i think kroger's is one of the name it will go higher. >> sarat. >> nove artis is focused on development of new drugs i like this. >> mr. o'leary. >> asian index has beat europe last year and europe beat us and i'm using the fussy russell index on ntl. >> and here is your top story tz new record highs but those gains completely wiped out and no what is taking us down and it is time to begin questioning the amazing rallys jet engines and elevators. we'll show the industrial giant posting the fastest organic sales growth in tlhree years maybe the anti-ge and the ceo will join us. and it is golfing's annual feast. we'll show you the hottest trends from clubs to gadgets and why golf is suddenly optimistic

again. i'm brian sullivan "power lunch" tees off right now. and welcome to "power lunch. i'm melissa lee. the major average giving up gains. dow and s&p, russell 2,000 small caps did soar to record highs but now looking at losses across the board. the dow managing to hold on to ever so small gains. commodities are crushing it and oil at' three-year high and copper and gold soar the dollar at a low. saying a weaker dollar is good for u.s. trade transports getting slammed led by united. the airline down 11% on pace for the worst day in four months on fears about a price war. got much more on this coming up. michelle. thank you. i'm michelle caruso cabrero live in switzerland where the trump tax cut and the surging and global economy are front and

center we'll talk taxes, trade and whether davos is ready for president trump to arrive on friday and michelle, on this multi-con innocent, over the next couple of hours you will meet four managers who are the sole of consistency. that is why they have been named the 2017 morning star fund managers of the year you'll meet them and talk to them and learn how they did. it melissa, back you to. >> look forward to that. it is a big day for earnings latest results here. t the earnings squad is here we begin with another kitchen sink quarter from general electric this is the third sink at this point, morgan. >> we're collecting sinks here it is definitely a kitchen sink. earnings and revenue missed expectations but the quarter and full year was better than expected thanks to cost cutting with

$1.7 billion cut in 2017 another $2 billion tarkted f -- targeted until the ceo explained an s.e.c. investigation tied to ge capital $15 billion insurance charge from last week, they tell me it is early and not unexpected given the size of last week's disclosure but still is spooked investors now they did reaffirm the 2018 industrial eps and guide, health care and avenue -- aviation gre but powers profited plunged 88% and this year it may get worse lastly, regarding a breakup, flannery saying they are reviewing the structure for the company and there will be a ge in the future but it will look def -- different than today shares are down 3%. >> and let's turn to comcast because it peers the death of cable may have been greatly

exaggerated. julia boorstin back with us. the key thing to watch her, subscriber numbers how are they looking >> comcast has more subscribers than wall street the stock did drop despite expectations and a dividend increase subscriber strength and record profitability driving revenue up 4% -- to 21.9 bms. that is 2% beat. comcast added 350,000 high speed internet customers that is about 40,000 more than expected and although the company lost 33,000 video -- video customers during the quarter, that is a smaller loss than the 45,000 subscriber loss that analysts had been expecting. nomura said they should ease concerns but we expect ott

declines to continue given least steady competition from existing player and likely newent rants and the value will be high as they evaluate opportunities. united continental down, dragging the sector based on the conference call. phil be low is here to explain. >> they will boost margins to be more competitive let's look at what they are looking to do. 4% to 6% capacity increases, primarily domestic for each year not only this year but 2019 and 2020 as i mentioned, mainly domestic into the chicago and houston and denver hub where they are getting killed by american and delta. and in the end, they believe this will boost not only profits but profit margin at the hub after years of retrenching, here is the ceo talking about how

they've made bad moves in the past. >> we listened to too many people and started to be conscience and we started bring you smaller aircraft where our competitors offer more comfortable eric and we're wondering where you -- [ inaudible ]. >> and today they are pushing united down more than 10% and the rest of the airline stocks getting hammered as well and it comes down to this. when united adds capacity and say they are hoping to increase margins against american and delta, do you think they'll sit there and say bring more flight news chicago we're welcoming that no we'll talk with doug parker tomorrow here on cnbc. you do not want to miss it it is right here on "power lunch. we're down at the american operations center with doug. i'll be curious what he has to say. he won't say we're going to match them plane for plane, but they won't see ground. doug will say we're going to make sure this is not -- we're

just not going to hand over to united that is the concern for investors. >> we look forward to that thank you. phil le bowe. >> michelle out to you in davos. >> you could call it the trump effect, the mood here is up beat as world leaders wait for the president to speak on friday the bank top ceo are weighing in and cutting deals. >> it is not clear what the right straetegy of a negotiatio has to be, but if you are going to negotiate and get some benefits you have to lay it down and say this is the way it is going to be and what do you want to do. and i think the chinese has been mon -- an emerging market and now we have to compete on more of a level playing field and i think they recognize that and in some cases they -- they request a subsidy -- not a real subsidy but a benefit and in some cases

i think they dominate certain aspects of the market. >> you could be tougher and i think we need to be smart where and how we use those powers or how we negotiate those but i think you can always be tougher around certain aspects i don't think of this as a broad brush. >> i'm not against foreign ownership. i'm against competitive. what people are doing today -- i [ inaudible ] to say we're going to help our people and stuff like that. but the real benefit comes over time >> let's bring in dan glazer he's president and ceo of marsh and mclennan companies good to have you here. >> it is good to be here. >> this is your ninth davos. what is this mood like in this business climate like compared to the past. >> well nine years and finally some optimism. so people are feeling good there is a bit more confidence there is the sense that this long slow growth economy globally over the last decade

really since the financial crisis is finally coming to an end. >> how much of that of the tax cuts in the united states for corporate america. >> i think the tax cuts are not the fuel behind the optimism there is some reasonable levels of confidence even before the tax cuts but the tax cuts are incredibly welcome. certainly for companies like ourselves. and so when i look at it, ceos have a bit of a bounce in their step and they are looking to invest. >> and i looked at your quarter earnings report and it was 26.2 and have you looked at where it is going to be next year. >> yes but i can't say it here because we're in the quiet period. but ultimately -- >> lower >> our effective tax rate over the last couple of years is about 29% in total apart from discrete items and yes, it will be lower and we're very pleased about. >> that and even more importantly, it increased the competitiveness and allows us to compete against the foreign competitors more on -- more on a

level playing field. >> is this crowd ready for president trump? >> well as an american, i'm happy the president is coming. i think the president coming at any time to a event like davos is important and i absolutely believe people here are interested in what he has to say. >> but there is this impression when you talk to people here, when you listen to -- listen tos media here, that the america first message is going to be anti-dove os or anti-globalism do you think the two could mesh or are there clashes >> well, the way i look at it, i would bring it back to -- i have no idea what president trump is going to talk about. i don't think it really matters all that much. the fact that he's here and saying, the u.s. is open for business, we're growing, we want to compete around the world, and i think it is a good message

overall that most people are talking about. so i've only heard enthusiasm for the president coming to davos. >> that the interesting. different from what i've heard but i don't doubt. you put out a risk report. what struck me is there is a lot of things you would expect on there. the thing that people were least concerned about, way down in the corner, you could barely see it, inflation. uncontrollable inflation i wonder if you should go against the consensus. >> the global risk report, we've done it 13 years in a row, it is a high quality, very interesting report and we poll literally thousands of people who are involved in risk business and that sort of thing. if you look at the issues from, say, four or five years ago, they were all economic unemployment, income disparity, fiscal crises, et cetera now it is like extreme weather events, natural disasters, climate change and cyber security it is probably the biggest risk

