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thanks to courtney gibson for being here and all of you for watching. "power lunch" starts right now. >> we won't let money be wasted anymore. those word weiss just heard from president trump. a big budget meeting is being held right now at the white house. we'll talk about that and so much more with grover norquist. americans for tax reform. are we finally going to get it? get ready for serious sticker shock at the grocery store. imwill president trump's immigration plan hit as hard as some may think? made in america is alive, but far from well according to one sector. two busy hours of "power" starts right now. >> once again, welcome to "power lunch." i'm tyler mathisen. down .7, .6 for nasdaq.

in the green today. today is the 51st session that s&p has failed to move in either direction. >> heck of a stat, tyler. thank you very much. i am brian sullivan. exist i existing home sales, number tripling expectations. wow! european anti-trust regulators are set to okay dow chemical's $130 million merger with dupont. despite warm weather in the east, it may hit 70 degrees in new york city tomorrow. reports of winter's death are being greatly exaggerated. massive storm taking aim at the midwest and plains, minneapolis could see its heaviest snowfall of the year. take that, pete najarian.

you just saw some brief remarks from the president who said our nation's finances are, quote, a mess. eamon javers is standing by at the white house. eamon? >> reporter: that meeting still going on here at the white house between the president and his top aides. we want to know exactly what they're contemplating in terms of the federal budget, tax, trade, obamacare, all of those details will play into what they're deciding here behind close doors. the president did give us a bit of a preview in terms of the timing of when all this will roll out. here is what he had to say. >> as you know, before we do the tax, which is very well finalized but can't submit it.

health care moving along well, some time in march, early to mid march we'll be submitting something that i think people will be very impressed by. >> reporter: there you have it. presumably, we'll get some kind of obamacare repeal and replace effort middle to early march. the president says. and after that, they'll move the tax reform piece of all this. that doesn't mean we might not get any leaks. the president is going to give an address to joint session of congress next week. typically, you do get some leaks before that of what's in the president's budget and what the tax details are that he's contemplating. we'll be on high alert. a lot of people trying to figure out exactly how the math is going to work out. brian? >> yeah, good question. we've got this event, state of the union next week we might get some clues and this interview you have to see tomorrow morning, steven mnuchin, first

big interview since taking the job. we'll ask all those questions eamon just raised. he made very big headlines on taxes here in november here on cnbc. >> there will be a big tax cut for the middle class but any tax cuts will be offset by less deductions that pay for it. >> donate to charity this year then? what are you going to do? >> it will still let you do charities but other deductions will be absolutely limited. >> how about mortgage debt? >> again, we'll allow -- we'll cap mortgage interest but allow some deductibility. >> maybe that's some hints of what they're thinking. we still have no tax reform plan as we just heard from president trump. the republicans are going to get it done this year? joining us is grover norquist president, an organization that long existed before there was any hope of tax reform. grover, good to have you here. >> good to be here. >> first, lots of skepticism about the pace in which things

are going, that tax reform can get done. by the time we get to the fall, will tax reform be done in the united states? >> yes, it will be. you saw the president today say we're on track both to abolish $1taxes and obamacare and reform health care policy and then to do the significant tax cut, rather sweeping tax reform. the outlines have been there for some time, both the trump administration and the republicans in the house and senate have continually been moving closer to each other so that the outlines of what will happen are clear. and this will all be wrapped up in the same amount of time that the reagan tax cuts took. >> which took how long? >> before september. >> okay. just so i understand why they're doing obamacare first, the issue is that it's going to reduce the cost of the government, right? and it's going to reduce tax in flow. you need to know those two things in order to have a really

clear view of the budget and what kind of taxes you're trying to raise through corporate tax reform. right? >> but you reduce the expected revenues by $1 trillion when you get rid of obamacare permanently, decade after decade. when you do tax reform, you don't have to raise that trillion dollars next time out. we already reduced it $600 billion when we made the tax extenders permanent. it's a lot easier to stay within the requirement you have to make it a permanent tax cut through reconciliation. it's technical but very important. the president is right, trillion dollar tax cut first, then the second tax cut. >> border tax, border adjustment tax is this. >> yeah. >> numerous places saying it is dead on arrival. is it?

>> no. we're going to get rid of the death tax, all consensus issues. the whole package fits together. in it is border adjustable. if you want to remove border adjustable, fiddle with it, reduce it you need to come up with either savings in spending, lower spending, that's fine, or taxes somewhere else. and so they don't like that piece of it. so they say okay, then what? the business community, house and senate, the president really want overall tax reform, the lower rates. the border adjustable is a piece of that, can be replace bid something else. that's not impossible. but you've got to bring that to the table. >> am i hearing you, that you're agnostic on it? that you favor it or don't favor it, but if you have it, you have to come up with another way to keep the tax reform revenue

neutr neutral, which i gather say principle of yours. or is it? >> it only takes 51 votes. it has to be deficit neutral in year 11 out. after the first ten years, it has to be deficit neutral. this bill that the house and the president have been putting together does that with border adjustable. if you want to take border adjustable out, you need to put something back in. it could be spending restraint, entitlement reform or a different tax. the overall package is so sweeping, so dramatic, so pro-growth, so helpful to american exports as well as american jobs in the united states that it's going to be a power -- political power as well as an economic power. you're not going to be able to stand in front of it and say no unless you have an alternative that is equally impressive. >> grover, you heard the sound bite we played from steve mnuchin right after he was named

by president trump before he was confirmed, does that still stand? do you believe -- oh, it's my favorite topic and the feed went down. darn it. i was going to ask if he thought that would still stand about the upper middle class not getting any tax cut in terms of -- >> that it would be offset. >> right. >> grover, you're back. >> is he back? >> taxing satellite feeds. that's what happens. you tax something more, you get less of it. we got let grover. we only got grove. >> grover? >> yes. >> steve mnuchin was saying ultimately the rich will pay the same amount because deduction also go down dramatically. do you believe that's true? >> i don't think he means dollar for dollar in terms of static modeling. in dynamic modeling if we cut taxes, both the corporate rate and the individual rate and make it easier to save and invest, the government will both get more money from the entire economy, but also from higher-income people because there will be more investing and

more jobs and more opportunities. when reagan's tax cut passed, the total budget funded by the top 5%, 1%, 10%, all went up with lower tax rates. not from some offset on credits or something, but lower tax rates and more growth. the president said it repeatedly. his goal is growth, jobs and a stronger economy. that gets you more revenue. if you grow at 4% for a decade, as reagan did, rather than 2% as obama did, you actually net $5 trillion in higher revenue from growth. that's what we want to be targeting, growth, not nickel and diming tax reform. >> how do you feel about capping minimums? the reason i bring this up -- we're already in tax acronym hades. we've got amt, bmt, wmt.

