stock. 79 to 85 meek mi microsoft, unusual call activity. >> that was peter brady. you're right >> i do not own ge i sold it in december. >> that does it for us thanks for watching. "power" starts now. i'm melissa lee. shutdown countdown only two days to go until a market shutdown. right now the votes don't add up in this record-breaking rally, general electric is tanking but boeing is flying high is ge a victim of short termism? we'll break that down. and a $350 billion question. what it means are to the american company

"power lunch" starts right now welcome to "power lunch. i'm michelle caruso-cabrera. as you can see, negative territory by more than 100 points nasdaq is still in positive territory by higher than 3.5 points melissa mentioned ge and boeing. you can see ge by off by 2% and boeing off by 2.5% bitcoin, though, is bouncing back following a few wild days you can see it's higher by nearly 6% along with other movers alcoa is down 8% on its earnings you can see it is off by 5 bucks. brian? >> thanks, michelle. here's what else is happening the race for amazon headquarters and the money behind it is heating up there are a number of surprises.

did your city make the cut we'll have that list ahead speaking of heating up, according to the united nations last year was one of the warmest records on planet. some things are cooling off. dropping sharply especially in the northeast. melissa? >> we begin with today's market drop the dow is down triple digits. bob pisani is watching all of the markets. hi, bob. >> there's two things that worry me here. first is the ten-year yields i don't usually lead talking about ten-year yields but they are moving up. 252 on monday and they are slowly creeping up that's getting a lot of discussions on various trading the second thing is volatility i don't get terribly worried until the vix hits 20. we've been so low for so long, it's notable we were at high nines in the start of the week and now we're over 12. again, up a bit today. take a look at interest rate

sensitive stocks bond yields have been up today utilities are act being normally banks are not. that's interesting i think they are looking top heavy. they had a nice advance and are probably due for a pause here. elsewhere, the basics of the rally are in tact. the cyclical rally that we've been talking about, retailers, materials, consumer discretionary continuing to advance. oil has sold out around that $64 level. elsewhere, remember about this government shutdown. i've been asked does this weakness have anything to do with the government shutdown and i think the important thing is, remember, this only applies to discretionary spending it only applies to museums, nonessential government workers and so guys, we have a debt

ceiling issue. if that turns into a problem, you could have more significant issues with the government not payingdebt president trump is going to talk equipment taxes at a heavy equipment company. >> reporter: republicans are shoring up support for the plan they put in place this week as well as putting contingencies in place. here's what the plan looks like that they are hoping has a little bit of something for everyone democrats and republicans alike. it would fund the government for a month and extend funding for children's health insurance for six years and it would delay certain obamacare taxes between 1 to two years

and the president tweeted that he wanted the children's health insurance portion to be a long-term solution, not a short-term solution. the pentagon said he did support this short-term continuing resolution and continued the partisan finger pointing over what would happen over the very possible case of a government shutdown >> the budget should be handled a lot differently than it's been handled over the last period of time, many years and if for any reason it shuts down, the worst thing is what happens to our military. >> it could happen we'll see what happens it's up to the democrats >> reporter: so republicans have said that it would be the fault of democrats if the government shuts down because they would be holding the military hostage meanwhile, democrats have said it would be the fault of

republicans, which controlled both chambers of commerce and the white house. this needs to be a bipartisan effort it can pass with only republican efforts in the house and nancy pelosi has said she will not let any members of her party vote unless republicans pass this in the senate, you need at least nine democrats to vote in favor of this. back to you. >> all right kayla, thank you very much joining us now is bill stone, global chief investment straft gist and we've had 16 government shutdowns in the last 40 years by the way, the dow is up 71% since that shutdown in 2013. look at that chart as a strategist and investor, i'm not saying the government shutdowns don't matter for a lot of reasons but the stock market shouldn't be one of them what do you think? >> i agree it's more of a political issue,

obviously. it's news headlines. it will probably hit there's no real reason to be nervous about stocks or worried about that somehow impacting the economy. i a i agragree. there's not much to see there. >> when you're going through your charts and models and earnings estimates and everything else and you think there's a government shutdown, it doesn't change anything that you're doing, does it? >> no. i mean, we say, hey, we could see some noise because you never know, if you know, what upsets the government on any particular day. it's not one that you worry about and it's more of knowing that the headlines may hit there could be some noise. but the underlining fundamentals should not be changing based on that >> you're agreeing with bill on the shutdown matter. we're taking a look right now at the ten-year yield of 2.611,

basically. they said 2.63 was the danger zone, the fact that that could pose challenges to the stock rally. where are you getting concerned? >> i think what mr. dounlock said, we may migrate away from fixed income we've been expecting interest rates to rise for a long time. 220,000 unemployment rates we're in a very, very tight labor market interest rates should be rising. so we're expecting this and shining away from the interest rate sensitive sectors and really focusing on growth. so i don't think there's a threshold where i'm going to get nervous. i think it's prudent for rates to move higher >> when you're talking about rates that you're focusing on and avoiding, sensitive to interest rates rising, is things like utilities, for example? >> exactly areas of the market where people

generally go because they want yield. eventually they will go back to the fixed income market for a yield. we have a bias towards technology stocks and a bias towards financials, which generally do better when interest rates rise. we're certainly not in that position defensively, at this point, and certainly not going after a yield right now. >> bill, you say that repatriation doesn't affect anything, in your view, of the markets. why not? why couldn't that be an impact when it comes to either the halo effect, the effect on consumers, for instance, that they get higher wages or a shrinked share count if they do buybacks. >> yes, i guess i probably overstated it because we thought last year and we thought we'd get tax reform and if we did, that we would for sure get repatriation but i agree in the sense that, hey, you're likely to see -- you know, kind of put

them in order of what you're likely to see, which is share buybacks, more dividends, you know, may see an increase in capex and also some mergers and acquisitions and what we've seen is we attract a basket of repatriation stocks we have clients positioned there and certainly this year they've been happy with it. >> we're waiting on the etf, bill there's going to be some catchy rept or something. >> it's going to be called cash. >> yeah, tax -- i think that already exists bill and darren, thank you very much, guys. >> thank you >> let's try to get more intel on a threat of a shutdown. let's bring in james honeman. >> good to be with you. >> we've heard from kayla

tausche. are they going to be able to get a deal done? >> i think the probability is higher than the markets think. i think negotiations are fluid but the reality is that someone has to blink right now there's a lot of people on the right and left holding firm more senate democrats coming out against the deal nine senate democrats are going to have to cross over and vote with republicans here. and basically kick the can down the road for a month but a lot of people concerned. the house freedom caucus, the tea party guys on the far right, they are negotiating with paul ryan there's some frustration with leadership leadership aides, republican leadership aides tell me they think this is going to work out and fall in line on the republican side. but right now, because republicans aren't falling in line in the house, that increases pressure on paul ryan to negotiate with democrats to

make concessions >> 80%, do you think >> no, i don't think that. i think at the end of the day people don't want to shut down the white house. the white house doesn't want this to happen republicans have unified control of government. we haven't had a shutdown before when one party was in control of the house, the senate and the white house. so most republicans get that they're going to end up getting blamed democrats are trying to capitalize on that leverage. >> when donald trump says he's going to blame the democrats, this is a a foe they haven't dealt with he's got twitter and all of those followers and the ability to message and really in an effective way. do you think he could be successful in saying this is the democrats' fault for not going along with some stuff? >> yes i think that's important because what's significant is there are ten democrats up for re-election in it states that

