>> are you all right over there? >> like you tumbled or something! [ laughter ] >> joe >> twirlio >> that does it for us thanks for watching. dow is down 20 points, "power lunch" picks up that story right now. >> here's what's on the menu the question confounding investors, geopolitical and trade fears are easing where has all the volume gone? why isn't the street more bullish. southwest airlines stepping up plane exceptions after that deadly engine explosion. initial investigations pointing to metal fatigue. if you want to protect your privacy, it's not just go deleting your facebook page. you will have to stop going to sport events the technology that's picking you out of a crowd of thousandsings and what your identity is being used for

"power lunch" starts right now krirks i was worried you weren't going to find me over here, mr. cameraman. welcome to "power lunch. stocks are study at this hour. ibm is the biggest drag on the dow. blue shares they are in the blue down about 7% right now, on pace for the worst day, the worst day in five years. that's saying a lot. home depot, caterpillar and chevron helping to offset ibm. energy on pace for the fourth straight day of gains. lumber price, highest intraday price. coco, get ready to pay more for chocolates and wood. treasury yeels pushing fresh nine and a half year highs >> springtime hitting the housing market mortgage applications jumping 5%

from a week ago, up 10% from a year ago tesla is ramping up production aiming for 6,000 model 3 cars a week by ten of june. tesla shares rallying almost 3%. kentucky's attorney general suing johnson & johnson, accusing the company of contributing to the opioid epidemic the kentucky governor will join us in minutes. >> we begin this hour with markets. dow would be much higher without ibm being such a big drag. bob pisani is at the stock exchange. >> look at industrial earnings we have had today. new highs on a lot of new stocks united continental, excellent earnings all of these companies beat by a wide mother-in-law on their earnings it is reflected in the stock prices we are 10% through the earnings season 52 of the companies reported of the 500.

earnings up 30% of the companies that reported. and revenues up 10%. way above expectations and expectations were already high going in. that's why the market keeps advancing. breakouts in a number of sectors, energy stocks, many new 52-week highs. oil has been advancing and these stocks are finally start to show leadership we have issues ibm is a issue, it happy been a tech leader for a long time but it is definitely weighing on the dow. semiconductor stocks are weaker. banks have had issues. they been down basically slightly down since the earnings started on friday. the loan growth has been anemic. the yield curve has been flat. by and large we have done very well on earnings and expect it to continue. here's the mystery the volume we had higher volatility since february and we have had a few good volume days but generally volume has been poor simple way to understand this.

higher risk generally means lower volume less leverage than we've had also means lower volume. there has been a broader shift to passive investing and we have had no stock splits. am son $1500 stock if it was a normal $70 stock it would have more volume that's the way to understand this if there were more stock splits we would have more volume. goldman sachs was speaking on cnbc earlier today with his take on what's ahead for the market and for the economy. >> if you divorced yourself from a general feeling of anxiety and just looked at the facts and the numbers and what you can measure, you would say things look awfully good and it feels like awfully good this a way in which there could be a bit of a runway here for things to remain pretty good. inflation is in check. interest rates therefore are lower than you would expect at this part of the cycle people are -- you know, people are working, commodity prices

are in check >> all right so lots of runway says lloyd blank fund but you heard bob pisani saying there is good things in the makt and yet not a lot of volume. where are the best opportunities to invest. let's bring inniana martin and jay kaplan good to have you year, yana, let me start with you. where do you come down on this you heard lloyd. that should be a good recipe for stocks but bob pisani points out not a lot of people are showing up >> thanks for having me back i would point to the stats that bob was talking about, the earnings we are in the midst of q 1 reporting season, so far, so good earnings are the precursor to price movement so far you have had topline expectations not only meet what the companies are doing but they are exceeding the numbers by about 300 basis points and the leadership is broad based. not only that, this beat and raise story is seen not just in the tech space that has been

leading the market but across the board. we are seeing pickup in industrials, consumer discretionary and so forth and so on. we think if earnings continue to do that we've seen to date we have another third of s&p 500 reporting next week, i think the markets cando better than they have in the past couple of weeks. >> bullish. >> jay, you manage five small and mid cap funds. everything you have heard thus far, we have been talking big picture, big industrials, the s&p 500. everything hold true for the small and mid cap stocks that you follow >> it does in some ways. but i think what's really interesting for us is to think about what's gone on for the past 15 months or so in smaller stocks the growth stocks have really, really led the way they have actually kind of trounced the value stocks. 14% gap last year. about a 5 or 6% gap this year. so there is a sea change going on in the marketplace. and we think that you are at the very beginning of some rerating and some return to normalcy that's primarily given by

