recovering >> it's recovering very well people turn it into action and everywhere we go, there's the community doing well. >> thank you for spending time with us. >> thank you. >> thank you. >> welcome, everybody. i'm tyler mathieson, you know who that is. the tussle over trade. the u.s. putting the pressure on and china now bracing for a battle what does it mean for you? your investments and your money. bitcoin, dropping again. now down around 13% in a week.

what is behind the latest? a live report is straight ahead. the sale of the century. the rockefeller family auctions half a billion dollars worth of goodies from picasos to the family china and the favorite sugar bowl an exclusive look is minutes away on power lunch which starts right now. >> welcome to power lunch. covering up descent i gains. the dow still off triple digits. struggling for gains check out the big movers snap taking a big hit. rihanna posting she doesn't like the new changes to snap. neither did kylie jenner alibaba rallying planning a stock listing in

china. here's what else is happening at this hour. the trump administration issuing sanctions for the first time against russia for mettling in the 2016 u.s. presidential elections and cyber attacks. global demand for oil is expected to pick up more quickly this year. that's according to the international energy agency but supply is growing at a faster pace the fda proposing lowering nicotine levels in cigarettes in an effort to reduce smoking rates. back to you. >> thank you we begin in washington at this hour announcement after announcement over the past 24 hours, big implications in many cases for the markets. your money, the economy as well. trade, tariffs, taxes, our team in washington all over it. aman live in the capitol, you first. >> thanks, so much focus now on

larry kudlow arriving at the white house. we expect him for a trade meeting later today. we don't think we're going to see him. focus on the divide over the issues of tariffs. obviously an opponent of broadbasbroa broad based tariffs. both men have been on television sending soothing signals about how they'll be able to work together here inside the white house. peter navarro talking about what his message is on tariffs to wall street. here's what he said. >> let me just say one thing we come in peace here. the thing everybody on wall street needs to understand is just relax they have no incentive to rock that boat. all we're doing is standing up. >> he was on cnbc yesterday signaling that he agrees that it's the president that makes the ultimate decisions around here not the national economic

council director which is what he will be when he gets fully underway larry kudlow suggesting even if he disagree with the president, the president gets the final call here's how he put it. >> look, i have known the president a long time. we have mutual admiration society. he is the president. so it's a different role and i will abide by that there may be agreements, there maybe disagreements. we'll talk it through but once decisions are made that's it. it's time to execute. >> interestingly, both kudlow stressing they have known each other for a long time. they can work together papering over any differences and both telling me they work together here on cnbc years ago so they know each other and have a long history together we'll see how that relationship unfolds after it gets started today. >> what an interesting week or two weeks here really appreciate it >> the president talking about a second round of tax reforms.

what do we know right now? >> kevin brady wants to bring forward a proposal to make the individual tax cuts in this new law perm nanlt now they do expire and that includes the lower rates, the 20% deduction for pass through businesses and the larger child tax credit also looking at changes to the code that would encourage business innovation. the committee said he wants to unveil phase 2 this year but unclear if that means before or after the midterm elections. there is already a bill introduced by senator ted cruz that would make the individual tax cuts perm nananent but so fr that bill has gone nowhere meanwhile, democrats are not going to be willing to supply republicans with the vote they're going to need to get any legislation through the senate they have their own proposal to reverse the tax cuts to pay for infrastructure democrats want to bring the corporate rate up to 25% the top rate would go back to

39.6% and they would restore the big tax thresholds so guys, passing a phase 2 of taxes before the midterms are slim but they're worried that just running on what they accomplished last year is not going to be enough in november back to you. >> thank you from tax reform part 2 to trade and tariff bites so a potential battle inside the white house over that economic agenda. lots on the plate now for the trump administration's personnel with our all star panel. your all star, joe. >> thank you >> he is also a cnbc contributor just like larry kudlow was diane is chief economist steve is our senior economics reporter folks, welcome joe let's start talking about taxes. do you see any that a fresh tax bill making those personal tax cuts permanent passes?

>> no but it's good politics permanent has the biggest effect on changing behavior if it was permanent it would help more but if the democrats vote against it and the economy performs as well as some believe this year it will arguably look bad for them in terms of while i'd love to see it i don't anticipate it. >> your thoughts on that one anything could be called permanent until it's not the tax law can always be changed and it can be, and the concern here is that there were certain provisions regarding individual tax rates that were -- had a sunset provision involved here. do you see anyway that this gets done this year >> no, i don't and i think the other issue was that the uncertainty, the uncertainty, from tariffs to tax law and all the proposals out there is undercutting some of

the things that you'd like to see. the corporate tax reform do and that's investment. because it causes hesitation instead of commitment and the idea that all of the tax reforms themselves and the tax cuts and also sort of the last minute rush with a lot of lob yiss in the tax cuts not becoming, wasn't the perfect theoretical we want to do tax reform i think all of those things are comply katding the process and the stimulus that we would get from it. >> last year the agenda was clearly taxes, right what is the agenda item that leads this year and frame it for us >> can i recorrect you >> sure. >> the initial agenda was tax reform what did we end up with? tax cuts we had arthur on this morning that pointed out to -- i said what is left to be done. he said are you kidding me we could eliminate deductions,

we could broaden the base, do all kinds of stuff we could lower rates further it's interesting to think about larry, a man that -- larry kudlow, our former colleague. >> i don't think we can call him former now. >> whatever the deal, he's a guy that all of a sudden outside the pie shop now he's in the pie shop there's pecan pie, there's chocolate pie, there's blueberry pie of eliminating deductions. all of this stuff that's available to him now, having at least some access to the policy there. what's left? in this congress there's no appetite for revisiting this larry is very smart when it comes to politics. i don't think he's going to tilt the wing mill of a tax bill that won't happen there's infrastructure and i think one of the things he said

yesterday he's going to do is promote the tax bill he doesn't think the white house itself has been as up front in promoting what he sees as a benefit. >> very interesting. if we can sort of move beyond the taxes and talk about tariffs are you able at all to come up with an economic model if we see these big tariffs instituted against china. reports between 30,000,000,060 billion, what does that do with our economy when it comes to trade? >> the new issue isn't the tariffs themselves it's how does china retaliate and how does the rest of the world react. this is low hanging political fruit. everyone knows that china has gotten a lot of political support within the republican party. it's not as devicive as across the board steel and aluminum tariffs. it has a lot of potential there. the politics are one thing and economics are another and retaliation is real. i don't think we'll see china stand idly by and it could hit

consumers, retail sector, real estate to higher education and people showing up and paying full tuition and subsidizing other people all of these things need to be taken into account and it's hard to get your hands on the uncertainty created by this. the investment component, i know many of our markets talked to our commercial real estate clients and they're telling me the chinese have been huge investors. if they were to have to put a cap on their investment that would have ripple effects through a lot of the regional economies where there have been chinese investors. not the least of which is san francisco, atlanta, new york, it's very porn that we think about it it's hard to put a number on it now. >> let me turn it a little bit what if the inevitable -- i don't want to use that word, what if the outcome of threatened tariffs is not, or actual tariffs, is not