trumpcare ree trump carried in 2016. trump is saying that these democrats are voting against the troops and blaming them. could be a very effective message. i think there's the false narrative that democrats want to shut down. senate democrats don't want to shut down. it's not necessarily clear cut who would win or lose. i think republicans are nervous they'd get blamed. certain democrats, more than nine, are nervous they'd get blamed in the senate i think both sides are playing poker right now and they think the other side is going to cave before the midnight deadline on friday the problem is both sides are under pressure not to cave and both sides think that the other side is going to that's a recipe for trouble. >> james, why isn't the apple news and other vestme investmens like the "washington post" >> well, we're covering it

i think that it frustrates a lot of people on capitol hill. this is something that could have been dealt with last week they could have -- instead of passing a short-term resolution to keep the government open for a couple of weeks, they could have done something to keep it open for a couple of months. republicans on the hill are frustrated that they are not talking more about apple and repatriation and they are frustrated that they've gotten bogged down in this counterproductive unhelpful debate and want to get out of it they want to be able to talk about increased wages, bonuses, et cetera, et cetera >> right all right. james, thank you james at "the washington post," good to have you on. to the new tax law and apple's big announcement we'll put aside the political hy apend look at the real economic impact when "power

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boeing is one of the biggest losers the dow is down 3% the stock has soared and is up more than 100% it's a double in the last year more than 15% this year. and analysts have raised price targets on the stock 12 times already in 2018. joining us now is wall street's top airline analyst. hunter, great to have you with us.

>> thank you >> you upgraded boeing earlier this week? >> yes >> we were just going through how the stock basically doubled since trump has been in office. >> yeah. thanks for mentioning that. >> so what has convinced you all of a sudden after this huge run that it's going to outperform? >> yes thank you. a couple things nudged us. coming into earnings took a fresh look at the assumptions that we used at dsf and in 2027, we had free cash flow ramping. a little bit by margins pushed into the aftermarket and services business. a lot of little things that contributed to that. expect a good quarter coming up here soon in the near term for 2018 a lot of things added up >> but that must have been something that held you back

i read your report you do a lot of mea culpas and you apologize and call it one of the worst recommendations of your life and so you're sad about that, obviously. but why didn't you and what's changed? like, what held you back and what do you think is happening now that means there is still room left in the stock >> yes again, great guy but it's a fair question what held us back before was a little bit of concern around orders in the 777. to build the production bridge from the current generation 777 to the 777 delivery starting in 2020 they are incrementally positive. deferred production burning off of the 787 which is future cash flow that is being released from working capital. making progress on production for that aircraft program and just overall better belief that the cycle is going to continue

pouring rate increases and it's really going to be a big driver of cash flow again, we talked ourselves in that we've missed it, missed it, missed it. eventually when the stock moves like this, it forces you to get a good look. this is a $435 stock and that's not at all a bad case scenario. >> hunter, bow's valuation is 29 google is 27 facebook is 26 apple is 14. why does boeing deserve a forward valuation double that of apple? >> so p.e. doesn't really matter for the stock. the markets on a gap basis have almost nothing to do with the cash flow that they generate and so p.e. is really just optics. if you want to use a multiple of some sort of cash flow metric, i would use the cash flow yields trading at 15 times cash flow in 2020 p.e. doesn't really matter it doesn't move for this stock

even if you wanted to argue for p.e., it's still double digit top-line growth in the years to come p.e. doesn't really matter to us. >> to get to the $435 price target, you say 15.3 estimate on your part, hunter. is that a historical high for boeing >> it's not. >> that's interesting. >> no, it's not. we've seen this go north of 20 times prior cycles it is among the highs, but that's not the primary valuation tool the primary valuation is a discounted cash flow >> hunter, thanks so much for calling in. >> thanks, guys. >> speaking of boeing, that stock propelling with just a few weeks left in the competition, the leader board is getting tight essentially, we've got a two-main race. o'leary retaking the lead but

tim seymour is high on his heels. it's a little early to call who is going to take home the trophy this is going to be close. so tune in february 5th when we announce the winner of the power lunch stock. it is a show that you can't miss, apparently unlike all of the other ones >> don't miss that show but the other ones are okay. >> i don't know this personally, but after a breakup, often someone has to leave, right? is the impending breakup of again electric going to get it kicked out of the dow? >> plus, where amazon could build a new headquarters that's next on "power lunch. ♪ ♪

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indicates elevator 3 will malfunction in 2 days. there you go. you still need a pass. amazon announcing a list of 20 cities. which cities made the cut? deidra has the answer live from san rancisco. >> they meet amazon's criteria, talented workforce, good public transportation infrastructure, access to a major airport. washington, d.c., is one of bezos' own personal home los angeles. the only city out here on the west coast there's a lot at stake for all of them. $500 billion in investment and 50,000 high-paying jobs.

so huge economic opportunity but some have warned in the lead-up about the less desirable impacts that amazon has had on its first home seattle's housing market is one of the country's most expensive. a lot more traffic and some natives. it's taken the city's soul the project is moving into the next phase of the process and for the proposal valuation and amazon working with the candidate cities, am sdplon says t amazon says the final decision will be by the end of the year did apple say we'll add a new location and give a stock bonus because of the tax cut or would it have done it anyway we'll hear from tim cook from that plus, could it impact the entire american economy? big questions. some answers ahead

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abuser layerly nassar. the judge read a letter from nassar calling it a media circus during a 17-minute response, the judge hit back hard. she's expected to render a decision on friday uber plans to roll out a fleet of self-driving cars without human backup drivers sometime next year it's the company's chief who says uber will not deploy the cars unless proven safe. strawberry farmers in florida are encasing their crops in ice they've worked throughout the night trying to save the crop. eating foods that cause inflammation in the body may increase the risk of colon cancer those who ate a lot of meat, refined grains and high-calorie drinks were more likely to develop the cancer. you're up to date. that's the news update at this hour michelle, back to you. >> we'll add that to the list.

>> i know. exactly. >> it never ends. >> never. markets are lower right now after yesterday's big rally. the dow hit an all-time high before pulling back. s&p is lower by four points. nasdaq is in positive territory by more than two real estate, energy, utilities are lagging. utilities, real estate tend to have higher yields does that have to do with the high higher yields? we're keeping an eye on the ten-year yields, as i mentioned, hitting the highest level since march 2017 as we all start to wonder when does that provide competition to stocks. a lot of debate over apple's big announcement yesterday and how much economic impact it will have apple says $350 billion over five years but where did that number come from josh lipton is taking a look >> melissa, here's how it breaks down apple says it's going to create 20,000 new jobs.

now, that is in line with the current hiring trend for the u.s. it's going to build a new campus its third in addition to cupertino and austin plans capital expenditures of more than $30 billion over five years. it spent 15 billion in the last fiscal year but did not break out what it spent in the u.s continued spending with domestic suppliers. 55 billion this year alone increased the size of the advanced manufacturing fund to $5 billion tax reform, in part, helped enable the result of the tax reform and large parts of this that we would have done in any situation. >> so it sounds like president trump's tax bill has been a huge win fall for apple. >> there are two parts of the tax bill there's a corporate piece and an individual piece i do believe the corporate tax side will result in job creation

and a faster growing economy >> apple says it will make a one-time tax payment of $38 billion on its overseas cash now, it's not saying how much of the 252 billion in overseas cash is going to be repatriated brian, back to you >> josh, thank you very much great analysis there all right. if you look at apple's move, who doesn't look at everything politically these days the new tax law either has everything or nothing at all to do with the decision let's bring in steve liesman for a look at the real economic impact. >> brian, thanks despite businesses and investments plans from the tax cuts, these are certainly early days for assessing the potential economic effects of the tax cut. the early returns are good but it's like calling it an election with only 10% of the ballots counted.

too early to call. a large part is from the tax cut. senior economist at the budget model, told me nothing he heard from apple or any other companies has altered his forecast "the apple announcement is certainly part of the justification for the tax cut and evidence that it's doing the things we thought it would do. but the magnitude doesn't suggest huge labor income. there's a positive market effect from the market but another thing to go forward and say that the bulk of the extra money ends up as capital spending, new jobs or higher wages, which will have a very positive economic effect rather than share buybacks or dividends where the economic impact is less >> i love steve liesman. i just love him to death. >> there's a big "but" coming. >> larry kudlow is here.

