discretionary stock year to state and s&p 500. >> pace. i think it's pace. look at the pace of quarter points here and there, scott, yes, some impact, but not as much as what everybody loves to put into the market. >> all right, good stuff. good to have you here. >> thanks. >> thank you so much for watching." power lunch" starts right now. i'm melissa lee and what we're watching this hour. has the fed been trumped? the big debate over who is really driving your money. is it the president? is it the fed? we'll get answers ahead. plus, deregulation nation, home builders soaring on the promise of less red tape. hear from the nation's biggest home builders' ceo joining us. plus, some clown tweeted that president trump today and likely made him grimace. we'll explain. "power lunch" starts right now. ♪ >> have not heard the word "grima "grimace" used on "power lunch"

recently, good afternoon, everybody, stocks are steady, a couple markets are minuscule amounts lower as you see the dow and s&p. nasdaq up one-third a point. a ton of households names hitting record highs in today's session. priceline, alphabet, home depot, lowe's, and netflix among them, and take a gander at goose. the stock soaring today, and right now, canada goose making the pricey coats, shares up 30% there, up $3.50 at 16.29, michelle. >> i'm michelle caruso-cabrera, this is what's happening at this hour. mortgage rates hit the highest level of the year, freddie putting the 30 year at 4 .3%. u.s. airlines saw a record number of passengers last year, 823 million in all. that's according to new data for

the transportation department. president trump hosts the irish prime minister today at the white house, brexit and immigration on the agenda. stocks struggling to gain traction as there's a breather from yesterday's rally. here's the money question of the day. how much of the rally is because of the fed and the economy, or has the fed been completely trumped -- that'll make you grimace -- by the president's promises of lower taxes and deregulation? we got steve leisman, and bob pa sanny. the rally started five weeks before the december rate hike. seeing the fed, indeed, was trumped, but what are the pros saying? >> well, look, the markets have been comfortable with the fed raising rates because they believe that the trump agenda can deliver 3% growth rather than 2%, and issue dine ed, this is quite a feat. here's where we are, the fed is moving from data dependence who sort of are going to be raising

rates for a while, and the market's fine with that, but only because of the trump rally, the question is has markets continues to give the trump rally the benefit of the doubt. the answer is yes. are they fully discounting the effects? some argue there's not a bump-up because it's front end loaded. i don't agree at all. a tax cut has enormously beneficial consequences on the s&p 500. earnings, reports out, one from reuters, the effective tax rate for 20 p 17 is 26%, not 35%, cut to 20%, they estimate the s&p 500 earnings go up 8.7%. that's enormous. two years we've been going down on earnings. 9-10% increase, that's enormous. no analysts raised numbers on this, and no company has come out and said, our numbers are going to be higher because of a tax cut. they are awaiting specifics.

once we get that, there's another boost for the market. it's a speculation. people anticipated it. once it happens, a boost. in my opinion, to answer the question, brian, is that this is not the only cause for the rally, but it is the principle cause for the rally that we have seen. >> okay. bob, that's one view. steve leisman and the fed, what say you? >> so i think the market here wants it both ways. they want pasani and leisman to be right. they want their cake, scone, and donuts and eat them all too. they want to trade here based on the belief that donald trump is going to enact all wonderful policies. yet, they are trading on the belief that the fed's only going to do three rate hikes. i don't think both are compatible. if you get -- first of all, a survey work we did on just this question you have. you have it here. which is the biggest influence on the forecast? fiscal policy. that's driving it. until it's not.

until the fed gets involved. remember the question that janet yellen yesterday -- does this forecast include fiscal stimulus, and she said no. >> no. >> you're saying, essentially, that if the trump agenda gets enacted, get corporate tax reform, major boost to the mark market, that means the fed feeds the number of rate hikes this year, and so, therefore, derail or throw a wrench in the markets in that way. >> my main point is the market's calculations do not add up on both sides of the equations. you can't have this and that at the same time. by the way, a lot is dependent on the kind of stimulus they come up with. yellen wants stimulus to increase productivity, essentially saying noninflati noninflationary growth. if you get growth in nominal, nothing in real, that's even a tougher bit. >> okay. >> extraordinary that the market is now comfortable with the idea of instead of data dependent, we're going to keep raising rates for a while, and they did have three in 2017.

the market did not flench. they are comfortable. >> that's the forecast. >> can we say this, though, steve? i called the -- >> say anything you like. >> i call the federal reserve the l.a. rams of the market. they exist in the league, but not relevant. how about this? is it interest rates or is it the reduction of the balance sheet where the federal reserve is the most important? >> i think the reduction of the balance sheet will be a trial for the markets and for the fed. i don't know if they can -- you know, if they'll get there. i think for a while, it's going to be mostly an interest rate story. brace yourself. there is a story coming, and my goes is that sometime around the fall, where the fed will come forward and say, this is how we think about reducing the balance sheet next year. >> all right. thank, guys. >> there's the analysis. let's get to the action. what should you do with the money given what we just talked about? we have guests differing in

opinion, boston private and eric, chief investment strategist with russell investments. i have a pop quiz. a multiple choice question for you. what is the most important reason for the rally, a, fed normalizing, b, overall economic growth, c, promise of deregulation and tax reform, or, d, all of the above? >> well, i think the main premise is why the market's been rallying since the election is because way trump is proposing, but in reality, it's a combination of both. economic data has improved. look at things like the manufacturing data, the chicago pmi, the chicago purchasing managers index, philadelphia fed index, ism manufacturing index, which is pointing to, right now, somewhere about 3.4 gdp growth. personal income, the initial unemployment claims, nonforeign payrolls, all improving economy. >> eric, same question. >> yep. >> i don't want to read that like brian did.

>> look, i agree with bob. basically, i think the market's pricing on the expectation of political perfection from the trump administration, a lot of policies, very creative for the u.s. economy. we are less hopeful that all of those things are going to come true. i think the economy has been improving, although, that accelerated growth is stopping in the last few weeks. >> if you are less optimistic that happens, do you sell here? is too much priced in? >> we are underweight the u.s. equity market. we think the u.s. equity market is poised for a pullback because expectations are too high. it's price for political perfection. if trump gets corporate tax reform, health care reform, and now a massive reallocation of the federal budget aggressive agenda since lyndon johnson in the '60s, enormously powerful legislative agenda. i don't know he'll get it all do. >> bob, two quick questions, if

i might. yesterday, the fed raises interest rates, stocks and bonds go up. that does not happen. why do you think it happened yesterday? >> i think the bond market looked at the fed statement and saw it as more dovish than what they might have been worried about, and so you saw a little bit of covering on maybe some of the shorts of that. i think the stock market also had maybe short coverings, but i think, as eric said, you know, trump is being aggressive, but he's been able to accomplish you know some pretty easy hurdles right now, but what he's proposing as far as tax reform, as far as deregulation, these things are probably going to be able to get done, infrastructure spending, fiscal stimulus take time. the easy work has been done, but i think the harder work really comes down a little bit more in towards the administration -- >> is deregulation the biggest and best tonic for stocks? >> think about it. if you're a small business worker and want to start your