not the ticker for walmart. am i correct in hearing that this worldwide minimum tax idea where corporations would also have a minimum tax that they would pay is gaining more steam again? a, is that possible and, b, would you be in favor of that? >> no. the whole point of going to a territorial tax system is not have the united states government tax activity outside the united states but in a territori territorial. it's a destination-based tax and so you -- >> but you have to -- if you don't get the border adjustable tax, i'm just wondering, is the wmt thing -- i have heard about it. do you think it's a real thing or is it literally like the lochness monster? we're going to hear about it, but nobody is ever going to see it? >> it was an obama play thing. i don't think it survives in a

trump administration. it was never going to pass as legislation. the business community doesn't want it. it undermines all the other parts of fixing the tax code. >> grover, what do you want to hear from steve mnuchin tomorrow on cnbc? what's the message he has to get out? >> that they're on track, give some sense of how house and senate conversations are going. they're going well but he needs to speak to that for people. he also needs to let people know when this is going to take effect, particularly for expensing. a business decides i'm going to invest a billion dollars here. should i wait until the bill passes or is whatever happens going to take effect starting now? allowing people to know when this tax reform will take effect, hopefully january 1st of this year, not when the bill passes. you don't want people waiting to make investments based on the bill. you want them to feel they can do it now, safely, and take

advantage of progress. how will this treat individual americans overseas? we've talked about how we treat businesses overseas, but not the millions of americans who live overseas. all the efforts to double tax americans who live abroad. that needs to end. but we're not sure that's happened yet. >> got it. grover, thank you so much. grover norquist. news alert in the bond market. five-year notes are up for auction. rick santelli is all over it in the pits. rick? >> tyler, don't you just love auction days? second leg of our 8 billion in supply this one 34 billion five-yield notes. 1 1.937. the bid issue was 1.93. higher yield, lower price. you never want a lower price when you're auctioning something off, even a dutch auction. we gave this a d, as in dog, plus everything was weak on it. but not huge.

just a little bit. 2.29. 58.2 indirects. both of those were the softest since july of 2016. but one good bright spot, direct bidder, 8.4%, the best since may 2016. 3.3%. d plus. tomorrow, of course, will be the last of it with seven-year notes. brian, tyler, michelle, the whole gang, back to you. >> rick, thank you very much. on deck, forget fang. why power lunch's own g.u.m.p. trade is making headlines. one industry in particular feeling the pressure. that story and much more, still ahead.

lieutenant dan did take care of my bubba gump money. he got me invested in some kind of fruit company. so then i got a call from them saying we don't have to worry about money no more. and i said that's good. one less thing. >> that was in greenboro, alabama. we show you that for a reason. we know how much investors love investing acronyms. you've got the f.a.n.g. trade,

face book, and then a few months ago we came up with our own, g.u.m.p. play, goldman sachs, u.s. bancorp, morgan stanley and pnc bank. of course we made it tongue in cheek but it played out. g.u.m.p. stocks as a group are up nearly 9%. outperforming the broader sector as a whole. over the past three months, the trust g.u.m.p.s are up more than 15%. not bad for a made-up acronym, tyler and that's all i've got to say about that. >> run, forest, run. the dow on track now for a nine-day winning streak, if it can close positive today.

right now it's up about 29 points. jp morgan asset management and david bianco, america's chief investment strategist at deutsche bank asset management. that's a mouthful of titles, guys. that's just a lot. michael, let me start with you. you're a bond guy but say you like stocks better right now. why? explain. >> i like corporate america. i think there is -- >> there's a lot to like there, isn't there? >> there is, right? go back to the financial crisis since then. so for over eight years, the only thing corporate america has done is take out cost. and, in fact, earlier in 2016, the top line wasn't going anywhere and the bottom line was improving because of all the costs that have come out. i've been doing this 35 years. i don't remember a time when corporate america has been as lean and efficient as it is now. you put in -- >> you have some growth.

>> final demand, it looks great. i'm in the bond markets. that's why i like corporate credit as well. >> because the economy is healthy. there is growth there. there may be top line growth. so why worry? >> default should come down. that's what i'm most concerned about. and i think high yield spreads at around 400 basis points, still overcompensate you from where defaults and earnings are going. >> david, do you see it this way? in other words, bob has basically said so much cost has come out of the system. when you get a little more growth coming in, boy, the leverage to the bottom line will be terrific. >> that's right. there's no doubt that the s&p 500 is an efficient ly run set f companies. i'm expecting growth to pick up a little bit more and expecting this to be a long-lasting cycle, which would allow industries to show us their ability to replicate and grow their business models. i think we've got an environment

that's ripe for growth stocks. lot of health care, technology stocks. they've come back to life early this year. we like financials, too. and we still like them within the value space. that's the only part of value we like i think that's health care and technology that's going to leave this market higher the next two, three years. >> even with a gain of 21% so far this year? it's interesting. one guy on set who kind of says, okay, stocks or bonds. you're mostly a stock guy, right? you like stocks right now. but do you like them at this moment? do i wait for a pull back? we've had such a very strong year. uncertainty about whether or not we'll get corporate tax reform out of d.c.? >> deutsche investment management strategist. i do like stocks. i think it's also important to point out, i think interest rates, long-term yields rise but rise very, very slowly and i'm skeptical at the ten-year treasury yield gets above 3% by the end of this year or even early next year. there are still ate lot of spot

notice fixed income market, particularly when there's a credit spread available that i would find attractive, too. most attractive part is still the equity market where valuations at these interest rates, it should be 20, provided the risk stays -- >> david's point on interest rates, where do you see rates going? >> rates look stupid where they are now. if you think about the ten-year treasury, 2.4%, we just had headline cpi come out. core was at 2.3% and, by the way, year over year wage gains. so you're getting a zero real yield for the ten-year and the fed has to get moving. we're talking as though the fed

is at some sort of neutral level. if i were them, i would raise rates in march, go every other meeting until they go to 2%. then we can have a real conversation of whether rates are appropriate or not. and i think the fed is behind the curve. >> robert, thank you very much. we shall see. we'll learn more when those fed minutes come out in about 35 minutes from now. david, nice to see you as well. >> good to see you. gps. pizza sting. all in the good, bad and ugly in today's trade straight ahead. fees? what did you have in mind? i don't know. $6.95 per trade? uhhh- and i was wondering if yr brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me at schwab is offering? what's with all the questions? ask your broker if th're offering $6.95 online equity trades and a satisfaction guarantee.

