tv Power Lunch CNBC December 9, 2019 2:00pm-3:00pm EST
management >> always good to see you. it's a good look >> thanks for having me. >> that does it for the exchange power lunch begins in about six seconds or right now when ever she's ready. i'm ready. we'll see you in a moment. here is what's new at 2:00 on power lunch. the trade deadline moving large just six days until new tariffs kick in. is the market discounting a trade deal going wrong disney dominates reaching for a 10 billion dollar year at the box office ahead of the latest star wars movie. we have the details. it's been a bad trip for travel stocks. shares of the biggest players have been getting crushed thanks to more competition from google. power lunch begins right now
take a look at where we stand with the market stocks under pressure today the dow down around 65 points. a apple is the biggest loser check out shares of macy's jumping despite a bearish call from goldman sachs is the bottom finally over for this beating down stock. our traders will discuss later this hour. thank you very much. the december 15th tariff deadline looms just a few days from now and the u.s. and china don't seem to be all that much closer to a deal, if at all. there may be progress on the trade deal with canada and mexico we are joined with all the latest news. hey. >> turns out the most protracted negotiations are taking place in the u.s. with the white house and democratic lawmakers discussing changes to that uscma deal for more than a year. they are now very close to deal according to two senior democratic aids.
it could be announced as soon as today. one aids says the democrats are still studying the white house proposal others suggest the deal has already been reached the white house is talking timing for a potential usmca vote informing two sources that this is the operative schedule house speaker nancy pelosi makes the final call on that scheduling december 15th is now in focus as a critical date for the usmca and the commerce deal. the two sides there should reach a deal as soon as possible no response there. >> thank you very much i suppose this is the ultimate walk and chew gum at the same time moment as they move forward on impeachment even as this deal
moves along in congress. the dow down about 70 points 71.5 bob is at the new york stock exchange >> lows of the day but there's only an agts-point range a little bit of china jitters going on here. how about the week here. a lot going on we have the fed meeting on wednesday. we have the brexit looming maybe we don't need to have a china deal right now we have these numbers work ng our favor.
still you've got to admit we're in pretty good shape right now overall. take a look at the s&p 500 we're sitting at or near historic highs it's not just here in the united states the most important thing happened is recession is off the table with 2020. we're at new highs here as well. even japan, ewj is the japanese etf. new high here as well. you put it all together, there's an etf for the whole world it's the entire global stock market the u.s. is about 40% of that. there you go we're sitting close to new highs as well. this is why the market is holding up bottom line is we have trade deals going on but u.s. consumer strong and the global economy is
table. that's the reason for the market's strength. back to you. >> thank you with the trade deadline looming, stocks under pressure in the u.s. jpmorgan saying now might be the new time to look abroad. gentlemen, great to see you. >> is it best to look for opportunity outside the u.s. given the 25% run up we have already seen with the s&p? >> for longer term investors the opportunities probably are a bit better outside of the united states i want to start by saying we do have a vu news past and economic release packed week by investors will be walking through a mine field a bit. it should be a volatile week we would probably suggest keeping a bit of powder dry till we get past that december 15th trade deadline investors looking overseas do have valuations on their side.
in places like europe it's about a third lower. there are some good valuation deals to be had overseas >> kevin, taking into account economic data, the fed this week, the six days to go until the december 15th trade deadline is it best to look for opportunity outside the u.s. >> we still tend to favor the u.s. thanks in large part of the strength of the u.s. consumer. we saw another record, psychcyb monday we have wages increasing 3.1% year over year overseas we don't know who will replace angela merkel. there's a lot of uncertainty overseas now >> you cite that fear of missing
out is one of the reasons you think the market may be propelled higher individuals will eventually come in and say i got to go in. if that's true, why have they been taking money out of funds at record paces this year. the wall street journal reported if that were true, if the people fear missing out they just missed out on 25%. >> perhaps they weren't advised properly as we have seen there's been a record out flow of funds in etf where they missed out on a golden opportunity. >> what will make them move higher you say fear of missing out is one of the reasons they will come back in what's going to flip the switch? >> i think what they are saying now is very strong holiday season likely to have a good fourth quarter earnings season. >> where is the opportunity?
