we talk about the ways that greater efficiencies can benefit our economy and also the climate change issue as well >> hundreds of students protested outside nancy pelosi's office on capitol hill urging her to make climate change a priority during the next congressional session. dozens of people were arrested scott got leeb warned americans not to eat raw cookie dough. experts warn that uncooked flour is a contributing culprit because of a danger of e. coli baking kills the bacteria along with the fun of cookie dough it's a gamble. it's a gamble. >> i wonder what it does to cookie dough ice cream >> you see what i'm taking? you take a risk when you eat that.
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>> yeah. and romaine lettuce. >> we should stop eating >> stop eating thanks next on "power lunch", the small cap heavy russell 2000 index worse levels of the year are there any opportunities in the beaten down names? we'll explore that when we come back now the latest from trading nation and a word from our sponsor. traders shouldn't let their politics affect their trading. instead, look to the current price trend and build an exit strategy based on where and when the current conditions may change this will help keep your biases at bay as the markets often react differently than we might expect
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we want to call your attention to the dow look it is positive by 17 points. it fell more than 500 points earlier today. so that is what we call a reversal the oil market closing for the day. we are following it from the commodity desk >> no reversal here as the dow has been going up. oil has been going down. it's now down more than 3% for the day.
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that's a change from just a few minutes ago. erasing friday's gains when opec and allies agreed to cut production concerns over whether it's enough to curb the oil glut seems to be weighing on prices citi group warning opec's cuts give u.s. producers a reason not to slow output down more than 30% from october highs. it's basically unchanged since thanksgiving i didn't realize it was still weaker the volatility shows a lot of sellers out there. it's who is selling that could tell us how long the downturn could last >> that's right. remember all of this talk about the move from active to passive? well, it's the bull market as it cranked highers investors retail and professional but largely retail kept parking in retail. the current environment appears to be the image, the bear market
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version of that phenomenon i've spoken across the street. they point to the broad based resetting of equities in proportion of the waiting in the indexes. that means as investors start yanking out their capital from the passive funds, the funds in turn need to sell their assets but only in proportion to how they line up in the index. and that makes for little discretion in the selling which is spooking investors and causing them to take more capital out and as you guys can see, the vicious cycle continues. according to credit swiss, this pattern first emerged in october. they write the, quote, recurrence of the pattern and growing risk of market risk signals may speak to the persistence of the equity market turbulence we could be seeing red on the screen for a while, not withstanding the reversals we saw today. whether you're invested in small or large caps, it's been a rough few months
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both the russell 2000 and the s&p 500 on record for their worse pace in ten years. the loss for the russell are almost twice that of the s&p 500 and approaching bear market territory. here onset with us is sally pope davis. she focuses on small cap strategy you say that there are values here you think small cap value is a good place to go >> we do i mean, small cap in general, the companies grow faster than larger cap companies they -- and if you hold them for a long time, you can benefit from compounding the value indices have underperformed growth. the economy is still pretty good >> they grow faster than the larger cap stocks but they're not getting credit for that. >> they are more volatile, and it's one of the reasons you'll see sometimes investors give a smaller allocation to small cap. but they -- they're a little
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less diversified when you have market volatility, they'll correct a little more. they come back pretty quickly, and if you're a patient investor, you will do well >> i'm curious about the financials we talked about the big ones, goldman and the like are at multiyear lows p and c is down 14%. key bank down 19%. fifth third down 17% when you look at the small cap banks, do you going back to your point about the economy, like what you see have they also been treated unfairly by the market >> they've been treated very harshly, and it's also -- financials are a little bit of a canary in the coal mine, and they're cyclical when the market is worried about the economy, the credit or rates, they'll take it out on the financials but we traveled around a lot i was out on the road last week. and when you talk to the banks, their customers are borrowing. and both on the consumer and the commercial side.
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and credit is really good. >> yes >> one of the arguments for small caps this year has been they are more domestically focussed and they would be affected less by any tariff or trade tension. and yet, they haven't gotten credit for that either >> well, they got credit for it earlier in the year. and if you actually look between march and september before the market started trading off, they were handily outperforming, but when all the markets started selling off and because they're a more volatile sector, they corrected more that's not surprising. but it is true about 08% of the revenues come dmo domestically >> you have a couple of choices that you want to draw our viewers' attention to. one is a financial sort of a regional financial the other is a sort of defense related company. >> exactly one is pinnacle financial. bank grows by growing a balance
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sheet in good markets. they've expanded into north carolina and south carolina. very profitable company. and selling it only ten times earnings significant discount >> the other is caci which is -- tell us what it does it's based around the nation's capital, and a little bit clandestine isn't the right word >> under the radar >> it's it services. >> it's spooky, let's say. >> well, it is i.t. services but what's great about that is it's a contract business you've got a lot of visibility to the revenues. and as we know, the defense budgets have been going up they do a lot of work for the d.o.d. between cyber security and intelligence, it's been helping the margins. it's a good defensive stock, and one we like very much. >> defensive in both senses of the terms. >> right >> exactly
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>> thank you very much for being with us. >> sally is with goldman sachs >> the top consumer trends for the future, we'll tell you what they are and why people think we might need a lot less. get this caffeine in the future that's when "power lunch" comes back in two. ible the screen is on the new iphone xs. and our unlimited plan really takes things to the next level with your choice of the best in tv, movies, or music. it's the perfect holiday upgrade. i know what i'm asking santa for this year. you still write letters to santa? no. please. i send him emails. can i get his email address? oh... i don't feel comfortable sharing it. get the iphone 10 s and our unlimited plan with your choice of the best in tv, movies, or music. more for your thing. that's our thing.