>> and ben white as well >> look, i acknowledge that it's only been officially been a couple of weeks. most of us have been gathering steam since it became clear as i reported that the gop would get it done before year-end. steve, you have 100 companies yourself >> 100 companies what, larry >> they have linked tax reform to wage increases -- >> no, no. >> bonuses, larry. bonuses. >> i'm fine with bonuses, steve. >> i am, too but a bonus is not a wage increase. >> yeah, but you've got to go from a to b. the knock-on effects are going to be terrific any investment boom -- >> potentially, yeah >> what this tax bill is doing, president trump and the congress are restructuring the american economy. they are now getting us back away from tax and regulatory

burdens, back towards the business sector, business investment sector and private sector incentives. the punishing of investment is coming to an end so you go from a to b to c to d. tim cook who is no trump admi admirer, part of his decision was a business one. >> which it should always be. >> and part of it was linked not to politics but changes in policy, which is how the game works. it is undeniable that you are seeing the early movements last six months, last several quarters where business investment, whether it's equipment, factories or whatever. >> the tax cuts weren't even in place. it's from oil and gas. you can't say the president is responsible for $60 oil. >> i'm sorry >> my jury is out, larry i'm ready to say right now --

>> what we are here to debate -- >> let's bring it back to apple. >> look, apple would be -- >> we can bring it to what cook said >> let's -- senator kudlow and senator white, hold on, hold on. i give the floor to the good gentleman from wherever you live >> right here. >> let's bring in back to apple. here's what ticks me off a little bit it's so politicized. everybody's right. cook said it some of it is because of the tax and some of it isn't why can't we as a media nation embrace this as pretty but good news why do people want to tramp on this stuff >> i think there are those who think we are giving unfair credit to trump and tax cuts and not talking about the ultimate deficit impact which will come

down to bite us down the road if we have much higher deficits and we're taking this candy right now, which may or may not be related to the tax cuts. tim cook, who is not a trump fan, as you say, it's still good politics for him to get in the good graces of the administration he's going to say things that are positive about president trump. >> let's underline that tim cook has said we needed to change the corporate tax cut in america for a long time. long time before donald trump was going to be president. he said corporate tax cuts will lead to job creation and a stronger economy >> he said it's absolutely going to help. >> steve, my criticism of you today, what i'm -- >> just today? >> send me a list of all the other -- >> and we actually agree on this than i think you're making out. >> you're using the warden model. i wish you hadn't. they are demand-side models and do not reflect any supply side, investment side, business side

they don't have it the channels are not there the international channels aren't there why don't you quote the tax foundation why don't you tax doug e. holtz egan i'm telling you, if you look at the data, the trigger has been gradually pulling. that's why the economy has gone from 2 to 3% >> i allow me to respond other than the one put out by the cea, which is not a middle, it's really using a different sense of what the models show we're going to have our producer who rolled his eyes. my interest is whether we're getting our economic bang for the buck if apple repatriates 200 billion and 250 or 280 billion ends up

as share buybacks and d dividends -- >> that's impossible. >> why is that impossible? >> or, by the way, it stays in its current form have we gotten our economic bang for the buck in cutting corporate tax cuts to 21%? >> this is the wrong course. >> i don't think so at all. >> i disagree strongly first of all, shareholder buybacks puts it into the investors' hands the investor will put that money to good use, building factories and new companies and new firms. that's point number one. secondly, there's so much evidence to at least cite in your analysis that many people, myself included, and 50 to 60 to 70% of the benefits will accrue to the working folks, the wage

earners. >> it's significant. >> it's not significant. >> please, ben, step in. >> let me make a political point about all of this, if i may. we will eventually know which one of you is right on the economic impact on this, in wage growth, corporate profitability -- >> we'll see if that's sustainable. it's very good news for trump and republicans that this stuff is happening but at the same time we're talking about shutting down the government and all of the special elections and republicans are losing it's a big opportunity that republicans have here to say our policies are working and they are not doing it. >> can i ask something very basic? >> i, by the way, agree, he needs to sell this all of us need to keep selling this i agree with that point. but on the other hand, i don't want to make this political. i really don't. >> and can with he go back to wage growth? here's what i don't understand very basically

unemployment is so low if they have to hire more people, don't wages have to go up isn't it a basic supply and demand we've pushed unemployment so low. >> would you think there's a tried and true conflict it's worked badly over the last several years and we haven't seen that effect that should be out there. i want to get back to what larry is saying here. >> she didn't say that wages are going into inflation all she did was use standard economic modeling that suggests if you have a resurgence of business investment from these incentives, which we have not had in 20 years, given the wage demands and wages will be bid on >> they should be. that is correct. >> to sully's point --

>> i had a point >> you had a point the repatriation is coming in much faster and will reduce the deficit. i'm going to factually say something. i said twice as much, apple indicates that there will be twice as much repatriation that's not factually true because i'll give the joint committee on taxation that made a final revision after the toll road was raised. however, you are right in this sense. they're estimating roughly 35 billion -- i'm sorry roughly 70 billion in the first quarter. all right. the very first year. >> yeah. >> okay. apple gave you half of that yesterday. and i think what we're going to be surprised to see is that the repatriation move to take advantage of the relatively low rates will come fast really fast. with momentum. that, by the way, will not only roll with the budget deficit, as you suggested correctly, it's

going to give momentum to the whole investment. >> thank you but hold on. we've got to go. steve, the good sir from buffalo, you made assumptions of 239 billion for the year >> it's 250 to 340 it's the jct model >> no. no >> larry, let me just ask you your thoughts. >> if we get more it's a good thing. if we get less, it's a bad thing. see that wisdom? >> we don't know that apple is writing a single check for 38 billion or -- >> over eight years? >> we have to go we all say, deficit spend are a function of the 1.9% growth of cbo and jp 2. >> got to go we've got to go. and let's go to 2.6% on the

ten-year with rick santelli. >> steve liesman, someone should have brought up inversions funny we don't talk about those anymore. look at an interday. notice 242 that's very important. we're back towards valentine's day and let's bring out the chart and go back to april of 2010 that's the last time the five-year closed and we're flirting with it right now you can see what is going on with it back to '08 and if we look at ten-year, september 2nd of 2013 is the ten-year yield we want to pick formal resistance, high yield, march of 2017, but there on that chart, the last day of 2013 was the last day we traded above 3%. one day at 303 finally, a big chart of the dollar index

you think it looks bad on the weekly look at that chart melissa lee, back to you all right. thank you, rick santelli general electric selling today for the first time in more than six years. a breakup of the company is likely coming. is ge a ctviim of short-term thinking is it possible "power lunch" will be right back tomorrow, it's a day filled with promise and new beginnings, challenges and opportunities. at ameriprise financial, we can't predict what tomorrow will bring. but our comprehensive approach to financial planning can help make sure you're prepared for what's expected and even what's not. and that kind of financial confidence