i know you like health care. >> i do. on top of 16 other ideals that's been announced already in 2019 i think that's the opportunity for alpha or upside potential in the markets right now. >> the tariffs go into effect. that doesn't mean there might not be a deal a week from sunday or three months from sunday. what would the effect be on the stock market short term if there's no deal and a tariffs on another 150, i think it's $156 billion worth of chinese goods go into effect >> i would argue the markets have gotten a little bit ahead
of themselves with pricing in a success of with a phase one deal they really haven't priced in these list b tariffs a lot of the trade news has been very trade on, trade off, risk on, risk off there's been a lot of noise out there. december 15th is an important point because of fact the consumer hasn't been drawn into the trade war. these are tariffs on things we buy every day. sneakers, iphones, laptops bringing the consumer and especially a time for the holidays really could take a bite out of consumer confidence. the u.s. consumer has been the one pillar carrying the global economy. i'd like to say they are like the tom brady of the global economy. they never he tiretire and keep carrying the team.
>> don't tax my ear buds thank you. to the bond market rick is tracking the action. >> i think it's always important to pay very close attention to the interest rate complex after big jobs report. friday's job report was not only a big important report, it's a very strong report the long end trade down to 178 we have held this. you can see we're in the mid 184 area
it still leans capital to continue to avoid stocks and come into the fixed income space. it's back down a bit today it's not strong. back to you. >> thank you coming up, disney's domination of the box office netflix domination of the nominations. the ceo of the new viacom cbs. mcdonald's going through major ive ges a t the boardroom and drthrough. we'll explain. power lunch will be right back everyone uses their phone differently.
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and save even more when you say "bring my own phone" into your voice remote. that's simple, easy, awesome. click, call or visit a store today. disney dominating the box office as they have while netflix dominates the award shows or one of them let's tackle all three with ed lee, new york times media reporter and cnbc contributor. we'll begin with viacom ceo. he told about the company's streaming plans. listen in.
>> what we're in the middle of now just like everything else is putting together one integrated company with one sbintegrated strategy in the streaming space we have a tremendous opportunity >> is there room for yet another streaming service? can he do it can he pull it off >> i think these days if you're a media company, you have to have some kind of streaming strategy i think the question is how exactly do you plan to sbintegrt them
if up to pay for something that's a question mark i think that's probably the direction they want to head in to how they integrate it he hasn't been forts coming on details. >> let's move onto our next topic and that's disney and frozen it's expected to surpass a billion dollars. disney has raked in $10 billion this year. that's before the release of its next star wars installment that comes later this month it's disney ease wor's world ane all just players in it >> you think about box office, it really is disney.
the big bet is streaming you have to wonder at what point they will make the calculus between they want to own the full window for these films versus pushing them on the disney plus to stoke more subscribers there. he wants to have his cake and eat it too i think in the near term he will want o shorten that window >> netflix dominating the golden globes nominations streaming giant getting 17 nominatio nominations. hbo got 15 here. what stood out was the idea that the traditional or conventional networks, abc, nbc, cbs and fox, i don't know whether they got completely shut out but they didn't show up among the top
golden globe nominees in tv. >> that's the most stark thing here netflix and hbo have been on this battle for years in terms of whose getting the most. netflix is coming out on top this time around usually you see the broadcasters representing in some form. i think it's an indication of where prestige tv is headed. there's a lot of artistic freedom. there's big paychecks. they can do almost anything they want it's becoming more crowded if you sign a deal with netflix, you kind of hope your thing gets good placement on the home screen there's only so much primetime despite the prestige and pay dh checks, i think the next fight is what kind of placement will i get. what kind of marketing budget
will i devote to what i'm doing. >> do you think they will continue to pay out more for content? 17 nominations i he will loosen the pursestrings even more >> i think the awards nominations are a way to attract more talent. at some point they can't keep the negative cash flow burned. it will be like that next year i think year after that, i think they have to start leveling that off. >> we leave it there we appreciate your time today. coming up, a warning about
global banks in 2020 we'll hear from the moody's analyst who just turned negative macy's loosie in losing half of 'lbeig bk.e. wel rhtac woman: friction points, those obstacles that limit a company's growth. i try to find companies that turn these challenges into opportunities. but by going out in the field, and meeting management, suppliers, competitors. in the end, it's these unique companies with creative business models that will generate value for our investors. that's why i go beyond the numbers.
