horton and lennar. >> and they're still inexpensive. huge backlog i mean, there's a lot of reasons why, a lot of people are firing against this, i think we're going to see an acceleration of some of that space. >> there's d.r. horton up 3.5% and lennar got an upgrade yesterday. good stuff, guys. >> thanks, judge. >> all right "power lunch" starts now indeed it does, scott, thank you very much. tyler mathisen here. glad you are there and watching. here's what's on the menu for a chilly day, a wednesday. record shattering deep freeze gripping much of the u.s and now a major winter warning on top of that a rapidly intensifying, yes, they call it a bomb cyclone heading up the east coast. more than a nor'easter, a lot more we're tracking it and the impact on business, your travel and more it is cold outside, but stocks, they are hot, hot, hot the dow and the nasdaq and s&p all-time highs today where to put your money to work right now, we have smart advice

for you on that. and rolling out the red carpet, denver one of a dozen u.s. cities now battling to be amazon's hq2 we're going to go live to the mile high city with the governor of colorado. "power lunch" starts right now ♪ rocky mountain high colorado ♪ rocky mountain high welcome to "power lunch. i'm melissa lee. tech leading today's record breaking chart the s&p 500 topping 2,700 for the first time ever. commodities on the move as well. crude above $61 for the first time since june 2015 platinum by the way highest level in more than five weeks. and gold is trying for nine straight days of gains nat gas taking a hit today with prices up 10% in the past week as tyler mentioned this record breaking cold really causing people to stay inside. shares of scana up south carolina residential customers will get an average of $1,000 within 90 days of the

deal being completed, brian. melissa, thank you i'm brian sullivan as much as the world focuses on trump's tweets, let's stay focused on your money. and can you say dow 25,000 perhaps another milestone in sight. bob pisani is following your money at the nyse. bob. >> brian, a nice broad rally new highs in all the major indices. i want to show you some of the breakout 52-week highs what's interesting about this is there's nothing that's completely dominating. tech tends to be leading if you look at the new high list, you get industrials like united technology and union pacific, nucor, lennar, you're getting a couple breakouts in energy chevron last week, eog a big exploration company. 52-week highs. but see this list is not dominated by just tech or anything else, it's a fairly broad list take a look at the big story which i think is now continuing to be growth versus value. this is the way i look at it this is vanguard growth etf. you see that, twice as much in the growth today versus value.

and that's been the story really since yesterday and towards the end of the year last year. so what is growth? people keep asking growth versus value, what does it mean growth versus tech stocks semis like nvidia, amazon, a lot of biotech like alexion, growing rapidly that's growth outperforming just recently. there's a period in november, early december when value did well what's value you're looking at utilities like edison, clorox and kroger and most of the retail names like kohl's they had a moment for a while where they outperformed notably. that is not happening now in the new year growth is asserting itself overall. there is one what i call mean reversion play that's going on that's very noticeable and that's energy. this was a big debate last year, should we buy energy we started moving up when oil started moving towards 55 to 60. that was happening in november

and you can see the effect there most of them on the upside finally just mentioning the cold weather stocks usually happens when you get these freeze, columbia sportswear, canada goose, all up recently you can see they're mixed today. right now let's call it new highs for the major indices. back to you. >> thank you very much, bob pisani from the hot market to the bitter cold sweeping across the country. there's cold and then there's what's being called a bomb cyclone. dom chu is looking at the businesses that could be helped or hurt by maybe this deep freeze. >> bob made the mention of some of the stocks that could be in play here from jacket makers and whatnot, but we looked at some of the stocks that might be closely associated with the winter weather and we asked our data partners at kensho to see how they perform at the months end of november through end of march over the last ten years. polaris which makes among other things snow vehicles is actually up only 2% on average.

positive trade 40% of the time yeah, winter stock but maybe not as much of a benefit from the winter weather vail resorts, they're up about 4% of the time, not too shabby, but only up 60% of the time. think a winter stock that would be up pretty big compass minerals does a lot of the salt manufacturing for roads and that sort of thing is actually about 8% of the time positive, 70% of the time, 8% average gain one to watch perhaps there. columbia sportswear, bob mentioned that one average gain of 10%. it's positive 70% of the time. and the one that people talk about anecdotally speaking, netflix, do more people hunker down and watch a lot of those videos and binge watch, stock up 35% on average over the winter months over the last ten years winter weather is not entirely responsible for that, part of the story. of course netflix is a company with a lot of growth prospects out there. something to watch there one thing i would say, guys, to leave you with this, it would be interesting in the coming months to see whether restaurant companies make mention in their

earnings calls about whether cold weather has stopped people from going out check out names like darden restaurants, restaurant stocks may be ones to watch in the coming seasons. >> lots of stuff to watch as a result of the weather. thanks very much, dom. let's get the latest from rafael miranda. >> it is a crippling snow and ice across the country right now. savannah, snow and temperatures in the 20s we have snow in florida, this is moving out freezing rain in charleston. 30 degrees, very difficult travel conditions. expect all along the eastern seaboard you can see we have a blizzard warning in effect for north carolina and norfolk, virginia beach, that's the first time since the '80s we seen these blizzard warnings in virginia. and winter storm warnings in effect across much of the eastern seaboard not new york city but the jersey shore and long island winter storm warnings in effect and then another blizzard warning in

effect for the cape just south of boston. let's talk about how much snow we're going to be expecting tonight into tomorrow. don't expect easy travel here. new york city probably around 3 to 5 inches in some spots, but as you head east of there, long island upwards of 6 to 10 inches and the bull's eye right now looks to be new england where you can see close to and even over a foot around the boston area and cape cod absolutely brutal conditions it's not just the snow, it's also the wind. take a look at the wind forecast as we head throughout the day on thursday winds gusting over 40, 50 miles per hour, even up to 60 miles per hour on the cape thatcould cause blizzard and near whiteout conditions expect very difficult conditions throughout the day on thursday, winding down but then dangerous cold moves in on friday. back to you. all right. thank you very much. let's get more now on the weather effect on business from wall street's weather mandan leonard, senior meteorologist at the weather company. listen, you're up there in massachusetts, right, dan? we're used to it, we get it, we understand it, it's cold, it's winter

that's not breaking news but in savannah, in charleston, in richmond, that's a surprise how does this kind of weather really impact business is it, a, good because we all run out and buy stuff? or, b, bad because we sit home and don't do anything? >> i think it's a combination, brian. and just to clarify something, i am not used to this level of cold i mean, this is impressive stuff. we've had a week straight of sub 20 degree temps here in boston and it got over 20 degrees today and i'm going outside like it's t-shirt weather. but i will say this, this is actually good for the winter economy. especially up here in the northeast. it's great for the ski areas, right? i mean, we've had better conditions this year than we have in the past many, many years. and it's also good for the regular winter industry. i'm talking plow drivers a lot of good comes out of this. yeah, tomorrow we'll probably get a little bit of a pinch to the retail, the brick and mortar retails which aren't going to do any business. >> but, dan, have you no sympathy for the water parks of the south? i mean, people go to miami right

now to be warm and it's not working out. is it going to be bad for those places down there? >> fair, fair, but they don't have to deal with it for very long we are going to get a rebound. and that's the interesting thing going forward. and you've mentioned natural gas prices earlier, the past seven days or so, a big rally. 10%, 15% on this cold weather. but natural gas traders are a lot like equity traders. they want to know what's coming down the road. you can givethem a great earnings report record profits, but if the company says it's looking like we might have a tough next quarter, the price of the stock is going to sell off, right? it's the same with the natural gas guys, that's why the price is down so much today because we're looking at a potentially big january thaw coming up right now the question is does this thaw continue into late january? >> does it what's the answer? >> or is it stop and we go back -- >> i know that, dan, this is the social media age where memory, you know, is 30 seconds long, but remember 2014, the polar vortex

