my final trade, as i normally throw one is spy. because we'll be watching next week to see if doc's thing comes to fruition here, depending on what happens with this speech tuesday. what are you watching? ten second. >> emerging markets still. big upgrades. valuations are not demanding. i don't think the dollar is ripping this year. >> for blackrock. that does it for us. "power lunch" begins now. welcome to "power lunch." i'm melissa lee along with brian sullivan and tyler mathisen. retail etf, xrt, chief economic adviser gary cohen does not support the house version of the border adjustment tax. the man who broke this story, dan primac. welcome to the show. what did you find? >> gary cohen spoke in front of the u.s. business council, group of about 200 ceos in d.c.

he basically said the border adjustment tax as written, current language from the gop is mot something the white house would support. this comes about a day after a reuters story where donald trump seemed to hedge a little bit on that and seemed to suggest some support. cohen seems to back drtrack on this morning. >> could it be reworked? it also comes 24 hours after treasury secretary steve mnuchin told our becky quick that all options are on the table still. >> the cohn-specific negative sentiments were specifically on the actual language, the actual talk that the gop has had specific language. i think it certainly could be reworked. he did not say that the concept was objectionable but the way it was worked out. >> dan, long-time finance guy, covering banking, private equity, et cetera. from your market expertise, it's brian sullivan. from your market expertise, do

you think that the market is maybe overreacting to the upside, given your story? or do you think that a border tax could still live, to melissa's point, maybe just not in the house form? >> i think, to melissa's point, it certainly could. look, candidly, i think the market overreacts right now on anything that comes out of the administration in the sense that you don't seem to have huge agreement between different members of the administration, or at least not between the finance professional types, cohn, mnuchin and the president himself, who has to make the final decision. >> so it's all a question of li linguistics here really. it's not an essential knockdown of the border adjustment tax? >> not necessarily. it could be. the president has said repeatedly he seems to favor a much simpler form of tariffs and also has legal questions with wto. i think you have an administration as mnuchin said, everything is on the table. that's how they still view it.

ultimately it will be what the president decides one way or another. he has not seemed to make a firm decision and has been waffling back and forth on it. >> another adviser would be steven bannon and we know that he has supported the adjustment tax, reporting from john harwood. >> correct. a bunch of different folks in this administration who have different feelings on this particular issue and there does not yet seem to be a consensus. it's interesting that cohn didn't beat around the bush when he said the way it's currently written it's not something that the white house would support. >> dan primack, interesting scoop. thank you for joining us. moving markets. footlocker up, nordstrom is up. e e >> if dan's reporting is

accurate and the white house does not like the language of the border adjustment tax, clearly paul ryan, kevin grady, as we heard on our own air, are all in on this plan. can you actually rework the language to make it work for businesses? right now it doesn't seem like that is possible because in order for border adjustment to work, all imports would need to be subjected to this tax or to this lack of deduction. and what i've heard from lobbyists and from lawmakers is that once you start offering exemptions to one type of product, to one industry, then you start seeing special interests line up to ask for exemptions across the board. and once that happens, you lose the pay for. that's why border adjustment is so critical to the house republicans plan more broadly. >> do we know what the language was that mr. cohn, speaking on behalf of the white house, objects to in the proposal? what is it specifically?

is it that idea that it applies to all imports or something different? >> we don't know that at this point. that certainly is something that we are trying to find out. the other thing that is important to remember is who is really speaking for the administration here? is it going to be donald trump who said he supports some form of the border adjustment tax? is it going to be gary cohn who says that the white house -- is it going to be steve mnuchin? clearly there's a lot of division over exactly what this will look like going forward. and if there's not really broad agreement on the big picture, then how are we going to find agreement and consensus on the details going forward? again, as we know, the devil is in the details. >> yeah. and it looks like maybe the armada of lobbyists may have earned their pay. thank you very much. let's bring in brian nagle, of oppenheimer. got to have courtney reagan on. >> here i am.

>> i'll start with you, courtney. i've got a feeling if you're a retailer you're a little happy but probably also confused. >> sure. >> you heard dan's report. and melissa asked him, basically, listen, does it mean it's dead or does it mean this version is dead? what do you think is going on in retail board rooms right now? >> i'm sure they're paying attention to every single one of these headlines. they also have very strong earnings. i think that might be something else. xrt took a different direction yesterday than this morning. i spoke to jcpenney ceo yesterday. he was in d.c. and with president trump and other lawmakers about this very issue and tax reform in general. >> they're literally going directly to the source, trump, cohn. >> he was contacted by one of the retail associations as they were looking for various members that represented different segments to sort of come in, explain their concerns with the border adjustment. he said that president trump

listened, he asked really good questions. the questions went back and forth but didn't give any indication about where he was leaning. this was last week. then they moved on to those meetings with braidy and the other members of congress. he felt very strongly that they at least understood the retailer's position, that this would be a tax on the lowest income consumers and that would be very harmful. he said he doesn't think it's a foregone conclusion that's going to pass but is still on the table. >> moving higher on these headlines is the mirror image of what happen eed late in the session when the reuters interview came out with president trump, that said i would favor some sort of border tax, which would suggest he leans to a border adjustment tax. >> i changed to all black just to celebrate the death of the border adjustment tax. >> but it might be premature. >> this vampire is going to rise from its grave. we're going to have to have

something to fill the hole in the budget. if you talk to people in the house, which i've done, they really believe there's going to be a cross border adjustment tax in their bill. unless the administration pounds it out of them, they're going to have one in their bill. whether it will pass is still up for grabs. i still only always had it at 35%. 80% of getting a bill this year, 35% contains border adjustment tax. >> that's the probability? >> that's the probability. probably reflective in the stocks. if the stocks suddenly decided tomorrow there really was going to be one and it was going to be fairly broad, they've got to take another big leg down. the question is, if they don't like it this way, do they like it if you exclude food and the first $5 of cost of goods sold? and, therefore, everything you buy at walmart is okay and the poorest people in america don't have to pay more and you only have to raise the rate from 22 to 20? maybe they do. that's why i don't have my mallet and stake to drive this stake into this vampire's heart.

we'll have some form of revenue razor. where are they going to get it? >> that would be a pretty big revision, if that's what they do. >> but they need the money for something. >> of course they do. >> they need the money for something. stick to the stocks. brian nagle, thanks for being patient. first off you have to be yanking your hair off. to be the real tail analyst. i have to do the numbers with the tax, got to do the numbers not the tax. what do our viewers do if they own some of these stocks? they've got to be pulling their hair out. >> it's a great way to put it. i wrote about a week or so ago, my team and i published a comprehensive outlook for the sector and label this had potential b.a.t. as one of the biggest wild cards affecting retail stocks. i'm not a tax expert by any means. i don't think it happens. i say that simply because the administration was elected, in large part -- at least in part on the idea that lowering taxes

for middle income consumers. when this -- if this were to happen i think a lot of these retailers, rightly, would try to pass these costs along to their consumers in the form of higher prices. we may get lower corporate tax rates, maybe lower personal tax rates, the prices of a lot of goods would, over time, probably go higher. as people understand this math, i just don't think this happens. >> how many downgrades do you think you would have to put in your sector if there is a b.a.t.? are there retailers that leave at that cusp if, there is a b.a.t., that completely changes your investment outlook on them? >> there would be some. jcpenney reported today. not to pick on them necessarily, about that, to me, is a company that would have a difficult time passing higher prices along to their consumers. i think about companies like -- i'm going all over the place here but home depot, another company i like and followed it for a long time. home depot could pass along higher prices to consumers relatively easily. i think that's also the case in