that pops because it is a risk that is changing and ceo's are recognizing that the risk is changing on them and we all have to catch up to where cyber is going. >> and it is a big topic as well as davos thank you for joining us. >> my pleasure >> dan glasser the ceo of marsh mclennan thank you very much. right now back to julia boorstin with breaking news with regard to new tv and i mean literally new tv. >> that is right jeffrey katzenberg a name on board for his new tv venture announcing that meg whitman will become ceo of the l.a. based company starting on march 1st. katzenberg will serve as chairman he announced the new trf venture this past summer hoping to raise $2 billion to create the next generation of video. professional content designed for viewing on mobile devices in formats of ten minutes or less he has said that he has the

biggest content creators in the tv business on board and meg whitman now certainly adds more tech expertise to this company brian, back over to you. >> wow, quite the big name here. and from what i understand, katzenberg has been trying to raise a couple billion dollars for over a year now. used to be called wonder co and the new idea if i understand it and correct me if i'm wrong, is turning a half an hour show into a six minute program that a 22-year-old can watch seamlessly and streamlessly on his or her mobile phone. >> that is right so wonder co is the product and -- they hope the way people watch tv and my understanding is talking to various sources that they are talking to everyone about this and there are a number of potential partners or -- potential investors if you look at a teleco, like at&t or verizon. they may want to fuel a company

be a mobile tv destination with the kind of content that is designed for watching on your phone. so he's been talking to those companies as well as the tech companies, apple and google and amazons of the world as potential investors and partners and a lot of the companies are interested in creating more content. they think the media companies here in hollywood think it is great to have another buyer but the idea is people don't want to watch half an hour of tv on their phone. but when you think about the alternatives, a lot of content is designed for your phone is really low cost, katzenberg wants to go high cost, high quality. >> so basically he needs -- he still needs distribution partners or his new tv a distribution platform in and of itself. >> it would be probably both he would -- it would be an app but if you could -- he wrote he needs right no is the funding. because you can't launch a new service and subscription with an entirely new format unless you have the content at launch so he needs to raise that $1 billion to $2 billion to get started. >> julia boorstin. thank you very much.

big name there. the markets. the dow down 58 points right now. we were up earlier today we've seen a turn here we'll talk more to the dow ceo coming up because united technologies, one of the first targets of president trump now the company saying that it will repatriate a couple of billion dollars and see a long term benefit. the ceo greg hayes will join us to talk businesses, trump and taxes and more and back to tyler in chicago handing out the fund manager of the year awards. it is a city of big shoerulders and you are the man for the job. >> there is a little bit of snow but not terribly cold. when we come back after this quick break, the domestic fund manager of the year, if you had put $10,000 into this manager's fund a decade ago, you would have $30,000 today that is the kind of result he s enelerg. we'll meet him right after this. it's absolute confidence in 30,000 precision parts.

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welcome back it is the morning star 2017 fund manager of the year awards and we're going to meet morning star's domestic stock fund manager in just a minute but first, let's find out why he won. >> the morning star 2017 domestic stock fund manager of the year is steven wiemer of fidelity growth company. the tech boosted results and video was a top contributor.

it is a name he bought in 2008 meg whitm when it was a smaller company. and the fund did well with the biotech picks including bumer and anile um both were up triple digits for the year. good job >> you know what i like about your fund is the kind of consistency you have been able to deliver last year top 5%, up 36% over the year the three-year top 2%. five year top 2% ten-year top 4%. 15-year, top 2%. how do you deliver that kind of consistency. >> well it starts with getting help back at the fidelity in boston and around the world. we put together this portfolio over a lot of years. and we found some good stocks and we stuck through them through tough times and figured out which one would carry the

waters over the years. >> your ten biggest holdings last year and the worst was up 33%. >> it a good year for the market. >> good year for growth. >> good year for growth. so we needed a stock well up over 20% to be in the ballpark for a good name. but we had others up more than that. >> i'm looking at some of them apple up 48%, amazon up 55%, and think of what you could do if you invested stocks that began with the letter b., not just the a. invidia has been a long time holding. your largest holding, up 86% last year. why do you like it so much >> so semiconductor space was good place but in video it was a very good place. so they are the leader in computer graphics for video games and they are taking that technology and applying it to the data center in taking this acsetsell rated computing and bringing it to the automobile world and leading in autonomous

driving with over 200 projects around the world. >> a lot of familiar growth. in your portfolio, the facebook and tesla, as i mentioned, alphabet and amazon and so forth. >> and adidas begins with an a. >> yes and it was also a good year for biotech for you. do you see this year being quite as favorable for growth names, or may it tilt more toward value? >> i think there is still some good opportunities in growth i can't speak for value. but i think in general the opportunities should broaden out quite a bit. not only is the u.s. economy accelerating, but the international economy is a tail wind too along with the weaker dollar, we're seeing favorable business results translating back into u.s. earnings. >> and another thing about the job i like you've been there 20 years holding this fund. you can't hold a job 21 years and very low turnover your average holding period is about four years for a stock

25% turnover why is that an advantage in. >> i think it is an advantage because the stories aren't an overnight success. so we live through ups and downs and when we have some downs, sometimes it is a good advantage to build the position bigger and we see the companies that have a big advantage, they're advantages accrue to them well over time and in compound. >> steve, thank you very much and congratulations. >> thank you appreciate it. and when we return, we'll meet the international stock fund manager of the year, she leads a team of eight managers, very interesting approach to stock picking. we'll meet that person shortly folks, to you. >> coming up on "power lunch," beer and golf. why are budweiser beer going soft and as we head out, check out the market it lost steam. the dow was up triple-digits and

it is now down by about 88 points as s&p down 12.5. we're all over this market decline when "power lunch" comes back 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 can help you sleep better at night. with the right financial advisor, life can be brilliant.

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>> anybody who is anybody in golf is down in orlando, florida, not for a tournament but because the latest and greatest golf gear is on display. dom chu with the ceo of caloway. dom. >> i'm here with chip brewer, the ceo of caloway golf, one of the two major publicly traded golf companies thank you for joining us here on cnbc you're here at the show for a reason what is going on with your particular product and company that has you excited about this year. >> this is a great time of year for us because we get to announce our new product and energy and toys that are coming for the year so we have the new rogue product line driver, hybrids, irons, brand-new technology, brand-new golf balls coming. it really all starts here. and it is the year. >> and last year you made big strides in terms of your club line products. tell us what was behind that and

could you keep it up in -- >> we had a great year from a brand perspective and from a total business perspective two significant acquisitions, both of which have been great for us they're displaying here as well. and thecall oway side, we become the number one golf club company on a global basis in terms of dollar sold took over the number one position in drivers thanks to a whole new technology called jail break. which was in our epic driver last year. we'll be new and improved in our rogue this year. then for the first time ever, in the thorough wood and hybrids in the road, so great run but we are not done and we're exciting about 2018. >> so as more people buy more clubs, it is about whether the golfing economy is doing well. if you were to assign a grade for how well the golf business is doing, what would it be and why. >> i would say it is a b. or a

b-plus it is competition and had to resize over the last years but if you look at the health of this industry now, it is gone through some changes, some contraction and certain players existing the space on the oem and the retail side. we've had very good years, i know i'm probably a little colored because call away. >> and the game was at the healthiest when tiger woods was at his best and he is teeing up this week. how do you feel about the tiger effect and how do you feel about golf. >> it is a good sign a lot of energy around the game. where the tour is going with the young youth movement out there has been really good for the game and obviously tiger, he's the man. right. so he's getting a lot of attention. it is nice to see him healthy again. we're going to see a lot of eyeballs and i think it is going to be good for the game.