retaliation but rather negotiation? >> yeah, that's what -- you just -- i was hoping you were going to go there. the economics i think has gotten itself all up in a tizzy over prospects of trade wars which are very unusual i'm not sure if we ever really had a trade war. i look at this as negotiation whether allies or not. we're making a bigger deal out of this than what it's worth i'm more concerned about the fed and the prospects. they hike rates more than i believe they should given inflation backdrop >> let the record show he just gave you a thumbs up there. >> i was going to sgive a thumb down saying trade wars are not a

concern. they are a concern. >> you are still an all star joe and you too diane. absolutely. >> thanks. >> thank you. >> well now let's go over to julia. she has breaking news on spotifies ipo. >> hosting it's investor rate day. right now just took the stage and just announced key dates around their public offering they say they expect to begin trading on april 3rd and then on march 26th they will announce financial guidance for both the first quarter and physical year 2018 and they're not issuing any new stock. investor day is underway >> well, rally on the street at this hour. dow up triple digits, united health, ibm among those leading

the way. what's behind the rebound? plus it's called the sale of the century. the rockerfeller's auctioning the family fortune 2,000 items can be sold for $500 million and it could top a billion. we'll have it for you after the break. at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. and at $4.95, you can trade with a clear advantage. sometimes, they just drop in. obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances.

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a bill that the senate passed last night that would relax much of the dodd frank regulation from the financial prices is now stalling in the house with the chair of the house financial services committee telling reporters that he will not rubber stamp the bill he plans to negotiate it and he has floated a package of some 30 provisions bills that have already passed the house on a bipartisan basis that he wants to suggest to include in any sort of final new financial regulation he told reporters that he plans to speak with senator who chairs the senate banking committee very soon and that he is open to talks that are informal, that happen behind closed doors without going to a formal conference although that is certainly an option that he is keeping on the table at this time it's worth toting that leadership in the house do not have an appetite to go to

conference they are preparing for this to be done behind closed doors so we'll see what happens from here but certainly the time line has slowed there's no deadline now. despite the senate passing this last night we'll see what happens next when the house and the senate get together and try to hash out a compromise melissa, back to you. >> thank you, we are seeing s&p financials come off on the back of this news meantime, checking on all major averages we're in the green and holding on to those greens bob is on the floor of the new york stock exchange with more. >> the dow has been dramatically outperforming the s&p. it's because the big global industrials like boeing are proxies for trade disputes navaro was on pushing back against them it's moving to the down side again in the middle of the day this has been a big issue all week with these trade war concerns here. sectors, industrials are holding up a little bit. banks are holding up a little bit and that's why we see it

positive right now we had an adverse ruling for some of these limited partnerships there's the etf for that and a lot of big energy names are down oil are all down 3, 4, or 5% on that news. the day is playing out like the rest of the week we start on the upside the middle of the day we start weakening and the s&p is flat on the day. this has been a problem every day this week. that's because we just have a lot of issues going around, floating around with the retail sales being weaker than expected and of course with the whole tariff issue so three days in a row this is normally an up week but it's not playing out along typical patterns back to you. >> thank you, bob. do you know what else it is today? the ides of march. let's dive deeper into the market

we bring in jeff mills, managing director and co-chief investment strategist and the vice president and portfolio manager. i'm going to start with you. and the industrial average a long interview here on cnbc yesterday. he also spoke with us at length earlier this morning do you think the markets are a little comforted have we quelled some fears after hearing from these two >> i think so. we view it as largely a positive and if you look at the way the market is performing, if you look at tech and industrials and companies like boeing leading the market higher, i think the market is looking to his employment as he is now going to step into the white house as the free trade voice you can take positive signals from the fact that trump is willing to bring someone into the fold that clearly disagreed with his trade policy very

publicly trump has a lot of leeway but we think kudlow coming in is going to be a positive and the market is reacting to it as well. >> we talked about the uncertainty in the markets because of all the uncertainty that's still continuing in washington we have a fed that maybe we're expecting 3 to 4 rate hikes but inflation could be coming in, creeping up, what are your thoughts about all the cross currents in the markets? are you feeling as if this rally will continue or are you waiting for us to step back and sort of retest those february lows >> well, the market is a turbo shot from the tax cuts the ice bucket challenge with the inflation numbers that came out in january but the fed is taking away some of the seats for the musical chairs game here and they raise rates a little bit they know it's there they have known it's there before it has even shown up.

they were raising rates in anticipation to this it's a little more of a surprise to them than the markets the market hasn't done much this year and earnings have meanwhile come up dramatically since the end of the year so the market has gotten cheaper and guess what, two weeks from now the earnings season begins to roll out in earnest and the projections are from really strong earnings expectations at 18% growth this year on the back of double digit last year and there's some underpinning underneath the market that should protect it as the fed begins to raise their rates. as they stay gradual and if they can take them away very slowly the music can play on a little bit longer. >> picking up in terms of the valuations getting cheaper, shouldn't they get cheaper, though aren't we in for heightened volatility in terms of what the fed might or might not do? what washington might or might not do on the tariffs? we are performers in the market like technology up about 10% this year.

boeing up 10% this year. shouldn't we set back and reevaluate at this point >> yeah, that's an important point and the market has it starting to come up from the move in the beginning of the year to now and i think it's important to put 2018 as far as what might be left in the tank in perspective if you assume $155 per share for earnings which is some what down the middle and then put an 18 times multiple on that, that only puts us to 2790 in the s&p 500 so a percent higher than where we are today so not all that exciting that might not feel so good. but we do think that that's an issue. if we're only up 6% it might

feel bad but again coming off a 20% plus year last year, if we get another 6% total return year this year it's not the worst outcome. >> we'll have to leave it there but thank you for joining us. >> billions and billions being wiped out this week. this as a major industry gathering is underway. sema is there in puerto rico >> we are live with some of the biggest names in the industry and they're talking about the outlook for crypto currencie and whether bitcoin cagen t back to 20,000 that it hit in december those comments coming up when power lunch returns. so what else is new? how's your mother?

umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person,

on what matters to you. morgan stanley. >> let's get you caught up on the other headlines at this hour toys "r" us is liquidating it's u.s. stores. the nation's biggest radio company is going bust too. i heart radio filing for chapter 11 bankruptcy. they have more than 850 stations and home builder confidence falling more than expected builders are worried they don't have enough land to meet rising demand. >> larry kudlow, the new director of the national economic council had this to say on the subject of china and trade on the closing bell. >> china has not played by the rules for a long time. i have talked about that intellectual property rights, corporate technologies, other

barriers, transshipments to get around things. china needs to come up i believe that. >> and straight ahead, another person who has served as senior economic adviser in the oval office he did so under george w. bush, larry lindsey joins tuso talk trade tariffs and the economic agenda next on power

hello, everyone. here is your news update for this hour. president trump welcoming the prime minister of ireland to the white house. he said he believes russia was behind the nerve gas attack in britain against a former russian spy and his daughter. >> i spoke with the prime minister and we are in deep discussions, a very sad situation. it certainly looks like the russians were beline it. something that should never ever happen and we're taking it very seriously as i think are many othe others. >> a lawsuit filed by the muslim boy that was arrested for taking a homemade clock to school was

dismissed by the judge the family claimed discrimination the judge ordered the family to cover the cost of the lawsuit. >> dairy queen suing wb mason to stop them from selling bottled spring water baring the blizzard name they are filing their own lawsuit seeking a declaration that it didn't infringe on any trademark. that's the news update this hour melissa back to you. >> this as cryto bulls gather. seema is there and joins us now. >> the focus has shifted to the decline in cryptocurrencies.