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welcome back to power lunch. macy's hit with a downgrades to sell from goldman sach's today check out the stocks it reversed losses higher on the day. is this a sign the bottom is in for the beaten up retailer craig, i'll give you first crack at this. obviously bouncing on what would seem like a negative call out there. any reason to think this one has gotten sold out? >> i think i would be selling this relief. the stock is in a down trend at this point and time.
>> $10 pretty big percentage move down from here. mark, it's got close to a 10% dividend yield it looks cheap based on recent earnings trend market is making the call that's in decline what do you think? >> yeah, i'd say if you want to buy a retailer there's much better options out there macy's is a dinosaur mall traffic is in a decline most of their stores aren't even in a class malls no exclusive products so they are forced to discount the merchandise to move it and fulfillment cost is higher than competitors. the trend is for brand to go direct to consumers so there's no need for macy's you throw in fact they have too much debt, bad margins and the dividend that's unsustainable. you want to stick with strong
brands, off price. not these old school department stores >> thanks very much. for more trading nation head to our website or follow us on twitter. back over to you ahead, a major warning for moody's. why the firm has cut its global banking out look to negative they will join us next to explain. amazon coming to new york less than a year after pulling from queens. not every one is happy with the news we'll bring you the details. a band trip for travel stocks. they're getting crushed because of growing competition we'll discuss with the ceo of kayak. gold!
welcome back here is your cnbc news update at this hour. the number of illegal migrants along the southwest border has fallen for the sixth month in a row. customs and border patrol giving an update in washington this morning. >> total enforcement actions in november numbered 42,649 that's a decline of 6% from october. >> french president macron is hosting russian president putin to discuss the conflict in ukraine. putin arrived this morning and he met with ukrainian president zelensky to discuss a cease-fire a national park in the netherlands is offering visitors
a chance to come and chop down their own christmas tree for free they have set aside areas where the trees are threatening to overwhelm land used by krcrickes and other species. >> those look like rather sparse christmas trees. >> they are but they're free >> and you protect the lizards >> and the crickets. >> where was that? >> in the netherlands. >> great markets right now. let's look at the dow. the s&p 500 and the nasdaq moving on from the crickets. that's what will happen if i keep talking this way. >> i tried one they were good >> i was not here that day modest loss across the board of
a quarter percentage point or there about. it's the first time in several days draw your attention to the oil market closing for the day >> oil prices relatively steady so far perhaps not all that surprising given a nice run for west texas intermediate you can see wti $58.98 prices are up around 6%. the big headline, the massive drop in natural gasoline prices. currently around $2.23 per unit. this says the weather forecast for many parts of america starts to look unseasonably warmer than expected folks on the east coast getting
taste of that early on this week with temperatures slated to hit 60 degrees fahrenheit. back over to you >> let's get out on the golf course we got a news alert to tell you about. morgan stanley is about to cut 2% of its work force because of an uncertain global economic outlook according to people with knowledge of the situation the job cuts will hit technology and operation rolls the hardest. cnbc.com reporter breaks the story just moments ago let's bring him in for more. what do you know here and where are the cuts likely to take place in are they do m place? are they domestic, global? >> what we think is going to happen is they will focus on people in operations people without front office responsibility less traders and sales people and investment bankers and more people in the background that make everything run but who are
