pect them to >> okay. we began the show talking about the financial sector and mortgage lending the equity trading and volatility is ben trading firms and you see nasdaq and virtue and they all worked out. i like nasdaq here >> scotty is back tomorrow i am going to send it to "power lunch" two-minutes early >> i am michelle caruso-cabrera. >> super market war of kroger going on a higher spree. and an exclusive with the ceo straight ahead starbucks is apologizing after two black men were arrested at the philadelphia location and shares of allegiant air is

tumbling "power lunch" starts right now >> welcome to "power lunch" i am melissa lee. the s&p 500 is just shy of their 50 days moving average merck is the biggest gain in the dow. bristol-myers is tanking more on this story straight ahead. and yields of the 2-yr is at it highest level in more than three weeks. check out cocoa. prices here soaring to levels that we have not seen since november >> everybody loves cocoa >> tyler mathisen here, welcome everybody.

let's get you caught up on other headlines. home builder -- domino's pizzas rambling up more deliver hot spots. these are places bike parks and beaches that don't have traditional addresses. more than 200 million eggs being recalled over salmonella fears 22 people have fallen ill and more than 20 states are being affected including florida, new jersey and new york. the largest egg recall in the u.s. since 2010. sara >> i am sara eisen we begin on wall street. stocks are shaken up with syria and the feud of james comey. bob pisani is live where all sectors are in the green right now. >> we took another leg higher

about half an hour ago, seven or eight points for the s&p take a look. we started the day up at 12.14 and blasted off. we had some disappointing commentary from one of the oil sectors, oil sector companies and materials tech and banks and flat right now that's a good sign actually taking a look at the banks here, we have bank of america in line. the sell-off we saw on friday is not materializing today. that indicates a one-off sell in the news event you can see other regional like zions and keycorp. good numbers that's bringing up k. c.h. robinson. oil surge, this is one of the

blits here, natl oil well. it is taking that stock down but the other big names like halliburton is not doing much. a lot of people believe it is a company specific event you heard stories of russian trolls being back and we are seeing some of the cyber security stocks like semantics to the upside. overall good numbers but not any volume down here with the vix down you would think volume is picking up not really >> back to you >> thank you, bob pisani william dudley is stepping aside, today he sat down with our own steve liesman with the details. >> melissa, thank you. the market is still up 20%, out going new fed president dudley says he's not concerned of

current valuations chlts. >> if you look at the stock market and expect for it to grow the next few years the volatility is back to a more normal regime. what was unusual was a low volatility that we saw in 2015 or 2016 or 2017. we are back to a reasonable level of volatility. >> on rates, dudley says, 3% hike is reasonable he says it could be around 3%. the fed funds is between 1.5% or 3.25 he'll be replaced by john williams on tariffs. dudley held out hopes of a possible positive outcome. >> you can imagine that we push very hard on trade and that leads to lower trade barriers

and better access to the markets or you can imagine we push hard on trade we raise trades and they retaliate and trades become less open that's very bad for us i don't think we know which course we are going down >> dudley did note that the chinese did appreciate against the dollars. making chinese exports less competitive and that's what the president says in his tweet this morning. >> oops. >> he could have looked at charts >> oops, it is a big oops. >> was there something browrongf what i just said there >> very blair witch though as you were saying steve. >> i was going to say he's not worried of valuations and volatility so therefore, it sounds like full speed ahead >> i think so, that's an important point, michelle. when the feds get worried of market valuations, the first thing in the checklist is

jhavon maybe being off 7% or 8% of the high, maybe that's enough of air coming out of the balloon given where the inflation and projection is where rates are going to be and also i should under line that he added given the capital in the banking system and his believes that current valuations don't represent systematic risk to the banks. >> the powell fed has a higher threshold, pain for feipain in t market >> i asked him that question, sara, he rejected the idea of what the threshold is. if the market crashes, hope it does not happen, folks and it brings down the economy with it, the fed will act because of the impact on the economy. he dismissed the idea that it acts because of the level of the market itself. >> steve, thank you very much. >> the dow crossing above key levels once again, the focus is back on earnings where do you put your money to work now joining us is jaime cox and our

chief investment officer with c.i.b.c., welcome to you both. dave, you point out that the forecast for economic growth is very positive and almost universally shared for the united states. most of the world is growing as well earnings looked very good but you point out that you think earnings are already priced in to the market. what does that implies about equities over the remainder of this year and what does that imply i do with my portfolio >> i think the earnings stor will be supportive as the year goes on. i think folks are looking for trading ra llly here based on first quarter earnings report. this is the most telegraphed earnings season that we have seen in the expectation bar is high as the years go on which we think will surprise on the upside especially domestically and continue to strengthen

earnings we think it will be more volatility than last year and due to policies of head winds and the area of trades and aggressive fed in terms of tightening we think equity is continue to be the access of choice relative to fixed income. >> you think it is higher than today? >> yes, we do. >> yjaime, how about you do you agree with dave or disagree, what >> i am happier that the market is sold off. in terms of earnings, corporate earnings are quite good. the bigger thing for all of us to pay attention is inflation expectations we are starting to see it pick up if the feds does not raise interest rates at a higher clip, even though dudley said they are not does not mean they won't if that happens, all bets are off and markets will not end the year higher. my base case is yes, we end the

year higher than we are right now but i don't make forecast on the level and i don't think it is responsible if you look down into the weed, you look at individual sector. the technology sector continues to lead. i don't think it will change the last couple of months, the seco tech sell-off given a lot of people the chance. >> to that point, you step in and ybought facebook, what do yu see at this point? >> a lot of people are concern of regulatory up front with facebook, i believe there is a high chance that the people in congress are not able to regulate facebook the way they want to. if you listen to the hearings, the people that were asking the questions don't understand the company and they don't understand -- >> you bought after the hearings in other words >> no, before. >> got it. >> but it made you more

confident in your buy after hearing the question of congressmen and women had. >> i felt like the whole concept of the leap facebook and the privacy issues were not going to permeate through the company it was not something that made a difference of the future prospect of facebook a lot of people were paying attention that was not pertaining to its earnings in the future >> jeremy and david, we thank you for your time. we appreciate it president trump is in florida. comes a day after the bomb shell interview with james comey cayla tausche is live at the white house with more details. >> hey michelle, the president began the event in florida by introducing his cabinet members and his newly appointed national security adviser, john bolton in his first week in office during the air strikes in syria which president trump held as a big success and resulted in a long

round of applause for bolton >> i did not expect that i am a little jealous. are you giving him all the credit >> oh, you know that means the end of his job did our generals do a great job and military >> yeah! >> before landing in miami syr sara season sara sanders about syria, the characterization from french president emanuel macron, trump committed to be in syria for a long time during the phone call. >> sara says there is no time line for the u.s. exit trump has been critical of russia by name of its involvement. the white house is considering additional sanctions on russia and says a decision will be made in the future.