i think we went 30 days, guys, where it didn't get above freezing at one point in new jersey that was rough it was a stupid bomb cycle -- >> it was a $5 billion hit to the economy in terms of a loss in productivity as well as a drop in consumer spending. so how does it compare >> melissa, there you go, thanks, melissa. >> well, remember that even in the polar vortex winter that 2013 to '14, we had a moderation, we had a january thaw, mid january, temps got well above normal in the midwest. people forget that, but it happened so if this is similar and there are a lot of similarities this winter to that winter, if we have something similar where we get a brief thaw but then we snap right back into the cold, that could be really interesting for gas prices as well as other energy stocks. but right now it doesn't look that way this could be a more permanent pattern change as we go into the second half of january there's not a lot of cold follow-up as we head into say the third or even fourth week of january. we'll have to see what happens as we head into february but right now it looks like once we flip the pattern, we're at

least going to go back into a milder, maybe more changeable, more some cold, some warm, but it's not going to stick around. >> good news thanks, dan. back to the markets, hot markets as opposed to the cold weather we've been telling you about records and milestones, but the question now, where are we going to head from here and what's out there that could derail this rally? u.s. investment strategist and michael farris, cnbc contributor, lady and gentleman, good to have you here. >> thank you. >> mona. >> yes. >> can 2018 possibly be as good as 2017 when it comes to the market sns. >> michelle, i think it's going to be a pretty good year in 2018 narrative for 2018 strong earnings, robust gdp driven by tax reform upside and rates while they're still rising they're still remaining pretty low. the 2019 narrative i think can shift. i think we start talking about the cycle turning, the fed has now raised rates probably three,

maybe four times we're talking about potential downturn towards the mid to end of that year but 2018 i think can be robust mid single digit type s&p returns. >> so mid single digit not as good as last year but still positive. >> yes we've done some analysis on this if you look back towards since the 1920s any time the s&p is up 15% plus, the following year on average is up 5.7% so that's kind of the range we're thinking about right now i think it makes sense given where we are in the cycle as well. >> michael, mona's telling people if you're in it, stay in it even though you had a good run. what do you think? >> i think you have to i think you stay invested and i don't think you market time. but, michelle, i'm going to disagree just a little bit with mona though what mona says makes sense, this could go up next year, yes, id could, but it could go down 20%. that's the tough thing about this market. it feels like this is the new year's eve party that's now going onto 2:00 a.m. and i'm sitting there eyeing the

door waiting for the cops to arrive this is the first time -- 2017 was the first time in 90 years where we had 12 months up together so last time was 1927, 1928 was a good year, 1929 not so much. >> it is so cold that farr is wearing a vest under his brooks brothers -- >> this is a sweater and it's got a wind thing lining on it. it's cold. >> i like your style, baby you know, one of the things, mona, that really stood out to me last year was how the markets stepped over everything. >> everything. yep. >> just glided right by it. >> yep you know, i think, again, we're getting some of the geopolitical tension that's rising. >> yes. >> we're seeing north korea emerge. >> yes. >> and we're stepping over it. >> a big missile could ruin a lot of this. >> a big missile will absolutely -- >> i think this is a test. i won't go there. >> it's a family network, brian.

>> a missile is just a missile. >> we continue to feel that geopolitical will not move the market, will not move the economy until we're actually hitding the button whoever's button it is, it's really not a market driver. what we do seemoving the economy could be inflation that's, you know, the one risk we see out there and it's interesting the fed put out its forecast just a few weeks ago. they raised gdp, they lowered unemployment but kept inflation flat to slightly down. so if that surprises ths them in way, they don't want to remain behind the curve they want to continue to normalize and get tools in place so the next downturn they have rates, balance sheet, so i do think that is the one thing we're watching where, you know, you see a surprise there you could be caught off guard a little bit. >> michael, if i hear your message correctly, it's been so good for so long, how much longer could it be good for? if you're just worried about reversion, mean and the math, et cetera, what would you do here what would you lighten up on

how would you reallocate >> and all good things come to an end and markets do go down and back to mona's point about what the fed is doing what they need to keep their eye on, the two to ten-year spread right now is 52 basis points i mean, this is a really flat yield curve. if you want to watch one warning sign, listen to one canary in the coal mine, it's that two to ten-year spread at 52 basis points an inverted yield curve and we're cooked so i think you have to look at the areas that have really outperformed i think you have to look at things with commas in their p/e multiples and make sure that you've allocated number one reallocated from equities to whatever your specific asset allocation should be, make sure you're within your comfort level. if you were 70% equities, got up to 85% last year, bring it back to 70% follow your discipline and make sure you own good things with good balance sheets that will endure storms. this music will stop and you've got to make sure you've got a chair >> i don't know, last time

somebody used that metaphor it didn't work out very well for them we're going to put that aside.. >> all righty, coming up the race to lure amazon. governor of colorado will join us next to give us his pitch for his state to win amazon's second headquarters and another analyst cuts sales targets for tesla. this time by 75% s nd tesla have a big problem on ithas? "power lunch" back after this. at fidelity, trades are now just $4.95.

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we are touring the country looking at the cities bidding for amazon's second headquarters does denver make the grade cnbc's special correspondent scott cohn is in the mile high city with a special guest. hey, scott. >> hey, michelle one of the things that amazon has said it wants to do is replicate its current headquarters, its original headquarters in seattle. there are a lot of similarities between seattle and denver joining us to talk about that and about colorado's bid is the governor, the 42nd governor of the state of colorado, also a former mayor of denver, john hickenlooper we're live at the state capitol in denver. you have said that there's no better place for amazon's second home than here. >> well, there are a bunch of reasons. one is we have a lot of electrical engineers coming out of university of colorado, colorado state university, colorado school of mines, university of denver, maybe a couple other cities that produce

more, but certainly in migration of millennials who have those kinds of degrees, denver's one of top cities in america it's also we're a can-do that kind of western attitude that's exemplified amazon since day one you look at how denver and colorado have recreated ourselves in the last 10, 15 years as the most pro-business state in america but with the highest environmental standards, highest ethical standards. kind of what amazon's trying to reinvent a lot of economic structures in this country but with high standards. i think that's an important connection plus on a metro region wide basis we collaborate. when we passed our what we call fast tracks in 2003 but it was 122 new mile of track largest transition in the country 4 cent sales tax over the entire metropolitan denver area almost an area the size of connecticut, we had 34 out of 34 mayor

unanimously every mayor in the metro area two-thirds of them either conservative independents or republicans all supported that what other metropolitan area has done that effort >> which leads to one of the issue which is is infrastructure, which we'll get to in a moment it's also been reported that you're kind of lowering expectations or at least managing expectations about this bid. what's going on? do you know something that we don't? >> no, no, i have no inside information. i have some executives here who know jeff bezos and, you know, he is not communicating to anybody. as close as i can tell or if he is, he's not communicating to the people that i know but i think there are a lot of great cities in america. and there are a lot of -- i mean, it's a healthy competition in that sense. and i think in the end our chances. >> what do you think >> one in ten. with so much competition and so much at stake and other cities, we're never going to offer $7 billion in incentives, right we just don't offer that level of incentives. what we try to demonstrate is this is one of the highest

qualities of life. this is one of the most desired locations for young professionals in america and that's over the long-term going to be much more powerful whether they get a puny billion dollars here or billion dollars there. >> so colorado typically does well in our america's top states for business rankings. you were sixth this year you're almost always in the top ten. but we look at amazon's criteria and we measured some of that data so let's look at some of that. population, you've got that. that's an a-plus you look at stability. you're dealing with a pension problem in the state -- >> wait, wait, wait, the pension problem gets blown out of proportion if we change by the cost of living adjustment for the recipients of the pension by, i mean literally a fraction of a percent, right 0.25%, it dramatically changes the whole projection everyone says your pension is in such risk. there is no risk, i mean zero risk of colorado's pension being

anywhere close to default. >> but it's a financial pressure. >> yeah, but we're going to fix it we're fixing it this legislative session. if we were going to handicap this race, it's like saying you had a money trap and there's just a light rain. >> you've got a shortage of work a lot of great workers, educated workers, talented workers, but not a lot of them. >> the issue here is we've grown so rapidly over the last 15 years, and this comes back to infrastructure i'm sure you're going to bring up as well, but again, we have been so -- the metropolitan denver area so attractive to young people literally, if you talk to any of the tech employers here, they're happy. and they don't feel they're at a disadvantage. >> real quickly, infrastructure because that's where you fall short, what are you going to do about it >> we don't fall short if you compare us to austin or nashville or raleigh, durham, charlotte. we have a light rail system now rolled out we have one of the best and most modern airports, fifth busiest in the country