>> a lot of staffers besides tiger teeing up with your clubs. so with that, back to you. a big thing happening here in orlando. chip brewer from cal away. thank you very much. >> we'll see you soon. airline engines and elevators, it is not the entire story but it is not far off for united technologies. providing guidance the street is happy with and even with a one time charge around the new tax law, analysts are positive because of a big new jet engines and the rock well collins deal and joining us, the chairman and ceo of united technologies mr. hayes, thank you for joining us you are 4 and a half months into the deal and it is expected to close in a few months and you've had time to get under the hood and look at rockwell collins and is there anything a surprise to you either way and is the deal still on track >> brian first of all, thanks for having me on this afternoon.

as far as the rockwell deal, it gets better the longer we look at it and the more opportunity to plan out the integration. as you guys know, rockwell collins is a premier aerospace property and as i've spoken to the aerospace customers, everybody always said it is the best property out there. it is the number one in customer service. i think we have a lot to learn from rockwell, so we're excited about this there has been nothing from a regulatory standpoint that come as a surprise. we're working through the process and expect to close by the middle of the year here. >> also this -- utx investors will have this gtf acronym, geared turbo fan engine. it is a new lingo. the a-321, big pick, a big one for you. can you give us an update on the progress of that engine, because it is a big deal and also what you expect as far as pick up from other types of planes and other carriers aside from delta.

>> the gtf has been a long time in development we spent about $10 billion over the last ten years it has been in production now for two years. last year we shipped about 374 engines. importantly that is triple the production rate we saw from 15 2018 we probably ought to get to double the production again. and importantlythere is about 8,0 8,000 engines in backlog this is the future of aviation at prat whitney. they love it the measure of the reliability on wing is at 99.88% it is a great engine we saved 25 million gallons of gas or fuel since this airplane -- or this engine was introduced and it is a great product with a great future. >> in terms of the impact of tax, greg, on the conference call you indicated that you could access about $3 billion in cash overseas and that could allow you to borrow less and

become deleverage -- increasingly delevered in the face of the rockwell collins acquisition. any other plans for the cash or financial flexibility this gives you in addition to what you anticipated prior to making that deal >> it is a great question. so typically we re patriot about a billion dollars a year of overseas catch and two-thirds of the earnings come from cash. so there is a lot of cash over there, $8 billion. the rate will come down with tax reform, the actual benefit to us from a p&l stand point is 150 to $200 million a year. the real benefit is from accessibility to the foreign cash so our plan was a billion dollars to pay down some of the rockwell debt. we'll have to go out and finance about $14 billion to $15 billion to complete the transaction. but now a path to be paying that debt down very quickly over the next few years having access to this cash on a tax advantage basis. so it is a big deal for us

i think it gets us back into the credit metrics that everybody is comfortable with and it will allow us to eventually start buying back our own shares in the near future. which is something we thought was four or five years away. >> and the last time you spoke to us here at cnbc, you indicated that down the road once you guys integrate you could look at breaking up the company if the market doesn't seem to appreciate the combined company. what are your thoughts now has anything changed given the stock market environment, given tax reform, just given the back drop of what world economies are doing right now. >> i don't think anything in our thinking has changed fundamentally. tax reform is a benefit. it is a benefit -- a big benefit for the rockwell acquisition because rockwell is a u.s. based company. if you think about post rockwell, about a $50 billion aerospace and a $30 billion commercial business. all great global franchise and

otis and carrier and our fire and security businesses to go along with the aero side so we have a lot of flexibility and some thinks to do but right now the focus is on getting the rockwell deal closed and getting the integration done because there is still 500 million of synergies we need to capture. so one deal at a time it is out there and something we continue to look at and again i can't set the price of utx every day in the market but we'll do what is right for the share owners over t the long-term. >> at this rate, i'm going to -- you're going to buy ge the stock is down again greg here is the thing. chooip -- china cracking down and they're trying to stem the real estate tie they've had. are you hearing or seeing any slowdown on the elevator or h-vac side in china? >> i think we have seen that for the last two years already we've seen a lot of pricing pressure we've seen commercial

construction slow down a little bit. the good news is residential construction has slowed down and residential in china different than the u.s we're talking 25 story apartment buildings. as that has slowed down as they try to ease the speculative bubble the infrastructure spending has picked up and so we're doing a lot with subways and airports. so top line still looks good in china. and i expect that will continue. we saw good news on pricing in the fourth quarter which is something we haven't seen in a couple of years. so feel good about china over all. obviously it is something that we watch on a regular basis. but keep in mind, china is $2.5 billion out of our $60 billion of sales so it is important but the bigger markets for us are obviously europe and the u.s. where again going very, very well >> and just quickly, greg, do you see any benefit or are you seeing any benefit from ge having its own troubles? >> well, look, ge, the par that

we compete against is the aviation business and they are a formidable competitor. i think there is a lot of opportunity from a talent perspective to perhaps pick up some people. but we're folk unitcused on ourn business and customers nobody likes to see the troubles that ge has had. i would just compare and contrast utc, we have a pension plan in the u.s., which is similar to the ge plan but we're 100% funded as we exit the year so we've got a lost financial flexibility that others don't and that means on the m&a side and our capital structure. so i like our hand a lot. >> mark caps are closing in. ge just about $30 billion bigger than you now, greg hayes, ceo of united technologies good quarter and guidance. thank you for joining us we appreciate it. >> thank you so much have a good day. coming up, we'll go back to michelle in davos. michelle >> coming up, i'll be speaking

to sir martin sorl of w pc there is a new competitor on the rin. lot more to discuss here on power lunch. so don't move.