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welcome back to "power lunch." time for the good, the bad, the ugly. garmin fitness wearables offset the weakness in gps device they sell for cars, up 7%. the bad? papa john's lower by 6.5% after reporting weaker than expected same-store sales. ugly day for texas roadhouse after the company missed on both the top and bottom lines, that stock off 13%. ryan, sometimes you get the bull. other times you get the horns. >> where is that video? >> right? the poor queen's cow. >> did not end well for poor said cow. clean-up on aisle five. why some serious sticker shock

may be coming to a grocery store near you if the immigration plan plays out the way some think. or will it just push automation faster? we'll explain when "power lunch" returns. ♪ it's not just a car, it's your daily treat. ♪

go ahead, spoil yourself. the es and es hybrid. experience amazing. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

i'm contessa brewer. here is your cnbc news update for this hour. rex tillerson is meeting with australian foreign minister. contentious phone call between president trump and malcolm turnbull. three tons of supplies aborted its rendezvous with the international space station because of a computer glitch. nasa says that glitch can be corrected. you know, simple call to i.t. i thought it was funny. 360 migrants have arrived after being saved from boats in the mediterranean sea.

a record number of migrants last year crossed the sea. ivanka trump visits the supreme court and sat in the v.i.p. section with her daughter. that is the cnbc news update. back to you. brian, quick call to the i.t. people at nasa. they fix that computer glitch. >> they could fix it right away, send a shuttle to fix it. >> they might but -- >> i thought it was fuvennny, t contessa. >> there was no laughing. it was just crickets. >> forget the audience. we're just talking to each other. forget the audience. contessa, thank you. tyler gave -- that's right, tyler. you delivered to the audience an amazing stat. 51 sessions since we had a 1% move either way in the s&p 500. today could be, what, 52? >> could be. >> s&p 500 is down .7 of 1%

right now. the dow is outperforming. thank you, dupont. i say that because they're your big winner, eu approving merger with dow chemical. dupont kicking and screaming, pulling the dow higher today. the aforementioned tyler. potentially setting the stage for a growing number of deportations could affect one part of the u.s. economy in a major way. aditi roy is live in san francisco with the details. hi, aditi. >> hi there, tyler. roughly 11 million undocumented workers in the u.s. as of 2014. the american farm bureau says that means 15% of farm workers are undocumented. a study before president trump was elected on an impact on deportation. if agriculture were to lose access to all undocumented

workers, an extreme scenario, agriculture output would fall $30 to $60 billion and enforcement only approach would increase food prices by 5 to 6%. and a study commissioned by the national milk producers federation, conducted by economists at texas a & m found even a 50% reduction in the dairy immigrant workers would increase the price of work by 45%. foods that could be the most affected are the ones most dependent on labor for harvesting, including strawberries, blackberries, cherries and asparagus. trump administration policy focuses on undocumented workers who have been charged with crimes mostly, even minor ones, which would not affect the majority of farm workers. it remains to be seen whether the policy will thwart workers overall from crossing the border. new immigration rules and break down the potential broad economic impact it could have as

leon rodriguez, former dh director of immigration services under president obama and the executive director for the national immigration forum. leon, i pay attention to span h spanish-language television and immigrants rights groups call president obama the deporter in chief because 2 million people were deported, more than had ever been done before. is that correct? and what level could it rise to when you look at what the president -- the new president is trying to do? >> certainly, there were a lot of removals back in the obama administration. if you read the order that was issued yesterday, in fact, you do see certainly the tools, the principles for a much broader expansion of removal authority. more agents, broader classes of people that are subject to deportation. in fact, if you read the order as a whole, pretty much anybody who was here as an unauthorized

immigrant is subject to removal. >> do we have the capabilities to do that right now? he wants to hire more border agents, et cetera, and to give more powers to local government officials. but what's the actual logistical capability of being able to do that? >> right. at this point we have the capability to be able to remove 400,000 people a year, if i recall our operational capacity correctly. to expand beyond that will take time. it's not just a matter of hiring agents. it's hiring them, training them, creating the detention capacity for the people who are going to get locked up. and then hiring the immigration judges to hear their cases once they are put into proceedings. >> so, what kind of number could we get to at this point? actually, tell me, what is the difference between when you say there's a much wider definition of who could be deported, what was it before and what has it become now? >> the way we operated in the obama administration, certainly after secretary johnson's order

in 2014, was really to focus on felons, threats to national security, recent border crossers. now pretty much anybody who has been charged with any kind of crime is declared a priority. but also the order pretty much says that anybody who i.c.e. encounters and is illegally in the country should be taken into custody and should be put into proceedings, that now i.c.e. will have that discretion. and i.c.e. is immigration and customs enforcement. >> mr. rodriguez, thanks so much for joining us. we really appreciate it. giving us the breakdown of what it looks like. >> okay. >> the potential ripple effect this could have on the u.s. economy. ali nuroni, good to have you with us. in aditi roy's piece she said 50% to 70% of america's farm laborers are here on an

unauthorized status. farms and companies that employ those workers knew that going in. i understand there would be a cost presumably to find replacements, but they knew that going in, didn't they? >> let look at a state like idaho, with an unemployment rate of well less than 4%. it is also home to more than half a million cows, who produce an enormous amount of milk and, frankly, put a lot of yogurt on the shelves of dproesry stores across the country. for a labor market so tight to all of a sudden eliminate such a large portion of their workforce means a lot of cows go unmilked, a lot of milk goes unshipped. they went with their best deal, best option. undocumented workforce highly skilled, highly trained and contributing to the idaho economy, much less the national economy. so, ultimately, what we need from congress and this administration is a solution

that serves the interest of the american worker and business owner and, yes, the cow in idaho who is producing milk and yogurt for the rest of us. >> we want to serve the interest of the cows, for sure. i'm being flip there, mr. nooranin. so what would it be? who gets to stay and who gets sent out? >> i think it has three categories. there are 11 million undocumented immigrants. 8 million of the 11 million are in the workforce. that's about 5% of the workforce nationally. what we need to do there first is make sure they're registering for legal status, passing a background check, learning english and ultimately becoming a contributing taxpayer. second, we need to have a functioning legal immigration system so that our economy, which reality is that our economy depends on skilled engineer as much as it depends on the skilled farm worker an r

anders have access to the talent they need in order to create jobs and a system that ensures that american workers, american business owners are competing for the same job at the same wage. right now the only person winning is the unscrupulous employer, pushing down the wages of the undocumented worker as well as the american worker. >> by the way, tyler, 60% of those workers are in six states, according to pugh. florida, texas, new york, new jersey and california. those are the states we're going to see the impact the most. but i will say this. let me take the other side a little bit, ali. >> sure. >> it is a sensitive topic. if you're a citizen, you commit a crime, there's a good sense you could go to jail and prison as well, great cost to society and taxpayers as well. if you're here illegally and get caught with a crime, should you

go to a u.s. prison and cost me more money or just be shipped back? >> if you're a threat to public safety or violent criminal you do not belong in the united states of america. >> you would agree with that on the criminal side? >> violent criminal side, absolutely. if you're driving without a driver's license in order to get to a job to keep a business open, let's make sure that those individuals who get legal status, paying tacks, passing a criminal background check. that's just a better use of our tax dollars. >> so, again, for you, the demarcation line is where the crime is? if it's just a small thing, like you said, driving without a licen license, whatever, you would say no but with violent criminals, you would agree with that? >> smart law enforcement to make sure we are prioritizing our police officers. >> if those 8 million workers -- obviously it isn't going to happen all at once. if those 8 million workers disappeared, what happens to the u.s. economy and wages? >> so, the american action forum