own business, sorpt ted bogged n by regulations, only so much capital, and if they remove some of the overhang, now, all the sudden, you start business and hire people. if you are required to spend so much money on lawyers and filling out forms for the federal government, you can't start a business, and so it puts a big overhang on the market. >> eric, do you feel you're the only one underweight u.s. equities at this point. are you lonely being underweight? difficult position to hold because there's a fear of missing out men ttally in the market now creating extreme positioning to the long side on u.s. equities. >> in the short run, it's been a difficult time so far this year, but, look -- >> how long have you been underweight? >> we've been underweight at least six months. >> ouch. so you've missed a lot. >> yeah. >> you missed a lot of this. >> well, yeah. i mean, we are seeing in other parts of the world are doing

reasonably well. today could be what happens the rest of the year, europe having a better day than the u.s., emerging markets better than the u.s. emerging story for the u.s. equities. suggested pe is over 29. when that high, future returns are low and potential drawdowns are big. we just don't see the semitry in the risk as an investor, not a trader, but investor. >> six months ago, there was not a notion of everything being priced for perfect because policy was factored in, right? >> yeah. well, no, but the u.s. equity market was still extraordinary expensive on the basis versus the historic pattern. earnings at highs, effectively, through earnings recession, profit margins high, prices high. you look, it's a valuation argument for us at this point. u.s. equities, we don't think juices work the squeeze to be heavily weighted in u.s. equity. >> leaving it there, bob, eric, thank you. >> all right, bond market, rick, heard the market discussion,

what struck me is skepticism about the president's ability to get these things down. i mean, everybody's underestimated him every step of the way from the primary to the election. can he get it done with governance? >> yes. i think there's actually part of the story that's a big part that usurps that. i'm a stickler for what are markets watching? we never know if we're right, but i disagree with all of this to some extent. i'm still a firm believer. there's others that think this way. i think the current rally in equities is every bit as much about the fact that hillary didn't win, the last administration liked regulations, last administration and a hillary administration most likely wouldn't have put a halt on creating new ones, and they most likely wouldn't have cut taxes at all.

i think part of the euphoria in the stock market is at david said. there's not going to be new regulation. if they repeal many more, that's a positive. with regard to taxes, we are optimistic. one thing we know, it's now in the venue. it's being discussed. this wouldn't have happened unless donald trump didn't have a surprise victory on november 8th, so, to me, anything moving forward, we get in those two categories, that's going to take the dow much further and as far as rates coming down on the fed yesterday, listen, they are already moving back up. less than ten-year closes a good solid week under the 240 level, it doesn't mean a lot. >> i think you're exactly right, rick, and we don't need to ask the question in a way because the market presented us with the answer. guys, the stock market rally took off on november 7th, the dow rose 250 points roughly that day, but bring up, and i don't know if we have time, a ten-year chart of the market, one thing is clear, rallied off the lows

for seven years for 18 months in the election, the campaign, i should say, nothing happened. nothing happened. a year and a half. we took back off once it became clear to the market, anyway, what the outcome might be. a temperatun year chart shows, see, but very clearly. >> rick, thank you. >> thank you. all right. deregulation nation, how the trump administration could cut the red tape and green light a megamedia merger. the tweet having everyone talking today. mcdonald's and the president of the united states. tough mixup. the tough hack. we're just getting started. "power lunch" back in two minutes. you're watching "power lunch" with melissa lee, michelle caruso-cabrera, tyler sullivan, and brian mathison. flrs

welcome back, corporate tax reform is not the only driver for the post-election rally. it's also deregulation, not just financial deregulation or environmental deregulation, but all kinds of deregulation. just one example? the rules about how many television stations a company is allowed to own. take a look at the stocks of sinclair. up 56% since the election. 20% since the election for

tribune media. why? on the belief that ownership rules will be reinterpreted or relaxed, and that the two companies could be allowed to merge. here's the deal. right now, there's a 39% cap on percentage of the household a company can reach with their tv stations. sinclair owns 173 stations in the united states, and reach 38% of u.s. households. tribune owns 42 stations, they are bigger, reaching 44% of u.s. households. legacy issues why they are above 39%, but the new chairman. fcc, pai, he says the rules are antiquated in this day and age. there's more choices for consumers because of the internet. our next guest says the hookup between the two broadcast jiegis is the next big test for the fcc under president trump. let's bring in the manager.

there's reports out today that a merger and nounouncement could t as soon as tomorrow by the two companies. do you think that's going to happen, and is it going to be allowed under the trump administration? >> well, i think there are three types of change. there's legislative, judicial, and regulatory. the first two are pretty tough to call. the regulatory particularly when you have strong statements by the chairman of the regulatory authority that you just quoted become easier, and i think the companies are betting on favorable regulation and mr. pai has the ability not to change the broadcast cap, the 39%, but to reinstate the discount for uhf stations. >> can i explain what it means before going further? >> sure. >> the 39% cap is congress. that requires change in legislation, however, people over 40 remember when there were

uhf channels, and these stations control them, and because your people used to watch them, even if you had a uhf channel, it was, oh, you only get 50% credit for the people in that area because there just aren't that many people. he could change that, right? >> yep. we think it's highly probable he's going to change it, and probably within the next month. i don't know about the merger being announced within the next day, but within the next month i think it's a very, very high probability, and the second thing that's a high probability, especially after the fed meeting yesterday is that interest rates remain favorable, and you look at sinclair, inkwiring company here, trading at seven times cash flow, depending how you define it, they have just had an equity offering, a lot of leverage capacity, and the cost is dead at the margin somewhere in the neighborhood of six, but 600 point spread. >> they could do it. >> that works every time.

off to the races. >> bottom line question, do you like this business, the station operating business, or is it a shrinking one, ultimately? >> we like the business because what you say is correct, but what is not said is really the important thing, and it's the free cash flow. if you bought phillip morris? 1972 when cigarette consumption went down, if you held it, you'd be a wealthy person. while broadcast tv is probably a 0-1% growth industry, the industry generates mountains of free cash flow. there's free scale economies from operating multiple groups of stations issue and as long as sbraes ra interest rates are low, use leverage. they created great wealth by using leverage, and they created great shareholder wealth. >> larry, running out of time,

jumping in, before we go, there's a thought if we get corporate tax reform, other countries that have high taxes may also have to respond, japan has the highest corporate tax rate in the world. do you think there's a chance if we do it, the world does it, and is that part of the reason why sony is your biggest holding? >> no. i think the reason why sony is the biggest holding is the value of the game business. if you put the similar multiple on take two in the electronic arts, the game business that sony is worth more than two-thirds of the market cap, and sooner or later the market's going to figure it out. they have a sensor business as well that we think will explode with the new iphone camera, which is camera intensive, and sony has monopoly on cameras. corporate tax reform is not a factor forsony. >> appreciate it. a twitter troll, a twitter clown trolls the president using mcdonald's account. we're guessing that he, the president, not loving what was said.

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it's your trade. e*trade welcome back to the tweet everybody's talking about today. this morning, the official mcdonald's corporate twitter account shocked everybody by sending this out, quote, real donald trump, you are actually a disgusting excuse of a president, and we would love to have barack obama back, also, you have tiny hands.

the tweet of the pinned to the top of the mcdonald's corporate twitter page. that means that's the twitter equivalent of highlighting one specific tweet. now, shortly after mcdonald's sent out this half hearted apology, quote, the account was compromised, we deleted the tweet, and secured our account. some people find it funny. here's the thing, number one. this may be more about twitter than mcdonalds, could have been a rogue employee or a hack. if corporations are too nervous to send up tweets, twitter may be in trouble, and mcdonald's corporate, apologize, even if you were hacked, say we're sorry. >> that was a weak we're investigating kind of thing. i will say this. i'm stunned that no one has hacked donald trump's twitter account yet. stunned. >> you'd hope that there's even more security there, right? >> one hopes, but i hear it's his regular social account.