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hello. i'm sue herera here is your cnbc update for this hour. larry nassar, the ex u.s. gymnastics and michigan tate doctor has been sentenced. more than 150 people testified he sexual abused them. the judge said i just signed your death quote he apologized for his actions. >> your words these past several days -- your words -- your words, have had a significant emotional affect on myself and has v shaken me to my core an acceptable apology to you it is impossible to write and convey i will carry your words with me for the rest of my days. >> the european union slapping a

$1.3 billion on chip maker qualcomm for anti-trust violations the e.u. commissioner for competition announcing that decision in brussels michael wolff's "fire and fury" is on the way to becoming the fastest selling books. henry holt saying 1.7 million copies of hard cover and e-books and audio books have been sold in less than three weeks that is the news update this hour to michelle caruso-cabrera in chilly davos >> thank you very much we're keeping warm so our next guest a long time fixture here in davos. running the world largest advertise company wpp. welcome sir martin sorrell the ceo of wpp so dan glazer has been coming for nine years you have him beat. for 30 years. >> since the late '80s i think it was. >> you say the mood this year is the best he's seen it ever

because we're to longer talking about crisis, or not talking about growth. >> some people compare the mood this year to 2006. which -- >> the last year -- >> which is over optimistic. and davos is not the great forecaster of -- didn't get leman or the sub crisis right. that may be a dangerous assumption we'll see. >> but do you agree the mood here is -- >> the growth and goldilocks, not too hot or cold. i think the biggest issue is whether the growth in the u.s. economy is strong. and we're 3% to 4% worldwide and whether it triggers inflation and then banks will move interest rates up faster than people are anticipating and that is the risk whether it happens in 2018 or 2019, whenever, clearly the trump tax plan now being implemented was more than the markets expected expecting 25% rather than 21%.

it is warmed off -- it said on your program "squawk box." a high in tax properties this is a having an affect -- and it is the world's biggest economy and put america first. america does well. >> so you brought up america first. a big topic of yours president trump is coming here he arrives tomorrow. big speech on friday how will he go over with this crowd, which you know so well. >> it depends on what he says, i guess. i'm expecting a speech similar to what i heard in the room at the u.n. general assembly. and i thought that was quite -- it was a tough speech -- >> combative. >> it was combative but it had good speech and balance in terms of dealing with the political issues, particularly north korea. dealing with the political issues at that time that we're faced. now north korea seems -- the ioc and the games in pyeongchang are

totally different attitude and sport i think is reflective of politics you're seeing a united flag and a united team. it is quite interesting. >> has president trump's foreign policy worked? >> well we're yet to see it is clearly more divisive. and you ask whether it would resonate in amongst the elite of davos who are committed to globalization but as grass trob two books and through davos we are dealing with a fractured world and it is a question of how we bring it together, for the benefit of everybody and not just the 1%. >> so if we were to look back and we would say we were worried about the future but we're excited about technology and now we're talking about tech lash and whether or not -- technology is bad. >> well the lash is about privacy. do i have my privacy if i'm a consumer. and secondly, do have my job that is a big issue as to

whether jobs will be created by new technology, stay the same or less amazon, we saw a humanless supermarket a couple of days it didn't work perfectly, but it is the first time they've trialed it. >> but do i read correctly, you want regulation. >> i didn't say i wanted regulation i said there are seven companies if you include the two chinese companies that are all -- around half a trillion dollars of market capital to about $800 trillion, the big question is who is the first $1 trillion. maybe saudi or am co in that, given the seven sisters and there are similarities to energy and jeff bezos being john d. rockefeller. >> jeff bezos is john d. rockefeller. >> one of our clients said to jeff bezos, you will be the rockefeller of the 21st century. >> how did you feel about that. >> i don't know. i wasn't there at the time. >> it doesn't sound like a

compliment. >> he has the world's -- the world's richest man. and amazon is incredibly successful company and people talk about a do only and digital advertise so they control between 22 and 23% of world advertising that is a very significant sharement and amazon is coming over the hill. it has an advertising platform and a search platform through alexa. 55% of product searches originate from amazon already. so amazon is becoming a very powerful company and what you hear here amongst sort of government is a growing concern about the power of these companies. you take them as a whole, they are certainly about $4 trillion in market cap which is extremely large. so this is sort of reminiscent of the sort of talk that there has been historically in interests where there is government players. >> story in the journal about the price war going on in

consumer products, who are the biggest advertisers. >> package goods it is about 30% of the industry. 30% of the revenue. >> and i read that and thought maybe that is good for your company because they need to advertise more to retain market share. >> if you put the two things we've been talking about, technology and direct to consumer, amazon, alexa, jeanne, echo, jeanne being alibaba and put those together and investment in brands become more important. cutting prices is not necessarily the way that you build loepg market share, all you have to do is be price competitive. you have to innovate and you have to invest in brand. and the problem in our industry i think is that marketing investment has not been regards as an investment, it is a cost and that is what we have to shift. so the -- the focus has to be shifted away from cost to the top line because the way companies will be successful is innovating the new product chz are attractive

to the company and growing the top line. >> certainly. >> thank you. >> so good to have you on. your 30th davos meeting. >> 30th. how many -- thank you very much. >> thanks. sir martin sorrell over to tyler mathisen in chicago. >> thank you very much it is time now to meet the international stock fund manager of the year, let's find out why she and her team prevailed >> the morning star 2017 international stock fund managers of the year are sara caterer, harry hartford and team at causeway international value. >> stock selection was quite solid across the board in 2017 but particularly within the euro zone and south korea german's volkswagen and the casha bank and the samsung electronics all posted solid results. >> sara welcome.

you lead a team of eight at causeway international $9 billion fund. you are also the ceo of the company and the co-founder so you wear many hats there you attribute your performance to a real bottoms up stock picking approach that emphasizes operational distress but not financial distress that is how you identify value and last year it led you to volkswagen why? >> that is correct and i just want to make sure i -- i explain how we even got to volkswagen. we have two -- the co-founders, harry hartford and i oversee what we call a research cluster hits and one of them are -- >> cluster heads. >> cluster heads it sounds more -- >> it sounds like an in sult. >> it is not at an insulting they are experts in their area

of sector research and our colleague who covers industrial looking at autos found early in 2015 that an underperforming company, volkswagen, needs to cut cost and pull back on capital expenditure. >> and they were going through some of the things with the emissions scandal at that time as well: so this was a company r distress what do you do when one of the value oriented companies, a distressed company loses its distress and becomes the company that you think it can be do you kick it out >> not until it reaches the price target we work with price targets that's where research time and effort goes into determining -- first of all, when volkswagen plummeted it dropped 20% one day and 20 the next in late 2015 on dieselgate our assessment was buy more quickly because the company had such extraordinary financial strength they had 24 billion euros of net cash on the balance sheet. >> as i look at your portfolio it is a consequence of stock

picking but you had a lot in europe, probably still do. a third of the portfolio in the united kingdom that's not necessarily because you see value in the united kingdom per se, but just because those companies led you there. >> exactly the uk is a large market in international context anyway post brexit, a number of uk-listed stocks did become cheap. only 9% of the revenues of the companies in the international fund come from the uk, even though it's over a third of where companies are listed. >> a fair number of industrials. a fair number in health care, fair number in financials last year but only 50 to 60 stocks overall in the portfolio why does that level of concentration make you comfortable? >> concentration means more bang for the buck when we have a big weight in samsung electronics it makes a difference, or hitachi or last year's winners if you have small weights you have diluted your great ideas.