the auto parts business. potentially where you have a lower-income consumer, a more price sensitive consumer, that's where it would be most difficult for the retailer to pass along these costs to consumers and probably see the biggest earnings with retailers. >> we'll leave it there. thanks a lot, brian nagel, courtney reagan. >> vampire hunters. news flow seemingly never stops out of our nation's capital these days. president trump rallying his base earlier today at the conservative summit, cpac, calling out bad trade deals, promising more tax cuts and vowing to build the border wall between u.s. and mexico and announced a massive military buildup. also signing a new executive order within the past hour. it is aimed at slashing regulations. let's get to cnbc's eamon javers with coverage of the president's busy day so far. >> reporter: that's right, tyler. a bunch of those ceos here

yesterday were back, standing around the president, flanking him as he signed this executive order. here is what the white house says this order will do. we haven't seen the official text of it yet. to give you a summary, they say this will create a regulatory rere form task force inside each agency. the task force will be focusing on eliminating costly and unnecessary regulations. they say that agencies are going to be expected to measure and report their progress back to the white house, which will make some determinations about whether they're moving fast enough in cutting regulations and red tape or not. here is how the president described all this today. >> each task force will make recommendations to repeal or simplify existing regulations. the regulatory burden is for the people behind me and for the great companies of this country and for small companies, an impossible situation. we're going to solve it very quickly. >> reporter: tyler, one of the ceos who was here yesterday told me privately on leaving that meeting that the president asked him and other ceos for a list of

ten regulations he would like to cut. they want to bring in all the suggestions from industry about what regulations to slash and burn here at the white house. tyler? >> eamon javers on the north lawn. thank you very much. let's get to jackie deangelis. jackie? >> good afternoon, brian. crude oil is hovering around that $54 mark. losses were steepening as these numbers came out. five oil rigs were added last week, total 602. this is the sixth straight week we've seen increases. this is the big risk when it comes to crude oil. yes, opec has cut its portion to help balance the market here. you've got production in the u.s. back now at 9 million barrels a day. that could push these prices lower. back to you. >> thank you very much, jackie deangelis. private prison stocks taking off today, trump administration vowing to keep using private prisons, sending shares of the group higher. a look just ahead. "the new york times" is doing something it hasn't done in a decade.

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welcome back. utilities are the leaders right now, up 10%. let's get more on the market slide today with dominic chu on the floor of the new york stock exchange. dom? >> reporter: tyler, as we talk about what's happening overall with the markets, the dow is not so bad. we were worse off in the premarkets this morning. the big movers, dow is down about 50 points right now. post eight, gts, chevron down about a percent, one of the biggest point drags so far on the dow jones industrial average. 54 bucks, thereabouts, chevron one to watch here. we work our way around here, we'll show you what's happening with post six, big blue, ibm, off half a percent. one of the more heavily weighted stocks in the dow as well. those shares a big drag again, off overall total for the dow so far today.

and those guys are just trying to mess with me. biggest weight in the dow jones industrial average. downgrade from barron bank say i -- i will end on a positive note. positive kind of guy. post five, citadel and show you johnson & johnson. they are up about a percent and one of the biggest gainers in today's tradings. right now we're off our session lows, down about 50 points. back to you. >> is this move lower sort of the pause or something that presses it more? let's bring in the president of farr, miller and blackstein and the portfolio manager of dynamic funds. who would be surprised if the market takes a bit of a breather, michael?

is there any particular catalyst why stocks have stopped moving up today? can you point to anything? >> no, probably not. we're getting talk that there's concern about the elections in france and what it may mean, resulting perhaps in a frexit. so is that really the pressure? who knows. after a market run like this, it doesn't seem a bit surprising to have stocks pull back some fraction of a percent. >> can you point to any particular catalyst today other than what i know you believe, which is that earnings will drive this market as they move through the rest of the year. the earnings have been pretty good. >> right. i think the earnings have been pretty good. we've broken a near three-year

streak this quarter. i think that's going to be the key driver. you closed a big valuation gap in the fourth quarter of last year where, you know, the undervalued financials and cyclicals had a monster rally based on, hopefully, regulatory relief. and steepening yield curve. now the financials have caught up in terms of valuation and everything is sort of kind of fairly valued across the board it's going to be individual companies, earnings reports that will drive individual stocks for the rest of the year and news out of washington in terms of living up to the promises of the election. >> do you take any comfort from the reports that we began the broadcast with today that gary cohn, white house top economic adviser, has said that he is not and that the white house is not on board with the border adjustment tax, as it is written today in the house gop proposal? what do you think the future of that tax is beyond this rather

measured response from mr. cohn? >> nobody who voted for trump voted for this border adjustment tax or the worst way of installing a vat in the united states. it's a half-baked idea that could probably only come out of a committee somewhere. trump and mr. cohn, mr. mnuchin all during the campaign and afterwards suggested a 15% corporate tax rate. that's where the corporate tax rate should be put today. border adjustment tax or manipulators can be put in place at a later date. house their ip in ireland or move their offshore to get that down. this border adjustment tax hammers the consumption part of the economy. and the export part of the economy is not that material. this whole notion that dollar is going to go up is completely, completely -- just no evidence that that's going to happen. it's a dangerous plan. hopefully it dies and we can get

the corporate tax rate down. >> michael, pick up on the border adjustment tax if you want or maybe a reaction to the fed speak earlier this week and whether you see rising interest rates as in any sense a rising market. >> i love all those questions, tyler. on border adjustment tax, i don't know how investors are supposed to know what to pay attention to. from this president we've seen political analysts criticize or suggest that president clinton in his first term or president obama in his first term expended a lot of political capital on getting health care done. president trump, we've got a tax cut, maybe border adjustment tax, immigration, repatriation of funds, affordable care act, defense budget, which restroom to use. it's hard to keep track of all the news. i think that the interest rates are being driven by a lot of

things around the world. i listened to noah. i'm not sure i disagree with him on that. the dollar is getting stronger and does act as a headwind certainly on gdp growth. we have some issues. >> my comment on the dollar was merely the -- >> go ahead. finish it off. then we've got to go. >> my comment on the dollar was the concept of a big dollar rally once you install the border adjustment tax is femoral. it's nonsense. i don't know how you can say that the dollar will offset any negatives. >> excuse me, noah. gone broke, prematurely calling the end of the trend. don't bet against the trend. >> guys, thanks. >> i don't think i was, but thanks. >> no, i don't think he was. >> no, no, that wasn't to you. >> thanks, guys. america's private prisons having a very good day, courtesy

of the trump administration. that story, next. say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 per trade? uhhh- and i was wondering if your 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 what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

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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 >> new u.s. attorney general jeff sessions reversing a decision by the obama administration to phase out the federal use of private prisons, sending shares of geo group and corecicic higher. since the election, shares of both private prison companies have doubled.