>> it's important to separate where hacks happen. corporate level or individual level, that's our security. if it's the twitter level, that's another issue. that means anybody who uses twitter could be vulnerable to a hack because that's twitter's security, and that's the problem. >> my point was twitter needs corporations to tweet. >> yeah, yeah, of course. >> if they take -- >> they cannot trust twitter security, then the risk is too high. >> you know, the president has thick skin, it did not bother him. >> rolled off him. >> do you think mcdonald's should still apologize? >> absolutely. >> yeah. >> even somebody in another country that did it, it's your account, say sorry. >> staying focused on deregulation, home builders excited about the prospect of less red tape. why aren't they building more? that is straight ahead. they jus. cme group can help you navigate risks and capture opportunities.

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hello, everyone, i'm sue herera with your news update. president trump welcomes the irish prime minister to the white house telling reporters he loves ireland. this evening, hosting the prime minister and his wife with a

reception in the east room. in miss morning briefing, house speaker paul ryan praising president trump's ability to negotiate and mediate with the gop health care bill. >> he is making a easier and better for us to pass health care. the president, his involvement, engaugement, his listening, and his negotiating skills are bringing people together so that we can pass a bill. we have a bill to pass, get consensus on and make good on promise. google has software that gives parents control over what kids watch online, family link, allows kids to establish a google account, track screen time, and set limits. now it's only vail on android. that's employed at my house, i think. back to you guys. >> yeah. all right, thanks, sue. all right, treasury secretary is speaking right now in a meeting with germany, and

here's headlines interesting. first, he said no decision at the white house about whether or not they like the border adjust. tax, and, in fact, says it's one alternative under study. they keep us in suspension whether or not they'll back that, and he says the stronger dollar, strengthening of the dollar is a good thing in the long term, a sign of increasing confidence in the u.s. dollar as reserve currency, running a little bit against what we heard from president trump who, i think, sometimes just likes a weaker currency in order to help our exports. we'll see if the dollar moves on that. >> treasury stand that a strong dollar is in the best interest. >> exactly. latest read on housing starts, slightly above expectations after a huge jump in home builder confidence. the two seem out of whack. we are joined from washington to explain why, diana? >> they are. look, single family was great, real driver of the jump in housing starts, a good thing because that's exactly what the market needs right now. single family up 6.5% for the

month. still only about 3% higher compared to a year ago. this all on the heels of a stunning jump in home builder sentiment to the highest level in 12 years, but here's what's weird. look at sales of newly built homes compared to the confidence of the guys that build those homes. it tracks closely going back several decades. a few exceptions like in the tech bubble, but look all the way to the right to today. a huge historic gap. bi builders feel good, but selling few new homes, and that is the trump bump of deregulation. last month, the president signed app executive order on the waters of the u.s. rule, an environmental role which costs builders in both time and money filing permits for new homes. they pass that on to buyers, raising the price of a new home. the home builders say the cost of regulatory compliance today 25% of the selling price of a

home, up 30% since 20 is. deregulations making sentiments high. >> builders are feeling good, but not building. a matter of time -- i think it's a leading indicating, the sentiment, and building catches up. >> well, you'd think it is, but it's other factors in the market, and number one is the cost of land and labor. we saw sentiment drop on a different executive order, you remember that, immigration thing, which hurts builders when it comes to labor, in short supply. they get very excited about deregulation. you see this huge jump in sentiment in march, but there are so many other factors playing into construction now. >> all right, thank you. let's hear from one of those home builders on deregulation and what it means for the industry and his company. joining us exclusively on power lunch is steven hilton, steven, great to have you with us. >> thank you. good afternoon. >> diana walked us through how home builders these days feel optimistic.

are you feeling that? how do you feel the push-pull of deregulation in the trump administration? you got some regulations that will directly help your industry, such as the waters of the u.s. rule, repeal of that, but also things like a travel ban, immigration ban that could hurt your supply of workers. >> melissa, we're seeing a lot of reasons to be on tptimistic right now. first and foremost, the spring selling season started six weeks ago. there's good traffic on the ground, in the offices, a positive increase in sales. that's why we are feeling optimistic now. in the top 20 housing marketings in the country, in the sun belt, job growth is substantial. job growth is the number one indicator of housing sales, jobs growing dramatically, especially in the sun belt markets, and then number three, another positive reason is the return of

the millennials. the entry level buyers are coming back. it's prif been dormant, but they are now entering 30s, mid-30s, they are having kids and settling down and need a house. >> reasons for growth, but what about deregulation? additional 20% of costs? >> i don't know if it's that much, but it is significant. we are starting to see progress in that area. some regulations enacted in the last administration are talked about being rolled back. there was a couple that have actually happened, but i think that is a big positive impact for the industry, and we're excited about it. >> which regulation of all the ones that impact your business, whether in some markets or federally would you like to see rolled back the most? which specific one? >> i can't tell you one specific regulation, but there's regulations in the epa. regulations in osha, regulations

in the department of labor. there's regulations throughout the government that impact our industry. >> did they go up a lot in the last administration? >> absolutely. >> they did. 29.8%, to 84,000 -- the volume -- >> the dollar cost 84,671 per home. >> that includes local permits, local regulations, state regulations, and federal relatio relations; i wouldn't tell you there's 84,000 in federal regulations in the home, but it's a significant number. >> when you deregulate, pull back from the regulations, savings are just yours, not the consumer? better margins for you? >> no, not true. >> okay. >> provide a more competitive product pass that on in lower prices, and able to increase

profits for home building companies. >> there's an argument to be made for regulation, keeping the environment and workers safe, keep the home safe. i think that a lot of people here, hey, deregulation, okay, that means the chipny's going to fall in, workers work 30 hours a day, 8 days a week. balance the goals of society and making sure not a stupid amount of paperwork and jacking up the price of the homes and attorneys. >> free market will not accept that. customers will not accept that. they require energy efficient homes, environmentally friendly homes, require us to treat workers safely and fairly, so we're not going to be able to sell homes if we, you know, abuse the system. we've been building homes for a long time. this is a mature industry. there's just too much government interference and regulation, driving up the cost of housing, and lowers the ability to profit margins.