has done some incredible research. unique think tank here in washington, d.c. they have found that the impact on our gdp would be anywhere between 3% to 5% over the course of time. again, 8 million workers over time being reduced or eliminated from a workforce. which is anywhere between half a percent -- approximately half a percent cut to our gdp. and that's a hit i don't think we should be taking on. >> mr. noorani, thank you for your point of view. ali noorani, executive director with the national forum. >> there was a story -- i'm just going to summarize. basically this chicken farmer, everybody got scared off. they thought they were going to be caught and deported. chicken farmer needed 100 to 115 people. he paid $18 an hour, never had a problem. it's tough, hard work if you've ever dealt with chickens and that year, he had one person

apply. >> come to get a job? >> come to get a job because the undocumented workers had gotten scared off and none of the local workers had stepped up. four wall street calls you need to know about today. daily dose of street talk straight ahead. with this level of engineering... it's a performance machine. with this degree of intelligence... ...it's a supercomputer. with this grade of protection... ...it's a fortress. and with thistandard of luxury...

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it is time now for "street talk." >> walmart, the firm believes improving e-commerce sales momentums will continue next year and walmart is succeeding on four key objectives, making

retail easier for families, growing the digital part and increasing discipline, being the most trusted retailer. bank of america's target will be a big move to 88. shorting the stock, cowen and company cuts it to a sell. lowers the target to 35. they say the so-called wars between bigg companies like google that search everything and google and travel and flight searches are way up year over year. competition among review sites is heating up. analyzer says they must invest in the brand. $35 target, 20% below trip adviser's current price. >> juno therapeutics, wells fargo out dfrls performed $34 to

$36 price target. adoptive cellular therapy and expectations for a superior therapeutic profile. also seeing potential breakthroughs when it comes to killing solid tumors. >> nbioteches, madison wisconsin base, noninvasive colin cancer tool, buy from a neutral, backup earnings. roth analyst says he likes higher average selling prices and outlook leaves them more positive despite premium valuation. stock is not cheap. guidance looks good to roth raising it to 26, 13% upside on the stock, up 4% today. the cologuard. always noninvasive.

>> guys, thank you. president trump's push for buy american, hire american, putting pressure on the retail sector. courtney reagan live in new bedford, mass, with that story. hi, court. >> hi, tyler. that's right. president trump may want us to buy american but that's really hard. actually, almost impossible when it comes to clothing and shoes. i'll explain why, coming up on "power lunch."

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welcome back. president trump's push for buy american hire american is putting a strain on one sector in particular, retail. courtney reagan joins us. courtney? >> reporter: 1100 suits here are made every day at the joseph abboud factory in massachusetts. that makes this brand pretty rare. it's not that u.s. retailers don't want to manufacture in the united states. it's that there are a number of reasons that makes that hard to do. when it comes to u.s. manufactured clothing and shoes, shoppers are hard pressed to find an abundance of made in the usa apparel in stores. it's because nearly 98% of it is

made abroad according to american apparel and footwear association. it's not always been that high. but there are a lot fewer textile mills and factories than in years past. plus sewing labor at low cost is basically nonexistent here. >> near record number of open job positions because we don't have the workers with the skills necessary to do it. >> coupled with restraints of deflationary prices. in order to produce garments and shoes in the gold u.s. of a. but if you can make it work, the proximity to your supply chain can help a company react more quickly in changing consumer tastes and you might even get some credit from the consumer for some of that rare "made in the usa" label. joseph abboud has been owned by tailored brands since 2013. since that time the staff has doubled to meet the increase demand.

still only about 13% of the entire company's products are made in the usa. back to you. >> thanks, courtney. more insight from stefan white. welcome to "power lunch." >> thanks for having me. >> made in america, it's tough to define. >> it is. >> what can the president do to increase that goal? is it a worthy goal? >> i think it's a very worthy goal, especially looking at the very different types of brands. some brands stake their company on that mantra. think of leesa, the mattress company. it's a selling point. it appeals to their audience and they'll benefit. >> it appeals to an audience that can afford -- >> absolutely correct. >> -- to pay up. >> yep. >> how do you get over that hump? tyler, you should pay more because it's made in america. i know maybe you can't afford it

or don't want to spend that much but you're going to have to for the good of the country. >> that's the challenge that they'll face. many folks don't have that resource to do that. serious complexity with trump's potential new tax laws around companies that have established retail supply chains. >> border adjustment tax in particular or other stuff? >> that's the one. >> border adjustment tax? >> yeah. >> when they say don't worry the dollar will adjust so much that retailers will be better off. you laugh? they all laugh. >> looking at that, it does seem difficult to understand how that would actually work in their favor. i think you reported yesterday an objective of 50% -- >> wall street analyst who certainly believes that. >> that was yesterday i thought i saw that. understanding how to adapt their supply chain, but doing that in a short amount of time, that's a very complex multi-decade

proces process. >> let talk about corporate security, internet and so forth. how big a tax is it on american consumers? >> corporate security. >> yeah. keeping the internet in the digital age. what does it mean? if i look at retail fraud, how do we keep retailer from not being defrauded? it's half a percent of overall retail sales is fraudulent. huge number across the nation. and even our staff it's an extraordinarily expensive expense. >> who pays for it? every year i get whacked. somebody defrauds a card. american express is very good. >> they are? >> they'll say we'll reverse the

charges. i'm thinking that's great for me. >> but somebody is eating that. >> somebody is eating it. no one seems to give a you know what. >> i care. hurts my bottom line, actually. what we do, we guarantee our retailers no fraud. we have to do all the checks before the charge goes through to say we think this charge is a valid charge. if we get it wrong -- >> how do you know? what's a tip? what's a tell? >> shipping address and billing address not matching, ip range from a certain area of the world that have a lot of charge backs, 800 rules we run against every single transaction to figure out if this looks good or bad to us from a fraud standpoint. >> stefan, thank you so much, stefan weitz with radial. minutes from the last fed meeting are out in 3:30. investors are looking for clues as to the next rate hike. will they get those clues? we'll find out at the top of the hour, 2:00 pm sharp.