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u.s. markets turned positive after this morning's big declines it's difficult to know what the future holds out today with a new note on consumer products, rbc highlighting which stocks as they look at that are best positioned over the next seven years. joining us now is rbc capital markets, nick modi it's hard to look this far in advance. so why don't you talk about one of the most important trends you're trying to understand for a name -- today might be more attractive given all the selloff. >> the point of this project was to create a framework to help understand things that might not
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be evidence today but could come around the corner. for instance, had we done this type of project, we thought about what happens if amazon bought a grocery store that would have helped us understand this dynamic going on right now with amazon. >> if you understood five years ago. >> exactly >> what are you looking at today? >> a lot of things one of the best parts about this report is we went around the world and scanned what was going on in labs and research facilities and startups and said hey, what if some of these products for ubiquitously adopted? the iphone, no one at that time would have thought the revenues and the opportunity coming out of that product, that one product -- >> and uber would be launched. >> it changed how we consumed, how we behaved how we're on 24/7 because of that smart phone and today apps and marketing off the iphone are larger than the gdp of japan
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no one would have thought about that in 2007 that was the underlying spirit of this analysis as we think about the future, technology is now getting woven into everything. so if you leave moore's law that computing k computing capacity every two years, now it's entering the apparel industry there's digital fabric you can change the color of a handbag with an app on your phone smart. it's a real thing. what happens if that's adopted seven years from now and everyone is buying it? >> why does that help you buy coke over pepsi? >> obviously that's more of an apparel issue. coke versus pepsi. we talk about the agility imperative that's one of the big things coke got out of the asset -- bottling and drining and distrin that was a tough choice. it was good. agility, these are some of the things playing into our analysis
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>> let me ask you where you see transformation, health care and health care monitoring >> yes >> tell us how that plays out with what kind of devices and impacts on how we live, what we do, how we eat, whether we exercise >> if you think about it, right now wearables is very rudimentary to where we think it will be. first of all, there are devices now or tests where you can actually understand your dna and genetics and what you should be consuming. habit is a classic example campbell's put an investment into that business you can take a test and understand what you should be eating there are other tests that can tell you what kind of bacteria you should have in your gut. that will basically be determining what kind of diet you have as you kind of evolve, this whole process and you converge bio and wearables and ai and artificial intelligence, you're now going to be able to have a situation seven years from now where you'll get a real reading
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of how many calories you're consuming, how much@you have, how much sleep you need, how much water you need. >> how much caffeine you need. before you go, tyler has been a coffee drinker since age -- >> seven every day i've had coffee. >> is he going to be taking canabanoids? >> think about this. there's a lot of menial tasks we need that we need coffee for driving, data entry. >> to keep you awake >> yes think about how artificial intelligence and technology changes that even the autonomous vehicle area >> but you're not telling me -- i see your point >> i wouldn't say no need. >> you think society will need relaxa relaxants? >> yes think about this my kids are 11 and 9 by the time they're adults, they're going to be surrounded by technology internet of
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things, devices everywhere they're going to be on 24/7. >> you want them taking cannabis to cope with that? >> all i'm saying is the whole relaxation movement is i think going to become much bigger because everyone is so plugged in all the time. think about this >> lavende lavender essential oils. >> meditation, yoga, corona, why are they so successful it sells escapism. that's a manifestation >> it sells the beach. go to the beach. >> thank you very much >> you bet good to be here. >> all right it doesn't take much of a market expert to tell us where we have gone over the past week. major index down 5% or so. what are the charts telling us where we might go from here? we will get the technician's take next.
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so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety.
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come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you?
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stocks rebounding. the s & p 500 is higher.
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despite recent moves lower there is not enough fear in the market here is chris, head of technical analysis chris, welcome good to have you with us >> great to be here. >> i think when we look at today's reversal certainly a good look off of the lows. we have to ask has there been enough fear yet. our view is have we seen big spikes that is often present at or near a good tradeable bottom. i think so far this has fallen short of those thresholds. >> and here we are looking at the put call ratio i assume what you would like to see are more of those high highs, right >> exactly what you tend to see is a number of days, six, seven, eight, nine
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days where you'll get calls up into the 140/150 neighborhood. i think if you look at some of the other data as well there are more than twice as many as well. we think there's more work to do on the sentiment front into the first quarter of 19 before we are all said and done. >> if the sentiment, the fear gauge got to the levels that you think there, gets to the levels we were illustrating what would that cig that to you terms of what i should do? >> i think it signals the type of stress that presents itself near a bottom. step two is we need to see signs of momentum womanicoming back in i think leadership is a good tale i don't want to see the same tech stocks leading. we want to see stuff like high data we want to see stuff like small
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caps outperform large caps the chart we have here, this is high versus low. today that is making fresh relative lows. those are the types that need to change for us to make the flip switch >> i think you're the first that made me understand thnalecic stuff. >> and check please is next right after this quick break
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welcome back i'll quote the kid that said i didn't really know how to talk to people in a professional mannerment it's not something they really teach you in high school he had to learn how to shake hands with confidence. >> you know, i think it's interesting and i wonder whether part of it is the amount of time that today's generation spend on screens. >> it must be. something is going on. >> my son and his friends sit in the basement and play game and don't talk to each other you wonder about their socialization. >> they will say at least they are on the head set talking and screaming. >> yeah. and telephone calls are kind of past too >> millennials are past that text me. should we look at apple? amidst this big turn around you'll see apple, one of the leaders in that turn around.
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earlier today it was that low. the there you can see it has come back. thanks for watching power lunch everybody. >>coming up it's an all bro edition of closing bell. >> welcome volatility kicking off the week yet again, what's behind the move coming up i'm live outside the houses of parliment in london where theresa may unveiled on the brexit plan. a live update from london coming up new developments in the nasty battle between apple and kw qualcomm a new reported says retail investors have been buying up general electric
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