light rail from downtown right to the airport >> governor -- >> and we're going to finish that infrastructure. >> very good governor john hickenlooper here in denver live we're going to see how it goes we're going to continue looking at all of the cities in the amazon race, michelle. >> thank you, scott. we have breaking news out of the white house. eamon javers here with the details. eamon. >> michelle, that's right. scorching statement here from the president of the united states towards steve bannon, his former political adviser who left the white house earlier this year earlier in 2017 i should say this coming after steve bannon has been quoted in a new book by michael wolf which is excerpted in the new york magazine just hit the wires a little while ago has captured the attention of just about everybody here at the white house in which bannon says among other things that the meeting between donald trump jr. and russians at trump tower during the 2016 presidential campaign was, quote, treasonous and unpatriotic. now the president responding in very strong language to that comment and others that steve bannon made in that book which

has been excerpted widely. the president saying in a statement just released to the pool reporters here at the white house, steve bannon has nothing to do with me or my presidency and he was fired he not only lost his job, he lost his mind steve was a staffer who worked for me after i had already won the nomination by defeating 17 candidates, often described as the most talented field ever assembled in the republican party. now that he is on his own, steve is learning that winning isn't as easy as i make it look. steve had very little to do with our historic victory, which was delivered by the forgotten men and women of the country the statement goes on in that vain for some four paragraphs, michelle this is the response from a president who clearly feels bitterly wounded by one of his former chief political allies. not the only figure quoted in that "new york magazine" piece, katie walsh, former deputy chief of staff here at the white house also quoted in that piece saying that managing president trump was something like managing a child because of the chaos and confusion of the early days of

the trump administration the white house will tell you that organizationally that chaos has declined since general john kelly became the chief of staff here at the white house a few months ago but this is a very revealing look inside the early days of the trump white house is being disputed by some in the media sphere because some of the anecdotes are coming under fire for their apparent accuracy or lack thereof but the white house hitting back here as hard as i've ever seen a white house hit back this is an astonishing statement by the president. >> yeah, i think the word scorching was accurate that you used at the beginning. the other thing that's changed d dramatically since steve bannon left is the number of leaks which suggests they were all standing at a circle like guns drawn like a firing squad dramatically reduced since his departure. and think back to that time as well, right? >> spicer, flynn, all of them have departed, right so those people who are leaking

about each other are gone. >> omarosa. >> omarosa left -- didn't mean to interrupt you, michelle. >> go back to when everyone thought you want to fire this guy, don't you want to keep him closer, isn't he so dangerous outside of the white house running breitbart, et cetera, he's going to wage war on the white house? and look at what happened in all these months steve bannon hasn't done nearly as well as anybody thought he was going to do. >> right this statement coming on a day in which a democrat is being sworn in in the united states senate from alabama. that after steve bannon got deeply involved in the alabama senate race on behalf of roy moore, the candidate who was defeated in that race. the president in his statement just now calling all of that political acumen into question saying the president knows how to win, steve bannon doesn't know how to win. this is as fundamental a political divorce between these two men as you can imagine.

>> well said. >> you know, eamon, there's something else in the statement that i think strikes at the home and the heart of what we do, which is we have seen in the last year a number of good reporters, high level media sources have to restratract statements or correct stories, the president calling it fake news, you know the reporters how this works if you've got a good high level source in the white house that you think is feeding you good high level information, you're going to go to your editors and say this is my source, you don't name them ever in print or on the air and they say go with it, it sounds like the president has said that bannon was leaking bad information either to make himself look good or perhaps maybe, eamon, to discredit parts of the other media that they have gone after. that might explain why there's been some of what the president's called, quote, fake news out there in the first place, would it not? >> sure. absolutely there's a big media piece to this i mean, this the michael wolf book is largely about the president's consumption of media and reaction to it and interactions with high level

media figures. there's an anecdote in there about a meeting between bannon and roger ailes of fox news as fox news was sort of passing on the conservative media baton to breitbart and steve bannon this sort of generational change among conservative media, that all playing in the background here as sort of the background music. but michael wolf who authored this piece, i can tell you he was here in the building i saw him on this driveway behind me a lot this spring through the summer he was definitely getting into the building quite a bit they might dispute some of these anecdotes, but wolf was clearly here and clearly talked to some people willing to go on the record including walsh and bannon and some others quoted in that piece i mean, it is full of rev ealing anecdotes and we'll hear about this afternoon what sarah huckabee sanders can say, and jared kushner and ivanka trump made a pledge that ivanka trump

be the one in that couple to run for president if they were ever in that situation and positioning themselves for their own political future as a couple after the trump administration all of that will be chewed over by the media in that briefing at 3:00 and the reaction here from the white house has been muted until this broadside of the president just now. >> this statement is all about steve bannon what is not in this statement is a denial of the initial premise of anybody who's going to read this michael wolf piece, which is online right now, is that president trump did not want to be president and that nobody on his team thought he was going to be president. i'm not clear from this that many on his team actually wanted him to be president. that's at least the suggestion. >> or his wife did, most specially. >> and the anecdote he has on election night he has melania trump in tears on election night. >> and they are not tears of joy. he makes very clear. >> at the prospect of being first lady

so he also has the president and melania trump sleeping in separate bedrooms here in the white house. the president, you know, consuming cheeseburgers for dinner in his bed watching television i mean, all of these things that hit at the image of the presidency and the first couple that would be just -- the reaction here is going to be something to see. >> well, at least that normalizes him i'm glad i'm not the only one. >> eating cheeseburgers in bed at night. >> right unflattering anecdote piled upon unflattering anecdote in that story, the white house is bound to find something to pick apart and say it's not true. but what you're not seeing is the denial from steve bannon that he said these things or denial from the white house. >> there was another nugget i heard earlier -- >> steve bannon has nothing to do with the presidency. >> i heard another nugget eamon reported on on nbc that bannon said it was an absolute certainty, i believe were the words, that during the meeting at which his son tharks his son took with those russian

emissaries that it was an absolute certainty, says bannon, that the son, don jr., would have taken those people to meet the president. something that has not been stated before, has i think been denied but if that's true, that's another -- >> that's another astonishing piece. >> another page in this novel. >> now, if my chronology is correct, steve bannon did not start on the campaign until well after that meeting. >> correct. >> which was in the spring of 2016 so he wouldn't have been a firsthand witness to somebody bringing veselnistkaya or -- >> right. >> -- who was at trump tower but he may have information to that effect or may have been reporting based on his instinct about how those people operated with the how don jr. operates with the president personally. but that is another astonishing thing. if that is true, that is a new and significant piece of this story overall. i've not said that the president

ever met with veselnistkaya at all during the entire process. >> this is truly an incredible statement. and i want to apologize in advance, eamon, for your lack of sleep tonight. i know it's going to be a long night on the phone wild times in d.c. tyler, you made the point with our market guest earlier that no matter what has happened, north korea, iran, president, the markets continue on. we're seeing that. the dow up 55, you have got an incredible statement being put out arguably now some sort of media schism war whatever you want to call it between the president and one of his former closest advisers, apparently and, again, the markets shake it off. >> they just keep on walking like johnny walker, keep walking. all right. the big automakers reporting -- am i going to read it? yeah, i'll read. december sales today, that's what they're going to do airlines handing out bonuses and what is this frigid weather doing to the travel industry all those questions will be swedevy of them and more when "power lunch" returns right here on cnbc

hello everyone i'm sue herera here's your cnbc news update for this hour.