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welcome back. we are seblingdsk s we are seblingdseconds away fro release of the latest fed

minutes. 2.44%, dollar index at 101.54 and crude oil down 1.5% to 53.56 per barrel. will these fed minutes indicate that the chance of a rate hike in march are greater than they had been? i don't know. hampton pearson does and he's here now. >> minutes from that first fed meeting of the year say most monetary makers felt, and i'm quoting now, it might be appropriate to raise the fed funds rate again fairly soon. if incoming information on the labor market and inflation is in line with or stronger than expected. some participants worry that communication about a gradual pace of rate hikes might be misunderstood as a commitment for only one or two rate hikes per year. a few said continuing to raise rates at an upcoming meeting would allow the committee greater flexibility to respond to the changing economic conditions. as far as that discussion of the economy and economic conditions,

the overarching concern focused on the considerable uncertainty about prospects for changes in fiscal and other government policies. both the magnitude and the timing, as far as their affect on the economy. several expressed concerns about what expansionary fiscal policy would do as far as increasing the upside risk for fed forecast. as far as global developments, some relief risk from foreign activity have, in fact, diminished but policy makers are concerned that dpreerks of the doll dollar will impact foreign economies. two days of congressional testimony fed chair janet yellen did not exactly tip her or the fed's hand. >> hampton pearson, thank you. for market reaction, let's bring in money strong president and newly minted best-selling

author. congratulation. >> thank you so much. >> and jonathan of rbc markets who literally just arrived on the scene. >> wiring him up. >> putting his mike on right now. let's go, let's go! in your previous life, daniella -- and i mean that as a compliment -- spent time talking about the words. it's words. it's words. your read, your take on what you heard these words. >> i didn't hear two words. balance or sheet. even though she brought up -- >> you said sheet? >> balance sheet. $4.5 trillion balance sheet. if they were going to allude to dollar tightening, as far as rate hikes and beginning to let securities run off the balance sheet, they would have used balance sheet in today's -- >> is that -- that's the new double whammy. always got to give our viewers

things to worry about. >> there's tightening and double tightening. >> there's no indication of the dreaded double tightening. >> no, no. that's -- that should be a relief. on the other hand -- jump in gentlemen, but on the other hand they were very specific about saying this is not going to be gradual. this is not going to be one or two. they're clearly trying to put march on the table and put that three number on the table. >> did you hear it that way, rich? >> yellen last week and the minutes of three weeks ago. fairly soon doesn't really move the ball on march perhaps as much as they would like. coming into today it was about a 33% chance. also mentioned concerns about an overappreciation of the dollar. i think march individually would make a lot of sense to me. if the yellen fed wants that priced in they have move -- a

lot of work to do between now and march. >> for them to say we want to avoid gradual, that means they want to be aggressive. >> what's the message to the bond market in the face of potentially more aggressive rate hikes, yields actually go lower. >> go ahead. >> i think what the ten-year has been communicating for the past few weeks is go ahead, make my day, fed. if you're going to insist on bringing the short rates up you're going to end up inverting the yield quickly. >> a precursor to -- >> move the curve more quickly. we're more steep on the curve than we are on average. the market is telling you the economy is fine. the fed is responding to the fact that wages are going up. economic data has been strong. the fed is behind the curve at 62 basis points. whether they move in march or not, they're going to be moving with three times this year, between now and the end of 18 they'll be moving seven times. >> rich, can i read you what i

think is the -- >> please do. >> i'll read it for the viewers. took a while to search for this. in discussing outlook of monetary policy many participants thought it might be appropriate to raise the fed funds rate fairly soon. so we go to words. words. many participants. doesn't that tell you there's a majority? it seems to me is the data going to take a downturn? because we already know what we're going to do. >> i don't think there's a problem hiking in march. prior to when they signaled the next meeting and fairly soon is not quite as strong. >> it's a little fuzzy. >> yeah. >> this was, what, early february? >> many is not fuzzy. many is a big word. fewer syllables, the bigger the word. >> i think the big picture here,

is this a fed that expects if the data play out they will be hiking three times this year? the only question is do they want to tee up the market or not raise it in march? >> belief that higher rates are the devil, i think it's the exact opposite acres sign that things are going well and renormalizing conditions are a big benefit to the banking sector. it bails out savers who have been crushed, helps to pull rates up around the world. i think that -- >> who said they were the devil? >> i think this is general. >> rates too low for too long is the bigger risk than normalization. >> i totally agree. >> this is not 1931. they won't just start jacking up rates willy nilly in the middle of a depression. i hope. >> generally before this time

peeshd don't fight the fed. when rates go up it's bad for the stock market. >> you still have to bring in what we haven't talked about, which is the fiscal side of it, trump's ambitious plans, financing them. if rates go up too quickly, what happens there? >> in '94 the fed raised rates 2.5%. 1995, the dow rose 33%. it's just one period but -- >> not just the data. there is an old saw on wall street. don't fight the fed. there's a knee-jerk reaction. oh, rates are -- we have people on all the time who cite that data. >> what's the problem? when the fed stop raising rates because they feel as if they've done enough damage and right now they're way, you know, there's a huge gap between here and having done too much. >> stan fisher says this, and is correct, policy is still accommodative. it's removal of accommodation.

we're still running a policy, entering the eighth year of an economic expansion. >> and it's not a double tightening. >> not a double tightening but i think they need march. if they don't, they only have three other meetings the rest of the year. >> do you believe they have to have a press conference to raise rates? once they say it once -- >> if they'll have four lame duck meetings, cancel them and save taxpayers money. >> who will be the head of the fed by fourth of july? yellen or somebody else? pick. yellen or someone else? >> i think yellen sticks with it. >> got to go. i think she serves out her term. >> they didn't get the hook. i got the hook. >> got to go to bob pisani. >> shall we? bob? >> wow, two people introducing me. thanks, guys.

s&p. very modest reaction. down two points from that move, bank stocks, interest rate sensitive. debating what this word fairly soon means. for me it means march or may. it doesn't mean june. march is a little bit hawkish. it might imply four rate hikes but june sounds way too dovish. they don't have the luxury of sitting around and being dovish. fiscal stimulus is on the horizon. they run the risk of looking like they're behind the curve. june is way too far off. can i ask a question? why can't we do may? i know there's no press conference. then you do it may, than say in september, december and you've got three rate hikes in. i think that makes a lot more sense at this point. not a lot of reaction from the market. two points down on the s&p. back to you. >> bob, thank you very much. rick santelli is looking atarax in the bond market.

hi, rick. >> hi, tyler. just last wednesday it lowered. unchanged right now. volatility dollar index, look at the intra-day dollar index, down 13 now. big reversal. tens at 2.34. they're at 2.41. fives had a nasty auction but still managed to stay around 194 and, of course, 191. finally, maturity you would expect to have the most volatility, two-year note, it didn't come down for a while but did start to move to 122. i could pars through the headlines. the reality is that if inflation is manageable, manage it because everything i'm looking at looks

a little warmer. they probably should tighten it when you look at minus 90 basis points, two-year note overseas. they ought to be a bit nervous about that. back to you. >> thanks, rick. eli lilly, we'll talk to the company's ceo. and tesla's earnings are due out after the bell. president trump has been seen as good for defense stocks. but then he also pressured them to cut costs. margaret brennan is lievga lockheed martin where the f-35 is made. morgan? >> that's right. lockheed martin looks to bring the price of these f-35 planes lower. we'll tell you why exactly this fighter jet is just so special. when "power lunch" returns. to win, every millisecond matters.