as to whether trump and putin will meet, sara sanders says they are still discussing that although nothing is i mminent. >> cayla tausche, thank you. >> let's get to meg tirrell. >> big news for tech teams amazon have shelves plans to sell drugs to hospitals and continuing to focus on where it is operating there amazon has found that there are challenges to getting into the pharmacy space here including getting hospitals to change the way they work here as well as building logistic networks to handle deliveries. this does not mean that amazon will never get into this space, just that they'll shell the pharmaceutical distribution plans right now. the pharmacy space and as well as drug distributors like

mckesson and cardinal health and alit is hard to over estima the impact that just the idea of amazon coming into this space has had. clearly everybody isbreathing bit of a sigh of relief as our team is reporting they are not getting into pharmaceutical distribution right away. >> yes, meg, thank you >> one business at amazon is in is grocery, kroger is the largest grocery company in the country. it is the latest company to share what is going to do with the tax reform benefit it is going to give it to employees, we'll have all the details and a look of how kroger is dealing rodney mcmullen is joining us for a ""power lunch" exclusive right after this break power lune

right after this break so, what's new? we just switched to geico and got more. more? they've been saving folks money for over 75 years. a company you can trust. geico even helped us with homeowners insurance. more sounds great. gotta love more... right, honey? yeah! geico. expect great savings and a whole lot more.

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. welcome back to "power lunch," kroger just announced several improved benefits. they'll offer up to 35 to $100 for continuing education and educatia leave of absence and raising wages for store associates here to talk about that and a lot more of our "power lunch" exclusive. we have the ceo of kroger, nice

to see you again mr. mcmullen. >> it is great to see you again sara >> everything of one time bonuses and buy backs and dividends. why you are investing in your employees' education >> we thought it was important to have a balanced approach. saving is about $400 million a year we are investing that a third with our customers and a third with our associates and shareholders what are the things that we could help partner with our associates that would help somebody come here for a job and make it a career what we found through your research is obviously today people are incredibly interreese in education and fearful of debt and other part we thought it is important to support that and support it in terms that'll help you get your g.e.d. and english as a second language or a college degree or

m.b.a. or whatever works for you. >> what do you have planned for shareholders return? >> the guidance we gave reflected that one-third higher expectations >> you are going to increase the annual rate of $10 per hour and after a year of $11 an hour. the trump administration and everyone who backs this bill says the american household average is going to make -- do you see that number actual lipaning out, can that be reality? >> i think it is incredibly good and supportive of the american economy in total i think about for what we are doing with education, we know when somebody gets continued education and gets a high school degree or a college degree, they'll earn a lot more. we would not estimate relative to the whole u.s. economy. if you look at our associates,

it will support them to continue to grow in their career and when they do, they obviously will continue to earn more money and about 70% of our store director came to work for us. >> rodney in terms of investing the stores or the company itself, you are in the midst of rebound of hundreds of stores and your ceo and tech conference have said that's expected to disrupt sales some what when you do a massive revamp, what do we see in terms of the progress and in terms of sales if you are seeing one because of the rebound? >> well, we are really early in the process and we are going to and as we announce over 600 remodels this year using our data and using our insights to understand exactly what the customers want in each store every store will have a little bit of a difference. we are early in the process but we are seeing great results. the transition that mike talked about as really as you do the remodel you have a disruption.

once you get finished with that, the customers connecting well with the changes >> it brings up the margin question, rodney when you reported a lot of people were surprised to see that dip and gross margins, can you talk about what's driving that is that the cost of fighting with amazon and your business? >> when you look at gross margi margins, we are looking at it in terms of what costs are we getting out and reinvesting it for the customers. we'll look at it in terms of what's the investment for the whole year verses quarter by quarter so if you look back at the third quarter, it was a little bit direction in terms of increasing the fourth quarter was declining. if you look over for the full year, it was less than 20 basis points for a longer term, we would expect to invest for our customers based on we get cost saves out and being able to afford that together >> can you do it alone, rodney the biggest jump was the up 12%

day and there were rumors that you and target might join up but at the end of the day reported by cnbc and others that you guys were talking about a jv. when it comes to the shift business. can you comment of your plans if any to do any sorts of jv and whether you can think you can go alone, will kroger go alone in the next 12 months >> i won't talk about specific transaction that you asked about. the market should assume that we are constantly talking to others about partnerships and joint venn which you we ventures and that'll help kroger grow and create a better experience for customers it is both of us together of any type of relationships that we'll look at and we are focused on traditional type of opportunities and also opportunities from a technology space and digital space as well. >> it is sort of feeds into the narrative, rodney, we have talked about this so many different times ever since

amazon got into the business buying whole foods that it is just going to be tough to compete. short term or maybe you will see a price war long-term and it is hard when you are in competition with amazon and there is this idea where you have to have an acquisition or do something drastic to fight back. >> what's your answer to that? >> ye yeah, everything we do stt with the customer and what's important to the customer and we have over 450,000 associates that take care of customers everyday in terms of providing incredibly friendly service and fresh products what we found is customers really want to engage with us, whether it is physically in the store or talking great associates to help inspire them or online. what we find is really important is a combination of all of those together that's really where we are focused on we'll focus on partnership and things that'll help us

accelerate that journey. >> are you active on talking about partnerships with other people saying a year ago >> um, i would say we were reactive a year ago and continue to be reactive to say there is a pick up today, there was a lot going on a year ago than what most people would have assumed >> one thing amazon does not have is 450,000 employees. rodney, thank you for joining us on the news today. rodney mcmullen is the chairman and ceo of kroger. >> tyler >> thank you very much stocks higher across the board right now. markets being too cavalier about all of this? what happens next in syria and what it could mean for your policy and money that's coming up after this quick break.

tomorrow, it's a day filled with promise and new beginnings, challenges and opportunities. at ameriprise financial, we can't predict what tomorrow will bring. but our comprehensive approach to financial planning can help make sure you're prepared for what's expected and even what's not.

and that kind of financial confidence can help you sleep better at night. with the right financial advisor, life can be brilliant.