a bit more of a commodity. >> are you surprised the cuts are coming from morgan stanley at a time when the banks are facing lot of competition from the big technology companies >> absolutely. it can't be great for morale and not a great calling card to hire away from facebook and google if they understand they have to cut back 2% is about 1200 people. it's not massive for an organization that's about 60,000 however, my understanding is this is what happens every year around this time instead of wanting to pay money figuring if we cut them before the end of the year, we can pay recei severance. >> are you hearing these kinds of moves might be afoot at other places or is there any inkling
that's happening >> around december and february people get cut because they figure out their budgets for 2020 as we know in terms of trading revenue, the outlook hasn't been great for the past few years >> thank you appreciate it very much. >> for more, you can go to cnbc.com global uncertainty is run of the reasons moody's is out on firms today. they are cutting global out look from negative to stable. it's a slow down in long term nick growth and geopolitical uncertainty related to trade war among other things here is associate managing director at moody's. good to have you with us >> are most of these problems that you see or have identified in the global banking system outside of the united states or are many of them located here too? >> yes, absolutely the global outlook occurs effectively to replace our view
of the global banking sector as you said, we change it to negative from stable previously. if you look at different regions throughout the future is olympimixed. for u.s. bank, our outlook remains stable for next year >> do you think it could have implications for brexit and european financials? >> yes, absolutely the geo political race and domestic political race as well as trade tensions is one of the sources of uncertainty for the banks. >> how much of the problem that you see traces to macro economic factors on the one hand and on the other to the idea that maybe
some of those banks in some countries were not regulated as staunchly as they were here in the united states. that they haven't taken the clean up steps here to put american barnks on firmer footing. tell me about that >> they are both equally important. the slow down in growth is obviously a central piece of our global outlook it's very different. you look at europe, there's a remaining number of challenges due to slower economic growth. >> your reaction to this news that was laid out to us, morgan stanley is making cuts to its
work force >> it fits perfectly with the predictability of u.s. banks the banks deliver that can pull to meet this >> thank you very much for being with us. we appreciate your time. >> thank you amazon is coming to new york city after all, the company will lease office space and hire about 1500 workers a far cry from the 25,000 hq2 was expected to employ but it's part of a bigger push by tech companies. robert frank has all the details? >> we have a new silicon alley emerging on manhattan's west side three big tech giants planning on three and a half million jar feet of feet amazon plans to lease 335,000
square feet on 34th and 10th avenue it comes as facebook considers leasing 700,000 square feet a couple blocks away at the old post office building across from penn station total foot print is over three million feet in manhattan. google building a campus that adds to its existing buildings in chelsea where it has over 700,000 square feet. google expecting to need 7 million square feet of space for 46,000 employees it couldn't come at a better time for new york city commercial and residential realize. you have wework trouble raising question on the company's more than 7 million square feet of space.
you've got 20 million feet of space coming online. >> that's been the thing supply you've seen just every day popping up >> yeah, the inventory on the residential and commercial side. >> not that it's cheap it's not cheap at all. >> commercial is stabilized with prices we work was the marginal piers these numbers are huge >> aoc, did she get it >> it was not manhattan. >> thank you very much robert frank rj coming up, a new pot head. don't name your mutual fund after a zebra. all of this will make nse seto you in two minutes i promise.