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i'm ricardo, a sales and service consultant here at the xfinity store in bellevue, washington. here at the store,

we offer internet, tv, phone, customer service, home security. every situation is a little different. it could be about billing, simple questions like changing the phone number. sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. one of the great things about comcast, there's always room to move up. of course, it depends on you, how hard you work. ♪ president trump specifically called out lockheed martin over the cost of the f-35 jet. the company says it's working hard to continue to cut the price. but there's a reason this is the most expensive weapons programs on earth. morgan brennan takes us inside a rare look at the facility where the f-35 is made. morgan? >> reporter: hey, brian, that's right. not only is this a rare look but i would note the fifrs time there's ever been a live

broadcast inside this f-35 facility. so, with more than 200 jets now in operation in the expensive development phase likely to end as soon as later this year, lockheed martin's f-35 lightning two is finally starting to get attention for something above and beyond the cost. and that's capability. so, first off, it can fly undetected by radar. this is stealth technology. it can't be added to a plane after the fact. it has to be incorporated into the design from the start. second, as lockheed's f-35 test pilot billy flynn told me the million lines of code mean this is like flying a super computer. >> we are only now unleashing the smallest part of the capability of this airplane. it will be a fabulous intelligence surveillance and reconnaissance platform, gather data of what the enemy threats are and pass that back to

commanders hundreds of miles behind us on the ground or in the air. >> reporter: that is a result not only of lockheed but top suppliers to this program which may makes the google glass like pilot's helmet. f-35, pilots have given it rave review soes far in the air force exercise with previous generation of fighters, 20-1 kill yash ratio. it comes at a cost, making this america's most expensive weapons system ever. that cost is certainly front and center right now, thanks to president trump, but this is the other side of this debate. you have a fighter jet that disproportionately stacks the odds in america's favor. depending on the variance but it's a plane that, at that price, is bringing back or expected to bring back so many more men and women, american

military folks from war. guys? >> good point. thank you so much, morgan. deference space has been a pretty solid performer over the past year. will that trend continue under the trump presidency? let's bring in aero space analyst with buckingham research. 20-1 kill ratio is what? >> very effective. unheard -- >> what does it mean? >> 20 bad guys gets destroyed versus yours. >> that is what -- >> 20 bad guys flying what kind of competitive aircraft? >> in this case four or 4 1/2 generation airplane. f-15, f-16 with both four generation aircraft. >> this would take out 20 f-16s for every one f-35? >> fourth generation for every one of theirs. that's absolutely correct. that's actually an astounding

ratio. and one that would be enviable. >> you're skeptical? >> no, no. i hate asking this question. i always wanted to be a pilot. i was too tall. right stuff was my favorite movie. my dad was in the navy for nine years. but does arial warfare even matter anymore? who are we fighting in the air in a plane? >> that's a good -- >> i mean, now it seems everything is cyber and remote and drones. i just don't know. is that needed? >> that's a fine point. absolutely, it's needed. >> dishonor the military? i just wonder -- >> no, no. >> aerial combat against who? >> it's a fair question. what are we fighting? turns out right now fifth generation fighters are coming from china and russia and they're both completing flight tests and starting to enter production. the reason this is needed is the threat has been -- while we have been working, the threat has been working and evolved and

there's an ever-capable set of airplanes out there that will challenge the f-35 and air force in general. >> tell me this. one hand president trump says he wants to spend a lot of money on defense. on the other hand he complains about how much money he has to spend on defense. he wants more fighter planes, however he doesn't want to pay as much. how does it work out to the bottom line of the companies you cover? >> he wants his cake and eat it, too. by the way, as a taxpayer, i don't think we should be objecting to that. we want a strong military. >> should i buy the stock or not? >> absolutely buy the stock. >> why? >> he wants an effective military, he is not attacking margins. proof of the pudding, lockheed just signed a new contract with the government and that was signed well within expectations, double-digit margins for the f-35. it doesn't appear he's really going after margins. >> tell me this. him pressuring nato to spend more money. i heard wolfgang say for the

first time yeah, we need to spend more on our defense. worldwide will we see more defense spending finally? i mean actually the europeans. >> yes. matter of fact, i think you already are. a number of my company also talk about growth in the mideast. >> they've always spent a lot of money. germany, france, britain. >> japan is even rearming. >> good point. >> you'll see growth in aviation and -- >> should i buy a defense stock etf? is that a good way to go? >> absolutely. i'll tell you why. individual stories have individual benefits. you know i like l3 technologies and lockheed martin. in general, when defense spending goes up, these companies -- >> it stays up. >> it stays up. it's a sustainable pattern, right? not only that, these companies generally move in a herd. if one is going to benefit, they're all going to benefit. yes, i like individual stories.

yes, i absolutely like your idea of a basket as well. >> is there an etf? >> i'm not aware of one. >> boom! give me a ticker. get me, goose. >> goose. >> goose. talk to me goose. >> thank you, rich. >> thank you very much. always a pleasure. >> it was fun. thank you. apple is set to move into its new headquarters in april, the one that looks like a spaceship. detail details on the giant new campus. plus snaps corporate headquarters is not where you would expect. julia boorstin is live outside their place in venice, california. on the beach, julie. >> that's right, tyler. a block from the beach in sunny venice, california. this beautiful locale comes with its share of challenge challeng. why snaps headquarters poses some risks after the break. ♪

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with its unusual headquarters, advantages and drawbacks. hi, julia. >> reporter: behind me is snap's main headquarters, unlike any other company. snap's offices are scattered across buildings on at least six different streets here in pricey venice, california. the beach is just about a block behind me. and employees come in, pick up breakfast on this building and then walk to other buildings that house offices of snap. it is so unusual that this diffus structure may prevent us from fostering positive employee morale and encouraging social interaction among our employees. there are certain advantages to being in venice, not just the beach but there aren't as many

tech companies competing for talent. one disadvantage, having to work remotely. venice real estate is expensive. according to trulio, the price per square foot is a hair less in palo alto and 25% more than in san francisco. with real estate inventory tight that may make it difficult for snap to find other nearby real estate as it expands. tyler, back over to you. >> julia, speaking of headquarters, apple employees are moving soon to a new place, dubbed the spaceship for obvious reasons you'll see right now. the new campus will start housing apple's 12,000 local employees in april. the new campus situated on 125 acres, 2.8 million square feet. apple park will include a visitors center, apple store,

cafe open to the public and 100,000 square foot fitness center for employees. two miles of walking and running path paths plus ap orchard and pond. carl eichon is about to join us. we'll ask him about activists in his industry and his support for a border adjustable tax. power lunch will be right back. i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim,