>> your company is employee-owned why is that an advantage >> because every one of the portfolio managers i made reference to, our entire team all own a stake in the business. so we are perfectly aligned with mutual fund shareholders. >> your mouths are where your money is or vice versa. >> exactly. >> congratulations thanks for being with us brian? >> we'll see you in a bit, buddy. budweiser used to be the king of beers. now it's not in the top three. why american beer drinks are saying this bud is not for you next we took legendary

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drinkers. >> budweiser is falling a spot to fourth among the bestselling beers in the u.s. according to a report by beer marketers anheiser-busch's flag ship brand now trailing bud lite, coors light and miller light it is the first time all three top selling beers are lights the trend continues a trend for budweiser which held the top spot until 2001. all four of america's top selling beers posted declining domestic sales in 2017 it's a trend that reflects the overall struggle in the beer industry with sales flat in 2017 according to iri one bright spot for anheiser-busch, the michelob ultra brand with a sales increase of 11% in 2017. the company will be spending big on ads during the upcoming super bowl with four ads slated to run. its dilly-dilly ads have been a

social media success during the football season. it remains to be seen if that buzz, if you will, can translate into increased sales i think that's the big question and what everybody is waiting to see. you can love clydesdales all day, but if you're not drinking the beer, forget it. >> clydesdale is the seventh best horse. >> i cover alcohol, not horses. >> dilly, dilly. >> dilly, dilly. >> i don't know what that means. >> i don't i don't. >> to the pit of misery. coming up on the second hour, more top fund managers, more big names from davos plus, apple has made people rich, but look at that royal caribbean has outperformed apple. how about that wel k e o ouit day. 'lasthceabt beens over the years, paul and i have met regularly with our ameriprise advisor. we plan for everything from retirement to college savings. giving us the ability to add on for an important member of our family.

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and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. i'm melissa lee. royal caribbean hit a fresh all time high beating earnings and announcing new bonuses will it continue to be smooth sailing in 2018? the ceo joins us. and the best of the best morningstar unveiling the top fund managers of 2017. we'll speak with two of them, how they beat the market and

what they are betting on this year "power lunch" starts now ♪ >> the dow, s&p and nasdaq all hitting all-time highs, but the dow giving back gains although it was now we are back up let's call it flat intel and ge are the worst outperformers but apple and ibm are trying to weigh on the index which is again flat. airlines grounded following united earnings, american, delta, alaska, southwest down more than 4% the dollar is the story of the day skidding to a three-year low. the treasury secretary says he may welcome a weak dollar in the short term for trade after a massive move yesterday netflix up again today we'll get to that. right now back out to davos, switzerland and michelle. >> i'm in switzerland, thanks so much taxes and trade are the big

themes on everyone's mind here straight ahead i'll run you through the biggest names in business and geo politics and what they are saying plus darrell white, the bank of montreal we'll talk the future of trade and what happens if the u.s. pulls out of nafta now out to tyler matheson in chicago. >> thank you very much at the morning star mutual fund manager of the year awards we have two categories to go. fixed income manager of the year and the asset allocation manager of the year. you will meet two guys in the fixed income category. a guy who turned $10,000 into $18,000 over the past decade and an asset allocation manager who did the same and more with his mix of stocks and bonds. all that from morning star and now back to inglewood cliffs. >> we begin now with the markets pulling back from triple digit

gains. courtney reagan is all over the action >> quite the reversal. it began around 11:00 a.m. shortly thereafter the commerce secretary made comments calling china's 2025 technology strategy a direct threat. so that's stoking worries about a possible trade war we have been talking about it a lot. the dollar was weak. ross's comments coming around the time european markets closed down about a percent that gave investors looking for the opportunity to sell a window to do so look at the dollar action hitting three-year lows. we have wti and gold prices moving higher on the back of that for now, back to you brian and melissa. >> thank you very much courtney reagan. >> despite fear of a trade war and a weakening dollar the dow goes up despite an eight-year run and higher valuations, the dow goes up. despite the investigation around the president the dow goes up. what can bring it down

jeff clinetop and patrick kaiser from brandywine global patrick, you understand. saying that tongue in cheek but it's a teflon market, a juggernaut nothing has slowed it down when your clients call and say, patrick, i don't understand. i'm happy, but i don't understand what do you tell them? >> we tell them we are happy, too. obviously an up market is good for everybody. we don't necessarily understand. valuations are elevated for the broad market brandywine plays in the value universe our portfolio is trading at a meaningful example to the market the question is what makes it go down in an environment where the economy is doing well it is hard to figure out what the catalyst will be. i don't think we should have a right to go up 6% every month or whatever it is the most likely thing to cause the market to correct is probably interest rates moving up the ten-year 265, 266 today.

at some point when does the market react to the move in interest rates. >> answer your own question. at what point, at what rate, at what yield on the ten-year does the equity market finally react? is it 3% is it 4% >> well, if we get to 3% the market clearly reacts by that point. does it happen before that i don't know you know, again, we say the market is fully valued if we think you have cheap, fairly valued, fully valued and expensive, right now we are in the fully valued to expensive range. valuation alone isn't off en a catalyst for correction. something like the ten-year moving up, 275, 280. definitely by 3% people look and say the market multiple is too elevated given at that point the yields would be at 3%. >> how should we think about interest rates and the dollar? we are watching the dollar index hit fresh three-year lows.

the ten-year yield at three-year highs. usually they are hand in hand. where do you take your cues from >> the market is putting a low probability that rates will rise enough to trigger -- enough of a reaction by the fed or other central banks to rain in enough liquidity. interest rates have gone up. the key isn't that they are just going higher but they caused banks to pull back on the liquidity that generated that earnings number. that could be 2019 or 2020 scenario the near term risks are around the other issue talked about at the beginning of the segment and that's trade. >> patrick, i want to drill down deeper on sector since we have you. you are an investor in the airline sector we are seeing that space take a hit thanks to united continen l

continental's earnings and the idea that the airlines will be increasing capacity. it seems to always be a story and a concern about the airlines becoming disciplined and undisciplined again. are you concerned? >> when we look at the history of airlines, yes, we are always concerned. given united's results last night i don't think there is a promise of earnings and capacity it's communications. they did a poor job of communicating the rationale for the capacity increase. i saw oscar munoz this morning i wasn't thrilled with his answers. we are a shareholder in united, american and delta they are more likely than not to be rational and disciplined in capacity yes, united is adding capacity that's always something that the industry, investors should worry about. we'll get a good signal tomorrow when american reports to calm some of the panic that resulted

from united's miscommunications. >> jeff and patrick, our thanks to you >> thank you >> let's get back to michelle in davos. >> thank you, melissa. as we count down to the president's speech on friday many expect him to emphasize his america first policies we have had the first global leader weighing in on economic nationalism. french president macron saying this when he was asked about economic nationalism >> translator: look, i think we need more cooperation. that was the core of my message. i believe in this new global contract the governments, the companies, the investors because we have to finance -- i mean, common goods. we have to accompany this transition and deliver a new message to the middle and working classes. without this consistency, it

would be impossible to deliver we are reforming prince in steps, making it much more competitive but at the same time we want to build a new global leadership in that direction >> we should point out france has been lowering corporate taxes as well to try to be more competitive. he was asked specifically you defeated economic nationalism in france can you do it internationally. that was a veiled question about president trump who was going to speak on friday. trade is a big issue the whole issue of america first. however, of course another big theme -- in fact, there is a secondary off campus conference going on about cryptocurrencies. that's something not seen last year even the head of the imf weighed in this morning. >> i think we'll be talking about digital currencies i'm not sure we'll talk about bitcoin. i see that as a speculative instrument