melissa? >> president trump thinks china is so grand he calls them the grand manipulator of currency. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creativeusiness 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

hi, there. i'm contessa brewer. cnbc update at this hour. president trump was speaking in maryland in front of a cheering, racheering, ruckus crowd. >> we're going to make our tax code more simple and much more fair for everyone, including the people and the business. >> lytt has announced a major expansion. ride hailing service will increase its presence to nearly 300 cities nationwide. the announcement is on top of its 40 city launch last month. here goes, an implosion in ohio. after standing for more than a

century, down it came. the first energy lakeshore power plant in cleveland turned to rubble after crews set off explosives in the building. once that debris is cleaned up, the site will be returned to green space. i don't know what's up with our fascination with just blowing things up. but we always want to watch. that's the cnbc news update at this hour. brian? blowing things up. >> is there anything better to do going into the weekend? >> no. >> set off controlled explosions. i don't know what you do in the brewer family but sullivans are big into dynamite. >> fantastic. brewers are dynamite. >> thank you. >> yeah. overall markets are in the red. one notable loser today, hewlett packard reporting a revenue miss. it slashed its outlook for the year. here is what ceo meg whitman said on cnbc earlier today. >> around the world the macroeconomic environment is uncertain. uncertainty for business is never a good thing. >> no, it's not. you combine uncertainty with a weak outlook you get the

equivalent of that cleveland power plant. rick stantelli is tracking all, and i mean all the action. rick? >> a lot of it is based on europe. let's call it the hot shot spot. two-year. call the shots. european security. look at a one week. it has dropped 15 basis points this week, from about minus 80 to minus 95. now if you look at the ten-year, our ten-year, we're hovering at the lowest areas should we close here since november 29th of last year. so, let's keep that date. let's look at november 29th of last year for that aforementioned shot. it's been a swan dive. let's look at boounds during th period. finally, you would think with all that going on in european rate, that the euro currency would be toast. well, it's not really. because, as you look at the

mirror image in the form of the dollar index, it's bouncing around a little bit. it doesn't look too strong or too weak based on the context of the end of november. many traders will continue to monitor the forwards on the currency but also monitor the huge moves, the big drops. is it geopolitical? ecb bit off more than it can chew? i don't know the answer. investors seem to think the answer is going more negative. melissa lee, back to you. >> rick santelli, thank you. calling china the grand champions of currency manipulation in an interview overnight. same time treasury secretary steven mnuchin took a bit of a softer stance. chinese officials are paying close attention to all the commentary. eunice yu is in beijing. >> reporter: treasury secretary steven mnuchin seemed noncommitteeal to president trump's pledge to label china a currency manipulator.

at the foreign ministry in beijing, beijing welcomed the response. >> translator: just new into office. we look forward to cooperation with him to push forward china/u.s. economic cooperation and trade. >> reporter: despite mnuchin's moderate stance, president trump a few hours later told reuters that chinese were the grand champions of currency manipulation. foreign ministry spokesperson said that china is a champion, just maybe not the way the president meant it. >> translator: if you want to label china as a grand champion, indeed, china is a grand champion but we are a grand champion in economic development. >> reporter: the ministry spokesman repeated several times during the briefing it wasn't beijing's intention to get a trade advantage by devaluing the currency. instead he said the focus was to stabilize the yuan and press forward.

eunice yoon, beijing. how will this dance with china and the trump administration play out ultimately and what impact could have it have on the markets? let's bring in adjunct professor. let's talk about the president's rhetor rhetoric, a little more strident than mr. mnuchin according to all the press reports and what i see there. what about the reality of what china is actually doing with its currency? are they devaluing it illegally or trying to move it the other way? >> two different chinese responses to two different u.s. policies. and on this topic and on a couple of different topics, it seems like the white house is speaking with more than one voice. what's really going on? i think that some of the people working for the trump

administration, including the treasury secretary, are trying to reconcile the rhetoric that president trump has used during the campaign and then after the campaign, saying that china is purposely trying to keep the yuan down and intervening to keep it down versus the reality. that may have been true four years ago. now china is actually, to the extent it is intervening, it's intervening to keeping the currency from going down. the yuan wants to go down and china is intervening to keep it up. so the real challenge that u.s. policy makers face isn't to twist china's arm to get them to try to change course. it actually is to try to help the chinese if to the extent we want them to maintain a strong yuan, to help them do that. so, you're trying to translate what president trump is talking about to match reality. >> basically your view is that the president is looking in the

rear view mirror. why is china trying to support the yuan right now? and does any of it have to do with the fact that president trump has singled out china for, in his view, keeping the yuan lower longer than it should be? >> no, it has nothing to do with that. in fact, they've been doing it for two years. china has been drawing down its reserves to the tune of $1 trillion to support its currency. >> right. >> there are good reasons and not so good reasons for them doing so. one not so good reason is they're afraid of the effect of a stronger -- a weaker yuan on repaying foreign currency loans or dollar loans. the other thing it may be is inertia. a good reason is that a stronger chinese currency shifts the chinese economy in the right direction, towards more consumption, away from savings and investment. and that's really what we've been encouraging them to do all along.

>> so how does this end? you've got a treasury secretary who said yesterday to cnbc and in other venues as well that he would go through, as the treasury does in the past, the usual process of looking at what the other country is doing and go through that exercise and then come to some conclusion. and you have a president, who has staked out a more aggressive stance. how does it end? >> i think it really ends with sitting down and looking at the real challenge that u.s. policymapolic policymakers face, not to get them to try to change on currency but support them. u.s. policymakers need to think about in this new environment where the chinese are facing different pressures than they were before, how do you help chinese support a strong currency? instincts of the trump administration are right in that the u.s. and china both need a strong yuan. >> right. >> but how you get there is the key issue. >> so let me turn you, if i

might, to this border adjustment tax. and i don't know what your opinion of it is. i don't know whether you think it will come to pass. mr. cohn saying today it's not going to get the white house's support in its current form in the house version. how would china react if a border adjustment tax came to be? and would they challenge it, for example, at the wto? >> i suspect that they, like many countries, would challenge it at wto and might well win. what we see is not a classic vat but an attempt to warp an income tax into a vat. u.s. has consumption taxes, state income taxes and it has an income tax. other countries have consumption taxes and a state income tax. our consumption taxes tend to be lower and our income taxes tend to be higher than other country s. there is an argument that maybe we should, over time, migrate to where other countries are.

>> on a macro level, patrick, do you believe that china is a fair player? >> china has manipulated, in the sense of intervening to keep its currency down for almost a decade. what we -- but to let it float now, to just let it float is basically to confirm that intervention. what we need to encourage china to do, and what it is doing is to unwind that intervention by drawing down its reserves. the key thing for the trump administration to understand is that it is facing a very different challenge than the united states faced talking to china four years ago. >> patrick, thank you very much. great to have you on the show. have a good weekend. thank you. all right. from a very serious topic about chien wra and occurrenchina and germany, baby polar bear was allowed to roam in the outdoor

compound at the munich zoo for the first time. 3-month-old is happily exploring her surroundings, together with her polar bear mama named giovanna. the baby weighs 22 pounds, which i'm told is a healthy weight. does not have a name yet. the public can go on and vote but the name has to begin -- this is true. this is not sullivan fake news -- with the letter q. you know those whacky germans. every animal born in activity has to start with -- >> are you serious? every animal born in captivity this year has to be named q? something with a q? >> german-american producer could be completely screwing with us and now it's like german newspaper coverage tomorrow cnbc anchors don't know what they're talking about. it's true. queenie, quirina, querida, quilla, qannik, quinntana and

quany. i suggest quintanilla, or some type of cream cheese. it's white, fluffy. >> what is that last one? >> i don't speak -- >> with a q? >> starts with a q. if you want to go online and vote for the name of this cute little polar bear. >> can we vote more than once? >> before it rips its handler to shreds. >> so adorable. let's keep playing this. >> where is sue herera when we need her? she's the panda queen. we could show the polar bear all day. four wall street calls you need to hear about today, including a small cap call with 20% upside, according to the analyst. it's a friday version of street talk. always cuter than a polar bear cub. we're back after this.