as unrest continues in iran, the u.n. has issued a statement saying its secretary general antonio gutierrez deplores the loss of life in the protests and that further violence must be avoided allergan disclosing plans to eliminate more than 1,000 jobs and an additional 400 open positions. in a regulatory filing, the maker of botox says the moves are in anticipation of several key drugs losing their exclusivity. canada says it will fight a decision by the u.s. to impose duties on certain soft wood lumber exports those duties went into effect today. canada's foreign minister calling them unfair, unwarranted and troubling. and the uk's royal mail set to release postage stamps in release of "game of thrones. great britain's postal service said due to the very significant british contribution to that show that is the news update this hour

ty, i'm going to send it back to you. >> all right, sue, thank you very much. time now for the power rundown phil lebeau joins us the three big u.s. carmakers have released their latest sales figures. was it, phil, a december to remember >> it was a very good december and a very good 2017 we don't have the full numbers yet. we'll get those probably within the next hour or so for the entire industry. the sales pace is expected to come in about 17.7 million once again, trucks, suvs remain in demand while cars are out of favor. we should also point out honda and nissan, hats off to them we talk a lot about the big three, but those two companies reported record annual sales here in the u.s. and as you take a look at the sales pace for the year, keep this in mind it will be over 17 million, the exact number we'll find out later this afternoon this is the first time we've had three years in a row with sales topping 17 million 98 million vehicles sold since 2012 here in the u.s., tyler. >> one of ford's most popular brands and one whose styling i

always have liked, phil, the fusion, is now being done with. >> well, like others, sales are down there's report in the detroit news they are going to be scrapping plans to refresh the ford fusion. doesn't mean it's going away, but the fact that they are scrapping plans according to this report to refresh the vehicle, this is everything we're talking about in the auto industry are cars going to be what we envision them right now or is ford envisions a world with new mobility in the future, will it say change the fusion dramatically that's part of what's going on here again, sales being down more than 20% last year, that indicates just how little demand there are for sedans. >> sedans just aren't moving and some of them are really nice looking. i mean, the impala, malibu, fusion, the new accord, the new honda they've been advertising, beautiful car. let's go to the airlines, phil southwest, america celebrating gop tax plan with $1,000 bonuses

for employees. will rivals follow i would think the pressure would mount for them to do just that. >> well, we've reached out to the other airlines, most notably delta and united we said, look, are you going to be doing this as well? this is all in honor of and that's the language we usually hear from these companies of the new tax reform bill. and the airlines do benefit because of the tax law changes that are going into effect as a result american and southwest both said, look, we're going to reward $1,000 bonuses, not american and delta, but american and southwest delta and united we're waiting to hear about them to see if they do the same thing and, look, their profits are up and they are expected to benefit because of the tax law changes. >> all right phil, thanks very much phil lebeau in chicago. tesla's expected to announce fourth quarter delivery numbers this week. one analyst is slashing estimates by 75% to well below census expectations. he says tesla is silicon stock

he's had an under perform rating on the stock since september of 2016 currently has a price target of 170, about $150 below the current share price. jeff, great to speak with you. >> likewise. >> this has been a tough under to hold onto i'm sure. in terms of lowering the estimates of the fourth quarter delivery numbers, it's an eye popping cut to your forecast but at the same time you're keeping unit expectations for both the s, x and model three in tact for the fourth quarter as well as full year 2018 is that because you think they will work it out or because you just don't want to bother at this point with revising >> no, we're certainly below consensus for the fourth quarter. and then as we look out into 2018 we think they'll be able to grind it out revise the narrative down to a couple thousand.

they're still using the employees as guinea bigs, so to speak. and now we've finally gotten through some of the teething pains to open us to the mass public our census in the q-1 period they'll start hitting those numbers in multiple thousands per week it's imperative to hit that in order to do the next capital raise in our view. >> sounds like they're going to need more money. melissa is right eye popping. you've previously modeled they were going to say 9,200 models and now only 2,250 that's an enormous drop. is that because of all the things we've been reading in the paper about them having to hand solder items, they're not doing mass manufacturing at this point? >> yeah. you know, the narrative out of the company has been somewhat limited in terms of. our sense is talking to some suppliers they're not hitting multiple thousands per week. that's another aspect of still looking at number of vin registrations gone through nhtsa not up in the 9,000 range. there's a way of tria-- tri

anglating and our sense is again at some point in q-1 you'll hit that in likely late q-1 or q-2 to raise additional capital to fund multiple billions that elon wants to do. >> a big part of a lot of bears cases out there, jeff, is the cash burn and inability or ability of tesla to tap the capital markets. you're saying this may no longer be the case because it's always been the case. they come out with the bond offering they come out with an equity offering it trades very well in the market you point out that the most recent bond offering is actually trading below par and the financials look weaker >> it is bond offering has broken par certainly aggressively priced deal, but our sense is the next deal will have more stricter terms if they elect to use debt. and i think certainly if they wanted to use equity they would need to have a bit more of a sweetener as to, you know, the

ability to hit cash flow positive with the model 3. you certainly need more than 5,000 a week to hit that type of level. >> how much are they going to have to raise? >> you know, really depends. there's a lot of things he said he was going to announce by year end he didn't hit. one was autonomous drive from l.a. to new york that didn't happen he did say earlier in the year in '17 he would announce two new g gigafan gigafactories, that didn't happen growth potentially slowing down. i think at a minimum they're going to have to raise $1.5 billion or $2 billion. but i think if they come out and say build in shanghai like was talked about last summer as well as potentially something in europe it's much more than that they'll need to raise. >> you know, not to rub salt in the wound but we highlighted you had an underperform since september 2016, do you enter this year seeing the stock has sort of chugged sideways for the past six or seven months or so, do you enter this year thinking

this is the year tesla will in fact underperform? >> you know, when we initiated in september of 2016, we always kind of looked to the middle of 2018 as to when the competitive environment would intensify. i think if you looked at what happened at the auto show last september, certainly the germans now get it they're massively accelerating their e.v. introductions and mainly due to the decline of diesel sales they need to hit the co2 requirements mandated in europe and only shot to do that is to pile a bunch of money into e.v. development. so '18 is a pivotal year we laid that out in 2016 knowing this was a long-term case. certainly the enthusiasm into the launch of model 3 as well as to some extent the truck was a little bit overdone in our view. but now the rubber meets the road, so to speak, and we'll see how well they can actually execute. which has been a challenge the first couple months into this process. >> all right we'll see. jeff osborne, cowen. some states are threatening to individually adopt net neutrality can they do that

would it work? we're going to talk to the man who actually invented the phrase, net neutrality and we're all over this bombshell statement from president trump in response to a bombshell article about his presidency what trump said about his former adviser steve bannon

streaming and speeds of the internet continuing battle over net neutrality you thought it was over and done with no the rules blocking and throttling and fast lanes on the web were repealed by the fcc, but now states like new york and washington state that is pushing at the state level get ready for court challenges here on this and here to weigh-in on the tech landscape is columbia law professor timothy wu we'll call him tim originally coined the word net

neutrality tim, welcome good to have you with us. >> thank you. >> you were a supreme court clerk. so you can explain this to me. but i thought that the federal government had very, very broad powers to regulate not only interstate commerce but interstate communications and that when there is a collision between state laws and federal laws, the federal law is supreme. explain to me why these state challenges to what ajit pai has done. >> a lot of that is true, but congress has to actually use that authority and it's not completely clear, at least what the states are saying, it's not completely clear that when congress run the telecon act they wanted to completely push the states out they set up a system where both the states and federal government regulate, no one knows exactly what the boundary is we're going to find out, i'm guessing. >> so you think that states will

step in and do what net neutrality did, which was to ban fast lanes for traffic, ban throttling, slowing down traffic, ban the ability of internet service providers to set different tolls on the information highway. >> well, i think the states will do probably is go right at that core protections say this is a former consumer protection >> the metaphor we always use is a really big truck on the highway pays a bigger toll because it causes more wear and tear. >> right. >> netflix sends

why shouldn't they pay more for access for occupying more of the space? >> we're talking about a different issue here which is the blocking imagine the highway or a bridge or something to block certain brands of cars or trucks altogether that's often something that's been regulated and you think about the telephone service for early 20th century and you have to carry everyone's traffic. what i think are doing is getting at the core protections which is no blocksiing and no throttling >> so not being able to stay for vonnage which allows for free telephone calls over the internet and they know you can't do that at all >> and it could be used in an anti-competitive way, obviously, to keep off. let's personalize it this company is owned by comcast, one of the biggest providers of internet service in the country. if they were able to block they could potentially block