>> you mentioned factors as to why you are bullish about the industry and your business right now, steven, what's the biggest constraints on you? is it finding the land available to build? >> well, land and entitlements are an issue. it's harder and harder to find land development ready with services and entitlements, but the biggest issue is labor. there just is not enough labor heading into the residential construction industry. >> worried about restrictions on imgrants? >> i am. our industry is -- has a lot of immigrants working in it, millennials today are college educated, and don't want to work in residential construction. we rely on imgrants. >> look where the homes are, arizona, texas, florida. border states. >> exactly. immigrants are our big part of it. we need a comprehensive immigration bill, guest worker program, provide jobs for immigrants that other americans are not interested in. >> are you actively talking to the trump administration about

these issues? >> absolutely we are. >> in what way? how are you engaging? >> through our trade group that has a line of communication to the administration and to congress, and we're talking to them about the issues all the time. >> all right, good to have you, thank you. >> thank you very much. >> beautiful, isn't it? >> live shot. gorgeous. >> first federal dollars dedicated to building president trump's border wall, how much, and which companies could profit from that? we are live in washington with that story. elon? >> $4 billion, that's how much president trump is asking congress for to start building his big beautiful boardser wall. more than 600 companies are interested in bidding on this contract. some of the publicly traded names are martin marieta and more. the wall is controversial, and democrats threaten to block any bill providing funding from it.

two industries are staying away. others expressed interest but withdrew names, so most of the businesses that have applied appear to be smaller, local outfits, from nearly every state in the country, but concentrated in california, texas, and each with more than a hundred, a fair number up there in new york where you guys are. the numbers changing every day. latest analysis find 133 minority owned companies want to build the wall, including 39 owned by hispanics, 27% owned by women, 80 are veteran, and 13 foreign interests. the owner in mexico sells led lighting from china, the chances of winning the bid are slim. more up on the web, guys, at cnbc.com. >> mexican company in the first place applying to build the wall. >> it's an interesting case. someone born in egypt, became

nationalized american, and then moved to mexico in his retirement and now runs a family business selling led lights, so he's one for globalization. >> no experience in constructing anything other than lightbulbs? >> he sells the bulbs. >> maybe he's the perfect guy to build the wall. who knows. shines driebright. >> interested in building a wall on mexico's southern border as well. he's a fun company. >> interesting to prevent all the movement of the central american imgrants from coming up that they complain about themselves. all right. >> that's right. >> thank you. >> no problem. the basketball industrial complex in full swing right now. okay. i jest a bit, but this time of year means one thing. big money betting on the big dance, and coming up, we'll ask wynn resorts top betting man for his take and long shot pick or two on hoops right after this commercial break.

hundreds of millions wagered in march madness, only legally in nevada. million mores through other means. who are the gamblers picking to win if? let's bring in head of the sports book at wynn las vegas. good to have you with us. >> thank you. >> how is business on the ncaa tournament? how big is it for you and comparing this year with last? >> well, it's a big event. takes place over the course of three weeks, and not a weekend like the super bowl, so the business itself exceeds the super bowl. in our state for this past super bowl, we did $138 million, and we can't give you exact figures on ncaa basketball, but looking at basketball for the month of march, it usually does around $400 million, and i would feel comfortable saying the ncaa

tournament's going to do somewhere between $200 and $225 million of that. >> so who is the betting favorite now? >> well, remember that -- that's called the future book on who you can bet to win the entire tournament, and that's been up for 11 monlths now. duke was the initial favorite at 4:1, now second choice behind north carolina. two acc teams are the favorite at 5-6-1, and there's a lot of other teams that follow them in, that you know, 7-1, 10-1. >> uva, virginia tech, we play today and going to win, both of us are going to win. do you notice any correlation between the stock market and your betting? snor in other words, market's up, michelle's family is going to buy a new boat for the mansion in new hampshire. >> the mansion's in new hampshire? >> do people bet more if the target goes up?

>> maybe that's the betting, the stock market. >> there's no correlation between those two at all. you know, we got a versus b, handicapping one side or the other, and it is, you know, we -- the you have the control in the sports market whether you want to play a, b, with a point spread or a money line to win the game straight up. >> we have a theme today about deregulation and how it's helping drive the stock market rally, maybe more than corporate tax reform. if there's one industry that's really regulated, it's gambling. is there anything under the trump administration that might change or help your business when it comes to deregulation? >> i don't know if trump has anythinged to do. there's been a push from the american gaming association and its members as well as others, you know, to put sports gambling on the forefront, you know, it's been in the state of nevada only. it's gone into a few states like

delaware. there's a couple with lotteries, but i think over the next three to five years will be in other places. >> right now, there's a monopoly, a lock on sports gambling that takes place in the united states. once deregulated, it could take place across state lines. >> that's okay. you know, i don't think nevada loses the market share, and then there's opportunity for others in other areas. >> hearing you say you expect that there would be much more widespread multistate, maybe national at some point ability for individuals in new york, florida, wherever to legally play sports betting? >> if you asked me that question about ten years ago, i would have said no. hi a change of heart. things are moving in that direction. >> is the driver of that the need from states and

municipalities to raise revenue? >> well, yes, that has something too with it. in order to do it, there are some obstacles still. you know, there's the wire act, there's a lot of things that -- >> we can get rid of that. >> yeah, sure we can. >> executive order tomorrow. >> johnny, before you go, have fun. don't say south dakota state, that's 5,000:1. money line moving to the -- not a long shot, but a ucla 10:1, top six or seven team looking better? >> it always looks that way. you know, even when there's upsets early, when we get down to the time four, you're usually, you know, two ones in there, a two, a three. so we always say it's wide open, but the -- one of the top eight teams is usually prevaling. if you want to go a little

deeper in this tournament, look at smu or notre dame. it's hard to go -- >> you're taking notes. crimson beating notre dame. thanks very much, man. appreciate it. good luck. you guys are struggling out there in vegas. i'm kidding, take care. >> thanks for having me. >> 102 degrees and wearing shorts. >> all you need to hear about today, daily dose of street talk straight ahead. the, th live tracker board brought to you by the cme group. ♪ guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you.

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welcome back to "power lunch," gold up $25 now. seeing session high 1234. move in gold today, traders sa , because of the slightly dovish tone with yellen yesterday. moving higher with the commodity, but the mining stocks are low erlower.

confidence is not there that the gold trade lasts to the upside, technical, 1250, downside, 1190. back to you guys. >> all right, thank you. time for street talk, exclusive daily segment where we comb through piles -- >> piles. >> piles of wall street research. finding you the four most interest calls tea. >> united therapeutics, underperform. the stock is 20% overvalued because of the acquisition of a uthr competitor driving the stock up, acquisition, according to the am is, unlikely because the company mentioned dealing themselves, risk to hypertension drug franchise like generics launching in 2018. the company is the fast company, we had the ceo on power lunch, founder of siris xm radio. >> literally a genius.

>> yes. >> literally. >> now very deep in -- >> quickly, more sell ratings or higher profiled ones so there's cognizance about it? more ratings out lately. just in general. >> i don't know. are we gravitating to them in the pile? >> put an intern on that. second stock, blackhawk, starting coverage of the company with a buy rating, secular tail winds drive up growth segmentings, specialty gift card margins, retail related stocks, analyst counts somewhat on a return to retail by consumers. >> bricks and mortar. >> gift cards are there, at the counter, people in stores, don't use them, there's a $44 target, by the way, on hawk, the tick ir. that's 23% upside. >> third stock, lululemon.

interesting note, sti stick at rating, mkm's seventh proprietary survey shows bullish reads on the strength of the brand and fending, surveys 1,000 shoppers conducted in the second week of march. daily wearers, people who wear this every day peaked at 12.2% versus just 5.7% last march, which they say is more stable for athletic wear trends. >> you made my year. >> you wear it every day. >> peak yoga pants my dream. >> roomy bottoms. >> now in. which, by the way, does not go with the yoga pant theme. just throwing that out there. >> analysts say they will be caught offsides because the trend is not tight bottom, but roomy bottom. >> all right. carpet steer tech, using aircrafts, defense calls, securities upgraded from a buy,

recent pull back, more attractive. the company is a huge facility in athens in the south, and only been running at 50% unitization because they work on oil rigs. as they picks up, the facilitying investment should pay off, 5 target on crf, 20% less, stocks doing nicely today. upside. >> michelle? >> talking about the pizza trade, guys. guys. ladies. gentleman. shares of dominos up 40% in the last year. the company's ceo's laying out the growth plan for the next 40%, amazon upped the bet on booze. good move? we'll talk about it as the second hour of "power lunch" gets started in two minutes.