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welcome back to "power lunch." i'm tyler mathisen. there she is, seema mody. >> shares of restoration hardware, now ticker symbol rh rallying today. high-end home furnishings retailer forecasting higher than expected quarterly results. and an analyst says the fourth quarter forecast should quell any feels that investors still had. rh says its board authorized up to $300 million in stock buy backs. stock down still nearly 40% over the past four months but a big run in today's trade. melissa? >> seema mody, thank you. analyst recommendations on the stocks we need to know about. intuit.

goes to 140 from 109. better than expected earnings and credit suisse will strengthen the small business segment, given the concentration of revenue in the u.s. into its valuation looks very attractive, particularly if tax reform is passed before the end of 2017. core logic, suntrust upgrading the stock and raising the price. more bullish view reflects confidence and pricing actions they've taken in the market. market share gains against its competitor vsg should drive revenue growth and margin expansion over the next three years. their target goes from 36 to 38. still another 28% or 20% upside for corelogic. >> third stock, citron research, expecting mobile eye to -- as part of this call, by the way,

citron is closing its short position of nvidia. >> andrew left, who really is citron. >> exactly. >> he said mobile eye was bringing a knife to a gun fight because all their competitors had already caught up to them. >> exactly. >> smaller cap call of the day. dc based internet protocol company tcoi. drexel hamilton raising its target, 10% to 20% longer term revenue growth, cash flow is accelerating and the company boosted its dividend. cogent communication has a $46 target. ccoi. little wee cap call of the day. well, it's not a billion. >> it's pretty big. tyler? >> thank you very much. a sign of the times, "the new york times" that, is, the newspaper doing something it hasn't done in a decade. we will explain next.

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a big sign of the times from "the new york times," first national campaign in nearly a decade. smart move or will it be read the wrong way? let's bring in mike jackson and laura reese, partner of reese & reese. michael, i'll start off with you. it's already in the fray. is this a smart move? >> well, you know, "the new york times" brand is build on kind of truth and integrity. and the fact that they've been in this conversation, for them to go on the offense and come up with this campaign, i think the timing is good. and i think it's important for "the new york times" brand. >> you use the word that intrigued me, mike. that is going on the offense. offense. laura, do you think that this ad is going on the offense? do you think that this is its retort to all the attacks that it's fielded from the president

and others? >> well, to me, it feels a little bit like a pissing match with the president. he says they're fake news and they say hey, we are the truth. i think it is a little arrogant to say they are the truth. nobody owns the truth. they are the biggest, in some cases many people say one of the best newspapers in the entire world. i think the timing is great. the spotlight is on them. they should make the most of it. they should go out there and tell the world how important independent journalism is, how important getting the news right is. it's all the news that's fit to print is what the "new york times" has said for years. it's not all the truth that's fit to print. i think they're thinking too much they are the truth when they are the news and the news is what's important. >> what about that thought, mike, that there's a hint of arrogance in there that we are the arbiters of the truth and how we see it is the truth? that's number one. number two, do you think anyone's mind would be changed by seeing an ad like that? in other words, anyone who is prone to think that "the new

york times" is in the bag for the democratic party and anti-trump, do you think anyone's mind would be changed? >> well, "the new york times" has been around for 160 plus years. "the new york times" is also the most widely read on a daily basis publication that its brand, as i said earlier, are rooted around truth intestine teg right in journalism. for them to inject themselves in the conversation, i think, will appeal to a younger, more interested consumer that is at play today. when you look at the amount of people that subscribe to music services and to news, this is a smart business play for them to, again, participate -- >> sorry to jump n i want to get to the sound bite and i'll let you comment. we have the ceo of the "new york times" company, mark thompson, on the program about a month ago. here is what he said about future marketing.

listen. >> we're going to invest in more marketing. we think we've got an opportunity because of the intense interest and intense news cycle, we've got an opportunity to market and get new users to come and become paying customers. >> so, laura, let's not forget the big issue here. forget about donald trump. newspapers, all of them, have been struggling. everybody is getting their news on the web, mobile, whatever. this is a business they need customers. they need to make money. do you think this ad will do that? >> you're absolutely right. they only have 3 million subscribers and 100 million subscribe to download music, streaming services. absolutely, they need consumers. what this ad does, though, it is more polarizing in the fact that it is not bringing people together. it is not saying we are the biggest newspaper, we are most read, we're 166 years old. we are round the world. we spend more to cover the news with independent journalism. they're not trying to bring it together. they're trying to polarize saying we are the truth and donald trump is not. and that -- that's not something

that i think will be helpful to the "new york times" brand, who some say there's not a lot of people besides donald trump saying that they're fake news, but many are saying that they're biased news with a liberal slant and that's not good for them. they need to change the conversation to talk about the importance of their role, independent, original, in depth reporting is all about. and, listen, they're not just about politics. let's talk -- let's expand it. look how much they do with business, sports and lifestyle and fashion. they are so much more. remind people about that. remind people the love affair we used to have when i was a kid. and i still get "the new york times" thrown on my driveway. a love people have with news. remind them of that. remind them it's worth paying for, that millenials aren't paying for anything except music and netflix. it's important to know what's goes on in the world in this crazy age. it's important to have real news, facts. >> last question to you, is it going to work?

do you like the ad? forget about the content. is the ad good? >> no, i don't think the ad is good. the truth is -- >> mike? mike? mike? >> as a marketer, i really like the ad. i like the minimalist design. i think the messaging is something that is sustainable. to launch it on a huge stage like the oscars is a very, very smart move. i think it's a campaign that ultimately they can build on and execute flawlessly, and own that space over the next 12 to 18 months. i think it's very important for the brand. and it's not just about the administration or the white house. it's about growing "the new york times" brand. >> is the oscars the right place to do it, guys? >> you're talking to the people that love them. you've got to expand. >> some things in there that felt like opinion. >> it was. >> right? >> it did. >> talking to the immigration ban, climate change. there are people who are going to look at that ad and go, through go, new york time. >> espousing their point of view

again. >> you want the oscars to be light, fun. >> political rhetoric within the oscar speeches. that is a foregone conclusion. and this actually mirrors probably what will be said. >> that will be monday's story. >> favorite "manchester by the sea" is probably going to win. >> he said sarcastically. >> mathisen gave it two tomatoes. autonomous trucks could be hitting the road sooner than you think. how soon? that's ahead. ♪

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welcome to the second hour of "power lunch." i'm melissa lee. this hour, president trump telling the crowd at cpac he wants to get rid of 75% of regulations, saying they hurt companies and hurt jobs. the president also signing an executive order, targeting regulation. in this hour, we are expecting congressman kevin brady, the man who writes the tax law, to be speaking there. we're watching the markets. dow has two hours to turn positive or will the ten-day winning streak end here? plus setting up the red carpet for the oscars. has going to the movie theater lost its luster? are there just too many other

easier, cheaper ways to enjoy a movie? check out some of the market mover this is hour, jcpenney down big. it will close stores, offer early retirement to thousands of workers. incyte pharmaceuticals rallying, added to the s&p 500. which means index fund managers will have to buy the stock. up 75% over the past year. restoration hardware, also known as rh, beat earnings expectations. the stock popping 30% as a result. that's the story. as we mentioned, the dow's ten-day winning streak is in jeopardy. in fact, investor pessimism has at all lie been rising over the past six weeks even as the market has gone up. joining us now with the latest numbers on how investors feel overall, vice president of the american association of individual investors. charles, how do investors feel? >> well, you know, it's mixed. we do see it right to average.