competitive programmers. >> right >> from going through the internet >> right without net neutrality you would never have had netflix started or spotify or skype, all these guys because why should i have the cable company have these guys start and some of the pricing stuff is different and that's what the states will be going after and the blocking stuff. >> do you believe that companies that use more of the space in the pipe should pay more should netflix pay more to get the content down the tube? >> they should pay more. >> what i believe should be true is i'm a net neutrality advocate >> you try to advocate >> i believe the simple rules of the road have worked really well and i think the internet economy has grown beyond everyone's imagination and net neutrality have something to do with it and they can reach consumers without having to negotiate, and it

means in practice you start your business and you have to start talking to verizon and talking to all of these companies to get started and the track record of net neutrality is an incredible one for business and the tech economy. >> is it for the consumer? >> i think it's great for consumers. >> consumers are the benefit and take television, for example, television has been revitalized and deepened and netflix is cheaper and the cable prescriptions. >> and net neutrality will be bad for consumers? >> i think they'll pay more. >> what if you won't have better quality service? >> they've been saying that for ten or 15 years and the quality of cable hasn't gotten worse and people watch netflix, amazon prime. i think it's been a golden goose for everybody. their net neutrality and i think the trump administration is taking p real risk here by letting some of the gate keepers have a lot more power over persons and over new businesses and also, and that's what the case is based on >> we've got to leave it there tim, thank you very much

this is an ongoing conversation. >> sure is, and it will never go away. >> "power lunch" will be right back

all right. well, the markets are higher across the board, and not by much the dow jones industrial average is up we'll call it 0.02 of 1%

and the nasdaq, up 0.7% and we have news on the other side of the break and the federal reserve and we'll get more on that and the bbsllomhe comments by the president "power lunch" with a lot of news in a couple of minutes returns right after this see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated.

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>> release of the fed minutes just moments away. let's get a check of the markets. the dow, s&p and nasdaq all hitting record highs and the s&p crossing 2700 for the first time ever right now take a check there s&p higher by half a percent let's get to steve liesman >> minutes from the fed's december meeting show that most fed officials support a continuing, gradual approach to raising interest rates the outlook for economic activity was described as strong and strengthening and the labor market, as well. but there was a lot of debate shown in these minutes about the effects of tax cuts and about the outlook for inflation and indeed the outlook for rates what it seems like is the center is the same and both sides on the hawk and dove side seem to be digging in on the perspective point of view.

it's not comfortable with the degree of additional policy tightening implied by the fed forecast for 2018. what's supporting that is there were two dissenters, but when they say a few, there may be more than two people who are uncomfortable with the outlook with three rate hikes next year. a few on the hawkish side want faster tightening because financial conditions have not tightened and long-term rates have not risen very much and they have financial stability in the future on tax cuts, many say they expect tax cuts to boost consumer spending and capital spending and most boosted their projects because of the tax cuts several see the possibility of tax cuts could raise potential gdp growth and that's very important for policy in the future however, was there some caution on the business side where some say it could be used for greater mergers and acquisitions as well as debt reduction and stock buybacks on inflation, again, the center expects inflation to move toward the 2% target, but the doves say

there is a possibility it stays lower for longer than they expect and the concern is they've reduced inflation expectations and on the other side the hawks are digging in saying they're worried about elevated asset valuations and low financial market volatility and low rates could pose a risk over time. the fed debated this issue of low, long-term spreads that is the very low amount of space between the two year or the ten-year or short rates and long rates right now it's not outside of historical norms, but some express concern that a future inversion as in the ten year going below the two-year quote could portend the economic slowdown guys, a lot going on at the fed and the center seems to be pointing through these three rate hikes this year, but a lot of debate on both sides and the hawks and the dove it is that will ultimately have to be decided by the new incoming fed chairman jerome powell and he's got a lot of work to do when he takes office for his first meeting in march

back to you. >> interesting times for mr. powell and the fed we'll talk more about it, steve, thank you. >> we have other breaking news we are watching. the white house releasing a flame thrower of a statement in response to an excerpt from michael wolf's new book, that excerpt published in "new york" magazine, president trump pushing back very hard made by former counselor steve bannon. eamon javers is live >> caller: the white hou >> reporter: the white house pushing back in which steve bannon says allegedly that the meeting between donald trump jr. and the russians that took place in trump tower during the campaign is treasonous and unpatriotic in a statement released by sarah huckabee sanders the president said the following, steve bannon had nothing to do with me or my presidency when he was fired he not only lost his job, he lost his mind steve was a staffer who worked for me after i had already won

the nomination by defeating 17 candidates often described as the most talented field ever assembled in the republican party. now that he is on his own, steve is learning that winning is not as easy as i make it look. steve had very little to do with our historic victory which was delivered by the forgotten men and women of this country. yet steve had everything to do with the loss of senate seat in alabama held for more than 30 years by republicans he's only in it for himself. that's a blistering statement from the president of the united states to a former top political adviser who was here in the white house during the formative days of the trump administration i'm searching my mind when we've seen a president attack one of his former political advisers and i can't think of one meanwhile, we're getting other statements from other officials here at the white house about this michael wolf book let me give you the statement from sarah huckabee sanders. this book is filled with false and misleading accounts from

individuals who have no access or influence with the white house. participating in a book that can only be described as trashy, tabloid fiction exposes their sad, desperate attempt at relevancy. and we have this from stephanie grisham, communications director for the first lady, in the book michael wolff suggests that the first lady melania trump didn't want the president to become president on election night and was in tears contemplating her role as first lady of the united states stephanie grisham and the spokeswoman saying the book will be sold in the bargain fiction section, mrs. trump supported her husband's decision to run for president and in fact, encouraged him to do so. she was confident he would win and was very happy when he did the white house in full broadside mode here against michael wolff and steve bannon who were in full broadside mode against the president and we will see sarah huckabee sanders at the white house podium at 3:00 p.m. and we're waiting to see what else comes of all of

this, some astonishing anecdotes and alleging that rupert murdoch called the president an idiot with a modifier after having a meeting and conversation with the president about agenda items and there are a lot here that people will be reporting for days to come. >> from the business side, as well, eamon, this is from the "new york" magazine story, stev bannon compared china to nazi germany in 1930. we know that president trump has had a good relationship with president xi of china. i wonder if there's going to need to be a reachout here after this i know it was bannon and not trump, but there's no way that china or its officials will be pleased reading these comments that an official or an adviser compared them to nazi germany in 1930 >> there will have to be a reachout on that, brian. you're absolutely right. there will have to be a lot of reach outs from the white house and it will be an octopus reaching out to so many people

after this book. there was a photograph in the west wing of president trump with president xi jinping hanging on the wall until a couple of days ago the president really enjoyed that trip to asia, really enjoyed meeting xi jinping and was proud of the accomplish ams ther there, and that was a relationship that the president has been working on and clearly the president will have to talk to china and he will have to talk to rupert murdoch and his conservative allies and some of his former staffers and there is a lot of reaching out that will have to go on at the white house. >> we'll be talking about it today. eamon javers, thank you so much at the white house so let's get back to discussing the fed which is what we do here and the fed minutes. let's bring in daniel dimartino, and michael underhill of capital innovations. if people can remember steve liesman's report, but talk about -- interesting, the fed members of the fed, most of them boosted their gdp expectations,

danielle, and yet they were fighting about whether or not inflation would stay flat or lower. that was a lot of back and forth. a lot of back and forth and you heard about the financial conditions and i'm starting to hear jay powell and jay powell exerted himself in these minutes and i think we heard from william and from the new guy in atlanta who is coming in as a voter, and i think we heard from him from the doves that would be going on, but on the other hand there were a lot of hawks making their presence known 69 -- excuse me, 17 out of 18 industries described pressures were increasing and it was a six-year high. >> how much will this matter since there's so much change all of these people who are in this room, and i don't want to call it fighting, but having intense debates about whether inflation will be up or down a lot of them will be gone >> are we starting to hear voices that we haven't heard before >> are we starting to hear quarrels come out and we have somebody new in philadelphia and we have somebody new who we've