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i'm contessa brewer. here is your cnbc update at this hour. incoming ambassador to the united states is speaking out against president trump. gutierrez says mexico will be crucial. and calls the president's treatment of mexico unacceptable. san jose rising floodwater has forced the closure of a major highway, 101, submerged cars, flooded homes.

the rain has stopped, that's the good news. flood warnings are expected to stay in place until saturday. pope francis is calling on urgent humanitarian aid for those of south sudan. they've been mired in civil war since 2013. princess diana's address dres will go on display, the velvet gown she wore at the white house when she danced with john travolta is included. back to you, michelle. >> thank you, contessa. 90 minutes from the closing bell on wall street. in the wake of the fed, nasdaq and s&p 500 are lower. dow is higher. it would be yet another record high. oil market is closing for the day. let's get to jackie deangelis at the commodity desk. >> crude prices are down pretty much all day. not having to do anything with the fed, holding over that 54 mark either, loss more than a

percent today. commitment and trader report shows that long positions are certainly building. that's the speculators. we could potentially be taking a pause here today. at the same time, miller tabak is saying it's a very critical juncture. take a look at where crude oil futures are trading, higher over the last month. xle actually lower after the last month. now, history shows when we see that kind of divergence that the stocks actually tend to be the better indicator. but if oil continues to climb for reasons that have little to do with the fundamentals at this point, more about optimism in the future, you're probably going to see those stocks follow suit. this is a very critical relationship. watch it play out over the next few weeks and potentially months. back to you. >> thank you very much. jackie, top execs joining together in a letter to congress, call iing for big and bold tax reform, saying incremental tweaks will not level the playing field for american workers or dramatically

invigorate growth. newly formed american made coalition including boeing, dow, chemical and eli lilly. ceos are in support of a policy that would -- ceo of eli lilly, thank you for being with us. >> good to be here. >> you've been on the job a little less than two months. how is it going? >> so far, so good. q4 earnings, positive reaction and we're focused on executing a bunch of launches here in the u.s. and around the world. sxieth time at lilly. >> a lot to cover here, everything from the tax questions to drug pricing and more. let's start with the tax questions. you and several other drug company ceos, part of the republican gop house plan. tell me why you favor it, what

it would do for your company and why you also favor territoriality and whether the two are really separable in any meaningful way. >> thank you. for years, lilly has been for lower tax rate in the u.s. for territorial system that really leveled the playing field with other geographies. >> territorial means what exactly? >> that you're taxed in the jurisdiction where -- >> where you earn the money? >> where you earn the money. a feature of these systems is border adjustability or an equivalent. so we support the house blueprint that's been put forth because it includes these modern features that other economies have adopted and really are pro growth, good for jobs and good for innovation. that's what our business is about. >> when we hear people say gosh, it's so confusing. why would you make such a dramatic change here in the united states, it doesn't sound like you think it's confusing or all that dramatic.

>> our system is old, antequated. this is the time for change. the current system is yielding the economy we have if we want to drive further growth in the economy, increase job support, raise wages, we need a new corporate tax system and we think this is a great start, the blueprint being put forward by house speaker ryan. >> in addition, i was very heartened when i heard president trump say after the meeting with the pharmaceutical ceos that it's unfair what other countries do to us, a reference to the fact that there's price controls in most other major economies in the world that mean that we americans pay much more for drugs because we're footing the bill for the world's r & d. does it sound like he might actually take action on that when it comes to the world trade organization or something, or try to change that in any way? >> in our business, we have a

prepricing environment. we have a market based mechanism primarily for reimbursing medicines for patients and most foreign markets do not. they can use regulatory delay or outright delay which runs out the patent clock. we think that is unfair. we welcome more support from the administration on trade enforcement. most are bilateral and multilateral deals we have include these provisions. we just haven't been strong on enforcing them. that would be a welcome addition and agenda. >> so you favor taking some sort of action on the trade front against -- with countries that do what you just describe, but it seems that another component of that, that he has hinted at, is the idea that we are the only country or one of the few that in a massive way does not negotiate with drug companies. how do you feel if the federal

government, a big buyer, either through medicare, medicaid or va had the ability to come in and negotiate prices. >> i heard that explanation before. i didn't hear the president say that in our meeting. that's the farthest thing from the truth. list pricing is free for the company to change, which is well reported. what probably is underreported is how many buyers negotiate prices far below that list pricing, including state and federal government authorities. buy and large, we have a system that's negotiating. it's justify not the list price. >> these would be the pharmacy benefit managers that are negotiating prices? >> in a commercial market my company hires third party part d for retail drugs also does the same thing. i think it's just not true, that we don't have negotiations going on in the u.s. to lower drug prices. we do.

what we do have is insurance design that increasingly is exposing individuals to full price, list price, even though they're pbm or insurance company may be getting a rebate on that transacti transaction. that's what needs to change, from our perspective. >> david, i know foreign-born workers are very important to the pharmaceutical industry. what's your view on immigration? >> well, our main issue, as you're pointing out, is access to the best labor on the planet. we, of course, have operations globally. we hire workers in all these countries. many times, people come here to the u.s. to study advance science and technology, skills we need. we would like to see an expansion of the visa programs that allow us to directly hire those post-graduate and graduate well-trained individuals so they can stay in our country and help american companies like lilly grow and prosper. we're waiting for any announcements on that. we would like to see an expansion of that kind of

program. >> the tonality out of the white house doesn't sound like that's what's coming. do you think differently? >> it's hard to speculate on things that haven't occurred yet. that's been our position for a long time, expansion of that visa program. >> when we introduced you, we talked about the border adjustment tax and said it would reduce the cost of exports. do you believe that? the supporters of the tax say dollar is going to increase in value dramatically because of it. and that the net/net effect is actually not that important when it comes to trade or are you worried about that in any way? >> traders of currencies and understanding where those rate will go. we make an investment today in a manufacturing facility and we have a lot of them in the u.s., pretty extensive presence. but we also have them outside the u.s. the reason is we need to heavily

factor in the negative effects of the antequated tax code. there are many jurisdictions outside the u.s. that have more favorable tax environments for investment. we prefer there's no difference in those and the house blueprint being discussed would not only level that playing field maybe even tip it toward u.s. business cases and we think we should make investments based on other things, availability of resources, of human resource, best location for logistics and other things. today, lilly has to make that decision, in large part, based on the tax environment we face. >> bernie sanders calling for an investigation of insulin makers for price collusion. is there any price collusion going on? >> absolutely not. we firmly understand the rules in this space. we have strongly come out and said we haven't been party to any of that. we understand that people are

frustrated with the cost of medicines. >> why have the prices gone up? >> we've made significant investments in our insulin facilities, including bringing out new products and expanding capacity for a growing epidemic of diabetes. another reason is what we talked about earlier, the spread between list and actual net price i pricing has grown substantially. for our insulin business, net pricing hasn't grown. that gap growing and payments are being made to other entities. we recognize some -- >> they're not going to the consumer? >> some smaller portion of consumers pay the full price. we would like to eliminate that part of the equation. >> all right. thank you so much. we really appreciate it. >> thank you. thanks for having me. big interview on cnbc

tomorrow. treasury secretary steven mnuchin, first televised interview since he took the job at 7:00 am eastern on "squawk box." stop me if you've heard this before. but the dow is at an all-time high. and, yes, we know the dow is only 30 stocks and there are thousands of other stocks out there. so are there many that are not a household name but maybe should be a name in your household? citigroup recommending five small to mid cap companies that they say are unloved but are great values. those names straight ahead. see things your way. you have access to the right information at the right moment. and when you filter out the noise, it's easy to turn your vision into action. it's your trade. e*trade. i've got a nice long life ahead.