it had been running below average the past few weeks. not extremely low, within historical range. but this is a change from early january, where we really saw more optimistic stance. we have seen a lot of the post election optimism sort of drift down. and we're really not back to levels we saw in early january, december and even in late to mid november. >> you've been doing this a while, charles. how much of that downturn in optimism is maybe just a reflection of the fact that stocks have gone up so much that smart people know that you can't and should not go up forever, so they become, quote, more pessimistic just because, hey miermy team eventually has to lose? >> that is part of it. individual investors are looking at the dow 20,000, kind of using that as a reason to think maybe stocks are a little bit richly valued. s&p is trading at about 20. russell 2000 that is close to 30.

valuations are front and center and have been a concern among individual investors over the past year. we haven't had that strong revenue in earnings growth to back up the valuations. >> you know, is it surprising to you? >> it's not surprising and we have reactions to the new trump administration. some people are very encouraged by him. some investors are look at it a little more pessimistic. and it really reflects the greater political sentiment we're seeing across the country. >> what is the correlation between optimism and future performance? the market? what have your numbers shown you? >> it really depends on the optimism to extreme. we see optimism really being in the 40 or 50% range that tends to be followed by underperforming markets. >> and right now we're where? >> we're right at average. we're at 38.5%, exactly the historical average. >> 38.5.

so, we're averagely optimistic? >> yes. and so when we're seeing the average really within the -- >> that's how i'm feeling bl and so within the average range, it's really more -- well, that's interesting, but doesn't really give you a contrarian or bullish signal. >> think the market equivalent of grilled chicken. >> pretty much. >> it will fill you up but doesn't leave much to -- >> next time come on and teach me how to tie a bow tie. will you? >> absolutely. i'll do it on the air. >> that will make me optimistic if i ever learn. >> above average optimistic. >> everybody who watches cnbc is above average. we know that. charles, thanks. can we continue to ride the rally or is more negative sentiment coming into the market? ron insana and liz join us. it may not seem like a whole lot happen this had week. what was interesting to me, at least, was the move we saw in the more defensive areas of the

market. bond is up, utilities were up 3.7% for the week. telecom up 2.2% for the week. bonds and bond proxies did well as the market sort of side stepped slightly lower. how do you interpret this? are we being too complacent and not listening to the warning signs that are right in front of our faces? >> i'm not so sure they're necessarily warning signs. yes, indeed, there are times that they may be giving you a signal about what's in the economy, particularly as may have movement out of the more cyclical areas. what it probably reflects is that we have a rotation going on in the market. some of the rotation we're seeing, not just within the u.s. market but globally among asset classes, i think, reflects correlations for the benefit of active overpassive. i think that triggers some movement of money. and i wouldn't yet suggest it signals sort of impending doom for the economy because that have defensive nature.

>> ron? >> i would agree this market looks technically tired and it may be time for a bit of a break. you've seen money go into gold and u.s. treasuries. you've seen european rates come down and places go more negative. there are concerns out there with respect to german elections, french elections, potentially political turmoil at home to a certain extent that might delay anything the market has been betting on. it wouldn't surprise me if we took a pause here. i don't think the bull market is over yet. >> you raised an interesting question to me. you used the phrase money in motion. boy there will be a lot of money in motion over the next decade, baby boomers retiring, people rolling over money into rollover iras, people withdrawing money from their accounts. what are the implications of that for investors? >> well, before i answer the question directly, keep in mind that what we're in the midst of right now is the greatest generational of wealth from the boomers to the echo boomers and children of the boomers.

there are differences in the patterns of how younger people invest these days, how they consume, their approach toward debt. i think there are some differences. but this money is not, you know, retiring and disappearing with the baby boomers. we do have that transfer effect that i think will continue to be a support under the market. but i think when you look at some of the patterns specifically of the baby boomers, a lot of people make the assumption as they move into their peak retirement years that that's going to represent a mass exodus out of equities. inclusive of etfs there's not been a single dollar of net new money that's come into the market since 2007. >> liz, we've also got the biggest generation in u.s. history, 85 million people between the ages of 18 and 33 right now and they're going to shop, buy homes and save. >> and hopefully invest.

>> more experience oriented. >> but they're going to buy stuff. >> this notion that all millenials will only take ubers, only stay in airbnb, is that they get older, get married, move into the suburbs, buy a couple of car. >> counting on that, liz ann. >> you know, hipsters are hippies in drag, right? at the end of the day, same age, front end of the baby boom was very much anti-establishment, very much into sharing, communal and then they grew up and ran the white house. >> i'll show you the chart i posted to my facebook page. liz ann you haven't seen that. >> it's a chart of the stock market. >> ten-year chart of the dow and how we're going up, up, up since the financial crisis. for 15 to 18 months during the campaign, stocks stalled. so we could call this the trump rally or, ron, could we call

this -- i'm not taking anything away from tax reform or whatever. the continuation of the rally that already existed that got nervous, waiting an outcome? and i wonder, i'll ask you this. everybody says we've got to do stuff. all this positive stuff going on right now. is maybe the smartest move for the administration to just not mess with stuff right now? >> first of all, i don't think you're going to get that. second, i've been in the camp that -- >> i would agree with that. i'm just wondering, given everything else good that's happening, maybe we should sit back a couple of months and see what happens. >> it would be lovely in a certain sense. look, we are probably on the second leg of a secular bull market. some of us have been talking about that a long time. i do think, however, that the powerful combination of tax reform or tax cuts, deregulation, the potential for infrastructure spending and defense spending have been the primary movers behind this market. at least certainly the expectations of those things happening in short order has fueled, at least in part, this rally. so, i think, you know, in the short to intermediate term those

are very powerful forces and we have to pay attention to them until some sort of imbalance occurs and then you have to start, you know, looking for yellow warning signs again. >> liz ann, what happens if things doesn't happen in the short order that the market seems to be anticipating? >> that's a potential risk. i agree that a lot of this has to do with the animal spirits associated with the business friendly policiors most of them are business friendly. i think the markets rally, leaving the election, leaving trump aside, you could point to the turn in the economic data, look at the index which bottomed in october. you could look at the earnings trajectory moving from a four consecutive quarter earnings recession back into positive territory in 3q and double-digit growth expected for 2017. i think the fundamentals were already there to support the market. the problem, to your point, is that the expectation bar has been set high. if you look at the soft economic data -- survey based data, the confidence based data, it has been accelerating to a greater

degree than the hard data. that's an opportunity in that it suggests there is that optimism that could pull the hard data up with it, but also represent ace potential risk if we're disappointed. >> are you slightly more cautious at this juncture, liz ann? >> we're in an ongoing secular bull market. the best advice at this point, if you're more trading oriented, is not to sell in anticipation of a pullback but i would be more of a buyer on a pullback than a seller here in anticipation of one. i think the bull market still lives on. >> liz ann, let me ask the same question of you as i did to ron, in a less proposed way. if nothing gets done, and it may not, is that a bad thing? >> well, let's talk about earnings to quote larry kudlow, the mother's milk of stock price. the big driver of that has been the turn in the energysector. in terms of year-over-year comps that, will trade as a factor behind earnings growth. you are going to need some