had as a voting member in atlanta, as well and we know nestor is a huge hawk. this is like pin the tail on the fomc member, but what was interesting to see the minutes reveal all of the back and forth because there's this contingency that says it's 1.5% tce and 5% away from the target and there are other signs that other inflation metrics are rearing the stock market, for example. >> the stock market, but not just the stock market and the ppi is a six-year high and that's not a statement of manufacturers imaginations >> so michael, what's the possibility that what the tax code giveth the fed will taketh away in the form of higher interest rates >> great question. so what you're seeing here resembles a led zeppelin song "communication breakdown." you're seeing very differing messages, and when you're seeing tax cuts with increasing pmis and a global economy that's heating up, we actually need a

higher rate environment. and so the fed, i think, will adjust that rate everybody viernmevier environment in 2018 and you will not see a massive ratchet in terms of rate, but what they're doing is they'll have to delicately balance what's going on here both with global growth, accelerating inflation and various measures of inflation that are now starting to rear their ugly head and modestly increasing the interest rate environment. so i think it will be a very delicate tango moving forward. >> anybody who can bring a led zeppelin reference into a fed discussion i like. so you can come back >> you know, tyler, i'm going to jump on what you asked a few minutes ago. david rosenberg in toronto recently put pen to paper, conservative estimates suggest that the tax cuts will result in 80 to $100 billion bump for good-bye and he said for every quarter-point rate hike that the fed pushes through that's equivalent to $50 billion of taking the gdp away. so if you get two rate hikes

this year that effectively offsets the tax cuts. >> and michael, given the ---y hate the term dot plots and i'll just call them the projections, we've got projections for 1.5% all of the way to 4.5%, in other words, huge disparity of thought among future interest rates in a year or two. does that aspect, i guess, of the fed being dazed and confused -- >> that would be the stairway to heaven >> hopefully it won't lettuce to the economic gallows poll. >> i'm done with all that, but do you worry that the fed is so -- has such a wide range of thoughts that they really don't know what's going to happen? >>. >> i think it's up for discussion that's really what it is you have a diversion of opinions and you have a collection of bird, if you will, and what you will find is moving forward they'll do what's best for the economy and they'll do what's best and quite frankly, i don't want see a ratchet like from february, '94 into february '94.

do you remember the rate increases and the largest was november 1994 and that was 75 basis points and not unlike playing sports and when you hit your nose, and your eyes water and crawl to the sidelines or play through a lot of people play through you saw industrials, materials, different types of equities actually performed well and fixed income struggleded a bit so i think there will be opportunity moving forward and it's got to be a coordinated effort powell is clearly a dove he's a financial engineer. he's got a light touch, but i think he's got a great sense of diplomacy about it, so i'm not concerned, but there is a lot of data going on here maybe they're saying something in the minutes that suggest they're more dovish than what they expected. >> hawkish >> hawkish >> thank you thank you, danielle, thank you, michael >> thank you all right. from the fed to pharma and a power rundown with the one and

only meg terrell sparks therapeutics with the gene therapy drug that will cost almost $1 million, $850,000 per patient, to be exact >> what's unique is it's the first gene therapy and they're delivered just one time. they're expecting this to be priced at more than $1 million for the one-time treatment of these patients so it came in a bit light of that at $850,000 and they're reacting fairly positively from a stock perspective and analysts are saying this say good thing not having the $1 million headline. >> it's not just the sticker shock over the price, sparks therapeutics is announcing aest is payment options and it will be a new model for gene therapy specifically designed to cure treatments or diseases, excuse me >> right they are trying to cure diseases by fixing the underlying genetic cause of disease what they're announcing is

important not just for spark's we're talking about three different models and one is outcomes-based pricing and a lot of companies are talking about this which is essentially paying for a drug based on how well it works. spark's laid out an idea that the drug is doing well in the beginning and after 30 months and this is for a rare form of inherited blindness that can lead to complete vision loss, based on how well patients can see and they're announcing a contracting deal essentially where hospitals don't have to experience the expensive drug themselves and trying to avoid the risk there and finally, a very interesting thing they're pursuing here and the proposal for centers for medicaid and medicare services and this is $850,000 one time and what if payers didn't have to pay that all at once, if they can sweat out that cost, and that can solve problems in the industry and not just for spark and remember hepatitis c and the outcry of paying for that. >> in terms of refunds, if the drug does not work, we've

already seen hints of that, correct? from other drug companies. >> novartis with the immune therapy drug, that cost $475,000 for a one-time treatment and if that isn't working for 30 days based on 30 days for cancer novartis doesn't get paid at all. in this situation, they pay a rebate. >> it can make the insurers much more willing to say go ahead and try it >> people do want to move toward paying for medicines that work for people >> let's talk about drug prices. drugmakers are raising their 2018 prices by almost 10% which sounds like a lot and there's a lot less than they have in the past >> we came back to the new year with a lot of new drug prices. these are just a few of the companies that announced new prices for the drugs and a lot of them are raising the drug prices between 5% and 10% as of january first or as of this week allergan raised the price of a dozen and a half drugs by 9.5%, biogen, gilead also raising

prices of drugs. these are the list prices of drugs, companies like to say this doesn't include the rebates and discounts we pay back into the system they'll be getting more revenue by two to three percentage points this year probably. so drug prices are going up. >> for some drugmakers, i'm sure, drug prices are keeping a cap on how much they increase and it comes at a difficult time and we got news that allergan will cut a bunch of jobs >> allergan is in a tough place right now and they're losing xfrity and that's one of the things they've been talking about about having to cut the jobs and that's where the revenue will go to. >> thank you >> meg terrell. >> thank you melissa, thank you very much here's what's coming up on "power lunch." freezing temperatures keeping consumers at home and there is colder weather on the way. we will talk to the billion dollar buyer himself about the chilling effect he may be seeing on business. he's got a lot of consumer-facing businesses and what's ahead for housing in 2018 we'll ask the number one housing

analyst on the street and the u.s. blocks an attempt by a chinese company to take over moneygram. we'll tell you what sealed the deal and "power lunch" is back in two cannot live without it.

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states about to get hit with a one-two punch of winter weather. a winter storm followed by dangerous arctic cold. rf a rafael miranda is standing by with the latest. >> this storm has the potomski

ea potential to cripple travel, and places like savannah and charleston and heavy snow there and the wintry mix in the rest of the carolinas and the snow potential is significant we have these warnings in effect and blizzard warnings in effect for portions of virginia and that is very rare and these warnings extend up the eastern seaboard new york city under winter storm watch and long island and the jersey shore, winter storm warnings and the combination for the cape and the combination reducing visibility tonight and tomorrow zero visibility and white-out conditions are a possibility as far as the heaviest snow, it looks like we're digging out of a couple of inches in new york city, but as you head east across long island and especially new england, that's where we're looking at the potential for over 6, 9, even up to 12 inches of snow in the heaviest spots and blowing and drifting snow will also be a major concern hindering travel and you can see the winds are going to pick up during the day tomorrow as the storm rapidly

intensifies and winds gusting over 50 and even 60 miles per hour causing the whiteout conditions and as the storm pulls away tomorrow night we have the cold moving in and dangerous arctic cold and it gets even colder than that the windchills below 30 below zero at times as we head into the weekend. back to you. >> rafael, thank you very much the deep freeze forcing businesses across the country to close doors including florida theme parks. eric is in chilly orlando with more hi, eric >> reporter: how are you doing it is chilly, relative for orlando, the next couple of days will be 32 degrees and if you see behind me. we're in front of aquatica. and behind me is the sign saying closed and if you look all of the way back you'll see the water slides which if you're a kid i don't think you want to be

on that when it's 35 degrees outside and it's the same story with disney and universal. they own water parks here in orlando and those are closed and the good news is if you still came down you can go to the theme parks and the regular seaworld and the regular disney world and those are still open for business and it's about 68 million people who come to orlando and $64 billion in revenue and we were surprised by how cold it was. take a listen. >> it's a big waste to buy sunscreen this week. it's a lot more rain and a lot more frost than i was expecting. >> no sunscreen for me either, and we're wearing gloves and the jackets. i know it's not what it's like for new york city, but for florida this is extremely cold the home depot, the manager said they're sold out of space heaters and they're down to the last bit of firewood >> i have heard, but cannot confirm that ice slides are more fun than water slides. give it a shot go to wally world. jump the fence