it's the move by google to ban cryptocurrency ads that will make companies and their ability to market their offerings much more difficult especially as they try to reach a broader audience there are other ways to communicate their products or market their products including telegram and reddit. it is a challenge for the industry. >> a lot of people are scrambling trying to figure out where they're going to place advertising and how they're going to do it short-term people are feeling some pain. >> now the rise in initial point offerings that we have seen not just in 2018 but in 2017 is also seen as a head wind for bitcoin because it allows investors to diver diversify it and lastly i would just point out, investors here keeping a close eye on their

virtual wallets and where bitcoin is trading but also a close eye on the stock market. when stocks fall, that has an impact on investor sentiment we'll be here throughout the day as well as tomorrow talking to reputable leaders in the industry investors as well about their outlook of the cryptocurrency space and where bitcoin is headed back to you. >> are they worried about the icos that they want to launch or the icos that they hold? i'm asking this because they're cracking down at this point so anybody that has one they want to launch should want to launch it at this point and that might be more difficult given the regulatio regulations. >> something that entrepreneurs are watching very closely but at this point it's not impacting fund-raising the latest numbers show that so far icos raised $2 billion in 2018 after raising $4 billion in 2017 so at this point the commentary

coming from the sec and not impacting those trying to launch token offerings. >> a couple of happy cryptobros right behind you thank you very much. the u.s. stepping up trade pressure on china. eunice is live in beijing with that story. >> thanks so much. well, there are more and more reports out of washington that the trump administration is preparing a package of antichina measures and that includes tariffs on a wide range of products restrictions and investments in the united states and perhaps even limits on visas for students and other chinese the aim is to pressure china to take further action to reduce it's trade surplus and also just stop the practice of forcing american companies to transfer technology to chinese companies as a requirement to get access into this market here in beijing the latest

comment on the foreign ministry was that china hoped both sides would properly handle any trade conflict through what they described as friendly negotiations this is a theme we have been hearing. the chinese government has been trying to restart talks and high level dialogue with the trump administration, similar to meetings that they held with the bush administration and the obama administration but from what my sources have been telling me, the trump administration doesn't believe that these types of regular meetings are effective and instead, there have been a lot of reports that the trump administration has called on beijing to come up with ways to significantly reduce it's trade surplus on its own we don't know what the measures would be but the state press here is taking a defiant tone. one wrote an editorial saying the u.s. cannot use china as a

punching bag for trade blows and another paper said china won't allow itself to be trampled upon. >> before we see a potential trade war break out between the u.s. and china, we may first have a little bit of a trade war in the west wing there has been one, hasn't there? this one between former cnbc contributor larry kudlow and peter navaro let's get insight on how this might play out larry, always good to have you with us. we appreciate your time. what's your first piece of advice for larry kudlow. >> he's a hard worker. >> what about the presumptive tensions within the west wing over trade, presumably between him and mr. navaro but also

secretary ross that's been more inclined toward a protectionist stance. >> first of all, i'm sure you watched house of card and west wing presumptive tensions is an understatement there's always tensions in the west wing. it depends on the individuals involved i'm sure that larry will get along with everyone there. it's all part of the game. >> do you worry about trade policy >> we're in a difficult state in trade policy we sign trade agreements 25 or 30 years ago based on conditions 25 and 30 years ago. mexico and china it's gotten rich and now probably has a larger gdp than we do. it doesn't mean we should have the same lopsided trade policy that we did in order to encourage the chinese to develop. >> so if i infer from what you're saying there it might be

what we heard larry kudlow say a few moments ago and that is that he favors fair trade between the u.s. and china and there needs to be some rebalancing even through negotiations and tariffs with respect to the chinese. >> i'm sure larry and i would agree that the ideal is free trade. we don't have free trade china is a communist state it manipulates all the rules it uses it's power to turnover intellectual property for nothing. we have to have some balance here and i don't think any reasonable person thinks china is playing fair. >> so you would favor some sort of negotiation or consequence there. let's turn to another area of

focus this year. and that is the federal reserve. big meeting coming up next week. it will be the first with the new chairman jay powell. what do you see coming up in terms of fed policy this year? >> i think the fed has laid out it's plan. it's done so for quite awhile. it wants to raise rates three times a year it wants to ramp up the pace in which ita liquidates it's balane sheet. they're well stated and they're going to stick to it they haven't stuck to their promises in the past so i think they'll be needing some credibility and stick to it this time. >> do you think the fed should leave options open because of the uncertainty surrounding trade? theoretically tariffs and trade war could be inflationary for the economy and maybe they want to leave it open, three hikes? maybe four hikes they're sort of there now.

>> i don't think they should for trade policy the steel tariffs and aluminum tariffs, you can't even get to a tenth of a percent. >> that assumes that these sorts of tariffs and targeted tariffs for china will remain targeted is that your belief that they can be confined to sectors for instance the proposed $60 billion in tariffs against tech products from china, that that will be contained? there won't be retaliation and then more tariffs back >> well, trade wars can always happen some might maintain that china is conducting a trade war against the united states already. that feels like a war to me. i don't think this is really an escalation of a war. i don't think it's going to get out of hand.

everything the chinese have said, said they don't want things to get out of hand. they have more to lose than we do so no i'm not panicked about a trade war. if i were the fed i'd be more worried about the pace it's running off it's balance sheet we'll see how much of an effect that has. >> thank you for your time in beautiful northern virginia where i grew up. larry lindsey, thank you. >> will the roll back of regulations send them to new heights? are they now a bigger better or a better bet than the big banks? we'll talk to one alanyst about what the senate bill could mean for the sector power lunch is back in two 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. welcome home mom. with the right financial advisor, life can be brilliant.