interest rates walking back up to normal. >> royce is usually known as a value-oriented shop. when i was tracking mutual fund way back yurg that was always the reputation you have three picks that are rather eclectic values one an airline, one a consumer products company, and the other is semiconductor capital equipment company. tell us about them. >> you know, active managers and value managers can look around and find all kinds of interesting things hawaiian airlines is one sells at seven times earning one of their competitors ran out of business. the makt is worried about challengers coming in, united and southwest. but they are working with japan airlines so there is a lot of good things seven times earnings discounts lot of bad news. la-z-boy and furniture we have had a good housing cycle so far those homes need to be filled up la-z-boy looksic it has sales momentum they have rationalized and made their real estate a lot better they are starting to work with

wayfair. i suspect am is coming up soon in tech, kohu, they help with testing and handling if you take out their large cash position the stock is about 11.5 times earnings the market thinks the cycle is done we think the cycle will go longer, lower amplitude to have more semis and cars. >> we don't often talk about cohu on this network yana you are focused on earnings what do you make of the post earnings reactions in stocks the way they are treated by investors. banks may be their own problem because of the yield curve ibm down nm 8% sounds like the bar is set pretty high for companies to beat, guide higher and get a positive reaction from wall street. >> that's a great question, sarah. you are absolutely right if you look at the sector performance, financial standout as underperformer as well, majority of the companies have

beaten on earnings and revenue line the price reaction has been muted. counter that with today's performance where there is beaten raise, organic growth, a solid story to be told in these companies in moving. netflix, another growth of subgrowth and better than expected earnings and the stock moves almost 10% on earnings spread what we are seeing is company-specific stories coming to fruition and the market is recognizing where the growth is. we think right now, best defense is offense and that's why you are seeing, again, growth areas of the markets leading and continuing to lead. >> good to have you on yana and jay >> we are going to go to hampton pearson in d.c we have developing news on at&t and time warner. hampt hampton? >> hi guys we are at the noon break here at the at&t/time warner anti-trust trial. time warner's ceo has just finished testifying over the last few hours

his direct testimony in this case a couple major themes. number one, making the case for why time warner needs to partner with at&t, basically because it's a whole new ball game in terms of video distribution, primarily because of major internet players and changing customer habits as far as how they receive and want to pay for video. but to the heart of the case, the government contends that post merger, basically a turner/time warner combination would have more leverage in terms of negotiations where it would cost them less to go ahead with a blackout during negotiations than it did before the the merger the ceo absolutely refuted all of that saying, no, i don't agree. if our channels are not on, we lose a lot of money. hundreds of millions of dollars. and we never really get that money back it creates a whole new series of risk that we don't want to have. another area of contention, the

notion again put forward by the government that post-merger, at&t/time warner merge would essentially have incentives to basically team up with nbc and comcast in terms of negotiations with distributors. again, the whole question of leverage and the ceo not surprisingly says absolutely makes no sense we, as a merged company, want to be on all platforms. we need subscription revenue we need advertising revenue. we need to be in everyone bundle everywhere going forward the nice thing about his testimony, by the way, he was very comfortable on the witness stand, very at ease. almost doing a tutorial. and looked directly at the judge during the entire two hours-plus that he was bisque leighly being quizzed by at&t trial attorney the cross-examination will probably take up most of the afternoon. back to you.

>> president trump josing japan's prime minister at mar-a-lago right now they are getting together for a working lunch, then a press conference later this afternoon or evening ayman jaffers is live in west palm beach. >> this they managed to squeeze in some golf this morning as well they were out on the course for several hours. we don't have pictures to bring you but we are told they did play a little bit of golf and they are going to go to this working luncheon at 2:00 this afternoon. the big news here is all about north korea. the president confirming earlier today in a tweet that his cia director, mike pompeo actually went to speak with kim jong-un he said pompeo met with kim jong-un last week. meeting went smoothly and good relationship was formed. details of summit are being worked out now denuclearization will be great thing for world but also for north korea. the white house after that tweet was issued that the president golden gate wong it wasn't last week. it was the week before, easter