$20 in it for you. >> you always have the best ideas. >> or the worst. stay warm! thank you, eric. tillman fertitta keeping a close eye on the weather map, why? because he has hundreds of restaurants and hotels in the impact zone taking a bite out of sales. tillman joining us now by phone. it's not too bad in houston, 37 which i guess for you guys is the dead of winter, but chicago, tillman, it feels like 3 degrees. are you noticing an impact on your restaurants are people staying in or are they going out more? >> they stay in. you know, and orlando is a good example because we have major restaurants even at the disney parks and disney springs that are some of the busiest restaurants in america, and you just feel it it has an effect, and what's happened now is that it's been going on for 7, 10, 12 days and it will go on for another five days and after a certain point, people just will not go out and

the problem is that if somebody was going to buy a tv or going to buy a car, you get that sale a week later, but you don't get to go back and eat another meal, and so it does affect your business it's affected the gaming business of course, it gets always so cold in snowstorms on the weekends in atlantic city. it doesn't happen on monday and tuesday and it always happens on friday, saturday and sunday and it's affected the gaming business in biloxi and atlantic city and not in vegas, but you feel it. >> you don't see a bump later, and i get your point about tvs and if you need it, you'll get it whenever it may be and i know you lose the meal, but do people then, because they're pent up, isn't there an aspect, tillman where i've got to get out and maybe they weren't planning to go out, but you might make it up on the back end and just because people are going stir crazy. >> brian, you really don't because you do business regardless, and like i said, you're not -- as soon as the

first beautiful day. everybody just doesn't run out there. it's not the middle of summer after it had been raining for eight days and everybody wants to get out and everybody goes on about their lives and the people just tend to stay home and eat what's ever in the pantry when it's just super cold and people don't travel businesswise and people, if you look at all of the flights that are canceled coming into new york later in the week and you see the people going there and they say i'm not going to go and fight the storms and it affects the businesses there. >> tillman, is it possible to encourage delivery or is that too expensive? there will be a snowstorm, obviously, that's not going to work, but where it's cold people can order out. >> and people do, but we all do it because it's real competitive and we pay a huge amount of our profit to the delivery company do we want to lose the sales no, but it's not real profitable dollars and you have to remember

also, because you never really know how bad the weather is going to be. it's hard to manage your labor it kind of affects your food cost because, do you throw product away and it affects your labor cost and you don't know how to schedule and of course, you lose the top line. it's just really been a weird, last seven months when you think about the hurricanes and floods and all of the fires in california, and i've always said i never really worry about weather because everything balances out over the year you get hurricanes one year. you get floods one year. you get fires or blizzards and ice and this year we just seemed in the seven, eight months we've gotten everything across the country and i've been doing this for a long, long time and i've always paid a lot of attention, and it's never really bothered me, but it's definitely different out there right now and we're all fighting it, but believe it or not, sales are not off as bad as you would think they are people are still out >> go to the luxurious new mass groves in houston, throw up the

rocket theme on tv and that doesn't suck -- excuse me, sound too bad. >> it's not just you and me talking now, brian >> fair enough tilman, thank you very much, buddy. we'll speak to you soon. don't forget, tune in tonight for the season premiere of "the billion dollar buyout. the new season kicks off only on cnbc and we should say tips off. "power lunch" back in two.

analysts expecting a boom in housing prices in the coming year one possible exception, the big apple. robert frank is here now to explain why. >> manhattan took a big tumble and a rather unexpected one and experts say 2018 could get even worse especially for the most expensive condos the fourth quarter was the worst in sales down 12%. average prices falling below $2 million, almost affordable for the first time in two years and that's according to a report from miller samuel ec broers s brokers say it was a one off details of the tax plan. the problem is it's bad for manhattan real estate as the tax deduction is expected to put downward pressure manhattan

property prices. the high end is getting hit the hardest and sale prices for luxury apartments dropped 21% in the quarter and there is now a 17-month supply in inventory and that's up from ten months just a year ago the most expensive sale of last year was the $91 million purchase of three combined penthouses at 432 park avenue and that went to a chinese buyer and the second most expensive of the year was an $80 million townhouse and that was sold by vince who bought it for $20 million back in 2006 so the longview here is that manhattan real estate is always a good investment, but short term, i'm being told that it could take two years before the pressur pressures could show up in prices because sellers are in denial and we can see whether it's 10% or 5% it will take a while for this to soak in the market >> for someone to accept the lower prices. >> exactly >> robert, thank you. 2017 was a big year for the

homebuilders check out the 12-month performance of the top four. lgi homes and kb urging more than 100 dr hort be on, up and pulte up 91%, and pulte up 84%. what about this year who will the winners be? >> and joining us is the number one housing analyst on the street welcome, you seem to like not the builders as much as you like the building product companies, why? >> well, to put it the in short, the valuations for the builders have reached levels that are far beyond anything that we've seen given the fundamental backdrop and frankly, 2017 was a power move largely driven by multiple expansion. the actual estimates for the homebuilders didn't rise that much from the beginning of the year to the end of the year. so we think that there's a little more room in terms of valuation on building product stocks in addition, i would also say

that this tax bill that we are just hearing about frankly, really isn't a positive for how it is secretly removes the subsidy for home ownership that we've had in this country for a hundred years and therefore we like the building product stocks because they're exposed to renovation and other international and commercial market. >> and the subsidy that you're referring to is the mortgage interest deduction which is limited by size to mortgages of $750,000 the reduction of the mortgage interest deductability limit to what you can borrow and deduct the interest on it what has gotten less attention is frankly, more important is the near-doubling of the standard deduction because what that means is that the vast majority of people who are currently itemizing their taxes will not do so anymore because they won't need to they might as well take the standard deduction if you don't itemize the taxes you don't qualify for it, period and this is the backdoorway of

removing a subsidy for what you've seen in this country. >> the other impact of tax policy is that it benefits the homebuilders with more land holdings is that why you like tripoint? >> thanks for that that's one of the most contrarian outputs from our report, we believe, recently, the trendiness in home building, and the trendy thinking has been let's go for the builders with short land positions because they can turn their assets quicker because the margins can't really go up so maybe we can turn our assets quicker and generate better returns, but actually, when you think about it, land that you bought before the tax policy change actually is going to go up in value because now we believe that builders will be able to pay more for land as a result for paying a lower corporate tax rate home building is particularly vulnerable, we think, to sort of having those tax benefits competed away because land is very unlike almost any other input for other manufacturing

companies because land is not a fungible commodity and the only bidders are homebuilders which are homogenous, so you want to own the builders that actually have a lot of land that they locked in before the tax plan actually was approved. >> stephen, thank you. stephen kim with evercore isi. we're hitting 2015 highs and the closing trade and a check on energy stocks straight ahead hey, anna, do you have those plans? yes! but if you have a sec, i just wanted to show you something i've been wor... ♪ james r. and associates. anna speaking... ♪ yes, i understand. well, well what's your guess?! thanks. ♪ james r. and associates. anna here... ♪ it's ridiculous, pour into the hudson's a...

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hello. i'm sue herera here is your cnbc news update at this hour hour a woman who once taught at google's child care center in palo alto, california, has filed a complaint in superior court alleging ge alleging gender pay discrimination male teachers started with higher salaries than female counterparts. volkswagen on a rough note vw auto sales in the u.s. fell 18.7% last month, almost every model underperformed year-ago levels with the exception of the atlas mid-sized suv. a virginia court has rejected democrat shelly simonds bid to overturn a ruling that her state house race with

davidianyancey a tie. a random drawing to declare a winner is set to take place tomorrow. french president emanuel macron will propose a new law to combat fake news during election campaigns. the legislation would include new rules for websites including more transparency about their content. that's the news update this hour brian, i'll send it back to you. >> sue, thank you very much. the oil market set to close for the day and let's see if we'll be sticking above 60 jackie deangeles at the commodity desk. >> actually gapiining 2.1% and increased concern over the unrest in iran is probablythe largest factor right now, but also an expectation of a large drawdown in inventories tomorrow any that's delayed because of the holiday and part of the move, as well. colder temperatures with refined products and that trend is

expected to continue until the cold snap makes. crude is trading almost 3.5% higher, and the session high is 1628 >> thank you very much, jackie. let's get to john harwood. he's got breaking news in d.c. >> among the many people caught up in a way they don't like in this book about the first year of the trump administration is tom barrett who chaired the president's inauguration is quoted by michael wolff, the author in this being book as sa president trump is not only crazy, he's stupid tom barrett has put out a statement which we have saying the quote is completely or utterly false and he'd never been interviewed by michael wolff and there was no attempt made to verify that quotation and this is just the beginning of multiple reactions we're going to get from people caught up in this book. we've already seen, of course, the president denouncing steve bannon who has a bunch of unflattering quotes in the book

saying that steve bannon, after being fired not only lost his job, he lost his mind and very soon, within minutes we expect to hear sarah huckabee sanders coming to the white house briefing room to give a more direct, in-person response guys >> it's certainly a loaded article. thanks for bringing us the news about tom barrack. we'll tell you why uncle sam stepped in "pow "power lunch" back in two minutes. (siren wailing)