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>> saying the house will not pass the bill without additional provisions for more on what it could mean and which banks could stand to benefit the most, let's bring in kevin. great to have you with us. >> nice to be on. >> there's still a lot that is unknown but based on what we do know and assuming that something goes through, which are the banks that will benefit the most >> you'll see banks with lower asset thresholds are closer to $50 billion in assets will be the biggest beneficiaries because not only are we going to see the most as a percentage of the overall platform but they plan to have more capitol that could have the ability to deploy that overtime. lcr changes as well. seen a significant head wind to

their margin and to their net nii which accounts for roughly 60% of the revenue over the last three years because they had to comply with the liquidity coverage ratio you could earnings and more flexibility for the balance sheet. >> as citizens financial could be beneficiaries when i look across this group of names, what strikes me is ally it seems like the big concern, these two particular stocks in the past i don't know six months or so, is there bigger exposure to consumer credit and the consumer credit portfolio deteriorating a little bit can you speak to us? walk us through that as it pertains to that being a negative and then the changes with dodd frank being the

positi positive. >> they're two very differ financial institutions it's under holdings but they're both trading very close to tangible to book value a significant amount of capitol versus ally which is just over 9% so when you think about the potential for that release of the capital or ability to deploy that maybe at an accelerated rate and could potentially deploy that we also could see the bank do other types of positioning in order to either deploy that growth or other strategic options. >> so other banks could also benefit. >> on the margin most of the roles within the regulatory bill have a very

limit limited. they'll be the main beneficiaries. they don't have to comply anymore. >> all right let's say they want to gut what comes across their stable. do we see a sell off particularly in the smaller banks that we have mentioned. >> you clearly have some benefit for these banks within the valuations and there's some expectation that they will be beneficiaries of this. if this bill fails, it's definitely a negative for these regional banks they, you know, i think the market is anticipating regulatory relief immediately in the near term to provide not only tail wind to earnings but more flexibility in the way they run their business if we suddenly have a change in sentiment that regulatory relief is not going to be there for the

banks, i think the banks could see some head winds here in the next few months. >> kevin, thanks for your time. >> thank you. >> being called the sale of the century. the largest auction of a single collection ever is going to go up on the block and robert frank, of course who else, has all the details. >> if you want to buy david rockerfeller's martini cuff links or the masterpiece that could top $100 million, you're in luck. they'll be selling all of it in may. the ultimate billionaire yard sale power lunch returns. you know what's awesome? gig-speed internet.

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and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. the rockefeller family selling the entire collection of the late david rocker feller, the largest auction ever of a single collection. this is a fun one. >> hard to know where to start there's so much stuff. some of the rarest picassos are included monets the sale of the rockefeller collection will be the most expensive auction of a single collection ever. estimate is $500 million, but many say it's going to well go to $1 billion, maybe even more christie's in may will sell the

collection of david and peggy rockefeller. david was the son of john d. david passed away last year. his homes have been sold everything in them will be sold in this auction with all of the proceeds from the homes and the auction, all of it going to charity. now, an exclusive interview, david rockefeller jr. told me the appeal of the rockefeller name >> i hope that many of the buyers will have that sense that they're buying stories and buying taste and buying something homey as well as something very beautiful >> also buying some of the best of everything that they had. the star of the sale is picasso's girl with a basket of flowers from his favorite rose period could sell for over $100 million. there's also a matisse nude that could fetch up to $90 million. david told me that while he's a little sad to see some of the family treasures go, he's happy they'll find new homes and all of that money is going to fund a lot of good causes

>> i certainly will feel wonderful about the idea that they will continue to be used. this is a grand recycling, if you want to think of it that way. >> and you don't have to be a millionaire to get a piece of the rockefellers that's david rockefeller's cuff link i'm definitely going to bid on these, little martini glasses. the rockefeller family is known as sort of a teetotaler family it's unusual to have those those are estimated alt $400 to $600 they're probably going to go more, but still attainable >> if i want to see this, can i go to christie's >> starting in april, the entire exhibit will be here most of the stuff is buried in a secret basement somewhere in midtown. but some of the select items including the picasso, the matisse, some of the things will be in christie's starting in april. everyone can go see it, and they

should it's a window into this family and how they lived >> for napoleon's sugar bowl, do kwee know that he used the sugar bowl >> we do david and peggy loved to go to france they had the best advisers in france helping them purchase these things everything they had was authenticated, cataloged, and the real deal. that sugar bowl alone will sell for over $250,000. >> i don't know if i could use it if i got it at auction. >> that's for the new kitchen of my wife. thanks so much eamon javers, breaking news. >> "the new york times" posted a story saying special counsel robert mueller has subpoenaed the trump organization requesting documents including documents relating to russia the times is saying it's not clear the entire breadth of the subpoena request to the trump organization, but it's significant because this is the first known demand of documents from the trump organization related to russia. it indicates that we could be

entering a new phase of the mueller investigation. we're also not sure from the times reporting exactly when the subpoena was issued. the times saying simply it was issued in recent weeks we'll be hearing from the press secretary sarah huckabee sanders at about 2:30 east coast time, momentarily, but i'm sure reporters will press her on this question typically, the white house has punted questions on the mueller investigation to the president's lawyers and anything about the trump organization to the trump organization itself. so it may be some time through the afternoon before we get an official comment from the trump organization, but "the new york times" reporting that the special counsel robert mueller has subpoenaed the trump organization for documents including documents relating to russia >> all right, thank you very much >> united states has not launched humans into space from u.s. soil since the space shuttle program ended in 2011, but that may be about to change. plus, look out, netflixes. amazon making major strides in

streaming. what it may mean for both companies and the media landscape overall. >> and we're all over isth market the second hour of "power lunch" begins after this quick break. i think that she's a very nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital. show of hands. let's get started. who wants customizable options chains? ones that make it fast and easy to analyze and take action?

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i'm melissa lee. here's what's on the menu. from tariffs to inflation to the fed. front lines have investors trying to decide what matters most to their money. toys were us the iconic toy store closing after 70 years in business what happened? was it a mismanaged company or are consumers' tastes changing too rapidly. and the battle is on between boeing and spacex to launch humans into space from u.s. soil buckle up, "power lunch" starts right now. >> let's get a check on the markets, the dow losing a large chunk of its gains in the last few minutes. still up, but only by about 59 points the dow looking to break a three-day losing streak, and right now, as you see, it is up modestly mcdonald's, united health, ibm

are the leaders there. investors are watching boeing closely. that stock on pace for its worst week since 2016. it was a hero for the first six, seven weeks of the year. tech and industrials powering the s&p 500 sectors. consumer staples and materials, those are your laggards at this hour some positive earnings in retail dollar general, williams-sonoma, barnes and noble are all in the green. look at the percentage moves most especially for barnes & noble. >> thank you very much, tyler. here's what else is happening. the fda says it's planning to try to lower the amount of nicotine in cigarettes to make them less addictive. an unprecedented move. this is part of a broader plan announced last year. sbl spotify expects to begin trading on april 3rd they'll do a direct listing saying it's aiming to be as transparent as possible. according to reports,

regulators are preparing sanctions against wells fargo. they rsked commissions on auto insurance policies that were forced on more than 500,000 drivers. for now, back over to you. >> thank you very much >> stocks giving up much of their gains. let's bring in mike santoli, bob pisani, rob insana >> the italian trifecta. >> welcome bob, take it away. why has there been a bit of a fade here? >> well, the most immediate headline that we have seen is that "new york times" story that mueller has -- is now looking to investigate president trump's business dealings in terms of subpoenas. that would certainly be a change before it was just the campaign. that's the only thing that's come out in the last 15 to 20 minutes. this is a pattern, all week, we started up in the morning, in the middle of the day, we started moving south thirty-t three days in a row, the s&p 500 has been negative. >> i would give context, over the course of the three, now