we are in rally mode right now with the dow sitting at session high s&p 500 is positive for the gains today. interesting names such as consumer tapestaples and utilit, those are leading the sector right now. >> they're all rallying on this news >> yeah, those are big days. >> the u.s. and our allies dropping targets in syria and

russia is not happy about it what's the next step "power lunch" will be right back . with this grade of protection... it's a fortress. and with this standard of luxury... it's an oasis. the 2018 e-class. it's everything you need it to be... and more. lease the e300 for $569 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

now what? well, after your first reaction, consider your choices. go it alone, against the irs and its massive resources. hire a law firm, where you're not a priority. call your cpa, who can be required to testify against you. or, call the tax law firm of moskowitz, llp. i went from being a cpa to a tax attorney because our clients needed more. call us, and let us put our 30 years of tax experience to work for you.

hello everyone, i am sue herrera. the epa violated the law when it approved a $43,000 soundproof booth for scott pruitt the spending limit is $5,000 pruitt is under fired for travels and other expenses he occurred theresa may telling her decision for striking against syria was not the result of the pressure of president trump >> let me be clear it is in our national interest it is in our national interest to prevent further use of chemical weapons in syria and to defend the global consensus that these weapons should not be used >> here at home, desiree linden made her way through icy rain to win the women's boston marathon.

she's the first to win the race since 1965 her official time is two hours 39 minutes that's the slowest time for a winner since 1978 but congratulations, none the less of miserable condition to run in i cannot believe it. congratulations to her >> michelle, back over to you. >> you are right, congratulations. tan thanks sue >> coalition of the u.s. and u.k. launched against syria on facilities on saturday night last week oil rally and the u.s. stock market sold off in anticipation and other possible strikes and a lack of a wider regional conflicts, u.s. government is promising more sanctions against russia for aiding the syrians the pentagon says the russians have increased their cyber disinformation campaign in

response to all of these attacks, tyler >> the latest news is that the prime minister of britain and other west earner pointed o out -- at least those are the allegations and one would believe them >> let's talk more about it from the air strikes. joining us now from the middle east institute and mr. lister, let me start with you. these strikes, were they effective and is the impact lasting in any way >> well, in of itself, the strikes were effective it seems from satellite imagery that all the targets were hit. it seems from the department of defense that none of our missiles were shot down by syrian aid defense the strike itself is not going to achieve the objective that we asked which is to defer the

chemical weapons in syria. some facilities remained in place and untouched. the broad of syria is going to continue as the use of chlorine which is up until now we basically being unaffected or undeterred by. so the strikes were significant message but if not the most that the west sent so far it is not going to achieve the objectives that we set unfortunately. >> what does it mean in terms of what comes next, do you think? >> i think that in terms of what comes next we have to recognize that this was a good thing in terms of the political dimension and this did accomplish as charles said at least the principles that the united states says they're going to do something, that we are going to do it that's a good thing. from a military perspective, i

agree the targets were hit and buildings were down, they knew it was coming so it is possible they were able to move some of the stuff away the third element is the legal dimensions, was this really something that was authorized under the constitution of the international law. in terms of what come next, frankly we have to sustain this. the last thing that needs to happen is for this constancy between our words and our deed of testing and following through. the united states and u.k. will have to watch and be vigilant here and if they do bad things against the arena, we have to be prepared to act. >> charles, i take your point that one cannot be sure. if the mission idea is to obliterate all of syria's ability to deploy chemical weapons, it probably did not succeed on that metric but my question is how would one ever really know whether you had destroy all of it because these weapons are presumably fairly

easy to move around and how would we ever know where all of the depots for them would be >> well, the base of your question is entirely right and that's never going to be a situation where we can no of 100% certainty what struck me is within 24 hours of the strike taken place the chief of staff or the joint chief came out in public and said some of chemical weapon programs remain in place we have intelligence telling us some of that is still on the ground and presumably operational. that's the point that i am getting out. we can track back in syria when the chemical weapon deal between russia and the united states and syrians had to destroy and remove all of those chemical weapons. it was after a matter of months that officials and the obama administration knew behind the scenes and we know that the regime has retained some of its

chemical weapons >> i guess it is fair to point out charles and thomas that our report of knowing exactly who has chemical weapons and where they are is not exactly p prestine, right, thomas? >>s t >> this is not searching every gram of chemical weapons this is about doing every strike is necessary to make him think twice using whatever he is that he tucked away in the closets. we need to communicate to them if they do these things again that the next action will be something closer to home and more than these facilities and chemicals. it is going to be something that comes after their political infrastructure and again something they're going to hold valuable it is not about tracking it all

down but it is about deterrence their use that we cannot touchdown. >> charles lister and thomas thank you. >> all right, a programming note "squawk box" will go to capitol hill tomorrow and big lineups including paul ryan and kevin brady and josh bolter and mnuchin and steny hoyer. >> this is a heck of a lineup. >> and more it says right there. "squawk box" in washington tomorrow >> melissa allegiant is defending itself and starbucks apologizing at one of its stores of who black men emoyksed after starbuc' plee called the police

how to fix these bruised brand, next on "power lunch."

starbucks apologizing for arresting two black men at its store in philadelphia. c contessa brewer has the story. we are joined by dean crutch field joining us to react with both of those stories. first, we begin with contessa. >> two black men trespassing in a philadelphia coffee shop last week they said there to meet a business associate and used the restroom, instead, they were asked to leave in philly, protesters showing up in person where the men were arrested, videos of these

arrests went viral showing six officers responding. the officers played by the book. >> what did they do? >> tell me what they did >> they didn't do anything >> i saw the entire thing. >> kevin johnson says practices in training led to a bad outcome referring to non paying customers from using the restroom >> now certainly there are some situations where the call to police is justified. situations where there is violence or threats or disruptions, in this case, none of that existed. these two gentlemen did not deserve what happened. we are accountable i am accountable >> johnson says there will be training about unconscious biassed and even as other customers post their own videos accusing starbucks of discriminatory enforcement the store is closed and the manager no longer works for the company