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$17 a share for the first time since 2011 today. the decline caused in part for break-up rumors surrounding the company. why can't ge bounce back "the wall street journal" writing that leadership may be to blame and the company could be a victim of its own short-term thinking. joining us is dennis, financial editor of the "wall street journal." >> good to see you. >> i thought short termism on the part of the investors and

looking forward to the turnaround but you're talking about short termism on the part of management and because in the moment it was good for results. >> it was a great piece. and i think it really sort of tried to -- we could have ph.d. the thesis on this i'll try to pin down the idea that really even during the welch era which began in 2001, it's now 2018, the company was fixated on, as we know, meeting those quarterly results and making sure wall street was satisfied, always beating by a penny or two and in a way not having its own identity and vision its vision was to satisfy wall street and i think that obviously worked up until 2008 and it really was the breaking point of the ge model and it's been ten years for that to work out and what we've seen now is really amazing when you look at ge, it's lost about 270, $275

billion of market value since immelt took over it's really an incredible lesson, i think, in sort of trying to apiepease wall streets there are moments when the market says, oh, my gosh you have too many financials you have to get rid of that, especially in the wake of the financial crisis and now, looking back on it, gosh >> maybe they shouldn't have sold that. the irony of it, of course, there was a whole regulatory overlay that was being applied to ge because ge capital was so big. but when you look at the total value created from those spli split-ups, again, sort of like let's keep them happy, keep them happy. when you look at the leash that say a jeff bezos has or tim cook, they have room to run because they have a vision, they lay it out they let the market come along with them, and ge --

>> a tough comparison. >> we don't know what tim cook -- we don't know what the next product launch is going to be we don't have a vision they have a long leash because their stock price is going in the right direction. >> right, i think it's a fair point to ask when was the moment when ge said we're not going to keepia happy right now because we want to do x, y, and z. the maintenance of the dividend, so crucial to that stock the dividend yield right now is moving up as the stock price moves down like 2.7% and getting higher each day when was the moment when they could say, guys, we're not going to feed you what you want every corner we're going to do this with the company. they never did that until circumstances forced them to, which is right now, at the begin of 2018. it's a shame because it's a wonderful company and it drifted into the wall street malaise >> it look like quite a fall from grace thank you very much.

dennis berman of the "wall street journal." >> coming up, why a massive gold heist, a robbery, is hurting one company's earnings that story and the analyst calls you need to know about coming up in street talk

time for street talk

the analyst recommendations of the stocks you need to know about. comcast, getting a downgrade to a neutral. the analysts saying comcast has a lot going for it, superior broadband product, and unique content ownership, but they says there's now heightened challenges, especially the pressure o.t.t. or over the top is putting on linear video, and broadband growth should be slowing. upside is limited to $45 a share. we're talking to the analysts who raised his price target on comcast later on this hour >> both sides of the story second stock is cognizant technology solutions up to buy from neutral and citi group. they poost the target to $79 they see growth improvement and they like the evaluation on cognizant. they imply about 16% upside. that stock has been okay, but certainly has underperformed some of the others in the group over the last three to six

months >> third stock, fleu the group in which is considering industrial construction they think they're going to go back to enc loorxing for value this is the go-to name with a diverse end market it's benefitting from the turn in mining, and energy will be the next leg to the backlog later on this year >> infinal stock has a weird back story bear with me this is brinks bco. the armored car company, right okay, first off, imperial capital raised their target to 100 from 86. they like the recent performance. also see the company growing their target implies a 19% upside here's what's interesting. in the last quarter, brinks took an $11 million charge due to a gold robbery they have given no details on the robbery, but it was one of 10 or 11 biggest gold robberies in the history - >> when did it happen, last

year >> they didn't say where december 6th is when it happened $11 million charge massive gold heist they kept quiet about it an interesting story but a price target increase anyway >> there you go. thanks, guys >> will companies choose to buy back their own stock with recently freed up money? if so, can that create yet another leg to this rally? >> we'll ask the ceo of a company that handed out bonuses to his employee what the tax law means for his plan

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or maybe even more. welcome back here's what's topping your hour. could apple's move spark a cash repatriation wave? and maybe spark another leg to this amazing rally ibm shareholders feeling less blue, but is this comeback for real or a blockchain dream the number one analyst on the street will join us. and amazon has 20 mayors salivating right now it cut its list of potential home for a second headquarters down big what city, though, really has the prime chance we'll break it down as the second hour of "power lunch"

always free delivery, starts right now. >> welcome to power lunch. i'm michelle caruso-cabrera. the dow was down nearly triple digits after a massive rally yesterday. higher this morning, now off 57 points s&p lower boy a little more than a point. nasdaq higher by eight points. wondering if this is the fly in the ointment treasuries are on the move the two-year yield at the highest level since 2008 the ten-year highest level since march. big names still at all-time highs, apple, walmart, home depot, jpmorgan, and fedex two big dow components on the move boeing in the red after a massive run-up ge falling below $17, hitting a new six-year low melissa. >> thanks. i'm melissa lee. here's what else is happening. according to nasa, last year was the second warmest on record 17 of the last 18 years since

records began have now happened since 2000 china's economy expanded faster than expected last year. gdp at decision.9% year over year, accelerating for the first time in seven years. u.s. movie ticket sales fell 6% in 2017 thanks to the worst performance in decades sales hit the lowest level since 1995 >> all right, thank you. we're less than three weeks into the new year, and the economy is like a well tuned engine, firing on all cylinders growth is up, wages up, unemployment down, stock market breaking records nearly every day, but could all the good news eventually lead us to the bad old days of inflation? is good too good mike santoli joins us from the nyse with a look at this story >> brian, you know, inflation is certainly one of those factors that could represent some of these good trends becoming a little too good. although to keep with the car analogy, i feel like the market has found a new gear and accelerated because all of the

news that's right in front of the mark has been so positive. whether it's the broad economic trend, obviously, the sort of embarrassment of riches companies now find themselves with, and strong earnings as well as risk appetites rising. everything like inflation that could be a pain point, it seems like it's further out in the hazy horizon inflation is trending in the direction of higher. talk about interest rates. is 2.6% of the treasury yield really a frightening number inis it really a threshold for changing the story on stocks unclear, even oil, right up 20% year to date, but not at a level where it seems like it's a constraint on consumer spending all these things are fitting into what i think is the one area that could be too good to stay this way for very long, which is investor sentiment. people are happy about how the market has done. they have been chasing this rally, and i think that's one of the short-term factors that says, okay, it's not itself enough to take the market down, but enough for a pause or a slowdown in the trade.