>> welcome to the second hour of "power lunch," stocks breathing today in the record breaking trump rally. forget healthcare overall and tax reform. one thing investors

underestimate that fuel the market higher? much higher. a 15% this year, up 40% in the past year, dominos pizza on fire. domino's ceo tells us how to grab a bigger piece of the pie, and tez la on a tear. go for the ride? >> check out the movers right now. it is the ipo of the day. canada goose soaring 30% in the debut. the company makes rather high end winter coats priced at $900, a limit less for some of them, but a big, big celebrity following, and a lot on the streets of the new york city these days. shares of williams-sonoma rallying 3%, beating profit estimate, revenue fell short. company saying the holiday season was one of the best, and announced a 5% dividend increase to 39 cents a share. check out the biggest gainers in the s&p right now.

they include oracle, nucor and wynn resorts. those are the big winners now, up between 2-7%. >> the trump rally taking a breather today. big question on wall street, though, washington and board rooms across america right now wondering if the biggest driver when it comes to business and weeks and months ahead is administration's efforts to cut lots and lots of red tape. all right. all-star panel on this issue ready to break it down for us. our guests are from the corner office, gordon, former content thenal airline ceo, jimmy, american enterprise institute, and inside the market, mike ryan, chief strategist. gordon, let me start with you. deregulation, former ceo, how important is it that this

president up like who could have won, hillary clinton,mentes less regulation, nots more. how much does that add, do you think? >> well, there's a lot of confidence that a lot of nonvalue added costs will be removed from running your company. i think that's driving the optimism and you see that in the market caps of companies going north. it's given people confidence of change. i know change sometimes gives you trepidation, but this is positive change. >> going hand in hand with deregulation is offense privatization where a government stops doing something, and instead hands it over to the private sector, and in the budget that the president put out last night, there's a plan to privatize air traffic control. how do you do that? >> well, you just make it a government own corporation, but they have an ability to fund their need for technical upgrades. we work in a world war ii

technical system today, but they always have to fight for the budget because it has to be funded all at once. if you're a corporate, you can issue bonds, do your capital spending like a regular company, and make the investments we need to privatize, and make it more efficient. you are sitting on the runway, the taxi way, 30 minutes wasted, and money wested with the current system. >> that would add directly to the bottom line of airlines? >> well, it would add directly to the bottom of productivity of you and everyone else, plus the airlines. wasted time in route, taking routes, securely and rather than run direct, technology is there, they just have to implement it, and they can't afford to do it under the current budget. >> privatizing airports, does that help, tremendously, she asks leadingly? >> they have access to capital. they get a fee for each ticket, plus, airports issue bonds, so their capital con straights are

not like the system that issues bonds and has to spend every dollar they spend. it's different. >> got it. gordon, thank you so much. >> all right, on to part two of the discussion. obviously, business leaders like him are excited about the prospect of deregulation. what are the odds of it happening? joining us, jimmy from aei. people believe trump signs executive orders meaning things get done. that's not the way it works. you're there. explain to the audience, please, plain english, dotted line between what the president is asking for in his eos and skinny budget and how it's likely to get implemented. >> listen. it's depends on what area you're talking about. let's say -- i mean, there's been a lot of conversation about dodd-frank and financial regulation reform. that -- seen like goldman sach stock boomed and other financial institutions, like, that's going to take awhile within the first

year or two. there's conversation about it. the rule writing can actually be implemented, you know, more unilaterally, but talking about, like, dramatically repealing dodd-frank, that's congress. that's going to take a long time. democrats are going to be against it. there's things to do with the epa. what's interesting is the areas where you can get the most economic oomph from deregulation, we have not been talking about. we talked about the environment and dodd frank, but not, fringe, about intellectual property reform, copyright to patent, oomph from that, repealing net neutrality, looks like it's going to happen at the fcc, might get some more growth in other areas. >> jimmy, is it kind of like a restaurant at peak dinner time? right? trump is ordering all this stuff, and it's getting clogged up. it's going to be hard to get everything done, and the more stuff we go for, does that reduce the likelihood that

anything occurs? the kitchen of congress is completely backed up. >> right. right. you get the entree, but they never gave you the soup you orderedappetizer. >> it was not what you ordered. >> right. there's a huge agenda, we want to do everything at once. that's right. there's going to be a priority. we're seeing that, you know, with health care, then tax reform, and some of the stuff, requires congress. i would be very loathe to make huge investment bets, maybe in the market, but anticipating there was master reform of dodd-frank. that could take a long time if it happens at all. >> quickly, a last question, ncaa bracket time. lay odds. what are the odds, what are the odds we get tax reform before new year's eve this new year's eve. what's the odds? >> oh, i'd say maybe 4:10. maybe 50/50, maybe a little less. if you were to tell me that we would be talking about this summer 2018, i wouldn't be

shocked. >> we might be. literally, you, i, michelle. it could happen. thank you very much. tyler? >> brian, where do you go from here? what are investors watching now? let's bring in to talk more about the deregulation press, mike ryan, chief investment strategist at ubs. mike, welcome. same question michelle asked gordon. how much of the rally in stocks that we have seen since the election is directly tied in your view? what percentage to the deregulation fever that is about? >> i think that's really hard to parse out. if you quantify which parts are related to hope or expectations about tax reform, how much is regulatory, how much infrastructure, i don't know you can do that. i would say if purely around speculation around deregulation, there's not validation in other markets. in other words, there's the u.s. equity market moving solely, and that's not the case. something more is happening. what you see is a broadening across equity markets.

largely, on expectations that the economic backdrop is improving. back to the issue of deregulation. it's important. when you look at confidence measure, and that's important because essentially what happens is confidence feeds through and creates that sense of animal spirit. what you have seen is a material shift in terms of business sentiment and, also, importantly, their expectations for investment spending. this is the slowest kpa esest e this history with regards to investment spend spending. the regulatory overlays coincide with slowness in business investment spending. expect, as you see some further easing of regulatory environment, expect to see corporate stewards having more confidence in the business outlook and reinvest. >> i think that's a really terrific nuance point there because what i sense is that the idea that a more business-friendly environment is about to take place, and it already has in many areas is what's driving it. you said that the economic backdrop is better.

well, that's the economic backdrop, isn't it? >> careful to go back to what gordon and jimmy touched on. it takes time. >> right. >> deliver in the next 30-60 days, regulatory relief does not happen quickly. >> which leads me to the follow-up question. in the last hour, i believe it was eric out at russell, he said that he was concerned that there was too much favorable anticipation built in the stock prices. are you worry about that? that anticipation goes to the question of deregulation, to the question of potentially corporate tax reform that would include repatriation and infrastructure. those are the big three issues that are out there. is there too much anticipation in prices? >> look, there could well be a temporary setback if we see the markets reacting to what i'll call execution risk. in other words, if the administration has difficulty getting all this done, you mentioned before there, there's a lot on the plate to address at once issue and sequencing matter is a great deal.