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all right. a live shot of the briefing room at the white house where journalists i'm sure, have hundreds of questions because of of a new article, an excerpt a book by michael wolfe of that has been published today that is behind the scenes of what was happening at the white house even before the election incredible stuff within this article and sarah huckabee sanders will have a lot on her hands at this point. i was thinking about this, my late father always thought donald trump's campaign was like spring time for hitler like, he just did not think that he was ever going to -- >> make a bomb and it succeeds

if you haven't seen the movie, "the producers," that's what i'm talking about. the first six or eight paragraphs, my father was right. donald trump did not think he was going to win at all. it doesn't sound like most of his family wanted him to win. >> the accidental candidate in a way. >> it's amazing how this story has trumped the discussion about whose nuclear button is bigger which actually feels a little more consequential than some of the -- this is a -- we've been reading it all here on the set it is a gossipy book let's put it that way. >> and i'll go back to the point i made earlier which we're cnbc. so we focus on economies and business and everything, and that excerpt from the wolff piece highlights bannon comparing china to 1930s nazi germany, and i know it was bannon and not trump that purportedly said that according to wolff, however, if you are the president and you want to maintain a decent working

relationship with the second largest and arguably most important economy in the world, you've got some explaining to do >> speaking of china, we should move on to this next story because it's directly related to that the united states late yesterday, we learned, has blocked a merger between moneygram and china's and financial citing national security concerns. this isn't the first time that we see a chinese deal blocked under the trump administration deidre bossa is live with that story. deidre >> exactly right, michelle i know as you well know, and i know you've been covering this as well. the demise is the latest in a growing number of overseas deals during the trump administration and calling off its plan to buy moneygram after three rouns of review by cfius, a national security panel and it comes after a year when jack ma and president-elect trump stood side by side and promised to, quote, do great things together

it would not gain a significant foothold a number of chinese companies looking to do deals have faced regulatory concerns in the trump era. look at the number of cfius, and the withdrawal of overseas m & a transactions more than doubled this year, 27 in 2016 versus 13 the previous year. some of the high-profile deals include canyon bridge, a chinese-based investment fund. its attempt to buy lattice semiconductors last year and last week cefc tried to abandon its 20% stake in cohen group china ocean wide holdings proposed $2.7 billion purchase of gen worth financial and skybridge capital from anthony scaramucci they've raised concerns among lawmakers about customer data and the latest moneygram follow doesn't bode well for chinese.

>> hnh we are still waiting for that one, but at the same time there is an issue of whether or not the u.s. will approve it and also the issue of whether hna has the money to pay and that company itself is a mess >> that's right and we continue to wait for the official word. regulatory, like i said,ant financial and moneygram went with three rounds with cfius cfius is a secretive organization because of the sensitive data it looks at, but michelle, as you know, these deals, chinese deals and companies looking to buy u.s. assets has really gone through the roof in recent years, but as that's happened the regulatory scrutiny has increased, as well. >> part of that could be tit for tat from the trump administration the trump administration has always said that the companies going to china go on an uneven field, and maybe this is payback. >> it feels like three-dimensional chess being played here. there are a lot of moving pieces in this and there is certainly the view within the

administration that president trump and others want american companies to remain american period period end of thought >> and guys, also, i think the argument, too that president trump could make or the authorities here is that the chinese authorities aren't exactly in the past haven't been exactly welcoming of deals either and they've been somewhat protectionist and it is a tit for tat with many layers to this deidre bosa. despite a rally, exxon ending 2017 as a dog of the dow. should you bet on energy in this new year we'll debate that on "power lunch. prevagen is the number one selling brain-health supplement in drug stores nationwide. prevagen. the name to remember.

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all right time now for trading nation let's get back to the markets and let's trade exxon because if you haven't noticed, exxon mobil, surging a bit lately. stacy, matt, matt, appreciate your note this morning you pointed that out i mean is exxon's move 10% in the last couple of weeks, do you believe that's sustainable and the stock will go higher from here >> well, it's kind of interesting because even though it's rallied a little bit here, it was, it was really being held down by tact the stock bounced off summer lows, but it was still down 7%

on the year and one of the dogs on the dow all the other stocks did much better so now, you know, this tax is moved out of the way the stocks really showed up and it's broken the resistance level at $84 and of course, exxon is 20, 22% of the xle so it broke 84, that attracted a lot of money to the exxon, which attracts a lot of money to the xle and the whole thing feeds on itself whenever you get a situation, when a heavily weighted stock has to play catch-up to the rest of the group, that's really bullish. again, it's overbought near term, this could be a bullish sign, especially since the fundamental factors are turning up >> stacy, do you have a bullish view on exxon? >> so we actually have a bullish view on energy as a whole. what i would say about energy from a sentiment perspective, we saw investors dip their toe in, let's call it late august early september, it picked up momentum late november, december actually had energy etfs topping u.s. sector in-growth

this was positive moving in and from an options perspective, we see position particularly in xle, exxon mobil makes up about 22% of that etf. from a fundamental perspective, here would be our argument, oil services management, wants companies that have exposure to u.s. land. that's hal butteren and those where the international space is picking up nicely. that makes up 10 to 11% of xle from an enp perspective, likes names that have high quality inventory, particularly in the basis. couple of names and the large cap space that he likes are going to be another 5% of xle. getting to matt's points here, we like energy, we like xle, we think it's a great way to play it >> matt and stacy, thank you both very much for more head to tradingnation.com. reminder we are waiting for the white house press briefing to begin sarah sanders, today it will be

overflowing following the breaking news headlines. trump on his former advisor steve bannon, the comments back and forth. we're going to carry that live as soon as it begins

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all right. the breaking news is what promises to be a very interesting white house press briefing scheduled to start initially at 3:00 p.m., but now has been pushed back until 3:15 the network reporters there getting themselves ready after a really a blistering statement from president trump in the direction of his former chief strategist steve bannon who was dumped from the white house earlier, what, earlier last year, after a stint on the campaign and in the transition and then in the white house. let's take a look at where the markets stand on a day that has been a bumpy one in terms of politics, but not so bumpy in terms of the markets the dow up 63, s&p 500 higher by 14, and the nasdaq up by three quarters of a percent, hanging

above 7,000. >> make no mistake in terms of the market gains today, it is the first time the s&p 500 has cost 2700, first time nasdaq is above 7,000. these are, you know, moments, milestones to put in the record books today. >> even in the wake of fed minutes that when you saw the reaction in gold for example were hawkish people thought they sounded like a fed could be more aggressive than they originally thought and you could see the move in gold there, market's taking it with a grain of salt. >> absolutely. >> interesting day of politics, obviously, it began with discussion of the president's tweets yesterday in the direction of kim jong-un, maintaining that he had a nuclear button on his desk too and that his worked and was larger >> what do you think would be the first question if you were at this news conference, what's the first question you would ask >> your response -- yeah -- >> as the president read the excerpt. >> the book. >> you wonder how many people

are going to come out like tom barrack and said they're going to have to go after wolff as well. >> not to be boring and go after the markets, watch oil oil's 61.70 a barrel. >> welcome s&p has passed 2700 for the first time, the nasdaq remains comfortably above 7,000 which it appears the dow and the russell are also moving higher in record territory right now. >> but the big story once again does come out of washington with a bomb shell battle involving the president. let's ge