stronger top-lying growth looking out beyond this turn from negative to positive in earnings. because valuation is stretched enough that earnings need to do more of the heavy lifting. i think we're in decent shape both in terms of earnings and the economy. the fiscal stimulus would be additive to that. >> have a great weekend, thank you. liz ann sonders and ron insana. the dow may be down but the transport index up about half a percent on the day, down about 1% for the week. jb hunt, southwest airlines, landstar and union pacific all up between 1% and 2%. since the election transports continues to be the stand yuts on these hopes around president trump's policies. >> thank you very much. which city's company's stocks -- got that? lot of possessives -- are doing the best so far this year? and why? we've got the answers. key housing number comes in

short of expectations. what that could mean for the housing market. and will the roads soon be full of self-driving trucks and what would that mean for the trucking industry and jobs? all that and much more coming up on "power lunch." the future of business in new york state is already in motion. companies across the state are growing the economy, with the help of the lowest taxes in decades,

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>> welcome back. time for our power city index, something that "power lunch" exclusively created on the gauge of 10 to 12 met row areas around the country. kind of a fun and exclusive way to see what city's stock markets are doing the best. so guess what, nash-vegas. nashville. congratulations. so far in 2017, your pci, power city index, is kicking everybody else's tush. you're up 16%. why? hospital stocks really, plus one more. companies that are leading in growth, community health systems, acadia health care and core civic, private prison company based in nashville we just talked about. nashville up 16. i expect we'll see more cranes in nashville if that's even possible. silicon valley. i know that's not a city but we framed that region as one of our pcis. they are second. and st. louis is up 10.4% so far this year. top three guys, nashville,

silicon valley and st. louis. long way to go to see which city wins the stock market in a pretty good year for stocks. nashville, obviously, has a lot more to do than just go to hospitals or see musical legends. last year, there were 18 nashville based health care companies that generated more than 78 billion in global revenue. but let's talk about the two leading the pack for our pci, acadia and community health systems. joining us now from nashville, which is appropriate, frank morgan from rcb capital. are you there because you live there, frank, or literally you're just there because every company you cover is based there? >> i've lived here about 22 years. i've been very fortunate to be able to work in a market where a lot of my companies r we're very excited about that. and certainly, to your point, nashville is a really great city for health care. by far the largest part of our local economy and the fastest growing part. >> pcis, we've made them tongue in cheek for fun but they're a

good reflection of how sectors have done. i do wonder when i look at community health, acadia or some of the others, okay, if you're soaring because of the idea that obamacare may not be repealed or the replacement may be sort of very similar, and i see these kind of gains, it's hard not to think are investors a little overly optimistic with some of them? >> well, i think it's a combination of things. you've got to look at the capital structure of some of these companies. obviously the more volatile their equity values are going to be. i think that's part of it. to your point, certainly, repeal and replace really looking right after the election, nashville, it didn't look so great. hospital stocks were down 13% the day after the election. nice recovery. community one of those great performers. a lot of this is driven by the fact, too there's growing comfort that there won't be a complete repeal. there will be a replace. and we actually wrote about this in december. we think this will play out over a long period of time and

certainly worst case scenario, it's not going to happen and got piped into the stocks. >> if there is a repeal and/or a replace, where are hospitals most vulnerable? is it to changes in medicaid? >> it's really both. medicaid was certainly the area where most companies saw the most immediate, positive benefit from repeal. certainly commercial exchanges are there as well. medicaid is the bigger part of that. when you look at those companies, though, we felt like after the election that the economic potential giveback from all the benefit they had seen from the affordable care act more than got priced into the stocks. and i think that's when people began to get comfort that maybe this group is still investable. >> you like acadia, frank, right now. but you like it because it looks like it has cash to spend. how do you want it to spend it? >> absolutely. we like the behavioral health care industry. we think the fundamentals there

are very, very strong on all levels. supply, demand dynamics, opiod and substance abuse issues. we think this is a very good growth industry. this company did sort of struggle last year. we're calling 2017 for a nice turn around in their business. there was some distractions in the united kingdom from acquisitions they had made that probably carried over distractions into the u.s. the company recently reported earnings. deploying that capital back into the u.s. to continue to consolidate the behavior of the health industry, we like that and we like the stock. >> canadian bank in nashville. it's a global economy, frank. >> absolutely. >> have a great weekend. >> thank you. bye-bye. sneakers, air conditioners and networking gear coming up in the good, bad and the ugly. disappointing month for new home sales.

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>> "new york times," cnn, among others were excluded from today's press briefing. this gets a little bit into the media weeds but the white house is changing the terms of the deal here with the press today. typically, there's a daily press briefing on camera. today the white house announced a gaggle, when the press secretary simply pulls reporter as side from the press pool and gives them an off-camera update about what's going on. in today's briefing they decided to do what they're calling an expanded pool, a new term of art here at the white house. they brought in the regular media pool, a small group of reporters, plus a number of hand-picked outlets to go to that gaggle today, including breitbart, oan news and a number of others seen as strongly pro-trump in their coverage. they brought that group back into the press briefing room and back into sean spicer's office. when that happened, everybody else in the press briefing room stood up and tried to go back

there as well and the white house press staff blocked anybody who wasn't specifically invited to this gaggle from going back there. you're going to see a lot of complaints about that from the media throughout the rest of the day today. i'm also told there are reports now that some of the media organizations that were invited boycotted today's press briefing in order to avoid going along with the terms, which they felt were too ownerous and didn't like them. this is a white house that very much some of the senior officials have said are campaigning against the media. they say the media as the opposition party, in many cases, particularly certain outlets. the president's speech at cpac was all about the media, at least in the opening salvo of it, complaining about how he has been covered and what he sees his relationship with the media as. and, of course, the significance here is that sean spicer, the white house press secretary, is giving out information now to the press pool and to that select group. but not everybody will get access to that at the same time necessarily. there could be market moving

information, significant information about the president's plans on taxes, regulation trade, any of those issues that have been so important to this white house. a lot of us would have liked to have been included in that briefing today but were not able to attend. >> clarify for me, when the press secretary does what's known as a gaggle, who goes to that? is it open and anybody can or is it by invitation? really, how different is this from prior practice? >> reporter: it's only different in one respect. that's a really good question. we're getting really far into the weeds in terms of the media. press briefing is open to all presidential reporters who show up at the white house every day. a press gaggle is only open to the press pool. that's the group that travels with the president everywhere he goes. we don't send the entire press corps with the president. a select group is selected each day to cover the president, travel in the motorcade, go on air force one, wherever the president is going, they go with him. that's called the press pool. that select group is usually invited to a gaggle. in this case, they invited that

group plus a number of pro-trump outlets and maybe some others. it's unclear who was on that list. we're sorting that out right now. they called that an expanded pool, not a term that anyone has ever really heard. >> gaggle plus? >> reporter: that's right. >> eamon, thank you very much. up next, one firm says self-driving trucks are coming a lot sooner than you think. is that a massive threat to jobs? we'll dig in ahead. kevin brady about to take the stage at cpac. what will he say about reports the white house does not support the house's version of a border adjustment tax? is the b.a.t. doa?