so here are some of the things besides investor sentiment to keep an eye on to know if the story changed. credit conditions. corporate bond market has been incredibly strong. a great support for equity valuations it remains very strong if that flares up, that might be an issue if the mark leadership narrows, that has not happened, that's another red flag that maybe the market is tiring and then the vix we have been talking a lot about how it's up a little this year, but still well within a contained range. not a problem for stocks if it trends much higher, gets above 13, people say what is the options market sniffing out, those are the things i think might change the story who knows down the road, if inflation is one of those things that does take the market by surprise i don't think it will be something that happens within a month or so. >> thank you, mike let's talk more about your last point there, especially when it comes to volatility and the vix. it has creeped up, as mike suggested. the dow has been on a wild ride in the last four trading sessions triple digit swings for the last

four days. is that what we should expect and why is it happening? let's bring in our experts mike santoni talked a little bit about rising interest rates, but what do you think, mr. wood? are we seeing a sell-off today because people are starting to get nervous about interest rates? >> i think is part of the cause. if we look at the flattening yield curve, something we have been watching for a while, tens to twos have been coming in 60, 55 basis points right now. i think the flattening yield curve is something you ignore at your own peril >> hold on, i was thinking actually -- yeah, okay, it's flat, but yields are rising across the curve right? so both could be true at the same time. and doesn't a rising interest rate start to provide competition like when we see real estate sell off or utilities sell off are people making a choice >> they're making a choice, but the companion market is when the bond market and equity market disagreeing, i would go with the bond market right now. when crusee the flattening of the curve becoming pronounced, you could get a flat or inverted

yield curve by the end of the year, and for an economic cycle, it could have obvious implications >> is that what you think is going to happen? >> that's what we think is going to happen. that's something of an amber light. we don't have a recessionary call on the u.s. for 2018. we do see decelerating growth, and from our perspective, these valuations which are high, is a great opportunity for the u.s. dollar, u.s.-based investor to reallocate and rebalance globally where rates in central banks are less of a headwind globally, a u.s. investor can find more fertile soil >> mark, what do you make of the return of volatility in the last couple days? is it signals something, about interest rates, the shape of the curve, what? >> i think we're seeing more fluctuation in equity prices than we have seen for an extended period of time. by almost any measure, we have gone through an unprecedented time, a year, year and a half, without as little as a 2% dip in the equity market. that's exceedingly unusual if not rare >> why is it back?

>> well, i think we're at a conflew nls of a couple factors. you have valuations that are demanding, sentiment that is frothy overbought conditions in the equity market, and that creates an environment that we don't necessarily need to see bad news as it is something to begin to trouble that sentiment what we're seeing right now i think is that 2.62-year-old that is advertised, talking about it being the beginning of the end of the bull market, or beginning of the bear market in bond prices to which expectations would be that yields might melt up to 3% or higher, which is obviously being manifested by the way the interest rate sensitive sectors like utilities, like telecom, like rates have been clobbered recently >> shouldn't we be worried about the continuation we were up here at 2.6%, we're still within this range, but all the signals around the world point to other people moving towards normalization of their rates, which will lead to us having rates higher here maybe even higher beyond the

range we have seen >> i think it will be in that range of 2.50 to 2.70 on the ten-year is a reasonable range, but i agree with all the good news we have been talking about. you have the apple story, the tax bill story and to the extend that bleeds through the inflation, so as we get into a more healthy macro environment, i think that will give the fed more rather than less courage to pursue a policy path if we see a two-handle on core inflation, et cetera, if growth gets closer to a three handle, the fed would be more comfortable normalizing grates aggressively i don't think that's true for the european central bank. that is a watch point for them if the euro strengthens aggressively, i think that's going to be a clarion call to the european central bank, and they might be more accommodativ than we might expect >> talk it down as they have done in the past thank you so much, stephen and mark >> thank you >> thank you as the president heads to pennsylvania to talk up the tax cuts, the treasury department has a lot on its plate back in

washington ylan mui is in washington withme waiting for the treasury department to give them guidance on how the tax law will work take a look at repatriation, what formulas should a company use to add up nearly three de decade of off-shore earnings that could result in some income getting double counted or that's the fear from businesses there are also two repatriation rates. 15.5% for cash and 8% for liquid assets what do you do about capital loans. which bucket do they fall into passthroughs, treasury needs to define what is a service business, and therefore not eligible for that big 20% deduction. now, these are all technical questions, but they're worth billions of dollars. and treasury hopes to start providing answers to companies by monday. the u.s. chamber of commerce says it's working with treasury and the irs to insure that any guidance is consistent with the intent of the law and, quote, does not impose an undue burden

on business. this is just the tip of the iceberg. normally, this process takes years. but the new tax law is already in effect. you see apple and other companies already making big announcements based on what they think will be the rules of the road guys, there is a real risk that uncle sam comes back to the companies later and says you did it all wrong back over to you >> thank you very much well, they say that only the strong survive in new jersey well, new jersey democrat josh got hiemer taking a strong stance against the new tax law's elimination of many state and property tax deductions. he wrote a letter to steven mnuchin stating his legal basis for turning some tax bills into deductible charitable gifts. the congressman joining us once again. the debate is simple that you and some others in new york and i think connecticut are trying to change the classification of payments to charities so you'll get around this lack of deductions, some have said it's against the law you say it's not you have got a bunch of

academics to back it up. build a case >> well, we've got eight of the top tax scholars in the country behind it. really, it's the fact that 30 states have 100 programs that have been doing this for years what we're trying to do is now bring it to jersey to cut taxes. it's not that complicated. basically, each town starts a charitable fund. you contribute to the charitable fund, and the town can give you a tax credit on your property tax bill this will then, of course, allow you to take the charitable deduction federally. what we're doing is fighting against the tax hike bill, which gutted the state and local tax deduction, which hurt states like new jersey, this is a way to fight that. >> the interesting thing is, is you're kind of crossing lines in a way, federally and state you go to washington, d.c., represent new jersey federally, but you're going to have to imagine, i would imagine, work with state officials as well if this comes through so it's going to be kind of a dual thing the new governor said he wants to raise taxes on the rich and

impose a millionaire's tax do you think you can get this through the state as well? >> on that, i came out very strongly against that. we can't raise taxes on anybody in jersey, and in terms of working with this, working already with the new governor's office and with the senate president and the head of the appropriations committee which had a call this morning to get any legislation we need through to be able to let the towns do this you have states that are already doing this what we said to secretary mnuchin is here are the actual sites, the case law. this is how you do this, and it's there so we're going to use it we have to cut taxes in jersey, and frankly, everybody is going to try to find a way to reduce taxes. shouldn't we look for every single way to help our citizens am. >> when you work with local officials, congressman, is there a desire also to trim budgets, to trim spending, do it the old fashioned way, lower taxes by actually tightening the belt buckle >> i think that's a great question i think you have got to do both.