>> a future decision, they said. >> con stessa brewer, thank you. >> dean, what are your thoughts here the stock is not really reacting to this at all, negative at least. >> i agree i was told by a famous p.r. executive in a situation like this, what did you eat last wednesday and most of us cannot remember they do define who we are as an organization there is number one fear of any ceo -- how they behaved was poorly handled and they were delayed in getting out the gate. this would not happened, he would have done it on day one to be at this situation because of the brand of starbucks >> did they recover with the ceo coming out and say it is all on me >> absolutely. they're the ones that people want to talk to and integrity and honesty of where they stand as a business and they can make

the decision they count and clearly they made some clear decisions here >> why are you so sure that consumers will forget and people are still talking about it non stop >> if things die down after a while. as long as they are out there with the ceo and talking about the facts and reactions they are making, it will apiece people to a degree that they at least tried to do something of the situation as opposed to ignore it >> or the other way this would not go away is if there are other reports that surface over the coming days of similar things happening to african-american individuals whether they were ultimately arrested or not. >> that's the thing. you got to cut the momentum here it will run away from you and that's exactly it. >> how fast does the ceo have to be on something like this. >> if it is feasible and you should to have a team in place

and open the line of all communications >> the immediate statement saying we are looking into this and concerned about it and we'll get back to you as soon as we have the chance to gather the facts and then if an apology is indicated, you apologize >> i think this is very slow >> the event took place on thursday >> it took a couple of days for them to get their act together it is going to damage their brand. is it going to stop people buying starbucks i don't know >> how much does starbucks gets forgiveness because of the nature of their brand. i would imagine a positive brndd awareness when it comes to the minds of consumers if the same thing happens at chipotle or another restaurant, would it be a different story? >> yes, brand is about what happens in the crisis and can it defend you its got the resilience to take the crisis on as long as you

handle it correctly. it is also about the vision of the company and not the tactical response and your purpose and vision in terms of what you stand for to your point of starbucks. >> if you remember, melissa, the last time of 2015 when shults wanted to about this >> things moved forward and coffee kept going here let's turn to allegiant here the stock is down, phil lebeau got the details. here essentially of what was the focus of this half hour investigation by 60-minutes. most of it focused on the company's aging fleet, older airplanes, they fly a lot of man m-80s. the pilots are pressured to down play safety issues and they also

say the faa lacks enforcement. according to allegiant which issued a statement today, this unoriginal and out dated story bears no resemblance to allegiant's operations today and shows a fundamental misunderstanding of faa compliance practice and history. >> there is going to be some people that saw that and cancel flights or change the way they travel with allegiant certainly in the future. certainly could be but it is hard to estimate how that can look >> this company does report earnings next week and the big question, guys is whether or not this will prompt people to say i am not going to fly allegiant. allegiant on 80% of its routes have no competition in terms of direct flight. if you are a smaller allegiant,

you can do a connecting floiight to another hub if you want to fly directly to las vegas orlando, allegiant is the only game in town. that's going to help customers being sticky >> phil lebeau joining us from chicago. dean, what are your thoughts here its got no competition at least on direct flights. >> i think the business standpoint is shielded its response to the crisis is being diligent and negligent and i think it is going to suffer for it ceos don't get to choose decisions that they face but they do get to choose which way they jump and clearly we have a situation here where is gallegher and where is the ceo >> what is more shocking to me in this is that this is a long standing historic issue with this airline >> the tampa bay times a year

and a half ago wrote a long take au out piece that won journalism award on exactly of safe issues mostly involving aging mda aircraft when i read that series of articles, i said i will never fly that airline ever. the difference here between this and starbucks, this thing and starbucks happened last thursday and kind of came out maybe nowhere. the thing with allegiant is long standing and historic and they never about these issues they have tried to correct them. they taken a lot of those md 80s out of service and i believed they tried to improve their record it was not as if this was something they could have seen coming >> that's where they faulted and allegiant being unprofessional and they got the wrong man doing the job when it comes to handling the crisis. where are you and what's the number one word of airlines?

>> safety. >> what does that mean >> trust i have my trust in you to look after me and that's totally broken over a period of a long time of this one firm that's now stating everything is squeaky clean and the sun is shining and it i >> shocked the stock is only off 2%. >> yeah, really. >> you see that and wonder, am i going to die if i take this airline? >> happy to have the ceo join us we've got breaking news now. steve leisman on the fed steve? >> thanks very much. the federal reserve board of governors under president trump taking a major step towards being put together now with the announcement that the president later today would announce richard clarida former professor of economics at columbia described to me as a widely recognized figure in monetary policy to the job of vice chairman of

the federal reserve board of governors. this is something we reported was going to happen for quite a while. but we didn't understand why it didn't happen. the president will announce that michelle bowman, a kansas state banking regulator as well as a person who's worked on her own family bank taking a community banking governorship that's reserved for community banking and she will take that job on the federal reserve board of governors. these are now the fourth and fifth nominees of president trump to the federal reserve board. there are seven slots open he's nominated and confirmed powell and now goodfriend whose nomination is in limbo senator rand has put a hold on that and now clairida and bowman. that's now five slots nominated

by president trump >> and more cnbc guests. you can look back on number of appearances. >> i should point out branard is the last from the obama administration we don't know how much that matters. >> all right steve, thank you big news in other news, we were just speaking about damaged reputations. sir martin sorrell, a long-time ceo of wpp out of a job this morning under pressure to resign shares tumbling right now. we'll talk about the fallout ahead. plus, taxes a big issue on president trump's feud with amazon that could be decided very soon. we'll have that story for you next on "power lunch."

at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly.

you know what's not awesome? gig-speed internet. crowne plaza. 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. one area that president trump has targeted amazon for is

the collection of sales tax. a court case could soon force the company to change its ways courtney reagan joins us to explain. >> last month he tweeted the company pays, quote, little or no taxes to state and local governments. in reality, it's a bit more complicated. if amazon sells the item, it does charge the appropriate state sales tax because of a 1992 court case, sales tax for online purchases are only required if they have a physical presence in the buyer's state. amazon has been collecting sales tax on all the items it sells for about a year but amazon hasn't required its third party sellers, those who list their goods on the site to collect sales tax. according to amazon, about half of its items sold on the site are from third party sellers amazon says it has more than 100,000 sellers. that's a total of more than 10 billion bucks. that's the loophole that can cost states big.

the accountability office assessed state and local governments could have made up to $13 billion by taxing internet sales last year alone so the so-called physical presence law may not be around for much longer. tomorrow the supreme court is slated to hear opening arguments to decide whether it's constitutional for south dakota to require online sellers to collect sales tax if they sell $100,000 worth of goods in the state even without a physical presence some say they can do that, some say they can't if that changes, this could change for everybody it's third party sellers they're going after here >> super pivotal thank you so much. moving from one dotcom to another. netflix up this year can it go higher we'll talk to one analyst. from laughing stock to title contender in just two years. the turnaround of the philadelphia 76ers how'd they do it

we'll speak to their ceo in a minute coming up

hey, everybody welcome back to the second hour of "power lunch. let's tell you what's on the mean you netflix, they report after the bell

they're up 5,000% in the last ten years. but could its continued binge spending on content lead investors to start selling and martin sorrell is out at wpp. what's up there and should shareholders be up in arms about the massive payout he's going to get? and the city of brotherly love is in love with the 76ers. a slam dunk season, a record sales and tickets are already sold out for next season we're going to talk to the ceo about the process. trust the process. "power lunch" starts right now welcome to "power lunch. i'm sara eisen storm marking the 22nd time in the last 26 sessions that the dow has posted a triple digit move today it is up sharply higher.