i don't understand the underlying fundamentals of the investment >> i think you have said enough. i won't say more you guys talk about it too much. you should stop talking about it and go back to something relevant. >> crypto currency -- >> it's not my interest. >> you are opening a bitcoin trading desk. >> we are? >> that's what i read. isn't it true? >> yes, it is not true i read it also. >> it is not something that will threaten the national monetary order. it is not one that will challenge the position and place and authority of central banks it's clearly a movement that corresponds to people's aspiration also to speculation from some corners. the dark side of it is something we need to be very cautious about. if it is conducive to increased money laundering, increased money moving around, bad news. >> lagarde said the architecture

for crypto currencies is interesting and promising. you can see more of the interview with her and yoyo ma on cnbc's facebook page. >> answer the most pressing question so far from davos -- >> can't hear you. >> i guess not >> we'll work out the audio issues. >> michelle, if you can read lips -- we'll see you soon andrew looks like he's going with earnest shackleton to the arctic. >> there is a stronger heat lamp. >> this is the question that everybody has. andrew, i love you unless you are exploring something with the risk of being stranded for weeks, don't wear fur. ahead, the apple analyst fight heating up after a couple of rare downgrades one analyst out defending apple today. who's right? plus, one of canada's biggest banks weighs in on trump's stance on trade. is it smooth sailing for

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back at morning star for the 2017 mutual fund manager of the

year awards. time for the winner in the fixed income category. let's find out how the team did it >> the morningstar 2017 fixed income fund managers of the year are michael collins, robert tip, richard pickarillo and gregory peters of prudential bond. >> this team was firing an owl cylinders. they got gains, good sector selection and security selection. they had gains from emerging markets, high yield was a big contributor as were nonagency mortgages. >> michael collins, welcome. you were one of the four-person senior management team you won because you're also handsome you pulled it off. >> thank you. >> i want to go over a number here i love consistency this is consistency. three months, top 2% six months, top 1% one year, top 1% top three in five.

top 5% in 15 years how do you do that >> you do it with a really strong team. i know team work has been a theme we have heard today. we have over a hundred fundamental research analysts. over 50 risk managers and over 125 portfolio managers who specialize in a particular segment. in fixed income it's about avoiding the down side in bonds, in sectors really leads to the consistent performance. >> you have outperformed your peer group and the benchmark every year for 15 years. that's the way you build up. you turn $10,000 into $18,000 over ten years what was the big position, the big bet that worked for you last year >> we had a lot of good ideas that all worked. we had a big yield curve flattener that added a lot of value. we continue to have that position we are short the front end of the treasury curve thinking the fed will continue to raise rates and there aren't enough rate

hikes priced in. >> you are out on the longer end as interest rates go up. >> absolutely. we like the back end of the yield curve, the ten-year yield at 265 today it's flashing value to us. we don't think the fed will hike rates enough for cash to outperform the ten-year yield over the long term. >> how are things different this year >> we have aggressively rotated the portfolio over the last year or so. basically we are reducing exposure to more cyclical industrial corporate credit risk around the globe high yield bonds, bank loans we are rotating into high quality, mostly senior positions, aaa-rated positions in structured products, commercial mortgage backed securities. >> you were talking about structured products. take me through what it means and what's the increment to yield you get from them over treasuries that's the appeal, right >> there are two appeals they are safe and defensive.

even if we are wrong about the strong macro economic environment we feel we are in now and we have a bump in the road or a recession, these things should hold in well they have tremendous credit enhancements the likelihood of losing money is low there is still a little bit of a stigma you say structured products like a dirty word there is a hangover from the last financial crisis. >> cmos. >> three letter words. we'll generate an excess return over treasuries of a percent which may not sound great, but a lot of corporate bonds are at 40, 50, 60 there are high yield bonds at 150 over treasury. >> what do you think will happen with interest rates? we talk about how many times the fed will raise them. where do you see them topping out? what's your forecast >> in terms of the fed funds rate they will probably hike three or four times this year, assuming things continue to be okay maybe another one or two times

next year and the following. right now, the funds rate priced into the yield curve over the long term is two and 5/8 once they get there they'll be cutting rates. maybe over the next ten years the funds rate averages 1.5% in an extra session presumably they cut it back to zero the ten-year is a good value at these levels. >> you love what you do. >> i'm excited. >> you are fantastic. love it. michael, congratulations appreciate it. melissa? >> thank you, ty now to kayla for a news alert. >> thank you, melissa. we are getting early reaction to the tariffs that the president introduced yesterday on washing machines lg will raise prices on washing machines sold in the u.s. according to a memo from the "wall street journal." an executive from lg sent this memo to retailers saying as a result of the trade situation we will be initiating price actions

shortly. it doesn't say what the price hike will be the article sites industry experts who say roughly $50 on the sticker price. we'll see what it ends up being. this is a consequence of the initiation of tariffs that the president put in place yesterday. back to you. >> thank you apple is on the decline after a couple of downgrades our next guest sees growth ahead. plus, royal caribbean hitting an all time high. we'll talk to the ceo about the quarter, the futures and big bonuses the company announced for employees ahead on power lunch. hi, i'm mike ditka.

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febreze unstopables. breathe happy. let's bring in the analyst, michael walkley. great to have you with us. >> thank you for having me >> this month on apple a downgrade from long bow, atlantic equities. jpmorgan lowering expectations just today we had bernstein lowering expectations for unit sales for the march quarter and the stock is off 3% from its all time high.

what's this telling you, mike? >> i think a lot of the buy sites expect a softer start to the year we lowered the march and june quarter iphone estimates today we expect an upgrade to the new models to come out with strong asp new models coming out we raised the calendar 2019 estimates for iphones and apple. that led to the increased target for long-term investors as we think the cautious near term shipments are under by the market already. >> what makes you think the visibility through 2019 to get us beyond the bumps that it may face with the seasonally weaker quarter, the march quarter, the one analysts are skeptical about? >> sure. i think march will be soft we did lower estimates below consensus now for the march quarter. long-term, we have tracked regional demand in sales by region of the world. we believe apple has over 630

million new iphone users there is a loyal base and we believe there will be two versions to the fall this year continuing to drive a strong upgrade cycle to the higher priced iphones seeing the user base stay loyal and a big installed base by fall of this year, probably over 300 consumers with a three-year or older iphone bodes well for an upgrade cycle into 2019 raising estimates today. >> you don't think the upgrade cycle gets stretched out because the ability of 6 users to upgrade their battery for $29? even if it is an imbakt bakpac it spreads out the demand. >> that's a good point longer term looking at the installed user base with the aging iphone and we believe the new features for the 10 models. we are expecting two versions. that will be compelling enough to drive an upgrade cycle. continue to drive trade up, strong earnings power.

factor in the apple stock the tax rate coming down and cash returns leading to a strong buy bs back. earnings are likely longer term. short-term, we agree with some of the callers that the march quarter could be soft relative to consensus >> do you factor in at all tax reform as the impact that it could have in terms of putting more money into the consumer's pockets and therefore more money perhaps to buy apple products? >> yeah. i think that could help. we haven't factored that in on the demand side. you look at upgrades and if that leads to an upgrade cycle quicker than one, two or two and a half years, that could add upside to the apple estimates. especially as we believe once again with a larger screen phone that might be more expensive than the 10, that's where tax reform money could help

consumers upgrade. >> thanks for phoning in. >> thank you for having me all right, back out to davos and michelle >> thanks, brian coming up ahead from davos, i'll ask the bank of montreal ceo darrell white about the business with the united states and what it means if the united states pulls out of nafta more ahead on "power lunch."