get the sequencing wrong, spend too much too early on things less a priority, it makes it harder to get some of the key initiatives like tax reform through. there's a risk of that. i think what we'll see, however, is a better regulatory environment, i do expect to see over the course of, let's say, between the this year and beginning of next year, comprehensive tax reform, especially on the corporate side. i expect to see, at least some moderate infrastructure spending. those pro-growth elements are likely to be fulfilled over the course of the next six to 12 months. >> terrific. appreciate it. >> thank you. >> mike ryan, ubs. shares of snap hitting a fresh new low in today's session, 1980fuls the low, off of that right now, but more importantly, it's sub 20, the 11th day this newly minted ipo has been public, 11th day new low here in shares of snap. >> all right. billionaire weighs in today on his take on how deregulation could impact the market.

remember, a big hillary clinton backer. cnbc caught up with him in vegas. what now? >> that's right. he says he's capitalizing on the runup in the current market environment. that's result of the prospect of deregulation, he says. when it comes to the execution of deregulation, he's skeptical. >> you want deregulation coming in, seeing the effects, and hopefully that'll end up being positive. i just don't see how it's going to be as much as everybody thinks it is. >> it's the current market environment that has him the most bullish saying there's little cash on the sidelines. >> we're probably, today, more invested than we've ever been, merely because we think, again, short term is all positive. >> i asked him about whether the actual implementation of policies such as tax cuts and

deregulation present a selling opportunity, and he told me it does, guys. back to you. >> all right. just to clarify, leslie, more in invested we've ever been, long u.s. equities, or what's it mean. >> correct. he said, all in all, more invested than ever, with very little cash on the sidelines. distressed debt investor. that's the specialty, but he's riding the wave and benefitting from the equity increases as well at this time. >> all right, leslie, thank. leslie in las vegas. here's what's coming up on "power lunch," dialing for delivery or asking alexa. dominos hoping for a slam dunk. the ceo joining us. tesla rallying now adding to the year's genes. what's driving the stock? what are speed bumps ahead? why this successful facebook alum always, always tips 100%. all that and much more on power lunch.

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clean basketball tournament month is a busy time for domino's pizza. last year, they sold 2 million pizzas in the 2016 semifinals and championship games alone. the proof is in the dough. 10.9 billion in retail sales total last year and 40% stock pop over the same period. check out the chart of 3,000% gain since the market bottomed. so, what's dominos doing right

when other restaurants struggled? exclusive with patrick doyle, great to see you always. >> you as well. >> how do you think this nrgs caa championship will do this year for dominos? how many pizzas, you think? >> oh, we'll do very well, and it's a wide open tournament. i don't think you've got a clear favorite coming in, and that helps to drive viewership, and as long as my michigan wolverines win at the end of it, i'm happy. >> all right. we'll keep that in mind. patrick, curious. there's a lot of fast food chains now that are are employing technology as a way to cut costs. you announced you can order pizza with google home, other ways including the smart phone. how many pizzas do you sell or what percentage of revenue come in through devices?

>> 60% of the sale s in the u.s are digital now. pushing two-thirds of those are coming off mobile devices, and so that just continues to be a powerful part of the equation for us. now, i'll tell you, you talk about kind of cost efficiencies around that. it is more than anything about the customer experience. it's easier. it's a more accurate order. they can see the whole menu. that's really what's created the most value for us. >> i hear more than half now are on the other handed digitally. >> wow. >> astounding. they don't pick up the phone anymore, and two-thirds of that are mobile devices. >> right. >> digging deeper, curious how many pizzas alexa orders for you or google home. >> yeah. well, you know, that number's still small. they are getting the installed base up, but it's growing. there's usage continuing to go up on that, and over time, we're convinced that voice is going to

become a bigger and bigger part how people interact with technology. >> give us an idea of how much costs came down thanks to your move to digital, certain forms of digital more cost effective for you than others? >> no. any order placed digitally is just as cost effective for us. it helps at the margin on cost, but, really, big value add is more on the sales side, revenue growing side. that's really where it's driven most of it. there might be a small labor savings in that, but that is a very small percentage in the value creation. >> what's the next surprise that you're going to deliver, both either to customers or shareholders? what's the next thing? >> we are looking at delivery, where we play in the space, but in terms of the next platform we roll out, we'll hold that until we are ready to go with it. i think what you need to

fundamentally, you know, accept is, and what we've decided is that every platform coming out we think will have real scale, we're going to play there. >> but, but, let me just probe a little bit more. without asking you to just open your playbook, what would the kinds of things that are going to change be? among them could possibly be? >> i think voice is critical within that, and i think what you're going to see is voi shows up in platforms. thinks of vehicles, cars, what's happening there. you look at your home and how you're interacting with alexa, google home, more and more away from the physical device and ordering, and so we're looking at that and kind of how, you know, not needing to have your phone in your hand and summing in the order opens a lot of other ways to interact with technology, and so we're spending a lot of time looking

at that. >> patrick, on a separate note here, a couple years ago, health was the rage in restaurants, right? mcdonald's roasted chicken, it did not talk out. your chain avoided this. you have cheese inside of cheese inside of dough. you guys feel like eventually there's going to be a backlash to this for dominos and the industry? you guys walked your own walk on this. >> yeah. you have not seen us doing those things. we have not done the kind of stunt marketing and more gimmicky foods. we released -- the last thing released nationally on television was salad, and so what you're seeing with pizza is, number one, from domino's, you can have it be as healthy or as indulgent as you want. we help you with that. >> i like indulgence. you're going to order pizza, you

do indulgence. >> exactly. and people can get that or they can put vegetables on it, have a couple slices of hand tossed, and it's a great meal. at the end of the day when people play hard against the health scene, it works if it's -- >> okay. >> if it's within the expectations of what you're doing, and we're pizza. at the end of the day, people -- >> mr. doyle, we did a segment we looked at netflix -- >> right. >> and the rise of netflix seemed to rise on par with the pizza stocks. there was some kind of relationship between the ability to stay home and see good stuff on tvpgs, and then ordering pizza. do you see any causality in your, you know, people buying pizza because they stay at home more? >> yeah. connection is convenience. i don't know that it's because they are home for netflix they order more pizza, but i think

what is seen across the category is a split. people who win are people who make it convenient or give a r terrific experience in the restaurant. fine dining is doing well in the restaurant industry over the last few years, if people are going to go in, sit down, commit an hour and a half or two hours to eat, they want a special experience. if they want convenience, we're it. it's great pizza. it's coming quickly. easy to order it. where you have seen restaurants getting squeezed are those in the middle. you're going to have to go in. you're going to sit down. it's not going to be particularly fast. it's not going to be a special experience. those are the people who really struggled. >> some of the restaurants squeezed in terms of stock price, patrick are burger chains, shake shack, underperforming dome know's and papa johns at the same timement do you think there is a trend or is there some sort of change in american tastes where they move

away from burgers? >> i don't know that that's right. burgers are still very, very popular. most popular food is pizza, second popular are burgers. shake shack has done just fine. they have a terrific burger. you know, the valuation may have gotten pretty excited after they first went out, but, you know, i think you're continuing to see the people are getting the quality right, doing very, very well. if it's a better experience, better food, you know, in a better environment, that's going to continue to drive results for people. overall, i don't think there's a big secular shift from, you know, burgers into pizza. i think there's flat growth maybe a little bit negative in some of the categories. >> okay. >> i think it's more about who is taking share and who is winning within the categories. >> all right. patrick, good to see you. thank you. patrick boyle, domino's ceo. >> thank you, melissa. booming dollar and sagging jeans.

i don't know. here we go, the good, the bad, and the ugly. sagging jeans. g goes with the burger trend. that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses.