all 11 s&p 500 sectors are up right now. led by utilities, energy, and telecom. merck, united health, and caterpillar leading the dow. and some of the other stock movers here, costco is higher on an upgrade at wells fargo. bank of america lower despite an earnings beat. and tronc up i'm michelle caruso-cabrera and here's what's happening at this hour. bill dudley telling cnbc it would be bad for the economy if trade barriers went up he added he's not concerned about volatility or stock valuations home builder sentiments dropping to the lowest since november verizon taking a stake in helieos and mathisen

earnings season has started this hour. will it be enough to get last year's rally back on track let's get to bob pisani and mike santoli. the jury was out on friday after the bank numbers, but today looks better >> it does i'm glad to see that there was an argument on friday a lot of people were making saying this was a sign of peak earnings for example, now that the banks were in and they were okay, therefore we should look to next year where earnings are not going to be quite as strong. my attitude is it's a little too early to say the earnings rally is over. maybe we could have that discussion, but right now i'd like to read the reports from these people i'd like to hear about their buybacks i think there's going to be more than we expect tax cuts we haven't figured out the exact influence there. >> i obviously think there's a chance of overthinking it, basically, going into this season maybe the good news can just be good news. when stock prices were down,

estimates held up. so you wonder if you have still that standard 3% beat on top of us but that's all, you know, noise. theoretically it should be supportive i think the market over the last five or six sessions has been increasingly tuning out the noise. the noise away from corporate fundamentals you saw that today with the drop in this index. that's a little bit of a new kind of lower reading that i think suggests some kind of normalcy >> the tone of today's rally is interesting. the best performing sectors on the s&p 500 seem to have a more defensive bend opposed to technology and financials. >> well, they're okay. they're not down that much the more growth oriented names if you get earnings and they're good, they're fine jb hunt had good numbers ryder is going up.

i'm really -- i think this is going to be very driven by the earnings if you can do a decent number, i still think there's upside >> to your point, it's definitely not some kind of momentum rush to the upside. it seems like a grind on low volume >> i'll tell you what i don't like i don't like we don't have volume again we had great volume in march and the last three or four weeks it's just been kind of crummy. they sort of walked away from buying the market. >> all right it's something we will watch the volume on the rally days bob and mike, thank you very much let's talk more about this market and get specific bets as well chief investment strategy at boston private wealth, and corner stone financial partners cofounder and managing partner join us. good to see you, shannon on one hand you have what looks to be a solid earnings picture, a lot of return of cash to

shareholders but we have trade tensions and rising interest rates. how do you square those? >> well, it's been really interesting. if you look at kind of from a geopolitical perspective, last year we had all the tensions with north korea that created a lot of angst in the market then this weekend with the concerted attacks on syria, we saw no market reaction whatsoever we see the tarries, the tit for tat retaliation. everyone gets concerned about a potential global trade war yet you look at the underlying economic data, it's still pretty strong what we're trying to do is find the segments of the market that we find attractive that we think are insulated in some ways from tariff escalation. also that represent the growth in the back half of this year. >> give us some examples. >> so we continue to like information technology we like health care. i think from our perspective in tech there are definitely pockets that are more attractive than others. financials are definitely somewhere we think that there's

value. we see the earnings reports, but we think that, you know, just the rate cycle kind of supports those. consumer stocks, consumer discretionary names have done really well. but we think that there's, you know, some valuations that are a little topee there we put it back into those more cyclical names we think can benefit in the back half of the year >> should i stay long this market or no >> absolutely. i think there's definitely the catalyst we all mentioned whether it's global tensions, trade, interest rates. we forgot about that remember we rose interest rates in march and inflation. we have catalysts for negativity, but i think there's more upside in this market with the earnings right in the midst of earnings season the next three weeks will pretty much be a telltale sign. economic data is continuing to be strong. and i do think this is going to be an opportunity for people if they just get invested and stay invested and diversify, there's an opportunity out there

>> buy anything? or do you need to be selective >> looks like you have some dow picks in here. even some losers >> absolutely. i call it the four horsemen. i think there's been great opportunities on some of the corrections we've had and some of the pullbacks you know, home depot, johnson & johnson, boeing all gave us examples i think it's a good time to relook at your allocation. with mid-cap and small cap stocks we can add allocation we have tax reform as everybody's mentioned not fully implemented yet. i think there's a good time to reallocate and find some opportunities to buy on these dips >> when did you sell disney and why? >> we actually sold disney last week really it was just, you know, from our perspective if you look at kind of the cost of old media, the number of, you know, consumers who are cord cutting

you look at espn, such a great business for disney. as far as the content and the price of content, you mentioned it earlier on the show with netflix. once you pay for content, that cuts into your earnings. we feel like right now we want to step away we think it's a great company, but just the cost of that media. we're not able to look at that and see that as a positive for shareholders. >> all right thank you for your time. we've got good news out in the battle against lung cancer merck leading the battle hi, meg. >> hi. these were trials in lung cancer huge unmet need in medicine. at first glance and merck and bristol-myers stock prices, they looked good. merck's may be even better and help extends its lead in a potential $15 billion market this was not a head-to-head study. so the results aren't

comparable in combination with chemotherapy and keytruda and found the combination cut the risks of dying from the disease in half analysts are calling this unprecedented. and the head said people are clearly living longer. that's a very dramatic result. as for bristol, they tested their two drugs in combination in a specific set of lung cancer patients and showed that the combination cut the risk of death by 42% calling that in line with expectations before the result came out, wall street set a threshold at about a 30% reduction in those measures still good news though you can see bristol-myers not really living up to the great news from merck today. that's affecting stock >> people on the cutting edge of

this have been able to live longer as they've taken these experimental drugs >> it's really incredible. especially for lung cancer which causes more deaths than any cancer there is. i was talking to someone saying five years ago i wouldn't have expected lung cancer to be the one we see so much progress in >> even with this recent data set, can they still reach the consensus of $11 billion by 2023 i think what investors are grappling with right now is bristol-myers trades at richer pe than merck. if it looks like merck is going to be in the lead, why pay a premium for bristol? >> that's a really good question i haven't seen anyone bring down their prospects. however, some of that difference in valuation may be an m&a valuation baked into where bristol-myers is of course some of that came out last week when we heard pfizer was not doing a deal