you've got to make sure you look at expenditures, always be doing that i spoke to a bunch of mayors this morning about that. you also, i'm not willing to have our residents take pain we should make sure at the same time we're cutting taxes and looking for every way to give them relief. >> every time you do that, it makes it easier for those mayors and those state legislatures to not cut the budget, right? you incentivize them to keep their spending >> i think that's completely a false choice they should watch their belt and i think we have to give tax cuts to people. we should do both. you can't have it the property values take a hit, our taxes are going up as we talked about here, new jersey, we pay some of the highest taxes in the country and we get one of the worst returns on investment. >> you can try to do both, but if you really want to incentivize the mayor when the constituents calls up and says my taxes are way up because you spend too much money and they might do something tubt, but if they get a pass like they have forever, there's no incentive to

dothat >> i would argue we haven't been getting a pass no one has been getting a pass mississippi gets $4.38 back for every dollar they pay. we get 33 cents back i mean, i think they have been getting a pass all these states out there, the nature states. how about we hold them accountable for taking too much of our money i think it's time for accountability on their end instead of taking our dollars. >> are we going to have a government shutdown? >> we're working incredibly hard to avoid that. i'm an optimist, so we had a meeting with 50 democratic and republican senators and congress people this morning to try to avoid it we'll keep working to the last hour to try to avoid it. >> one last question newark, new jersey, is on the short list one of the top 20 for amazon it's got some tough -- listen, you're a democrat. but you must admit that if newark gets this second headquarters, whatever, i know new jersey has to throw the world at them in terms of tax breaks it will meaningfully improve the lives of many people in that city, which has had a tough 40

years. >> this is nothing that could be better for newark and frankly for the whole region it will lead to a lot of jobs, 50,000 to 100,000 jobs, huge infusion of energy you have companies already like audible.com that are changing the city and have been for years. we have so much to offer besides pizza and bagels we have the best and smartest people i'm ready for amazon to come >> just add more roads because it took me four hours to get home friday night. and it wasn't even snowing >> let's come back next week to talk about infrastructure. we have to fix that. i'm with you >> thank you very much, congressman. we appreciate you coming on. >> take care >> here's what else is coming up on "power lunch. ibm, big dog of the dow last year, up 10% so far this year. is this comeback for year? we'll ask the number one analyst on the street ahead of tonight's earnings >> amazon narrowing down the finalists for the second headquarters who else is on the list? who is most likely to win? >> plus, bbnt raised wages,

announced bonuses and a $100 million philanthropic donation due to the tax bill. ceo is goi to lkngta about that and more right here ahead on "power lunch." ibm reporting

bell, aiming to break a 22-quarter streak of year over

year revenue declines after being last year's dog of the dow, the stock is up over 10% this year. joining us to take a deeper look at big blue, tony saganaki it would be a great accomplishment if they broke that streak, tony, but the question is can they keep that up what is the quality of that beat going to be like >> well, very likely, they will show revenue growth this quarter, but it's important to note that they're going to have about a three-point benefit, percentage point benefit from currency and they're also in the middle of a mainframe cycle, which occurs every two and a half years, and we believe will add about another point of growth. so when you ex out those two items, currency and contribution from mainframe above what is normal for mainframe, we have revenue growth down about 2% for this year. certainly, the headline print and optics will show positive revenue growth, but those are the important caveats.

>> in terms of the tax rate, ibm's tax rate is already very low. what deyou anticipate will be the impact of tax reform on ibm's rate >> very likely, tax reform is going to be a negative for ibm >> it's going to go up >> yes, it will go up. last year, 2016, the tax rate was about 6% this year, we expect ibm's tax rate for the full year to be about 10%. they have talked about a normal tax rate of about 15%. we think that's very likely to go up. and will likely be in the high teens or potentially 20% or more >> wow >> that will be a negative impact on go forward earnings. >> not surprising. when we talk about blockchain and bitcoin, et cetera, you know, there's all the prauth luatizers. but when you talk about real applications, the company name that comes up most often is trying to be the most aggressive to find some applications we can all understand, is ibm do you agree with that assessment, and are they

anywhere near making any money with it? >> it's very early days. so as you'll recall, watson, which is ibm's a.i. play, has been a central thrust for the company for the last three or four years more recently, over the last 18 months, ibm has been making significant investments in blockchain both are in investment mode. we don't know, ibm doesn't report, but even watson, which is probably a few hundred million in revenues today, it's unclear that's making money. and blockchain revenues certainly are likely to be in the tens of millions of dollars and be an investment for ibm these are both future initiatives. ibm has done a good job in making investments technically, making investments in terms of marketing and raising awareness, but they're a long ways,efe of them are a long ways of being away from thesis changers for an $88 billion company. >> why do you equate blockchain along the lines with watson and

a.i. i'm just curious because it seems like the ability to implement blockchain and capture efficiencies in very inefficient markets is right there for the taking the recent jb with maersk shows you that a $1 trillion plus global shipping industry. 20% is driven by inefficiencies, by paperwork and things like that isn't that low-hanging fruit >> yes and no. i mean, look, i think ibm when it talked about watson, it talked about the opportunity to save $1 trillion to $2 trillion in waste through better efficiencies so there's always big numbers associated with efficiencies and watson tries to get at that, and certainly blockchain can be an enabler as well i put them on the same plain simply because they're relatively new initiatives for the entire marketplace, and for

ibm. and to date, it's early days it's very difficult to say whether these will ultimately be transformational for ibm or not. >> what's your number one question tonight on the conference call? >> look, i think the number one question is trying to understand what their normalized tax rate will be going forward. as i mentioned, you know, their normalized tax rate for the last couple years has been 15% to 18%, but they had a number of sort of beneficial helpers that has brought that rate much lower. and so understanding not only what they say their tax rate will be for '18 because that could be distorted by one-timers what their normalized tax rate on an ongoing basis going forward is important for investors to know. >> thanks for your time. good to see you. >> it's manhattan's most expensive apartment building and so-called billionaire's row, and it's getting a very surprising new neighbor that story coming up plus, walmart stock soaring in the past year, so why is one big-time analyst getting even

more bullish on amicera's biggest retailer we'll find out coming up ent inss offer special protection that could help replace or repair damaged equipment and provide lost business income. they represent multiple insurance companies and customize coverage to help businesses get back to work. announcer: to find an agent, visit trustedchoice.com. when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

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meanwhile, the dow jones industrial average down by 52 points united health is the leader on the dow. amazon narrowing the field, picking 20 cities that could be the home for it new headquarters we'll break down who could have the upper hand stay tuned ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum -- just to help you improve your skills. boom! that's lesson one. education to take your trading to the next level. only with td ameritrade.

hi, everybody. i'm sue herera here's your cnbc news update at this hour. president trump visiting the pentagon and blaming democrats for a potential government shutdown that he says would damage military readiness. he told reporters the visit was a show of support to the nation's armed forces. >> if the country shuts down, which could very well be, the budget should be handled a lot differently than it's been handled over the last long period of time, many years if for any reason it shuts down, the worst thing is what happens to our military. >> according to bank rate, only 39% of americans say they would be able to cover a $1,000 emergency expense with their savings. the survey says more than one third of households had to pay at least $2,500 for an emergency in 2017. >> the british government has appointed a politician to tackle

the epidemic of loneliness in britain. british prime minister theresa may announcing the appointment on monday. maybe, perhaps, she should have appointed two people >> that is the news update this hour >> pretty good, sue. >> i wonder, there was an epidemic of loneliness, lot apparently there is. >> they should just watch "the crown" like we do. >> absolutely. you got it wrk back to you >> bill de blasio announcing a man to open a men's homeless shelter just a stone's throw for one of new york's most expensive buildings filled with billionaires contessa brewer is live with that story i bet they love that, contessa >> you know, there's a reason why they call this billionaire's row. the penthouse in 177 behind me sold for a reported $100 million. pershing square ceo bill ackman and a group of investors

reportedly spent some $90 million on an apartment here imagine the surprise in this neighborhood when they heard that mayor de blasio thinks a homeless shelter for 150 men, long-term shelter, should go in right next door to the back entrance here. it's not the only posh, high-end building here, and a local realtor said this is craziness, that apartments here can go up for $10,000 per square foot. let me give you a sense of where the shelter is going in. at the park savoy hotel, which is right next to the back entrance to the park hyatt hotel or the park hyatt new york, i should say, and on top of that, it will have 150 men living here the realtor points out to me there won't be goods or services in this neighborhood, and yet opposing realtor says that's true, but the city has to do something about real estate homeless problem, rather okay, so back to where this is located. here's the map you can see central park and