kathy engleberg to its board the moves far from the only changes at mcdonald's. kate rogers has more >> reporter: 2019 was the year of the deal for mcdonald's the restaurant made three major tech invest ments to take modernization to next level. it accounts for 70% of its sales and personalized orders in an increasingly competitive restaurant landscape the largest deal valued at more than $300 million. it will change mcdonald's digital menu boards based on different factors including weather. it's now in 9,000 locations in the u.s., nearly two-thirds of
mcdonald's foot print. we took the technology for a spin >> i'd like a egg mccmuffin and black coffee. >> reporter: the goal is to get people through faster. it suggests items that might go well with my order it powers the mobile app in 48 countries outside of the u.s the move also restricts from providing similar service from competitors in the space the next deal announced in september was acquiring a company that understands drive through orders using a.i the company said it's looking to grow its presence in silicon valley by hiring more engineers and data scientists. one big question remains what does the overhaul look like with the ceo that pickup truck
-- put this plan in place now abruptly gone. >> looks like he's planning to stay the course. he says he has confidence in the relevance and strebngth of the growth plan and believes the company is on the right path we know technology is becoming more and more important. really interested to see all these moves that mcdonald's has made in 2019 >> 70% of sales come through their drive through. >> it's why they made that acquisition to speed that up and personal ieds ize it >> it will tweak the menu because it knows what i've ordered or it knows what will work with i bought >> it looks at what customers order that go well with the items you placed >> when you oerdered >> it will suggest a hash brown. another thing that will do is suggesting based on time of day and how long the line is in the
thri drive through and the weather. they want to improve the speeds. there's a customer service angle as well. >> i guess we have to see when it starts helping the stock because it under performed some of the other names >> that's right. very different story than what we have seen in the past two years. they are talking more and more about leaning into technology. tost n they are really pointing to the future and going into that direction. >> thank you here's a taste of some of the other stories we're following. the new year set to bring in a new ceo for canopy growth. cline leaving his post as the cfo of constellation brand that owns 38% of canopy shares are sky high after today's announcement
>> the comes after $5 billion last november. this is their way of having a larger say in the decisions. the abc of retirement planning are creating biases in investme investmenting. 401(k) participants are likely to invest of funds at the alphabetical top they receive 10% more money than those at the bottom of the list. more stra tetegic lists could hp plan better plan option. >> you pick by the letter so avoid zebra fund tesla dealing with an auto pilot accident it hit a trooper car over the weekend. you never really want to do that police say the driver was checking on his dog in the backseat before ram sboming inth
rear of the trooper's vehicle. no one injured in the crash. it does raise questions on the safety of self-driving cars. the stock is up around a percent. >> this is not the first time that a tesla vehicle has crashed while on auto pilot. as youpoint out not what you would want to crash into out of all the cars out there coming up, we're talking to the ceo of kayak about all the travel industry's issues including a google chain that has all the travel companies scratching their heads everyone uses their phone differently.
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welcome back to "power lunch. it's been a bad trip for travel stocks online booking companies like expedia, trip adviser, and booking holdings feeling the pain from changes in google's search algorithm to favor its own flight and hotel products. while the market is perched near record highs, the travel sector is lagging behind. trip adviser falling 55% off its 52-week high expedia and booking holdings are 24% and 8% off their respective highs. let's bring in steve hoffner, the cofounder and ceo of kayak, a subsidiary of booking
holdings steve, thank you for joining us on "power lunch" >> it's my pleasure, seema thank you. >> as google becomes more aggressive, what are you doing as the head of kayak to stay more competitive >> we're not doing much differently, actually. we've been partners of google for 20 years we've always remained a couple steps ahead of them on the product. what we really want to do is to have consumers to use our services versus the google flavor on the travel side, that means better search results, more powerful filtering and sorting functions. on the open table side, it means more restaurants and reservations >> the ousting of the ceo and cfo of expedia last week seems to be symptomatic of this threat from google, as it tries to push its results. we know barry dillard, a chairman of expedia, is looking for a candidate outside of the company. would you take that job if it was offered to you >> i'm very content with my existing job at kayak and open