they don't want the stock price to be quite as high. >> the test results for bristol were not as good for the merck drug but sounded like you were describing the bristol tests as having taken place on a particular kind of lung cancer patient with certain permutations in the disease. so it might be narrower is what i'm driving at >> exactly it is a narrower group of patients they were testing their patients in. these drugs are both approved in multiple kind of cancer. right now it is a bigger drug than merck's i do believe that is expected to change over time lung cancer isn't the only part where they are competing >> thank you, meg. all right. here's what else is coming up on "power lunch." the cost of keeping ceos safe. how much your companies are spending and who spends the most plus he built wpp into an

advertising powerhouse and now he's resign k. what's next for the company? and from worst to almost first the incredible comeback story of the philadelphia 76ers how they made it into the playoffs for the first time in six years. the players themselves tell us straight ahead ♪ lower carbs. ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived. introducing corona premier.

play [music plays]his". when everything's connected, it's simple. easy. awesome.

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.

netflix falling on this up date for the markets ahead of earnings tonight it has been an impressive run for the stock. up 60% this year this year. will results keep the run going? joining us now is mike olson, senior research analyst at pipe jaffray. >> good afternoon. >> you've got a very nice price target this year and next year for netflix. not just for the stock but for profits. it looks like you think this stock is just hitting the booster stage and ready to take off. >> we're very positive on netflix over the long-term that's for sure. a big part of it comes from our confidence in international growth if you look at where we are today, 50% of internet households in the u.s. and only

about 12% if you exclude china internationally. if you include china, less than 10%. between that and pricing power, we're positive for the long-term. >> if i'm remembering correctly, your 2018 eps target was -- 2019 eps target was almost double over 2018 or roughly that. that's incredible profit growth for a company like this. >> yeah. we're very positive on the potential for ongoing margin expansion especially for the international business if you look today, the international margin is significantly below where it is for the u.s. which makes sense because they're doing marketing and content acquisitions over the next couple years, we do expect a significant improvement in the leverage they're able to get on that content and marketing spend. >> in terms of the second quarter, is it going to be

setting up for tougher comparisons given what was on the roster in terms of new series last year second quarter versus this year >> i think that's a good question when you look at specifically this quarter what they're going to report looking out at q1. we're positive on the long-term. i think for the q1 report specifically, it looks like it should be more of an inline quarter based on search trends that has a high trend with subscribers. >> search trends for content or netflix or what are you looking at >> yeah. specifically it's google search trends related to netflix. so it's specific key words related to netflix it's had a 0.93 correlation over the last quarters with netflix subscribers. it's been a good indicator and suggests an inline quarter i think as you mentioned as we look out to q2, a bit of a tough

com. i would expect guidance would be also in line but not materially above. >> is good enough good enough to keep the stock going >> well, that's a good question. as you mentioned at the onset, more than 60% move it's probably good enough to keep the stock where it is but we're very positive as i mentioned on the long-term but not necessarily telling people to rush out and buy it specifically for this quarter. >> all right, mike appreciate it very much. >> thank you still ahead on the show, a look at how much companies spend on keeping their ceos safe that is next and if you normally take the subway at 145th and broadway in new york, you might want to alter your route today more on this crazy video straight ahead

♪

welcome back to "power lunch. the cost of protecting a ceo, how much do companies spend and who spends the most? robert frank has a look at that story. >> it's a lot. mark zuckerberg's set what is believed to be the record for the cost of security paid by any company ever facebook spent $7.3 million last year on personal security for zuckerbe zuckerberg that is the largest for a fortune 100 company by a wide margin let's go to jeff bezos he's the richest guy the the world but spent only $1.6 million in 2016. tim cook had security expenses of just $224,000 last year and warren buffett only costs $387,000 to protect. now, google even cheaper doesn't list any costs facebook also spent $1.5 million

on private jets for mark zuckerberg and sheryl sandberg spent $2.2 million on security. that is believed to be the second highest among all fortune 100 companies for 2017 so why these big increases well, facebook said the costs were necessary to address, quote, safety concerns due to specific threats facebook paid to install a security system at zuckerberg's various homes. they don't list the number of security guards that protect him and his family but media has reported he has a team of 16 guards working in various shifts at his home so many, in fact, local residents have complained about the parking spots they take up he took his road trip across america last year to learn about the rest of the country which turned out to be very expensive. >> do they have to file numbers? can we assume sergei doesn't have security? and if they do, they pay for it themselves

>> they pay for it themselves to avoid this scrutiny. they say it's worth it to us to pay for it ourselves rather than having everyone know what we spend. some ceos would rather pay it themselves to avoid this kind of thing. when you're talking $7.3 million, it makes sense. >> do other companies spend on other executives beside the ceos >> yes, but again even many among ceos, even comparing her to other ceos, she is the second highest of anyone. and her costs have doubled over the last two years so remember with facebook, you're not just sort of protecting against a threat of people they're sort of worried about state government issues. and they are so public and so important that you're almost protecting them as you would a top national official. >> you're talking about russians and chinese, not burglars getting into the house. >> exactly if you took the subway to

work in new york city today -- this flooded due to heavy rain the most remarkable may just be the new york commuter who is clearly not fazed by all the wet stuff. you made a good point before >> that water is really clean. you could probably drink right from it. or swim in it, yeah. go home. yeah take another bath. >> gross all right. life after sir martin sorrell. the man who built wpp into an advertising powerhouse has stepped down what is next for the company and the 76ers are in the playoffs for the first time in six years. we're told how they did it right here on "power lunch."

zplmpl zplmplts. hello, everyone. i'm sue herrera. president trump's private

attorney arriving for a hearing over a search over his files michael cohen's lawyers want to see them before prosecutors see them women are less likely to receive the right medication than men after a heart attack. 70% of women were prescribed high intensity statins compared to 76% of men. it may help explain why women are more likely to die from heart disease than men domino will now deliver to the great outdoors drivers can now meet customers at beaches, parks, and landmarks with pizza and other food on its menu it will show up on the company's app and website as domino hot spots. japan's kowauchi winning the boston marathon. he becomes the first japanese man to win since 1987.