into four days where you had this downward pressure, the market has been testing exactly how much of the friday rally it was going to give back right now, we're holding slightly above the levels we closed at for the s&p 500 thursday before the jobs day rally. is seems like a round of testing at relatively significant numbers for the index. >> a point where the market has a lot to digest. a fed meeting coming up. soon enough, we'll be in earnings season. there's trade that is suddenly on the table in a way it wasn't last year in a major way and there is white house instability, let's say a lot of people coming and going. >> yeah. >> what do you think >> political sensitivities are starting to get the better of the market when you look at what's happened, the president requesting $60 billion in trade sanctions against china instead of $30 billion that's what we see in the reporting. all of the headlines bob alluded to a minute ago, and it's not just the china trade sanctions,

the possibility of a wider trade war. it just unsettles the market we have seen that expressed in caterpillar and boeing and those companies that face other countries suffering and taking it hard. it's a confluence of events and undermining confidence in the stock market >> are you looking, then frrx a rather more prolonged period of market choppiness or trading range activity >> i think so. i also think the market internals if you're an amateur technician as where might be here, today's advanced decline wasn't positive, so the number of new lows exceeded the number of new highs by a large amount we're seeing some deterioration in the underlying quality of the rally. from a technical perspective, that's playing into the choppiness as well >> michael, what do you see on that front, or bob, either one >> i would agree last year was pretty easy, ron we were all dealing with tax cuts and global economic

expansion. that's all we talked about now things are murkier we have inflation issues the fed may be getting more aggressive the trade war thing is throwing people off more notably. we had weak retail sales numbers. everybody was trying to figure out yesterday, you had people pulling down their gdp numbers for the first quarter. it's murkier than it was two or three months ago >> mike? >> to me, that represents a narrative shift right here at least we're trying to figure out if we have to take a little bit of a stutter step in the whole story line a month ago, it was about, well, this economy looks like it's on the verge of overheating bond yields will be shooting higher we have to own the cyclical reflation stuff. now it's bond yields in retreat. the realtime estimates of gdp coming down. a rollover in economic surprises. doesn't mean that the whole trajectory of the economy has changed, but the story line attached to how fast things are coming on has shifted a little bit, and that i think the explained in some of the choppiness and sideways trading

range action we have seen recently >> thanks. bob, mike, and ron we want to get to news on walmart because the stock is sinking right now. look at the intra day on shares of walmart this is perhaps why in part the dow took a leg lower here. there's a whistleblower lawsuit filed that alleges that walmart issued misleading e-commerce results and fired an executive, who lodged the lawsuit and claimed the company was breaking the law. e-commerce was - >> yeah, so in the last quarter, walmart's e-commerce growth did slow from the quarter before, and walmart changed the way they report their e-commerce growth number over the last year. so i believe we have five quarters of growth that are apples to apples, and the year before that, they were measuring it a different way we focus on the net sales. we reached out to walmart to have a statement clarifying what the lawsuit is alleging or what they have to say about this. >> again, you see there, the intra day impact of the lawsuit, the whistle blowerlawsuit on

walmart shares down by about 1%. we'll keep our eyes on that. >> meanwhile, bny mellon expects more volatility ahead, but not enough to shy away from making big, bold equity bets this year, given his firm is a whopping $1.9 trillion. those assets are watched closely by wall street welcome to "power lunch. why do you want to make bold equity moves at this point in the cycle? >> i wouldn't make bold equity moves at this stage in the cycle. it's definitely late cycle, but we're still in what we feel is an equity friendly environment and so much depends on timeframe. we have to digest the daily news flow and get used to days like today. get used to volatility spikes frankly like we saw in early february when you step back, we try to take a 12 to 18-month view in making our asset allocation decisions. we have an economy growing around 3%, corporate earnings up 15%. i think valuations remain reasonable in the context of the

current inflation and interest rate environment >> what's your number one concern? there's a whole menu of concerns out there you can choose from at this point >> the biggest concern is the bond side and interest rates >> not a trade war it's not turnover at the white house or anything like that? >> i think these things need to be watched, but it doesn't mean investors should watch them. where as t$2.58 trillion in mone sitting on the sidelines a big investors can make is watch and be nervous about the news and not act my biggest fear is around bonds. and interest rates, because many market participants have only experienced the 35-year bond bull market that we have all been in. and so we got a whiff of this in early february and remember, italian ten-year sovereign debt is trading at 2%. spanish ten-year sovereign debt is trading at 1.40%. we're fixated on the 2.80 to

2.90 as we think globally and monetary policy begins to get more normal in the years ahead, what i think about a lot is this elevation of interest rates and what that could mean to things like pe multiples. >> let me see if i'm hearing you correctly. it seems to me what you're saying is the underlying winds are favorable for equities but they are not maybe as favorable as they were a year ago. because of rising interest rates, because of trade tension, and the like am i right on that >> i think you are we have a 2850 target on the s&p for the end of this year we're at 2750 give or take today. that sort of implies a continued grind higher, unlike last year, which was a consistent move higher tyler, the big change is volatility last year, we witnessed an unprecedentedly low period of volatility that we have already seen change. last year, we had eight days in the entire year where the market

closes up or down one percent, this year, we had 17 such days what we're warning our clients, get used to that i think it's a marketplace that hasn't been used to that volatility, and frankly, even on a relatively optimistic earnings projection for this year, the market is trading at 18 times earnings it's reasonably valued in my view, but not inexpensive by any means. >> one thing stands out to me, that you have a modest underweight in financials, which seems to be the consensus trade right now, there's a notion that deregulation and even just the partial rollback of dodd/frank that's going through the house as we speak, that that will have an impact, a tailwind impact >> the fact that gets a double take from you says something that most of the folks coming on the show and others -- >> it gets a double take from your colleagues at bmy mellon. >> you know, look, the backdrop is definitely more positive. however, consensus is very

optimistic it's a modest underweight, but we see better advantages in technology and energy, as to other sectors. we're more underweight in utilities and reads. >> good to see you thank you. bny mellon wealth management >> speaking of the bonds, let's go to the bond market and rick santelli tracking the action at the cme. hi, rick >> hi, tyler before we get to the charts, two-year note yields popped up to 28. they settle at 26 yesterday. so we still have this short end really sticky in terms of the rates and climbing the rest of the curve, virtually unchanged. look at one week of ten-years. yes, we spent time at the low end, we closed in the 2.80s. this would be the 15th day in the row, but we are drifting a bit. although today, most of the selling action happened early, just like most of the big buying action happened around 10:30, 11:00 eastern. now, if we consider what's going

on overseas as our guest was just talking about, nothing gives you a better clue about that than putting a year to date of boons on with our ten year. obviously, they correlate, but boons are at 57, now below a key point at 60. they're up 15 basis points on the year, where 10s are still up 41 basis points on the year, and still holding better but there is this drag there especially after retail sales yesterday. finally, dollar index, having a good day finally up about a quarter of a cent, and it's now hovering at that significant left of 90 that traders in their jargon say is their pivot. courtney, back to you. >> thank you very much, rick appreciate it. >> here's what's coming up after 70 years, toys "r" us is closing its doors. a look at how the company got here >> plus, the streaming battle. new numbers from amazon show its prime video drew more than 5 million people worldwide are they a bigger threat than we

thought when it comes to netflix? >> and mighty mcmidcaps. why betting on the midcaps could yield big returns. >> you're looking at a live shot of the white house briefing room reports breaking moments ago that special counsel robert mueller is subpoenaing the trump organization stocks give up much of their gains when that news hit following that fade, we have seen the last couple days. we'llcry tarhe white house briefing live when it begins stay with us oh! there's one. manatees in novelty ts? surprising. what's "come at me bro?" it's something you say to a friend. what's not surprising? how much money matt saved by switching to geico. fifteen minutes could save you fifteen percent or more. while nothing comparesating modeto the real thing.d...