week, that mike pompeo was in north korea. mike pompeo, the cia director, of course, handling a job that would typically be handled by the secretary of state there is no full-time secretary of state in this country right now. and mike pompeo is the president's nominee to take that job should he get confirmed. so this gives pompeo some on the ground diplomatic and intelligence experience here in deal with the north koreans. not clear when exactly that summit is going to take place. they are saying end of may, maybe beginning of june. they are discussing a number of different locations, five of them to be specific. and here in florida, the president is also talking with shinzo abe of japan about trade. we are told that this idea of renegotiating tpp that the president floated last wee, the trans-pacific partnership, well that's more or less off the table. but the one negotiating point we are expecting them to haggle over today is whether or not there could be any exemptions in the so-called 232 tariffs that the u.s. put in place over the past couple of weeks for the

japanese side. the japanese definitely want to come away from this meeting here in florida with a win on trade as well as the negotiations over that north korea meeting which are so important to the japanese. talking about trade, kentucky bourbon, one of the u.s. products targeted by chinese retaliatory tariffs. the governor of kentucky will join us. stay with us flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing

this information. read it carefully.

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state of kentucky in the cross hairs of a poe tex trade war with china any retaliation overseas will hit the state's exports. wilford frost is in chicago with an exclusive interview with the governor of kentucky. >> as you say i'm here with governor bevin thank you for joining us. >> pleasure to be with you. >> as melissa suggested, all states of course fearful of a potential trade war. you had over $30 billion of exports in 2017 globally how fearful are you that the president's sort of tread rhetoric war is risking too much for potentially too little gain? >> i'm not concerned about it. this is the nature of dialogue and discourse that happens when people negotiate people have different styles some are more settle and more diplomatic others like the stir the pot throw things in there and see

what happens i think our president is one of the latter beau are effective it is creating a level of dialogue that is healthy it is creating dialogue between us and folks in the eu, folks in asia, and certainly as it relates to nafta as well all of this is healthy i don't worry about it we need global trade we do in kentucky as do other states we need it between our country and our countries. and i think at the end of the day all of us recognize that strong economic trading partners are better than adversarial partners and i think we will all do well in the end. >> governor i'm going to hit pause because we have a trade related news alert kayla tausche has that for us. >> the united states is targeting a deal on nafta in the next three weeks that's according to congressional aides and industry executives who have been briefed by the trump administration. last week i'm told u.s. trade representative robert lighthizer told members of congress that high level talks would take two more weeks with another two

weeks spent hammering out the fine print a senior administration official confirmed that to be the expected timing. for the second time this month, top officials from the u.s., canada, and mexico are desending on washington to hold negotiations those meetings will take place tomorrow and friday. at this time there is not expected to be an announcement as it could be a few weeks before a deal is finalized we reached out to the u.s. trade representative's office, we didn't get a comment before air time but we will let you know as the story develops back to you. >> kayla, lethank you. if we did get a resolution on this back on forth on nafta within three weeks that would be a step forward, would it not >> it would. you have provincial elections in canada this spring then you have elections in mexico in july may, july, and then us in november nothing is is going to happen if we don't get it done quickly

it does need to be resolved. it's something that is good for all of us. everyone recognizes it is an outdated agreement with you one that is critical for north america. the independent supply chain between canada, the u.s. and mexico is such that not to have a modern version of nafta would be disadvantageous to states like kentucky and many others who produce and export products. >> governor, here at the u.s./china business summit before we move on to china let's stick on nafta a moment ago. secretary ross has been here at this summit. did you get an inkling from him whether it is china related or nafta reported that this reporting is accurate that we are moving closer to that deal >> i think it is ambassador craft is from kentucky she has been very much involved in the conversations that have been happening and everyone knows if it doesn't happen in the next three, four, five weeks, politically, it is not likely to happen for the reasons that i mentioned i spoke with secretary ross

about this last night in person. he said as much inned a broer venue as well. the fact that he is even hinting at it is at least recognition of its truth and the recognition that it is what needs to happen. people want this to happen but you can force it there is sill a lot of i dotting and t crossing but i'm encouraged to hear it's becoming more publicly known. >> let's talk about china. here at the goldman sachs china investment hosted china/u.s. business umt s. you were on stage as i understand behind closed doors with governor walker both of you musingly pitching your states to chinese investors for why they should be investing in your state. what were some of your main arguments? >> one of the things, this cut button that i wear, a pair of scissors cutting through red tape no matter where you are in the world you don't like red tape. one thing about kentucky is we help our investors get to yes or