american runners came in third and fourth with a total of six finishing in the top ten congratulations to all that's the news update this hour back to you. >> thank you very much, sue. take a check of the markets right now. we're still up by more than 200 points on the dow jones industrial average s&p higher 0.9%. united health, merck, dow dupont, and verizon leading the s&p right now. energy stocks are soaring today. let's go to dom chu at the desk. >> snapping a five day winning streak as some of the worries of the air strikes in syria cool off a bit. prices for wti down by about one one-third percent. prices, remember, had run by

about 10% as anticipation really built up around those air strieb strikes. you coupled that with drillers add more rigs to the list last week and government data of course on wednesday. back over to you >> thank you very much w. rks -- wpp shares down. sir martin sorrell has stepped down as ceo julia boorstin has the latest from los angeles >> that's right. sir martin sorrell is resigning from wpp following the conclusion of an investigation earlier this month into alleged personal misconduct. the company is not releasing details. but the resignation is being treated as a retirement qualifying him for about 19 million in pounds depending on the performance of the company he turned the company into a

global ad giant including jay walter thompson among others along the way. he was famously well compensated. earning more than 70 million pounds in 2017 he only owns about 1.5% of wpp now, this all comes as wpp shares have lost about 35% over the past 12 months on disappointing quarter lly resuls this of course raises questions about whether wpp should be split up or managed differently given the growing dominance of google and facebook and more competitors. well, wpp's board searches for a new ceo. sorrell is not ready to retire just yet >> thank you for the details let's dig deeper into sorrell's departure, future. cnbc contributor and cable ceo

tom rogers questions the board's accountability welcome both to "power lunch." tom, let me start with you 73-year-old ceo, no plan for succession he gets to keep 19 million pounds even though there are some unknown allegations they haven't revealed to shareholders they let him retire instead. and by the way, the stock is down pretty sharply over the last couple of years where is the board on this does this make any sense to you? >> well, it's really hard to know how the board was evaluating this or exactly what they were evaluating because there hasn't really been any disclosure about that. worth noting that wilmerhale conducted the investigation here so i'm sure they did serious work you know, it is worth noting that martin sorrell was wpp. i mean, his facebook connections

would tell the story of global business he may have been the most connected executive in the entire world not only because of all the agencies they had and all the clients they had, but he was deep into their marketing strategies as a result of that and then really was intimately involved on pushing growth on behalf of a mass i haive number companies. >> let's bring you in on these points this marks the end of an era and he leaves in the middle of a changing business model. >> absolutely. the business has been different for few years right now. the ad agencies are facing a lot of challenges. consultants are coming in. clients are putting a lot of pressure on the agency clients are cutting back

their private equity is moving in venture capitalists moving in took a position on the p&g board. >> should they split up the company? >> it's -- i think that's one of the risk that wpp is facing right now. being taken by a consultancy that certainly that is the means to do it and split up the company. >> isn't it anachronism, the company? >> i think the company to a certain degree became too complex to be a company that services its clients martin sorrell's vision was a great vision and it had to do with skill. he understood early on that that's what clients want from their service companies like ad

agencies and that was behind the acquisition strategy that developed over the years but when you look at the company like wpp over 150,000 employees and 300 offices, it's simply very difficult to manage something of that complexity and clients want simplicity. >> so he was a visionary in terms of seeing that but tom, do you think he was simply behind the times when it came to seeing what was coming at him in his industry into the rise of advertising online basically made ad agencies less crucial to the whole ad-buying transaction. >> well, remember. this company grew up over the course of 30 years of media evolution. you know, it went from basically a 30-channel world to growing itself into the key media buyer

as we ended up in a 500 channel world and on demand media and streaming media. it was able to manage its relevance through a lot of evolution. where it's running into trouble has a lot to do with last week zuckerberg hearing, i think. not only because as mentioned google and facebook are such powerhouses now in terms of 90% or more the key growth sectors falling to them and putting pressure on everybody else and the sale of advertising. but this is an industry which is facing the onslaught of data enriched media where all kinds of data can create massive marketing efficiencies and that hurts the ability of ad holding companies in that it really goes at their margins and so the ad holding companies often are in the position now of kind of resisting that level of

innovati innovation, knowing full well they needed to be part of it to serve their clients. on the other hand it undermines their economic strength. that's a different position for them to be in. one very tough for them to manage through >> avi, just want to get your take on the future of wpp and the entire industry in a world where digital ads are being dominated by facebook and google >> clearly the companies that -- the currency of the future is data so whoever controls data is going to win and right now the people who control most of the data are google and facebook and those companies. so the ad agencies have to play catch-up in that environment again, to sorrell's credit, he was one of the early executives

that understood the concept of data and he's part of -- major part of his company is canter which is a data company. he try to compete on that basis. but it's getting more and more difficult for the other agencies to compete with googles, facebooks, and with amazon which is also there. it would also be coming in the fray at any moment. >> we're out of time, but it was a good one, guys we'll have you back on to talk about the changes in the industry tom rogers and avi dan the nba setting new records left and right nap is next plus -- >> i'm j j. reddick of the 76ers. we'll talk to you about the hottest team in basketball trust the process. ♪

adults are just kids with much, much better toys. introducing the 2018 c-class sedan, coupe and cabriolet. the thrills keep getting better. lease the c300 sedan for $419 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

we've been preparing for this day. 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. welcome home mom. with the right financial advisor, life can be brilliant.

the nba playoffs kicking off with a ratings slam dunk the saturday games put up their best opening numbers in five years across espn and abc according to nielsen ratings were up 17% over last season the philadelphia 76ers versus miami heat, they had the biggest jump at 26%.

after losing five seasons in the row the 76ers made it into the playoffs for the first time this year since 2012. it is quite a story. we caught up with the ceo and some of the players. we're joined live from down in philly eric >> that's right. we're here at the 76ers training complex. it's right across the river. like you said, this was a team ten years ago, 10 wins, 72 losses here we are this season 52 wins, 38 losses. they're on a winning streak. they're the biggest growth of ratings in the entire nba. that meant a lot of success from the financial point of view. we talked to the team ceo scott o'neil about how they're handling all that incoming money. >> our local ratings are up 70%. we have a 10,000-person waiting list we sold out for season tickets

for next year already. we're number one in the nba is merchandise sale we're seeing an incredible uptick >> what's unique about this team is their ownership structure you've got guys from apollo and blackstone but it's a wall street focused crowd. that's different from some of these other teams out there like steve ballmer in los angeles, a tech guy we actually talked to j.j. redick he came from the clippers. he talked about the difference in ownership structures. >> steve became more and more hands on with each year. steve was somebody that wanted to learn the ins and outs. whether that was salary cap rules, team roster construction, team chemistry you know, he was constantly picking people's brains and trying to learn more josh and dave and their group are hands on as well but i think they've done a great job in creating sort of a synergy in terms of what the