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i'm contessa brewer. here is your cnbc update at this hour. a victory for bill koss bichlt a judge ruled only one other female accuser can testify at cosby's sexual assault trial in june. the pivotal ruling means prosecutors cannot call 12 other women to try to show the comedian has a history of similar acts. relatives and friends of an indian man shot dead in a crowded kansas city bar are mourning today.

he and his friend, both engineers at a nearby garmin factory, both of indian descent, were watching a kansas city basketball game. reportedly shouted racial slurs at them and was kicked out but then came back and shot both men and a bystander who tried to defend them. two of the victims survived. obama sighting. former president attending a meeting in new york city. when he came out, greeted by applause right there on the street of busy manhattan. his first public sighting since leaving office. finally, this is a very important story you're going to want to listen to what i have to say. strenuous exercise might help men look and feel better, could harm their sex lives. university of north carolina researchers found men whose workouts were long or intense had a significant lower libido than those who didn't have a strenuous, long workout. researchers didn't say why that is but, i mean, i'm just going

from my own mid-life experience here. weren't they spending all their mojo at the gym? you know what i'm saying? >> leaving it all on the weight room floor, so to speak? >> kind of. this could open up so many opportunities. >> listen, with all due respect, tyler and i are acc guys, but these researchers, what's their problem? you're tired. that's it. your libido is down because all you want to do is sleep. >> me thinks thou doth protest too much. >> another reason not to exercise too much. am i right, tyler? >> i'm going to take a nap. >> long and strenuous mathisen. dow's ten-day winning streak -- yes, stocks are allowed to go down once in a while. could end that ten-day winning streak. dow is off. not a lot. it's been in this range all day. unless melissa makes a phone call things aren't going to turn around. >> i'm on set so i won't. let's get to jackie

deangelis commodity desk. >> you're on fire today. you are cracking me up. let's talk about where oil is closing. it looks like it will be lower just around $54 a barrel here. for the week a gain of about 1.2%. we are seeing some support in the market because of the opec cuts, confidence in them to extend them as well. the market seems to like that. there's serious resistance at $55 a barrel. we certainly can't break through. a number of times i have highlighted the risks to the downside here. i want to highlight that barclay's took its forecast for 2018 to 67. showing more caution on the long-term side of this trade. we'll watch and see but back to you. >> jacky, thank you very much. we are watching action at the cpac, conservative conference in maryland today. congressman kevin brady set to speak shortly. all this as the white house is reportedly saying it does not support the house's version of the border adjustment tax. kayla tausche joins us with

more. kayla? >> brian, we know very well that congressman kevin brady very much favors that border adjustment tax. he has been talking it up everywhere from the hill to cnbc. the afternoon headliner or one of the afternoon headliners here at cpac just south of washington, d.c. this isn't necessarily an audience where congressman brady will need to describe any compromise that might lay ahead. he has said in the past that tax reform wouldn't be reform if it favored foreign-made products. that's been a familiar refrain for the speakers here at this conference. now politicians have been beating the drum for made in america products, for jobs to come back, for jobs to not be going over our borders and to other countries. and, interestingly, that was a note that was picked up by the president this morning. but when he was talking specifically about taxes, he didn't use the word reform. though he did say change will be coming. >> we are going to massively lower taxes on the middle class,

reduce taxes on american business and make our tax code more simple and much more fair for everyone, including the people and the business. >> the administration has said that a tax plan could be forthcoming in two weeks or roughly two weeks. of course, brady's house, ways and means committee that he chairs will be playing a very heavy handed role in whatever that policy looks like. of course, we'll be parsing his words closely with the fact that now there is a report, which you mentioned at the top of this segment where gary cohn holds significant clout inside the administration, that he is not personally in favor of that border adjustment tax, that we don't have an official on the record white house approach to this policy. congressman kevin brady when he takes the stage a little later on. melissa? >> thank you so much, kayla tausche. is that controversial tax a roadblock to broader tax reform? could there be a deal on taxes

without it? joining us now from washington, ylan mui. >> we've heard a lot of conflicting messages from the administration over the past 24 hours on tax reform. i spoke with the senior congressional aide this afternoon. house speaker paul ryan's office is not in, quote, panic mode yet. in addition steve bannon, policy adviser steven miller also supports the concept of border adjustment. this is increasingly looks like it will be a decision that will come down to the president. now i did receive a statement from the exporters coalition. they emphasize that trump's comments yesterday mentioned a border adjustment tax would create jobs. the message here is pay attention to trump, not to gary cohn. one of the key unanswered questions in all of this is if border adjustment dies, what rises in its place? here are some possibilities that i'm hearing from my sources in washington. exemptions. is there a way to carve out certain industries or products from the import tax?

congressman pat mehan has brought this up and is worried about the border adjustment tax on oil refiners. there's also representative david camp's plan that would lower the corporate rate to 25% but also included an excise tax on banks that have assets over $500 billion. so, the warning for the business community here, guys, is be careful what you kill because you might not like what you get instead. back to you, tyler. >> thank you very much, ylan. autonomous trucks are coming sooner than you think. boost earnings potential for trucking companies by up to 8%. could it be a big threat to jobs? joining us now, jason sidel, transportation analyst. how soon are these trucks really coming? >> we're already seeing these trucks on the road now. they're being tested. our belief is five to ten years,

you're going to see level three autonomous trucks runni inning d the road. >> what is that? >> current state of the automobile and trucking industry, we're at level one or two, it depends on what you have in your car, what level of automatic braking you have, what level of lane assist control you have in your car. that's level one or two. level three conditional automation t still recovers a driver. the truck can drive itself for a while and the driver can take over when need be. what everyone usually jumps to is level five. >> no human being in it? >> correct, like the old steven king movie "maximum overdrive," when the machines rise up and take over. that's what people really fear. you look what could happen to jobs when you look at trucking being the most common job in 28 states. that's what people fear. that's not what we're talking about. we're talking about level three coming and being ubiquitous on the roads for america.

>> what is level three? the drivers can go longer, for longer distances without sleep? what sorts of rules still apply to these drivers in terms of the need for the number of drivers on the road? >> sure. well, you're going to get a lot more miles in a day when the truck can drive itself and the driver can rest a little bit longer. what you're not going to solve are tie-up at shipper locations which tends to take longer than it should these day. >> loading, unloading? >> exactly. the truck tends to drive better than probably 98% of the drivers out there. there's going to be a fuel savings. that could be big. you're also going to have less wear and tear on it in terms of the braking patterns of an automated system. you're also probably going to have some insurance costs being saved. it's very hard to get a prediction. we think we're conservative in our report. we did analysis in several large fleets, coming up with 4% to 8% savings. >> it's interesting. a good friend of mine a load broker. matching up trucks with people

and loads. will this digitization make that side of it also more efficient? because the enemy of the trucker is an empty truck. >> well, you know, if you look at the brokerage side of things we're looking at at-base trucking in terms of brokerage. whether it be guys like trans fix, convoy. uber is getting into it. google is starting to do stuff like that, amazon. >> amazon. >> amazon. >> they're getting into the truck logistics? >> absolutely. >> and technology side of things? >> brokering a lot of their own freight. uber started doing freight brokerage in september. we're hearing they're offering big discounts, trying to attract shippers to come over to them. it's really changing the game and the face of transportation. >> uber shipping in trucks or -- >> brokerage, third-party brokerage. >> putting trucks together with people? >> right. when you really start looking out, that level five automation,

that machine driving itself, it sort of begs the question, are we going to need the traditional trucking companies as we see them now? if daimler is making a truck that can drive itself and you have these big third-party logistic companies like a ch robinson, echo logistics that can coordinate between the shipper and receiver, where is the role that traditional trucker in there, right? >> that's interesting. it seems like at level three or -- level three, i guess, which is sort of the immediamed audit medication. you still need a driver. trucking companies actually own their trucks as opposed to the asset light models, the ones that just broker. at level five you can see that the trucking companies almost be displaced. that's what it sounds like to me. so there's like a sweet spot in terms of autonomy for certain trucking companies and then a phase where certain parts of that chain get wiped out. >> it's how they adapt.