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hi, everybody, the cnnbc

news update. a senior opened high school in the south of france today sparking a terrorist alert. eight injured. the student armed with a rifle, two handguns, and two grenades arrest. police say he acted alone. scottish leader facing opposition from other party leaders when questioned about her plans for a second independence referendum. scottish conservative leader davidson challenged her at a parliamentary meeting. >> a referendum cannot happen with the people of scotland have not been given opportunity to see new relationships with the european union is working, and should to the take place when there's no clear political or public consent for it to happen. >> and after nine seasons, indiana university basketball coach, tom crean, fire. announcement made minutes were the n clrkscaa tournament actio

tipped off. that's the cnbc news update this hour. back to you, brian. >> thank you very much, sue. the oil markets closing for the day, so let's get down to jackie. >> good afternoon, brian. one of the seesaw sessions, pretty much ending up slightly lower, flat on the day, down just about 16 cents, but what took us higher this morning news out there, reports that the chinese are talking to the saudis about investing in the corporation, idea that they try to continue to boost the price of oil higher. downside, at the inventory report yesterday, look into that, production for the united states, 9.1 billion barrels roughly and climbing, bringing us back to the core problem, supply and demand. fishi finish at $48 today. >> thank you very much. investors watching tea, election's over in europe, rate hikes, and big meeting with the german chancellor tomorrow at

the white house. we have a closer look. >> tyler, a lot of international developments starting with china following the footsteps of the fed and raising short term interest rates to curb capital outflows and a sign the second largest economy is managing the ballooning debt. meantime, bank of japan leaving rates up changed continuing to grapple with slowing inflation, and in europe, the focus is politics. dutch election showing that prime minister who won the election holding back that popular tide and securing a win in response to european stock rallying, in fact, the european stock index seeing the best day since march 1st. you see stocks in the netherlands ending higher. ditch decision behind us, focus turns to key elections in france, and germany, and speaking of germany, chancellor angela merkel and president trump have the first face-to-face meeting tomorrow where defends and frtrade domine

the conversation. they awe kused ge accused them exploitation, but merkel will take the argument that the weaker euro is beyond her control. >> right. the difference between the administrations is notable. the relationship between the u.s. and germany was a warm one under president obama, and, in fact, in one of the last trips, went to germany, encouraged the country's leader, merkel, to run for office again and would vote for her if he could. things are different under president trump. his trade adviser told us he thinks germany is, quote, sticking it to us. are they? bring in michael and alexis with pricewaterhousecoopers. peter says germany exploits a grossly undervalued euro, and that hurts us. is that right? >> well, the euro is a function of what's going on throughout all of europe.

germany had its own currency, the deutsche mark, would be strornger than the euro, but germany does not control the european central bank. in fact, germany is pushing for the ecb to have a tighter monetary policy, not a looser one. germany pushes for a stronger euro, not a weaker one. >> does that come up tomorrow? >> well, i think this is a first face to face meeting of merkel and trump, and i think they are going to try to have a working relationship, so there might not be too many contentious things that come up tomorrow, so if trump brings this up, merkel can counter with the fact that the euro is not controlled by germany, and, importantly, germany does a lot of investment in the united states to the benefit of the united states. >> yeah. the auto makers, for one, is one that i think a lot of people are familiar with.

ale alexis, the other issue, president trump complained about the financing the nato. all of these countries in the european union are to dedicate a certain percentage to the budget, matching 2% of the gdp for their defense. germany has not done that in a long time, but now they say they will do that. is there a change coming from germany because of what president trump talked about? >> not necessarily reaction to president trump. germans said by 2024 they spend 2% of gdp on the nato defense budget. very, very important and integral to the transatlantic alliance that they do so, and we have to think about what's going on in germany and domestically, there's a pension crisis as well. this is one of the reasons why they are saving. >> angela merkel is running for office again. she's weak, right? everybody talks about she's the strongest leader in germany yet faces vulnerability on the

immigration issue. there's talk and leftist parties in germany that want to leave the euro. never think i'd see such a thing. >> walking a delicate position, not just the refugee crisis, but russia, energy security, vis-a-vis the european countries, tens of thousands of people on the streets in berlin last year protesting the agreement with the united states, and those are meaningful numbers, however, looking at the rest of the countries within the european union, i believe her voice is amplified in france, and, you know, strong election results today in the netherlands, still, she's -- >> do you think they were strong? the place is fractured, right? the conservative leader, managed to hold on to power, lost seats, and other party, poof, gone, right? i mean, they are fracturing there. everybody's relieved, quote-on-quote, but doesn't what happened reflect when we saw here in the united states? what we saw with brexit?

that antiestablishment voice is still very strong. >> it is strong. amidst all of that, i believe that merkel has a very, very strong amplified voice in remitting europe as the spokesman. >> we like to believe we are similar countries, third largest economy in the world, we have a working relationship with them, and many of us drive german cars, believe they are the saim, but yet we are not. the german economy is more than one-third exports. we are 8% exports. do you believe that the economic goals of germany and the united states given very different underlying economies can both have mutually beneficial outcomes? >> economic goals of the country shouldn't be for one industry or one sector. it's to make the people in the economy better off. germany historically had more exports, but germany is a smaller country, and it's more integrated with europe. the united states is a larger

country. so, you know, the focus on exporting or manufacturing, i think, moves the view from what it should really be, how do we make the people in the economy have stable good jobs that pay well? >> is it a reasonable goal for the united states to drive 20%, professor, of its economy for manufacturing? which is suggested to parallel the rough percentage that is truly germany? >> well, right now, germany has about 20% of the workers in manufacturing. the united states has about 10%. 25 years ago, germany had 30% of the workers in manufacturing, and the united states had is 16%. this is a pattern we see all over industrial countries. it's not that manufacturing output fell as much as manufacturing employment has fallen. a lot of that has to do with automation. the pattern that we see in

germany as well as in the united states of automation leading to lower manufacturing employment is something that i think will not be reversed. >> thank you for examination of the visits tomorrow. appreciate it. >> thank you. one group of stocks not performing with the rally, is it a one-hit wonder or a real opportunity for you? plus, tesla getting new competition. will it hurt that red hot stock? stick around. yes? please repeat the objective. ♪ thrivent mutual funds. managed by humans, not robots. before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds.com.

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time for the good, the bad, the ugly. the good, dollar general. beating estimates on earnings and revenue. the discount retailer showed resilience against online competition and higher end stores. it is up about 2%. biogen lower after going from overweight to equal weight, ugly day for guess shares. they are down more than 10%, actually, more than 11% after the company announced quarterly profits three cents below estimates. brian?