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doesn't it seem about ten stocks command our attention? apple, facebook, yada, yada, yada? citigroup wants to help you make money in some of the stocks that get no love or attention. citi group pointing out what it calls five value creator stocks that are not wildwidely held by

mutual or hedge funds. aecom, infrastructure. we talked about it. medidata solutions, owens illinois, om asset management. om. >> they keep you calm. >> and vonage. make a joke about that one. >> that's like voltage. >> vonage. anyway, five names citi group likes in a small to mid cap space. could the best overall opportunities be in smaller cap stocks? let's ask the trading nation team. d dennis davin. citi group was naming these because they're broadly underowne underowned. >> i must admit i'm a little cautious on this for a couple of reasons. longer term should work out well. i'm concerned, number one, how much donald trump is going to

get passed and when it will be implemented. i'm not sure we're going to get the higher rates. or at least as high as quickly as people are looking for. along with higher rates goes the higher dollar, helpful to these domestically associated midcap and small cap names. the other thing is i'm worried about the russell 2000, obviously a lot of small cap names, is over owned. five names that citi group is under owned. but overall data shows they have much, much higher -- highest positions they've ever had, come down slightly in the last couple of weeks but still higher than they were any other time. too many people on one side of the boat, it will be hard for that group to outperform. >> all right. there you go, matt maley. the cost of insurance in the options market on smaller caps, isn't it higher than on larger

cap stocks? >> it is higher than larger cap stocks and should be. with embedded risks. price to earnings ratio. i will say, though, that that spread in earnings is pretty narrow right now. while they may be overowned in the russell, the equities overall are underowned in the marketplace right now. i think people are moving into equities and so like matt mentioned, equities across the whole band. i would look at the vicks across the russell called the rxy. that is higher than the regular vicks. you're talking about paying 3% above an already deeply discounted insurance rate. our portfolio is longer stocks, but insuring them along those

stocks. >> good view on the small cap stocks and market in general. den nis, matt, thank you very much. for more trading nation go to tradinganyways.cnbc.com. tyler don't forget the dot. >> connect the dots. tesla shares up 40% since donald trump got elected. what can the company say to keep that going? everything you need to know before tesla reports next on "power lunch."

your big earnings report tonight is tesla. shall we say your big results tonight come from tesla. there are unlikely to be earnings in it. the street expecting tesla to post another loss. that hasn't stopped the shares from soaring. up 43% in 90 days. let's get thoughts from two analysts who have been following

the story closely. joseph spak of rbc and dave which iston of morning star. joseph, the one or two key numbers to watch in tonight's release? >> thanks for having me, brian, first of all. we think the expectations are elevated going into earnings tonight. we think there are a couple key things to focus on. one is going to be data points related to the model 3 launch. elon promised basically 100 to 200,000 units here in the back half. that's a serious ramp. i don't think there are many who expect that. w but we're looking for data points to show that can get started. >> what data points specifically. >> one of the potential roadblocks they mentioned is the stamping aspect of the facility for the model 3. want to get more data points as

to how that installation and ramp-up is coming along. there were reports that they took some downtime here this month to sort of ready that plan for the model 3. so further indications that there is a beta vehicle out there i think are also important. brian, the other thing i want to mention -- i think you alluded to this earlier -- this is the first quarter where we have any solar city results in the quiet. it's a little bit about -- close to about half a quarter. i think you have a community that needs to get a little bit more comfortable with that business model and how that's going to look in the financial statements. best we can tell actually looking forward to 2017 forecasts, you know, there may be a good number of estimates that do not yet incorporate the losses that solar city is expected to generate. >> dave, what will you be looking for on this earnings report? i want to throw out a crazy

idea, dave, if i might. is tesla, ultimately, eventually an independent company or does somebody else ultimately own them? >> you are the second person to ask me that today, actually. the one point i would add to joe's -- >> maybe it wasn't that crazy, unless you're talking to crazy people. >> with tesla seems like anything is possible. 500,000 units by 2018. best guess, a million by elon back in may. model 3 is certainly important, but also every quarter i pay a lot of attention to the cash flow or cash burn. they back-weighted a lot of cap x in 2016 to q 4. we'll see how bad or good it may be. to your question, does it stay independent, that depends on the financial health of the company and the economy. as i was telling someone earlier, i think it depends -- if you want to buy tesla, i think you have to have a

sit-down with elon and say what's going to happen to his stake. i imagine it gets sold. if he leaves because he doesn't want someone to be his overlord -- there is great product and technology but elon is the heart and seooul of the technology. >> i'm going to give him a call. dave, thank you very much. and joe spak. "check, please" is next. >> i'm sure he'll tell you everything. >> he'll tell me everything, right. from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow - today at esd.ny.gov

what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

"check, please." my final thought. i hope this gump trade that we've tongue in cheek came up with will take off. it's outperformed fang and the other market acronyms. it's done well! >> yeah. >> steve mnuchin interview tomorrow 7:00. "squawk box." everybody will want to watch that. i thought grover norquist had a good question that we should ask tomorrow. that is, when would tax reform take effect? 1/1/17, 6/30/17. you don't want businesses having to hold back on that particular note. in the last hour seven earth-sized planets not too far away, cosmically speaking. 235 trillion miles away, have been discovered. it's the closest we have come now to the possibility of

finding life on other planets and, by some quirk, they're really easy for us to watch. >> these are not in our solar system. >> outside. somewhere else. >> i welcome the new alien overlords and remind them, as trusted members of the media we can be very helpful. >> thanks for watching "power lunch." "the closing bell" starts right now. hello. welcome to "the closing bell," everybody. i'm kelly evans at the new york stock exchange. >> i'm bill griffith. one of us believes there is life elsewhere in the universe and one of us does not believe there is life elsewhere in the universe. we'll discuss later and you can weigh in as well on twitter. meanwhile, president trump holding a key budget meeting today at the white house. we have the details on what they talked about. that will be live coming up in just a moment here. mcdonald's reportedly cutting