if you go back in time and think about when the automobile came in. how many horseless carriage companies adapted to that? that was a huge step function change in that industry. level five automation, a massive step function change and these companies have to prepare for it. >> how many will be gone in ten years? >> that's a hard question to answer. depends how they adapt. companies very good at adapting to technology, old dom inion out there right now, huge early adapter to technology. expio, who bought conway. >> most truckers are independent dudes and how will they afford this technology? multibillion dollar company can buy a new fleet of trucks. some dude who owns his own rig, what is he going to do? >> there's a converter. >> how much it cost. >> too much right now. >> that's what i'm saying. >> 30 grand. >> half his earnings, how to compete. >> interesting conversation. thank you, jason. >> on deck, trading nation and gold.

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welcome back, everybody. latest read on housing, showing

a big miss on home sales, new ones. diana olick in washington. >> inched up in january month to month but not even close to expectations and december's already big drop was revised down. we got an increase of 3.7% month to month to 555,000 units seasonally adjusted. that followed a very low pace in december, even with warmer-than-average temperatures. this may have a lot more to do with the jump in mortgage rates in december. newly built homes come at a price premium to existing homes anyway. on top of that, prices to new homes up 7.5% from a year ago in january, just not a sustainable kind of price jump, given higher rates. the supply of new homes for sale is now at the highest in eight years. maybe that's a sign that prices will cool a bit. builders still focus on that move up and high-end buyer, which is not where we need the supply. we need the entry level. newly built homes represent about 12% of all sales. that's less than half of the

prerecession average. clearly a lot of runway ahead for the builders if they could just step up. what's holding them back? labor. and what is available about twice as expensive as it was before the recession. back to you guys. >> diana olick, get to work. a house right behind you needs built. thank you very much. gold rising, hitting a three-month high. stealth gold rally? let's get a move on with the trading nation team. erin gibbs, what do you make of this? no one is talking about gold. it's been pretty good. >> yeah. we really see this as heightened geopolitical risk. there's a lot of stuff going on with the french elections, german elections coming up later. there's concerns about a frexit. so, the dollar has weakened slightly in the past couple of days. but this is really something we see as temporary, not long term. we don't see it as an opportunity to get into the gold miners. though, they're up about twice

the rate as the s&p 500 for the year, we really see this as something that's coming back down. they've already started to come back and retract since the beginning of february. and we don't see this as a long-term opportunity. just a little more volatility and risk. >> okay. would you agree with that, zach? are you a gold lover, gold hater or don't even think about gold? >> i agree there's a lot of geopolitical risk. my take on gold is everything is up. some things rup a bit more. some things are up a bit less. we have a market where almost any investable asset class has seen substantial -- >> you don't think it's a gold trade at all? you think it's just part of the trade? >> yeah. yields are up. global equities are up. emerging market equities are up. there may be intrinsic aspects as to why people are in gold. erin is entirely right. right now we're just in an asset

trade that's positive. >> is it going to last? >> i think the equity part is more likely to last than the gold part just because gold does not trade under the same fundamentals as the rest. it is, in fact, usually a fear trade. although right now it's clearly simply, in my view, part of a generalized asset trade. >> everything is higher. have a great weekend. thank you very much. for more trading nation head to tradingnation.cnbc.com. polar bear coveted german zoo. another adorable baby animal and make you choose which one is cuter. plus, julia boorstin is live on the red carpet before the oscar this is weekend. hi, julia. >> reporter: hi, tyler. that's right. the crew sets up here for the big show, hollywood is setting itself up for a changing landscape, competing with more entertainment options than ever. we'll take a look at the state of the movie industry next on "power lunch."

one time presidential candidate ohio governor speaking at the white house. let's listen in. >> he listened a great deal to my concerns. we talked about the problem of drug abuse. we talked about the problem of human trafficking. we covered a whole series of things in there, and we just moved forward. >> [ inaudible ]. >> no. no. pardon? well, you know what, this is the strangest thing. since i was a young congressman, i mean, i voted against ronald regan's troops in lebanon. i killed the b-2 bomber with a republican president. i proposed my own budget against president bush's budget.

these things are not personal. they're things that i -- you know, i've always done in my career. you know, i had a mother that taught me to stand on my own two feet and sometimes to speak out, but i've never meant any of the times to be personal in my criticisms or my concerns. >> [ inaudible ]. >> well, it was never really anything that came up, and when i made the comment that, look, throughout my career when i agree with something i speak out and when i don't, you know, i criticize it if i'm not being self righteous, and one of the voices in the room said, yeah, we noticed that. that was it. we all kind of laughed. i mean. >> has your opinion of the president change at all [ inaudible ]. >> i think you're -- look, the man is the president of the united states. it's sort of like being on an airplane, you want to root for the pilot. you don't want the pilot to screw up. so i don't -- look, i've been around too long not that i

succeed in it all the time but to be personal. i can have my opinions. now it's time to be constructive. sometimes being constructive is to not be positive to make your point. i'm glad i've been able to make my opinion on obamacare and the affordable care act and i'm going to continue to make it. if it upsets republicans in the congress, that's life. >> [ inaudible ]. >> i don't -- look. i always told him that i remember back when i first became governor there were some things that i was doing where my wife said to me, you're the father of ohio, act like it. it takes time for people to get stabilized, and we all want to wish this president the best, but that doesn't mean that when i wish him the best there might be things that i see that i don't agree with and i'm going to say that. i mean, it's -- i'm not trying to pull him down or anybody else down. look, i'm not red or blue, i'm red, white and blue.

i want to put america first, not my party, some arcane ideology. i mean, if i can help my country, i'm going to do what i can, and that comes in various ways and packages. >> [ inaudible ]. >> i just told him it was inadequate. >> [ inaudible ]. >> completely. isn't that clear? >> [ inaudible ]. >> nothing about it. that's enough for me to say that that's -- to me, it's not acceptable. look, i don't know what they can jam through, you know? i don't know what i can jam through, but the fact of the matter is is that i don't agree with that and i've been clear about it and i'll continue to be. thank you all very much. governor john kasich of ohio after meeting with president trump. obviously the two when they were on the campaign trail opposing one another. had a bit of a contentious history. mr. kasich saying it's time to

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gained 48. it will be more than a ton when it's fully grown. zoo officials will give it a name next week. it's no polar bear but it's cute. >> the polar bear is pretty darn cute. >> both nice. >> thanks for watching "power lunch." >> "closing bell" right now. hi, everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> it is friday, isn't it? >> it is about 70 degrees outside in manhattan. it feels like a friday in june. >> february 24th, we could get used to that. i'm bill griffeth at the new york stock exchange. >> the dow is snapping the ten day win streak. biggest since 1987 when it's been climbing to the records. it's down 56 points right now. we'll keep an eye