>> thank you. regional banks are surerging today. as financials have done well, this group lagged the market. talk about a potential turn around with the trading team. matt, first to you. is this the start of manager beautiful over one-day one-hit wonder and banks continue to slide? >> they could continue to slide on a near term basis. like them longer term, but we have to worry about -- short term rates are up, the yield curve flattened out over the last two months or so, and with the way the position -- i've talked about the positioning in the bond market, and jeff mention it yesterday as well. if the bond market rallies, rates come down, that yield curve flattens out more, causing a problem. the key right now that i'll will watching in the kre, regional bank etf is the 50-day moving average. that's rock solid. not just this year, but in the second half of last year as

well. rates below that level, could get players to knock the group down a little bit. >> yeah. >> again, with deregulation coming, that provides a floor under the thing, but could see more weakness. >> deregulation there, which is a topic all day for us. dennis, what do you think on the options and volatility side? >> on the options and volatility side, i'm not seeing much, which is not what you want to hear. prior to -- right after electionings there was enormous call buying in all banks and financials for the coming deregulation that was going to happen. i'm more bullish on the regional banks than on big banks because earnings from big banks, a lot comes from -- used to come from proprietary trading, not around them, hard to turn the switch back on. there's increased academic activity to help both banks, but whole in the big banks and regional banks will be -- priced inexpensively now relative to where the big banks are, up 51%

over the last year. it's a bit of a pause, but i think that the regional banks outperform and go higher. >> sounds like an opportunity for us, dennis, mat, thank you very much. folks, lot more of this, online tradi tradingnation.cnbc.com. melissa? >> tesla 3% today after announcing a $1 billion capital. own the stock up 20% this year? that's straight ahead. stay with us here on "power lunch." now the latest from tradingnation. tradingnation. tradingnation.cnbc.com. >> different sectors of the market do well in the different periods of the cycle. when the economy is expanding, industrial and technology stocks historically outperform the broader market. when contracting, sectors like utilities and consumer staples outperform. choosing to invest in particular sector? consider where we are in the economic cycle. it's our little differences,

that can make a world of difference.

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tesla up big after raising a billion dollars in stock fund and convertibles to fund model 3. on a tear, up 20% this year. if you buy the stock, good to

see you, rob, starting with you. you like the stock. buy rating on the stock, raised the price target to $300. you say it's really expensive, though. there's a lot of near term risk. capital remove risks risks. does this remove one of the biggest risks in your view? >> i think this helps because pretty much everyone knew this was coming up. having it now done is a plus. i mean, the stock is expensive i think on near term metrics. you really have to, and i do value it more on kind of 2019, 2020 type numbers. while that may in some ways sound silly, that is the point. this is still a company that's just getting going. they're still spending a lot to build the infrastructure to build more cars. i do believe in looking out to 2018, '19, '20 could be pretty huge. >> just so i understand this, normally when a company raises money. >> it's selling stocks. >> it dilutes the other

shareholders. the other shareholders get mad but instead the stock is higher today. that's a relief because everybody knew it was coming and now they can actually start building cars? >> right. i think near term it's just a relief. it's the fact that they had eluded to doing another capital raise. now doing that is a plus. i also think the capital raise is probably at the lower end of what people thought it might be so -- i mean, the capital raise is pretty darn small when it comes to dilution. >> sure. >> i don't think that in and of itself it's a big deal. >> phil, i want to get to this whole notion of deregulation. you talked about cafe standards. how could that impact the industry and tesla in your view. if they no longer have to comply, they might no longer produce as many low emission or evs out there. what does that do to the marketplace? >> well, it depends on one big wild card, melissa, and that's the state of california. remember, california has an epa

waiver which there's been some discussion that the trump administration may ultimately fight. that means that california can continue pushing for these higher fuel efficiency standards, these lower pollution, low emission vehicles to be manufactured and california is the biggest auto market, the most influential auto market in the company. so as california goes, so goes the industry. while the lower fuel economy standards may have an impact in terms of the costs that are borne by automakers when you're talking about trucks, suvs, internal combustion engines, for the ev market you want to see what california does. that's the driver. >> i want to unpack that in case people aren't familiar. california has a waiver given to them in 2013, correct, rob? >> right. >> to have stricter standards and create a program where companies like tesla could sell their emissions credits to other companies. >> right. >> now nine states have this same waiver.

in your view, rob, is there the possibility that the trump administration could rescind that waiver and therefore tesla would not be able to sell the emission credits, the zevs from which they made $302 million in revenue last year? >> i think anything is possible, for sure, but if you look at it, yeah, tesla's made money from zev credits in the past. it's been nice but frankly it is minute in terms of what i'm looking for them to earn over the next several years. i think it's already going to become a pretty immaterial part of their business. the broader question is are people really buying electric vehicles because of tax credits and because of government helpers? i don't think so. i mean, obviously it helps, it doesn't hurt but i think people want to buy electric vehicles because they want to buy electric vehicles whether they get tax credits or not. >> does the change in cafe standards, if a gm or ford is less incentivized about how much

mile age a car gets, it seems to me that's less incentive to actually produce electric cars, which would help and, therefore, you kind of lose that national infrastructure that everybody's thinking you're going to need in terms of being able to recharge cars at different parts along the highway, phil. >> i would agree. look, you're hitting on a key point there and at the end of the day this is discussion that this country needs to have in terms of how much help does the government want to provide for the development and adoption of electric vehicles or is it going to be leave it on the high end of the market, people who can afford a $75,000 vehicle or do you want to push electric vehicles in that 30 to $35,000 price range because if the government doesn't want too do that, that makes it much more difficult, whether it's the model 3, now you have the chevy bolt that's out there. that's only being sold in california and oregon. supposed to go nationwide relatively soon. if you're not going to have that

federal tax credit or states take away their tax incentives, i think you'll have a lot of people who say, kind of like it. what the heck, i'm going to buy this toyota with an internal combustion engine. >> thank you. >> thanks very much. our final thoughts of the day. i know you're dying for those. check, please, is straight ahead. ♪ we're drowning in information. where, in all of this, is the stuff that matters?

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check, please.

>> my check please is more evidence that people in silicon valley are crazy. palatia was on "squawk box." he tips 100%. >> i'm a huge tipper. i love it. it's so great. >> okay. all right. all right. you don't do 100%. >> yeah, minimum. >> 100%? >> look, i got lucky. >> you. >> i got lucky. i feel like i should pay it forward. >> you do 100% when you tip. >> yeah. >> every time? >> they're going to watch you. >> if it's bad service, no. most of the time because they just have such a joy on their face and it's wonderful. >> what do you think, guys. 100% tippers. >> if you can do that, why not do that. >> very generous. >> waiter and waitress, fantastic. >> and if the person's bad you tip them only 75%. >> you stink, here's 75%, i'm out. >> i like the fact that he acknowledged he was lucky, not brilliant in his investments

that made him so much money in silicon valley. >> very humble. we are watching shares of snap. it set a new low. 19.80 was a low. it's now sitting at 19.90. this is the 11th day since the ipo, 11th day of trading down more than 4%. this have been so many analysts coming out very, very negative on snap including yesterday canter fitzgerald. they're piling on. >> mine is on the tesla conversation, no one talks about competition. yet another all electric car coming out the lucid air. looks like a tesla. good looking car. >> nice. nice. >> gets a couple hundred miles on the charge. >> who makes it? >> lucid. >> by the way, i'm not -- i'm just going to say if you score more points than the other team you have a chance of winning. tonight i think this team, nation's greatest college will beat university of wisconsin. >> we have the two virginia guys here. >> wellesley in my bracket.

i have wellesley in my bracket. >> that's very charming. >> they have been watching the game on the whole show. >> virginia did win. we're very happy. >> beat the seahawks. >> let's look at the ipo, one of the hottest among the cold weather stocks today. >> thanks for watching. >> "closing bell" starts now. hi, everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm scott wapner. we're going to talk to renowned investor howard marks in a cnbc exclusive interview whether he's more focused on fed or fiscal policy. >> investors love the pricey winter coats. shares of canada goose are soaring up 28%. could it go the way of newly public snap chat which just dropped below 20