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more on that breaking news on walmart let's get to sue herera for the details. >> yes, here's what we know. walmart is being sued by a former executive who was alleging unlawful conduct by the company. as it pertains to its e-commerce business and its link to competition from amazon.com the plaintiff is named try hunya. he filed his lawsuit with a federal court in california. he said he in the suit says that he observed an intern alreported activity at walmart that he reasonably believed was unlawful and he also said that basically, walmart failed to properly process more than 7 million customer returns, which he says

inflated their results for several months until the issue was discovered the plaintiff also says that walmart reported misleadingly optimistic e-commerce results in late 2016 despite being on notice of its internal control deficiencies right now, walmart is off about half a percent i'll send it back to you >> thank you very much appreciate it. so if you were a kid or a parent in the '80s and '90s, this jingle may be giving you flashbacks ♪ i don't want to grow up i'm a toys "r" us kid ♪ >> now the storied brand will soon be gone for good. it's liquidatingilities remaining 800 stores leaving 33,000 people looking for new jobs the retailer is still hoping it can save several hundred stores if can can find a buyer, but few bankruptcy experts i have spoken to think it's even likely. it's easy to point at amazon for

toys "r" us's problem, but it's not that simple. they have been spending more on interest payments than improvingilities own stores and website. it was saddled with $6.6 billion in debt when taken private in 2005 when it files for bankruptcy in september, it still owed $5 billion. so while it focused on restructuring the organization over the years, refinancing the debt, competitors like walmart, amazon, and target had much lower toy prices they invested in their e-commerce offerings toys "r" us didn't do that, so sales and cash flow fell, making it impossible to pay the bills walmart passed toy s "r" us yeas before amazon had the formidabl toy sales it has now target has had 16 straight quarters of sales growth in toys that's according to key bank's latest estimates >> so great american group, a

subsidiary of b. o'reilly is in the proposed group of advisers that will see the liquidation at the u.s. stores. leading the charge is b. riley's structuring head who has led hundreds of firms through chapter 11 proceedings including polaroid, trump casinos, brookstone, and bb stores. thank you for joining us welcome to "power lunch. i ran through, death by 1,000 cuts the debt didn't help, neither did the competition. but it seems like there's a lot of commonalities between the retail bankruptcies when it comes to private equity and leveraged buyouts. did they ever stand a chance in. >> good afternoon, courtney. it's a confluence of events. it's not just the debt, although you could have a billion dollars of ebitda, but if you have $600 million in interest payments along with capital expenditures you don't have enough money to reinvest in your stores and products that's number one. you have a high cost structure it's debilitating because maybe it should have b 1.2 billion

back in 2012, and then the ebitda went down and then up a little bit you have consumers' habits are changing kids just don't have that many toys anymore when i go -- i mean, my kids are now in college and you know, when they were kids, they constantly had toys but now, you go around and you see people, and you see kids in strollers with ipads so i think consumer habits are changing and then you have the thunder bolt of amazon and e-commerce and target and other competitors. the confluence of those events, plus in toys "r" us, you can buy toys babies "r" us, where you can buy stuff for babies and strollers and things like that unless you needed a toy or a bike or a sporting good, there was no other reason to go to toys "r" us. >> a lot of people have been asking me over the last several days, is there any chance it survives in any form we know they're going through

liquidation. it's possible thou complicated someone could buy the intellectual property and open a toys "r" us of its kind. you're advising the liquidation. is this done toys "r" us is the end of an era? >> our liquidation group is involved, if the promotion is approved in bankruptcy court, to help sell the inventory out. in terms of other potential exits for the company, i mean, sure, there are been rumors of canadian firms coming in to restart the brand. it's possible. but you said it. the debt structure is so complicated. it's not just like the company is $5 billion in debt. there are like 17 or even more different debtors. there's different collateral packages what's known as propco, meaning the real estate entities, the licenses, the ip, the toys "r" us brand name. they also have other things like babies "r" us, which could be very valuable to some.

so it's so complicated, it would take a very big effort to reorganize, but it's possible. if folks want to put in the time and the money, because it will take a lot of money in order to restart those stores >> perry, how much inventory is it who would potentially buy it and how many cents on the dollar does one expect to get for it? >> well, you know, it's interesting because the way the store closings are done, i mean, you see the signs. you see people out there with going out of business signs, store closing. so the consumers, tyler, are the ones who will come in, the normal customers, and what happens in a liquidation is there's a multiplier effect. whatever normal sales happen in a week, when there's a liquidation, consumers coming bain and buy more. toys also announced they're going to shut down their website. so there could be other sales potentially through other website partners

but it's going to be the consumers are going to come in and buy it, and people are going to look to take advantage of the discounts that they see. >> thank you very much, perry. really appreciate it a lot of complicated factors going on, but i think in general, most everyone can agree, a little sad to see this end. >> thank you >> appreciate you joining us well, this painting of a young girl with a flower basket used to hang in the mansion of david and peggy rockefeller. it's now going up for auction. if you want to hang in it your house, you have to pay up. we'll tell you how much it's expected to fetch straight ahead. we haven't launched a person into space from u.s. soil since 2011, but now private industries are working to change that morgan is at the space center with more on that. >> i'm standing inside a future spaceship. meet starliner, boeing's new capsule that could by year's end be carrying american astronauts to space we have got that story coming up

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say carl, we have a question about your brokerage fees. fees? what did you have in mind?