table, and particularly being a direct report at glen fogle. i think expedia is a graept partner. they've been a wonderful partner of kayak's for many years. i know mark personally he's a great guy i don't know his circumstances of leaving the company or who barry dillard is going to pick next, but whoever it is, i'm looking forward to working with them >> what type of skills or characteristics does this new ceo need to have at a time where expedia is really feeling the pain right now >> well, i think if you put a really smart, capable person there, overall, the travel business is very healthy expedia is a great brand and i think they can right the ship on that company but i'm much more focused on what i can do to make kayak and open table even more successful. >> as we watch google, amazon now testing out flights in india. are you worried about the entrance of amazon into the online travel sector as though you guys needed another competitor >> you know i'm not worried about amazon it's a great company and they do
a lot of things very well. travel historically has not been one of them. they've tried multiple times to get into the game without any success. we're attentive to what they're doing. we'll watch it, but i think the core efforts we're pursuing at kayak, like kayak for business will keep us ahead of them, as well >> how are you preparing for what will likely be the biggest moment in online travel, and that is airbnb going public next year >> i don't know that that's the biggest moment in online travel. as an entrepreneur myself, i think a couple of travel companies public i'm rooting for brian. we're great to see airbnb come out. as a competitor in some ways, i'm eager to see what their financial reports look like so we can get some visibility into their operations welcome to the property, brian short-term rentals, highly regula regulated, fragmented given recent rules released here in
new jersey do you think this is a sign of more to come here in 2020? >> i think short-term rentals is a category that's gotten a lot of traction. airbnb didn't event it homeaway and verbo have had that on their site for many, many years. but it's big enough now that a lot of regulars are giving it additional scrutiny. and i think the industry as a whole welcomes that scrutiny we all want to have a level playing field and all want to have consistent rules and regulations in place and i think we need to pay taxes on that stuff, too you know, the one thing in the short-term rental space that i think the world is looking for is consistency and reliability in the service offering. and that's why we recently launched kayak premium, which is an attempt to endorse, if you will, certain properties so the consumers can feel more comfortable picking them >> how are you going to differentiate your suite of products from the competition? when i go on and use a flight search site, they all seem roughly to be the same to me
>> that's true, if you're just looking and snacking -- just looking for a quick price quote. if you're actually about to open your wallet and plunk down $500 for a ticket or two, you want to make sure you've seen the right price and have seen all your options. i think at kayak, we've done making sure we show you everything so google, for example, their achilles heel is they want to show it to you fast. as a result, they'll drop a lot of results on the floor or they won't have the consistent accuracy that kayak has. if you're snacking on content, you can use a lot of different sites, but if you're actually ready to buy, you better check kayak. >> thank you so much >> thanks, seema thanks, tyler. >> you bet check, please! is next
check, plooease so peloton stock is up about 6% today. it's had a little bit of a rockier week, in part over that kerfuffle over the ad where people criticized that the actress playing the role of the woman who's receiving the peloton clearly looked like she was in better shape than she pretended to be. >> yeah, that the ad was sexist. whatever it may be, the stock fell 15% last week on this controversial ad and the negative reaction it received from critics and people on twitter. but today, biking higher >> yeah, biking higher and now she's gone on to an ad for a gin, where ryan reynolds
is the major backer. it's called aviation gin there she is, and i believe she chugs an entire martini. something not even i have ever tried to do. >> really? >> chug a martini? >> maybe i'll show you some time >> okay! >> depends on the liquor >> we've got to go >> all right >> nice being with you that's "power lunch. "closing bell" starts right now. that sounds fun, guys. sign me up good afternoon welcome to the "closing bell," everyone i'm wilfred frost. the toll brothers stock is up 1.5% they report earnings after the bell the broader markets, down about 0.2% it's been a bumpy session. we're 59 minutes left. we're down 67 points on the dow. >> hello, everybody, i'm contessa brewer in for sara eisen. let's take a look at what's driving the action today chinese export data falls, which is rep kindling the worries on global growth. democrats, republicans, and mexico nearing a deal on the