carnegie hall next door. the mayor's office, and i just got off the phone with them, said look, we don't care about how high property values are here or what the impact is what we care about is every neighborhood in new york has a moral responsibility to deal with homelessness, so every neighborhood should host a homeless shelter the mayor, for his part, has 90 shelters in store. new ones for the city, 12 are already up and running they said that's the way it's going to be. they have the right to do it and they plan to move forward. >> how can they just take over the park savoy do they own it, are they renting it from the owner? >> it's interesting that you ask that those are the same questions i asked the mayor's office you know what i got for the answer a big, i can't tell you that they can't tell me whether they're owning it, whether they're renting it, leasing it i asked them and pressed them on it they said it may not be that the city is going to run the shelter. sometimes they lease out to contractors the ability to run a shelter. what that person may be paying, we simply don't know we're working to get details

though >> that is just amazing. i know we're all new york obsessed because we live in the area, but for the rest of the country, mayor de blasio think he's going to be the progressive leader of the left and he thinks he can be president of the united states under that ticket, so him putting this where he wants to put it is a message on that front >> and she was very willing to say, we don't care about how much property tax revenue we're losing by putting a shelter where currently they're making a couple hundred thousand dollar as year in real estate taxes she said they don't factor that in, just the moral imperative of taking care of homeless people one other point i want to make, she said because if you see homeless people lying around your sidewalks, that might not have such a great impact on your property value either. she said people who live in this neighborhood are unlikely to see a difference immediately in the number of homeless people they

see on the street because they won't necessarily be sheltering the street homeless, but rather transitional people from other areas of the city into the shelter here >> did they also say they don't care about cost when it comes to running a shelter, whether they outsource it or run it themselves it seems like it would be much more costly to run a shelter right in the heart of manhattan as opposed to someplace elsewhere you can open a shelter maybe double the size? >> i pressed her on that again, if you look at what this hotel went for in 2006, okay, so more than ten years ago, $172 million. i said is $172 million hypothetically speaking since you won't tell me how much money is changing hands here, is it the best way to address the homeless population issue in new york city? could you do more with $172 million elsewhere? and she said, again, we don't care about that. we don't factor that in. we factor in the fact that every neighborhood has a homeless problem. and that we think every neighborhood should deal with it she did say they saved money by opening a shelter than by paying

for a hotel room she said they budget roughly about $172 a night for a hotel room and pay about $150 a night for a shelter. >> even though it's in a hotel okay, deaf enoughly new york city math. much appreciated it. clearly all the answers she got showed this is a political move. no doubt >> yeah. >> let's get to deirdre bosa for a news alert on uber >> hey, guys moments ago, uber confirming its long awaited investment deal has closed today it values the company officially at $48 billion down from its previous nearly $70 billion valuation that it commanded just about a year and a half ago this also makes soft bank the company's largest shareholder and gives a huge payday to former ceo and founder travis kalanick and other early backers. major governance, they take part immediately and it essentially consolidates power for the new ceo. >> thank you very much amazon's narrowing the field

of potential locations for its second headquarters down to 20 finalists. scott has been following the story from the very beginning. he joins us now. hi, scott. >> hi, there from 238 cities down to these 20, and these 20 automatically now have some bragging rights to say that they are among the top most competitive cities not only in north america but really in the world, and they're in this amazon race, which now heats up in a big way off of the list, though, some sentimental favorites like detroit, which was mounting a joint bid with windser ontario across the river they're out. also, jeff bezos' boyhood home of houston off the list. but let's take a look at where we are here. and these new cities, 20 cities, they include toronto, which we had not previously graded in our amazon race report cards let's look at that first of all, the only nonu.s. city to make the grade in the top 20. certainly gets an a-plus for population an f for stability because

canada is not as business friendly as some might like. the economy, though, is good the talent is very strong. canada does much better than the u.s. in terms of educational attainment of its workforce. a lot of great talent there. so a c-plus. a c-minus on location. toronto has issues with infrastructure, just like its u.s. counterparts. and that could be an issue overall, a grade of "c" for toronto. los angeles comes into picture, if amazon wants a location closer to hollywood, it's not a bad idea it's not a place a lot of people thought of, but certainly has the population stability, california not exactly the most business friendly state, though the economy has gotten better. great talent in the area they call silicon beach a location, lots of issues that come with a big city, so a d-minus, so overall, a c for los angeles. the only california city to make the grave. a lot of people thought here in san jose where they submitted

the bid, there might be a silicon valley presence. no go. indianapolis is also on the list getting an a-plus for population, b for stability. they have a worker shortage, especially s.t.e.m. workers. a b-minus for indy and montgomery county, maryland, we graded the d.c. suburbs as doing well maryland has some regulatory issues so a c-minus for maryland a lot of cities we already looked at. chicago, we looked at raleigh, north carolina we looked at columbus, ohio. and we looked at denver just a couple weeks ago all on the list as well as newark, new jersey, which we'll have a lot more about that coming up. >> scott, do you feel like los angeles is kind of a token west coaster? i mean, all the other -- everything else is pretty much denver and then 18 others on the eastern side, i guess, if you take out austin. so it feels like they're throwing l.a. in to keep the californians happy >> i'm not sure that's necessarily the case like i said, the studio is becoming an important part of amazon's business. if they want to be near

hollywood and have that kind of a presence, more of a presence than they already do, that might be a possibility and there really is a lot of interesting things going on in california the issue is business friendliness, which is at the top of their criteria. and really everybody knows that california has a lot of issues as far as that goes. that could be a problem for l.a. but no indication that any of these are token bids these are -- all of these places submitted very strong bids it's going to be really interesting to see what happens from here. >> pulling for newark. i'm a homer. thank you very much. we'll see you soon cool stuff investors seem to like what they heard from bbnt bank this morning. shares sitting at all-time highs today following a solid quarter. net income was up, interest income was up year over year as well, and joining us is kelly king, chairman and ceo of bbnt thank you for joining us can you help us settle a debate. you saw the apple news

yesterday. bbnt was one of the first companies to come out after the tax cut changes and say, we're going to raise wages we're going to increase charitable donations a lot of the naysayers said this has nothing to do with the tax law or the government, basically that you have to raise wages because labor has gotten so tight. how much did the tax law change directly or not contribute to the wage changes that you instituted >> well, it was a substantial factor in our consideration. you know, we always look at what our appropriate wage level should be for our associates based on market conditions, market cost, competitive factors. in fact, about three years ago, we raised our minimum from about $10 to $12 there wasn't any fanfare about it, we just did it because it was the right thing to do. and in this case, we really were not having any challenges

frankly in terms of attracting, you know, labor into the jobs available. we simply thought that because the company was having more money to the bottom line, it was appropriate to share part of that with our associates, so that's why we did it >> you know, when you look at it, too, you think, all right, well, it's nice. people are getting a bonus or a wage, depending on the company, which is terrific. any middle-class family is going to appreciate another $1,000 check or whatever the government takes out after it maybe it's a mortgage payment or a couple car payments, whatever it might be. do you think, though, that tax reform, mr. king, will fundamentally help business in america? not just a one-time sort of steroid hit, but a fundamental longer term help >> there's no question that it will so think about it this way when businesses pay less taxes, they make more money, which means they have a higher return on capital which means they're able to attract more capital

as they're able to attract more capital, they're able to invest more in plant and equipment, in marketing, in staffing, product development. this is the way the economy works. when companies are able to justifiably attract more capital, invest that capital into business, the business grows as they're buying equipment. and adding more staff, that helps, you know, create more consumption in the economy the business that they bought the equipment from adds people that creates more demand so when you add more capital, you add more consumption, which adds more demand, which creates more supply. it's a progressive improvement in the economy that happens very, very predictably with these types of changes >> mr. king, what do you think of all these people who are saying things like, oh, these one-time benefits, this is just a little sugar, but the corporations are really not going to give out that much?