i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. an astronaut has not been launching into space from the u.s. since the end of space shuttle program in 2011, but

that may be about to change. morgan brennan is live at the kennedy space center in florida with that story. hi, morgan >> hey, tyler. that's right we talk about the moon and mars. but the new space race really starts here, with nasa's commercial crew program. currently, we rely on the russians to get our astronauts into space but that is poised to change as private companies move to fill in the void now, case in point, starliner. this is boeing's new spacecraft that is expected to make its first manned flight before year's end it is one of two capsules. the other is spacex's dragon, being produced for nasa missions to the international space station. this is closely watched. it's a new business model, and starliner's program manager says this emerging space flight market reminds him of the early days of passenger planes >> commercial aviation is government sponsored foundation to meet their strategic need it slowly evolved into a commercial market, but only for

high-wealth individuals. and now, we're at the point in the market where we have a 737 take off and land about every two seconds. and we can see the growth in the commercial space flight market paralleling that >> boeing and spacex will own and operate their spacecraft, and nasa, which has given both companies billions of dollars to help develop those spacecraft will essentially reserve seats on flights now, right now, boeing is developing three of these starliner capsules including the one behind me. they'll all be moving out of the factory in the coming weeks ahead of milestone tests the near term plan, to send the first astronauts into orbit to the international space station in november. guys back over to you >> thank you very much, morgan really appreciate it looks like a fun assignment. now over to sue with more breaking news. >> i do, indeed. this is out of florida international university, which is in miami. you're looking at a collapsed pedestrian bridge. the florida highway patrol now

saying five or six vehicles have been crushed and we have several fatalities we should note the school is closed it is spring break we're monitoring the situation and we'll bring you more back to you. >> thank you sue herera >> from the space race to the content race, new numbers showing amazon is drawing a lot of viewers to its prime original programming. are they a bigger threat to netflix than we thought? the mystery of espn's john skipper departure has been solved the shocking details after the break. >> and a live shot of the white house briefing room. reports breaking moments earlier that this hour that special counsel robert mueller is subpoenaing the trump organization we'll carry that briinli sn as it begins oh good, you're awake! finally. you're still here? come on, denise. we're voya! we stay with you to and through retirement... with solutions to help provide income throughout. i get that voya is with me through retirement, i'm just surprised it means in my kitchen.

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yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.

hello, everybody i'm sue herera here's your cnbc news update at this hour. veterans affairs secretary david shulkin speaking about reports of deep mistrust and dysfunction among top staff at his agency. he has reportedly cut off most contact with many top trump appointees who make up his management team. >> i have come here for one reason and that's to improve the lives of veterans. that's what i'm focused solely

on doing there are a lot of people that frankly are more interested in politics than i am i'm interested in getting this job done >> emergency crews are responding to a crash on interstate 275 in florida that left a camper dangling off the freeway overpass three vehicles were in the crash. one of which was towing the travel trailer, and police closed the road off beneath the overpass >> and after nearly a decade in green bay, jordy nelson wasting no time finding a new team espn reports he and the oakland raiders are finalizing a deal. he was released by the packers after refusing to take a significant pay cut. and the weather will be better that's the news update this hour melissa, a lot better. >> yes so many reasons why that's a great deal for him thank you. >> oil markets closing for the day. let's get to jackie deangelis. >> well, crude prices are higher on the session holding well over the $60 mark

as the stock market rebounded today. the iea coming out with its monthly report this morning suggesting oil demand will be more robust for the remainder of the year, revising up its current forecast adding support to the price. there are those who believe the charts are calling for a pullback, maybe $55, the testing of $60 has been evidence of that this camp will argue that global reduction is still too high to be absorbed by demand. they also worry about the tariffs that could cool trade and hence demand for crude >> thank you very much, jackie >> new documents acquired by reuters revealing how amazon's big bet on video is paying off and julie boorstin is in l.a. with a look at the numbers >> hi, tyler amazon's top tv shows drew more than 5 million people worldwide to subscribe to its prime service. that's according to leaked documents reuters obtained and we're getting our first look at the total number of people

watching 26 million u.s. prime members watch tv and movies. both exclusive and licensed as of about a year ago. that compares to the 17 million subscribers hulu announced in january and the 55 million in the u.s. at netflix as of the end of the year. now, the documents reveal that the first season of the man in the high castle drew 8 million u.s. viewers costing amazon $22 million in production and marketing according to amazon's math and the leaked documents, that made the cost of acquiring a prime customer $63 each for that show. subscribers pay $99 annually for prime, and amazon says subscribers typically spend more after they sign up and amazon's making even bigger bets now reported $5 billion per year on content. that's double hulu's spend in the u.s. last year, but short of the $8 billion that netflix is planning to spend on content worldwide this year. we reached out to amazon

they have no comment back to you. >> stick around, who will come out on top in a streaming war? joining us is ed lee, cnbc contributor. great to have you with us. >> good to see you >> as long as investors don't care about profits, don't care about spending maybe netflix is hold on to the league, but amazon has pretty deep pockets >> amazon has all the money right now, so they can certainly afford to spend a lot and lose a lot, at least at the outset. what's interesting about the reuters report is the way amazon thinks about the cost of the shows and how they apply a pnl what they're saying you can sign up for prime, and you start streaming a show, the show is responsible for your sign-up i don't know if that's always entirely a reason, but it is a factor if amazon starts to spend more than netflix on content, we're off to the races >> what is the model here -- go ahead. i was going to ask you, the model here for amazon is invest in content and attract new

subscribers to amazon prime, right? it's as simple as that if they get more money from prime, then they do what they spend, they make money do they also expect people to spend more within amazon as a result of this i assume they do >> i think there are a couple factors here not jus attracting them. they did that calculation of how much it costs draw new subscribers to amazon with a specific show. but it's also has to be about retention. amazon wants to have as many prime subscribers as possible. they have said that prime subscribers do spend more on average than nonprime subscribers. it's all about having the content to get people in and get them to stick around it's interesting because their strategy seems to be changing. they started off with these niche shows. shows like trance parent or good girls revolt, which shea say did not do as well as man in the high castle, but now they're moving more to bigger bets shows that seem more similar to the kinds of shows that netflix and hbo have invested in

working on this, they're working on a prequel to lord of the rings. that's a really big investment that show could cost over $100 million to make a season of. so now that they're moving more in that direction, i think they're going to go for the big headlines like netflix has been. >> ed -- go ahead. >> to julia's point, jeff bezos wants his game of thrones. hence the lord of the rings series they're not a niche. amazon is not a niche anything they want everything to be as mass as possible the other thing to note on prime subscriptions. the primary reason for a lot of the subscribers is to get the free two-day delivery. what's difficult about looking at amazon's video business versess netflix is people might be signing up for a different reason even if they start streaming a show amazon is doing its best to sort out what the pnl is on their video costs and saying if they start streaming once they sign up, chances are that's why they signed up in the first place, when they could be signing up for the free delivery portion. >> redd, where does that leave disney with its new streaming

product? we're talking about two juggernauts, netflix and amazon, for which investors are willing to give them a high valuation. not necessarily look at how much they're spending,not necessarily look at their profitability, even, but disney is a very different company in terms of its investor base >> it's a great point. so disney has a good strong chance here because they have great intellectual property. marvel, lucas film, pix ar, these are great things that people go to movies for. they watch on streaming. the difference is they're starting from zero so they're going to be a third player at least to start but bob iger, the ceo, he sees the future of tv as streaming. he figures i have some great intellectual property. i might as well sell it directly to consumers there's a lot of downside risk, which is you still have to do customer service on it, you have to do the physical infrastructure on it or the digital infrastructure on it these are all at different costs. >> ed, thank you very much julia, stick around. we want to follow up with a kind of disney related question, if we might

a big story in today's hollywood reporter gets into the back story behind the abrupt departure of john skipper, the former head of espn. we knew that substance abuse was part of the story, but there was more >> very shocking revelations here in this interview that john skipper gave the hollywood reporter he revealed that he was being extorted by someone he had purchased cocaine from and the whole timeline was sort of unveiled in this article. he did a big presentation to his employees on a wednesday in december and then by the following monday, he had announced his resignation. it shocked everyone. it turns out on that friday, he went to bob iger he revealed that he was being extorted by this drug dealer and he said it was clear to him from his conversation with iger what he had to do. and then over the course of the weekend, he was just distraught about it, and then on monday, he announced his resignation.