coaching staff is after, what the front office is after, and what the ownership group is after. they've been on the same page now for the last five years ever since this process started >> one of the things they brought from wall street is this big data analytics approach. that's one of the things the sixers feel they're leading across the league. we talked to their basketball general manager and he said that is specifically one of the things that the wall street ownership group with their data background wanted to bring to that team and the long-term investing approach now you're getting a big payouts, the big profits j.j. redick did say he notices the big growth of these nba valuations and what a big profit it is. >> is this essentially the money ball of basketball, what you're saying >> absolutely because if you look at the sixers, they've been innovative

with how they've run their teams. a lot of teams across the league complained they don't b like the approach they wanted the league to change rules around definitely you could say this is the advanced 2018 version of money ball you're seeing it with the success they've had especially this season. >> cool. thanks, eric still ahead, a busy week for earnings "power lunch" is back in two minutes. there are people in the investment industry who hold themselves to a higher standard. they are called "cfa charterholders." demand the best. demand a cfa charterholder. cfa institute. with a class leading 31mpgs nx combined estimate. lease the 2018 nx 300 and nx 300 all wheel drive for these terms. experience amazing at your lexus dealer.

at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. let's hold ourselves to the highest standards of ethics. as investment management professionals, let's measure up. cfa institute.

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.

welcome back to "power lunch. just breaking news in th welcome back president trump is set too nominate richard clarida, managing director at pimco for a decade, served an an economist under reagan and adviser to the fed in the' 90s. guys, these are important moves because we are starting to get a picture of the shape of the fed under president trump versus president obama. good friend, clarida, and michelle back in kansas in her state where she's a commissioner, and despite heavy criticism from president trump, then campaigner trump on the fed, on interest rates and keeping them artificially low, he's taking moderate

well-respected, academic economists to lead this fed and to vote on this fed, and it's not really that big of a change from obama yes, they might be republican, but as far as policy changes, you don't see anything drastic or critical. >> i think when he was elected, there was a lot of focus, wow, all three houses of government >> yeah. >> and the supreme court >> and the fed >> even more dramatic was that he was going to be able to pick these huge percentage of federal reserve governors. >> to your point, these are not out of the rand paul wing of fed critics. >> center right. >> yes >> right >> clarida backed yellen's policies he's been on a number of times it's important because they get votes at the meetings. >> well, earnings are heating up with analysts and investors looking for numbers to extend the bull market. we have the ceo of middle market lending with $20 billion in capital under management there's a high correlation with

the s&p 500 and gdp, that's why lawrence is on great too see you again. what are we looking at in the first quarter according to the index? >> nice to see you, melissa. this shows january and february were very, very strong months for the economy overall. revenue growth of 11% is the best first quarter in the history of the index the second best quarter at all, and that's with a couple tail winds not factored in like the tax cuts not hitting paychecks until late february, and we don't invest in the energy sector increased energy prices and flow through the economy does not show up yet. >> i understand this is through the first couple months of the year, but in terms of the data you are privy to, do you have a sense march proved challenges for the companies given market volatility we've seen and other headlines out there regarding a possible trade war as well as a possible conflict with syria

>> no. >> okay. >> short answer is no. we're not seeing difference. things like changes in gas prices, up 15% year over year, had a bigger impact on middle market companies than larger global issues, and we really have not seen any changes from that we have not seen any concerns about the dollar being weaker, and the quarter looks strong margin compression, but still a strong quarter >> in terms of loan growth, big banks reporting that loan growth is anemic. what are you seeing in the middle market right now? >> mediocre growth not really strong growth one of the governors, capital expenditures, spending leads to loan growth are labor shortages at this point. we talked about the cost of employment rising faster for companies than statistics show, but there's outright inabilities

to hire. we have one company with a manufacturing facility in kansas city and they lost half the employees over the course of six months to amazon's new fulfillment facility great for employees, but bad to expand businesses under those circumstances. >> what about use of cash? everyone's looking to see what the benefit will be from the tax reform, the steep cuts to corporate taxes. what's in it record buybacks? dividends? capital investment all of the above >> well, all of the above. we're seeing a lot of dividends. we're seeing returns on equity capital. we are seeing investment in acquisitions as well big, big interest in medium size companies trying to grow by consolidation. >> thank you so much of your time >> thanks. >> good to see you, and check please is next this is a story about mail and packages.

and it's also a story about people and while we make more e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service. priority: you

so what else is new? humm..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. check, please. washington post in the last hour, we're not seeing new russian sanctions today. the reason we expected them, u.s. ambassador to the u.n. was on the sunday talk shows yesterday saying that, in fact, today, there would be new sanctions on russia for aiding syria in their chemical weapons program. the washington post says that the president put the kibosh on that i spoke with obama era officials yesterday in the sanctions world very, very surprised she suggested it at all. they didn't think it was making

sense to do more sanctions remitted to this in the wake of the very impressive ones they did ten days ago >> struck right at putin's inner circle >> exactly >> looking to see if there's reactions. the ruble's been - >> six year highs directly of the result of the ten-day ago sanctions. that stock fell 50% in a day because -- so much - >> right >> all right i'm watching netflix - >> don't take that out of context. you got my attention aluminum cans. watching kne innetflix earnings they are the first of the fangs. we're going to watch this closely because the stock in and of itself up 37% since the last earnings report, and we're going to be watching the net new subs number, 6.5 million net new subs

is the number to watch there we want to see first of all if the group trades as a cohort and what sort of reaction we get we'll have mike olson on, saying sort of in-line report, is that enough to hold up the 37% gains since the last earnings report that's a key question. >> fascinated by the speed in which businesses change in the world, and we did the story on wpp and sir martin sorrell and thought about last week, talking about general electric, another massive company that assembled pain stakingly over decades now facing a similar passion that wpp clearly is going to face as businesses cha change i-- chang. it's a tough job, maybe tougher at ge. an important interview we have later, khristine lagarde,

why important? a potential u-turn on tpp and nafta deal, global coordination. this is her job and her bag. >> all right thanks for watching "power lunch. >> "closing bell" starts now >> hi iss, everybody, i'm kelly evans. >> a good afternoon to you two big ceos under fire, a new report prompting safety concerns at allegiant air there's concerns of racial profiling in starbucks the dow is up more than 315 points, about 1% gains right now for the blue chips and broad market the s&p and nasdaq are higher for the year, of course, trying to achieve that amid volatility. we start with bob