there's so much cynicism out there. should there be? >> no. there should not be. i'm not aware of any business ceo that's going to go around and try to play those games. you know, businesses are really trying really hard to do the right thing for the communities, for their clients. for their shareholders, for the communities. and so playing those kind of games is just absurd business people don't think that way, they don't act that way i get the cynicism, but it's because people don't understand how businesses work. look, we're not out there trying to take advantage of the community or fool the community or fool the press. all we're trying to do is help grow the economy now, we do have a self-centered interest in that we have to provide a good return to our shareholders, of course, but as we are investing and making good decisions for our businesses, that helps the economy grow. that's good for everybody.

it's good for the employees. you know, as we make more money, we donate more to the communities. look, everybody wins when businesses are growing and people forget this businesses are nothing more than a representation of the community. you know, in the banking business, for example, we are a summation of the loans and deposits in the community. so if you were my banking whole client, the more loans and deposits you have, the better we do, so we're all together. we're all in it together what's good for us is good for the community. >> so many people think that actually, you know, it's mutually exclusive, the pie is not big enough, but the pie gets bigger, everybody benefits thank you so much for joining us >> good to be with you >> kelly king, chairman and ceo of bbnt. >> so in the sweet spot of tax reform, that's what a top analyst says about one cable and icdia giant. whh one is it? where does he see the stock going? that's after the break objectivg capital for the future,

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except that the next morning... it all makes sense. fedex powers global commerce with vast, far-reaching networks... deep knowledge of industries... and, yes... maybe a little magic. ♪ cnbc parent company comcast is up about 15% over the last

three months our next guest raised his price target on comcast to $52 right now, it's below $42. a move like that will be a 25% gain why? because he says it's in the sweet spot of tax reform craig moffitt is the man who made the call. founder and senior analyst with moffitt 98 ettnathanso moffettnathanson good to have you here. you make a call like this, you're going to be on cnbc a lot of us own comcast stock because it's our parent company. make the case, why do you think the stock can move another 25% because of tax reform? >> look, the basic rules of who we're going to be winners and losers from tax reform are now relatively familiar. domestic companies, high-cash taxpayers, capital intensive industries the piece that i don't think people focus on quite enough is that in some industries, those benefits are going to be competed away. you know, the return on investment capital for say

customer acquisition rises, and so you get more promotional activity that drives it back down certain industries will be better at keeping those returns, and i think the cable industry in particular is pretty well suited to be able to keep those returns. i don't think don't think therea significant risk that they have to spend significantly more on capital. they weren't underspending on their network and capital investment to begin with so, in their case, if you can keep the returns, the real question is, what do you do with it our guess is they keep leverage constant, buy back a lot of stock and that should be very rewarding for comcast shareholders. >> let's be clear here this is a financial engineering call on your part. the fundamental issues that have faced comcast as well as the broader industry, they're not going away broadband growth is slowing. there's pressure from o.t.t., competition from 5g. none of that will go away. >> all absolutely true you're right, melissa. this is not a call that says the fundamentals are about to get better

now, that said, the stock took a significant down in september when they warned on exactly those issues fact, we took that leg down as an opportunity to upgrade it to a buy at the time. and i think those issues are now reasonably well anticipated by the investment community if anything, you might actually see things be a little better. for example, i think the growing sense among investment analysts is that -- on the buy side is that 5g is probably a bit less of a risk than they would have thought three, four, five months ago. no, but, you're right. this is really about financial engineering and an opportunity 23 for a company to see what we see as $14.5 billion free cash flow between now and 2021 and reinvest that in buying back stock. that has historically been a very, very successful formula for cable companies. >> you know, there's an irony there because historically

comcast isn't a big financial engineer, not super highly leveraged, et cetera. >> that's true. >> it's an interesting call. >> thanks, craig. >> thank you for having me. march rally continues today. it's now 21% in just three n nths cathe rally keep going we'll debate that. stay tuned stay tuned $1.50 futures contracts? what about a dedicated team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online. and made it liberating. we took safe and made it daring. we took intelligent, and made it utterly irresistible. we took the most advanced e-class ever

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time for "trading nation." today let's trade walmart. mark, the stock is up 50% in a year are you buying any or selling more >> we're buying more we've like walmart for quite some time because they're evolving in business if you don't evolve and innovate, you die. it's quite simple. you can see that in their name change they went from walmart stores to walmart, griping the hyphen and "stores. it's signaling their shift from brook a brick and mortar to stronger e-commerce we think they're well positioned to compete with amazon and we like the stock. >> it's been hot, well above a lot of metrics do you see more upside or peak >> we see more upside. we're a buyer. i think be you have to consider

the lost decade and a half that this stock is coming out of. walmart closed the year 1999 at $69. fast forward to the end of 2016, walmart closed that year at $69. so, after -- it's rallied sharply over the course of the last year, but this is following 16 years of no progress. so, we see a much larger breakout of play we're buyers of the stock. >> fundamentally, technically, they love walmart. thank you both for more, go to tradingnation.com. we have to go to president trump. let's listen in. >> great place what a great place i met the workers and the people that really do make america great. they're incredible people. thank you. thank you for being here i'm very familiar with this setting, as you found out. this is something special. and i am thrilled to be back in pennsylvania with the

hard-working men and women of h&k equipment. good job you do. good job good job you do. we're honored to be joined by the secretary of the treasury, steve mnuchin, director -- [ applause ] >> look at that, steve they must know you about 5% of this group the director of national economic council, gary cohn, he's our tax man where is gary? did a good job with the taxes. everybody being helped by those taxes, huh big tax cuts [ applause ] >> as well as a number of outstanding members of congress. representative lou barletta.

[ applause ] s. >> he's been a friend of mine for a long time. here's another one mike kelly i won't have you go through and over those gates pat meehan thank you, pat great job you do, pat. representative keith rothfes thank you, keith thanks for being here, keith a man that everybody in washington knows and so respects, bill schuster. bill representative g.t. thompson a person more and more are

hearing about, a real friend and spectacular man, rick sacone and mrs. saccone thank you for being here special people my daughter ivanka is also here with us today. and she worked so hard on the child tax credit ivanka, come up here come up here, will you come on up and a very special thank you to george cook for hosting us done a great job really a great job thank you. thank you. what an incredible company ivanka, are you going to say a couple words about the child tax credit boy, did you work hard come on, say it. >> hi, everyone.

it is always amazing to be here in pennsylvania and to be here with all of you. we worked so hard on tax cuts and tax reform and the president, my father, was so speveng about what he 79d to accomplish. it was core for him to support hard workings, middle income families and the child tax credit is a key to doing that. it's a big win for everyone in this room and across this country. we're very excited about that. doubling the standard deduction, the child tax credit, all of these elements that make this a very very family-friendly plan also enable great american businesses like this one to thrive and be competitive in a global landscape we're very proud of it america is just starting to realize just how great a tax cut plan is. more of that to come thank you for having me here thanks >>