really shocking, and shocking to everyone who knew skipper in that role, running espn. of course, he says it did not impact his -- the way he ran the company at all, and he says he was an infrequent drug user but he does take responsibility for how this all went down we did reach out to disney, and they said no comment >> of course, if he was being subjected to blackmail, mr. iger would very quickly recognize that disney could be subject to blackmail as well. >> yes i think that seems very clear. once he laid out the situation to iger, he said in that conversation, it became evident that he was going to have to resign but he did want to make it really clear in that interview, skipper made it clear that he did not use drugs in any capacity when he was at work or with people he worked with he didn't think it impacted the way he ran his company but it certainly was a big enough deal, and the idea of being extorted, that he understood that he would

definitely not be able to continue in his role of running that company he made a joke about the next guy taking over espn, jimmy pittaro, who is the new head of espn he said he wishes him good luck. so crazy times for espn. >> all right, julia, thanks. well n vestors searching for value after nine years of this bull market. straight ahead, one portfolio manager making for case for midcaps as a place to nd sfiome opportunity. we'll talk about it coming up on "power lunch."

stocks losing some steam the dow way off its triple digit highs of the day, and one of the key strategies over the past few years has been betting on large cap growth, but this year, midcaps may be the way to go based on valuation brian mccauley is portfolio manager of the hennessy focus fund brian, welcome >> thank you pleasure to be here. >> good to have you here what do you look for, what's a classic stock for you? >> we're looking for business that has a tremendous competitive position, a wide economic moat, large growth opportunity in front of it, a very good management team to lead that business, and a reasonable overall valuation >> give me an example of a classic pick in your portfolio right now. not necessarily one you're

adding to, but one that stands out as having all of the characteristics you just mentioned. >> i think i would point to carmax, the used car retailer. it has about 180 locations across the u.s. today. we're probably going to grow to close to 300 locations over time they provide a very unique customer prop zishz of fixed pricing, no haggle, wide selection. just a fair shake for the customer that's going to buy a used vehicle and it's proven very difficult for people to replicate what they're doing. what's exciting to us about that business today is that they're going from being a traditional brick and mortar retailer to a really omni channel retailer if you look a year from now, you'll be able to execute the entire vehicle purchasing process through their website or in their store, whichever pathway you prefer and that will be a real enhancement for most folks >> american woodmark is interesting, a cabinet maker is that your way of playing a housing -- i don't want to say recovery, but continued strength

in the housing market? >> yes, we have been involved with american woodmark for number of years. we take a very concentrated long-term approach to investing. and what's exciting about american woodmark is it is going to benefit from the continued rise of new home starts in the country. we're about a 1.1, 1.2 million housing starts today i think we need to be up to about 1.5 million, 1.6 million to get back to equilibrium, and they have had a large acquisition of rsi this is going to increase their revenue by about 70% this year should increase their cash earnings b s per share by 40% it will lay the groundwork for good earnings growth >> is their cabinet growth mostly driven by new homes or replacement? >> it serves both markets. it sells to new home builders and also through lowe's, home depot, and a lot of smaller

kitchen and bath retailers it's a beneficiary of repair and remodel as well as construction. >> another holding of yours is american tower about 11% of assets. talk to me about that one and tell me about how concentrated a portfolio you run, in other words, how many stocks do you have and what advantage does that give you? >> sure. so at the hennessy focus fund, we run, as the name suggests, a focused or concentrated portfolio. we run about 21 positions in the fund, which for a mutual fund is quite concentrated we have 70% of assets in the top ten positions, and american tower, our largest holding, is about 11% of assets. american tower, we think, is a great runway in front of it. it's a cell phone tower owner/operator, and they're a beneficiary of the growing trends towards plomobile usage d data if at&t, t-mobile, et cetera, want to grow and win customers,

they need to rent more space from american tower. so you know, it's trading at about an 18 multiple of aflo, and growing that affo per share. >> what is affo? >> adjusted funds from operations it's essentially a cash earnings number this is a real estate investment trust. it's a reit type metric. >> thank you go wahoos, he's a virginia guy we is to like him. >> toys "r" us saying it will hold all vendor payments while it separates international businesses up for sale sales of mattel and hasbro near decent lows. they do a decent amount of business, some analysts expect will be absorbed by other retailers but likely not all of it >> a $100 million picasso is hitting the auction block. courtesy of the rockefellers robert frank has the details >> we're going to tell you the incredible journey of a young french flower girl from

picasso's easel to the rockefeller living room. coming up for sale for over $100 million. we'll tell you the incredible story right after the break.

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a rare picasso hitting kourlt si of the rockefeller family >> it they will be selling young girl with a flower basket. it could top that way beyond the reason, it's an early picasso. it was owned by david rocke 2 s rockefeller. its journey is one of the most storied ever in the art world. he sold it to his good friend when he estate came up for sale david rockefeller and others formed a consortium.

they drew straws as to who would get the first pick david rowon. he got the first pick and it was this picasso it hung in their house for decades. billionaires from around the world have been waiting years for it to come up for sale >> from the outset sit a painting that stirred emotion. it captivates you. the rockefellers saw how important it was to this moment in the artist's career as well >> another big piece to come up for sale it could sell for up to $90 million. >> good stories. i like those stories thanks appreciate it. now it's time for trading nation reports the company is considering listing on the

chinese exchange let's bring in gordon. michael is here also what do you see here at least in the near term? >> sure. we absolutely have a strong looking chart here that will pop up we have a very very strong two-year i'm not seeing any concern if we could get the daily i would show you there are a series of two nice gaps in the direction of trepd on volume we have yell in baba we should be able to move up and breakthrough the recent highs. baba tends to be a short exposure i think i don't know if it is sustainable. i do think it is short covering

on the thnews they might be listing. >> see, short term strength but caution still. what are you seeing when it comes to ali baba? what does it mean to you if you're looking to the near term or long term >> we separated to near term and long term. we like the name on bot sides for num rerous reasons. their both story is stronger they continue to make money and continue to expand it is obvious they want them to come back to china many have lost out close to 90% and the last reason we like it is their new retail concept they came out with combining online and in store retail we would own the name near term and long term. >> you both tend to like baba. head over to trading nation

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another day that begins one way and ends another >> absolutely. good to have you with us >> closing bell starts right now. >> live from the new york stock exchange this is the closing bell i'm kelly evans. >> the white house press briefing started moments ago after mueller subpoenaed the trump organization we'll bring you there live as it continues. >> we'll see if they say anything about kudlow joining as well first we have a story that moved stocks lower a