hello, everyone. here's your cnbc news update this hour. militants stormed the offices of the save the children charity in eastern afghanistan, killing at least five and wounding 24 more. the assault lasted about ten hours. authorities believe there were six attackers. the islamic state group claiming responsibility. senators from both sides of the aisle are meeting to try to come up with a solution to the status of young undocumented d.r.e.a.m.ers. 60 votes are needed to pass the

spending bill that's been linked to daca. >> actually two efforts under way. i use the term loosely because they are at the earliest stages. one is among senators, both parties. there will be a meeting this afternoon to see if we can agree to ground rules. >> elton john is retiring from the road after his upcoming three-year global tour capping nearly 50 years on stages around the world. the 70-year-old singer, pianist and composer wants to spend more time with his family he's sold 300 million records. that's the news update back to you. >> thank you, sue. another check on the markets here while we are off the session highs -- session lows i should say we are not back at highs the dow is up 36 points. s&p in the green barely while the nasdaq is way down by apple now. we just talked about apple

bernstein lowered unit estimates for march. telecom are the laggards. >> jackie d at the commodities desk. >> good afternoon. you can see wti closed over $65 a barrel today and brent crude over 70. these are two key technical levels if you look at my screen you can see commodities across the board including metals and gold are higher because of the drop in the dollar index that's where support is coming from back to energy and oil for a second we did have the eia report it wasn't that bullish but a draw down in cushing helped support us, too. remember, everybody keeps upping the demand forecasts though u.s. production went up, they believe there will be enough growth globally and domestically to absorb the excess supply. that's why the prices continue to rocket higher back to you. >> thank you very much let's continue now to hand out

awards for top fund managers and good stewards of your money. we go back to tyler matheson in chicago. >> time for the final award of the day in the asset allegation category let's see how the winner did it. >> the morningstar 2017 allocation and alternatives fund manager of the year is david gireaux of t. rowe price. >> the fund outperformed within the stock and the bond sleeve. within the stocks the growth buys helped results as growth securities outperformed value securities within the bond sleeve the fund invested in corporate bonds and that's outperformed government bonds during the year. >> david, congratulations on this award we should point out this isn't your first time here you won in 2012. >> that's correct. >> that's a measure of consistency. another thing i like about your

fund over the past ten years you have beaten the s&p by one percentage point a year over that period of time with 25% less volatility than the s&p now, that's partly because you are a split fund you have stocks and fixed income what percentage of the portfolio today is in stocks and how does that compare with the average -- more or less >> our equity positions have had 59% today. it's a little bit below normal our beta adjusted. we have a lot of stocks that are lower risk today you beta adjust and we are lower risk than we were the last three or four years. >> you have taken risk down a little bit. >> we have. >> why >> valuations are high we're eight to nine years into a bull market and economic recovery the combination of those factors and strong investor euphoria doesn't necessarily fore shadow great return >> how about cash? where do you typically keep that and where is it now so that you

would have dry powder to put to work in case there is a market pullback >> i would say we have been running cash in the low teens. that number is now in the high single digits. we have added for the third time in my career to treasuries more recently in taking cash down actually adding to utilities today as well. >> what worked for you last year was it the growth oriented names, health care, financials what and how might it be different this year? >> really what worked last year was health care. >> mm-hmm. >> we own a lot of nonpharma health care. think of perkins and thermals of the year we owned a lot of hmos which were good stocks. >> unh. >> sig that, humana, anthem. we owned them all. >> you're still there? >> we are but we have moderated the positions. those stocks have done well in the last 12 months. >> as you look out at the economy around the globe this year how do you think the

economic performance will be how do you think corporate profits are looking? >> corporate profits because of tax reform as well as because of a weak dollar, it will be a good year for earnings and profit growth that doesn't necessarily mean it will be a great year for the stock market expectations are high, valuations are as well. >> you mentioned a moment ago you have taken risk down over the past couple of years going into treasuries, utilities. >> yes. >> where is the pocket of opportunity that you see on the equities side this year? >> utilities again, we don't invest on a one-year basis >> as your record indicates. >> yes. >> you invest long term. >> think about utilities we have a number of utilities that can grow earnings at 4 to 8% that are now trading at a discount to the market they have maybe one-third or one-half the down side risk. that's a much better algorithm

given how late we are in the cycle. >> on fixed income, how are you positioned now >> we have been reducing high yield exposure again, we started to add treasuries in 2018 as rates have risen. we are buying corporate bonds as well our portfolio is becoming less risky. >> david, congratulations. >> thank you. >> winner in 2012, winner in 2017 we'll see you in five years. >> absolutely. >> all right, thank you very much to michelle in davos >> thank you so much, tyler. congratulations to him our next guest heads up bmo financial group. 45,000 employees, 710 million in managed assets he has a lot to say on the economy, u.s./canada relations, trade and nafta. welcome to darrell white >> thank you for having me. >> bmo, the m is montreal. bank of montreal. >> that's right. >> canadian bank are you worried about the u.s.

pulling out of nafta do you think about it a lot? >> i think about it a lot. when you look at trade agreements we start from the premise that trade is good and bilateral trade and efficient global supply train makes sense and benefits countries, communities, our customers and ultimately the consumer and prices we think about it a lot. if it went away it would be bad for mexico, the u.s. and canada. >> have you done analysis about what it would do to the canadian gdp? >> we think over five years you would take off about 1% of gdp over the course of five years. not catastrophic it's manageable but it's not good. >> you will be listening to president trump on friday when he speaks? >> i will be. >> you are listening for trade >> absolutely. >> what words -- do you have any hopes, expectations? are you nervous? >> when you think about the success of the trade relationship as it stands, i would argue that it's probably the most successful commercial

trade relationship in modern commerce so canada is the second largest customer of the u.s. the u.s. is the largest customer of canada. china, by the way, is barely ahead of canada as the largest customer of the u.s. you have 32 states in the united states who have canada as their largest customer. >> wow. >> a lot of those people care a lot. there is a lot of alignment to canada, mexico and to the united states we are quite hopeful >> the corporate tax rate in the united states just went down. >> yep. >> by a lot. >> it did. >> it's now lower than canada's. >> yes. >> your competitive position changes dramatically. >> as a company or a country >> both. >> as a company we are a net beneficiary. we have an operation in the united states. 25% of earnings are in the united states. we pick up a benefit on that as a country, tax competitiveness is an issue that we have to think about but you have to think about it in then cotext of the other benefits that might accrue to being, working and living in

canada in isolation it's a net disadvantage when you put it together we're in a good place in canada. >> any chance they'll lower taxes even as macron is lowering it in france of all places. >> you have to talk to the minister of finance. i think it should be thought about in terms of competitiveness for sure. >> thanks for joining us we appreciate it. >> thank you for having me. >> bmo ceo darrell white good to have you on. >> thank you. >> melissa. >> thank you royal caribbean sailing to an all-time high. straight ahead, travel, tax reform and big employee bonuses. stay with us on "power lunch." you always pay

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shares of royal caribbean hit all time highs today after better than expected earnings and revenue. the company announcing bonuses to 66,000 employees. joining us now is royal caribbean chairman and ceo

richard fain great to see you. >> good to be back. >> across the board most analysts think it was a great quarter. when it comes to the 2018 guide they think you are playing coy here you got it to 1.5 to 3.5 net yield growth they say you are bullish talking about booking and pricing trends they have to be underpromising at this point. are you? >> no. i think we generally just play it straight. we have had a phenomenal 2017 which gives us a high starting point. we are off to a good start in 2018 with double-digit increases in eps i think we have just played it straight it's off to a good year. we expressed it and that's the way the numbers come out. >> let's talk about the strong start to 2018. one analyst estimates 56% of 2018 bookings have already been

made is that true that would imply that you have the ability to now stay away from discounting and things like that to get the rest booked for the year >> we are in a good book position we normally have about half of the next yearbooked. we are at the highest level of booking in our history that does mean that we aren't as anxious to sell off those things we can be more cautious. we can raise the pricing as the year goes on that's what we did last year that's what we expect to do again this year. i have to admit it feels like a good position to be in >> richard, certainly firing on all cylinders. spoke with analysts who said solid quarter. they struggled to find anything to complain about. they found something and i will bring it up. >> thank goodness, brian had to have something. >> we are the real news media.

your net cruise costs rose .2 more than expected but on a serious note your costs are going up just a bit. is that a concern for investors? >> it shouldn't be you know, we are investing in things which is what's generating the higher revenue. all of our income growth is coming because we are capturing the passengers yes, we have reinvested in our people this is a people business. we are investing in them we are investing heavily in technology we need to be ahead of the curve. as you say, we are really talking about small changes at the margin the proof in the pudding is in the eating those small changes are driving terrific revenue increases which are driving strong earnings increases. i can live with this any day. >> you have achieved double-double which is double eps and double digit roic. that's led to $80 million in surprise bonuses for your

employees ex-corporate officers. is that thanks to tax reform in any part >> no. >> could something come because of tax reform? >> no. this is nothing whatsoever to do with tax reform. this is three years ago we asked our employees to step up to the plate and really outperform. we didn't do it with the promise of a bonus we simply said this is the mission the company needs to be on today we announced we had achieved that. so this is our way of saying we call it the thank you, thank you bonus. they helped us achieve the double-double. it has nothing to do with tax reform it is focused on we had a goal, they helped us achieve the goal. we wanted to say thank you, thank you for doing that >> richard, there are a bunch of new ships. a couple of big new ships coming to the market in 2019 and 2020 do you worry over capacity has one analyst said ruined the

party? >> no. i think we have ships coming we have had ships coming in fact, each of the three global brands has new ships coming in '18. we have ships coming in '19 and '20. these ships, first of all, i think the market continues to grow to absorb the new capacity. these ships are extraordinary. i think the ships will, in fact, attract the customers that we need our business is thriving our industry is thriving our brands are leading our industry i think we have the ability to grow and i think we have shown it the question you're asking is the question we were asked a year ago, four years ago, seven years ago. i think the american public in particular, but also europeans, chinese and others really want experiences. we are delivering them and they are buying it. >> do you think tax cuts will help super charge the growth

you're seeing in the united states >> you know, we don't have any direct evidence of tax cuts helping us but it's very clear that the consumer is red hot at the moment. >> right. >> they are feeling very good. presumably the tax cuts are part of that. >> all right richard, it's a pleasure to speak with you thanks for your time. >> thanks. appreciate it. thank you, brian. >> richard fain of royal caribbean. >> on deck, how can one of the most beaten up and beaten down companies in the dow make one of the most incredible turn arounds in the stock market ever 'll may be left wetalk cat and whether it's still a big dog coming up.

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we're in d.c. with breaking news >> reporter: white house press secretary said that the administration will release a legislative frame work on immigration on monday in hopes of breaking the log jam on capitol hill over the issue. she said the frame work would include the president's priorities like daca, the border wall, ending the visa lottery in chain migration or family sponsorship. no details on what the frame work includes at this time, however, she tried to offer

context around the remarks earlier today the weaker dollar could be better for all, believing in a free floating currency and believes the dollar is stable. back to you. >> thank you time for trading nation, and today, we trade caterpillar. set to report earnings before the bell tomorrow. stocks on a huge run in the past year buy into the earnings? michael with the group at high tower advisers, and matt, you know, if a year and a half ago, they said, you know, matt, caterpillar is up 77%, you'd said they were drinking. nobody has said that, nobody thought it incredible run is there any way you think it can continue >> it's going to be very difficult, and it's nothing to do with the fundamentals when the stocks had a great run, but it's gone vertical in two months it's not a technology stock, but looking at the chart, it's rsi,

relative strength index, it's above 90 it's out of control. never seen anything like it. all-time high by a long way. it's an 8% premium 200 week moving average something reached one other time in the past. again, purely a near term basis. fundamentals look good, infrastructure bill could pass, that's positive as well, but the sto stock could pull back 10% and it's still up. that would be natural, healthy, and i hope it happens because i think if we pull back 5-10%, the stock has more upside down the road go up like this, only lasts so long, and it ends quite badly usual usually. >> michael, do you own it? >> we agree. short term, the stock moved up close to 80% in 12 months, trading a pe of near 120, and long term, we are optimistic

with infrastructure spending, everything that's growing in the economy, and if we continue to grow the economy like we do, we would buy on dips. we're lower, like around 150, but we would buy it on a dip if the economy slows down rs thou, look out below >> fall like a rock on caterpillar. >> michael, matt, thank you very much for more, go to tradi tradingnation.cnbc.com now the latest from tradingnation.cnbc.com and a word from our sponsors >> a double top is a chart formation that suggests an uptrend may be ending and ready to rebirth, sometimes called an m formation because the pattern looks like an m. it consists of two peaks approximately the same price they view a break of the lowest inhe formation as a bearish signal

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executives here in davos, all talking about this today, waiting to see what would happen feeling it would be a less market-friendly regime if he comes back into power. >> yeah, in the last two years, ewz is up double that of the dow. a heck of a good run we talked about it two years ago. all right, thank you update on the stocks grab now. valiant pharmaceuticals slapping you on the head today. >> today >> goldman sachs had a sell. that pushed valiant down and pushed tim seymour out mr. wonderful is now in the seat if he didn't have a beef with goldman before, he does know >> what was amazing, yesterday, the two -- the difference between them was minuscule because of that news or the thinking that there could be a deal between them, which pushed that stock higher yesterday, and then, today, mr. wonderful is getting a smack in the head because of the apple action. it's really -- >> a lot of head smacking. >> a lot of head smacking.

will be a really close horse race into the stock draft. countdown is on. >> 13% move for your buddy in one day. >> see more of him on fast money at 5:00 p.m. see what i did there >> clever. thank you, michelle, see you tomorrow >> see you tomorrow. >> "closing bell" starting now ♪ welcome to this closing bell, i'm kelly evans. >> we have a new musical director dow is up 181 points, down 103, and nearly 300 point swing, now back 42. we start on the floor with a recap of the seesaw action today. court? >> yes, the major averages have taken a jagged trip,