no faster then in others logistically, the ups world shipping hub, dhl, amazon building their world shipping hub, all in kentucky we have riverways, railways, roadways, the cheapest electricity east of the mississippi, these things are appealing. >> i don't want to talk your opinion down but governor walker did have a china flag on his. >> he did. that's the type of tunism that is transparent i think people say through it. i don't want to out him with you i was pinning it on as he walked on stage i wear this all the time. >> maybe he is going to put a bisht one on -- >> he is an excellent governor >> we have a question from the studio. >> the problem with attorney generals, they are attorneys they are always suing people all the time yours is suing you related to education. he has also filed a suit today

against johnson & johnson for decenting marketing practices when it comes to opioids his fifth suit to date when it comes to the pharmaceutical companies. are you on board with things like that. >> i am not on a board with anything that he does. i don't want to dock him personally, but the level of competence he has on any number of fronts -- he sues me repeatedly he aspires so much for political office these are political moves. does these for the headlines that he gets they are not thoughtfully done, not well laid out. i'm not on board with what he is doing at the broad level or the premise, but just about the way he does go about this. >> that's clear. >> very clear, as the governor has been throughout. we are out of time thank you for joining us much appreciate night will, thank you, and governor, thank you. >> am and best buy now partners. jeff bezos and best buy's ceo

struck a deal. we will explain it next. plus a rare look at jeff bezos's crivseete space company blue origin. we will hear from the company's new ceo. "power lunch" blasts off after this

can you can't beat them, join them. after years of competing with difficulty against am, best boy buy is now teaming up with its online rival courtney reagan has the story it seems strange to think about best buy and am teaming up

shouldn't they be rivals in ways, yes then again, best buy has sold amazon election tropics for a decade today's i nounment is a deepening of the partnership the companies are now announcing this expanded partnership where best buy will be the exclusive seller of ten 4k and hd fire tv models they are built by insignature fleeia and toshiba in stores, website, and best buy will now be a third party seller on amazon.com for these tvs amazon of course makes the fire tv best buy is aiming to be the first place consumers go for their connected home needs and jolie says these tvs have the alexa capabilities that kbt with the smart home. he also said we are the place where these technologies get showcased. they have been selling echos, e readers and tablets for ten years. in a quote by bay doze, he says

the last five years since uber came to best buy have been remarkable i mean the turnaround from just a business case study review is going to be written about and talked about for a long time amount of bit of a brow rans going. >> who makes the tvs. >> toshiba and insignia. >> amazon branded television sets >> no, well, they are insignia. >> the operating system is amazon >> so when you turn the tv on you have got am prime already loaded up on your tv >> and you can talk to alexa. >> we are seeing irs sha of roku trading lower. >> and bust buy is up 4%. >> in terms of the third party seller angle how does best buy gain from that it has an online site that it's

trying to ramp up. >> yeah, it does i think that depose about the idea of if you can't beat them, join them. if a shopper is going to amazon.com instead of best buy.com, best buy at least wants to be the one that's selling to them through amazon. >> another shot at getting that consumer >> yeah, and both of those stocks are up. turning now to another jeff bezos company, but origin, bob smith speaking with morgan brennan. she has the highlights. >> that's right. in colorado springs yesterday at the space symposium, blue origin ceo bob smith showing me the company's reusable rocket engine it's capable of being flown 100 time and broadly discussing the business plan. listen >> we continue to do build up our revenue stream and that continues to go on over the next few years we will hopefully see big awards here over the next six months to a year

i think that will be self-evident of the size and the scale of the business that we are in i would say our investments indicate what our ambitions are along that scale. >> the indication, then, some big apple businesses, plans to court for customers for the orbital rocket currently under development including government and military plans to manufacture the engines not just for the company itself but for other space launch companies as well. smith also says he begins to send tourists past the edge of space with the new shepherd capsule by the end of the year as you might expect from a company that has been funded by jeff bezos up until now exclusively, quote, it will be ready when we are ready. back over to you. >> thank you morgan brennan. one day after the deadly incident on the southwest airplane the investigation is on to find out what happened? and could it happen again? how concerned should flyers be ! - anncr: thankfully, prevagen helps your brain

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hello, everyone. i'm sue herera here's your cnbc update this hour cuba's national assembly holding a special two-day session to elect a successor to president

raul castro. the one and only official candidate is canal, who has been serving as cuba's first vice president. he will be the first outsider to lead the island in fatherly six decades. president donald trump says stormy daniels is pulling a quote, total con job, end quote. he is criticizing her for promoting that artist's stretch of a man she says threatened her in a parking lot the adult film actress claims she had an affair with trump and was ordered to keep quiet about it. there is an investigation into prince's death. an autopsy indicated prince died an of accidental overdose of fentanyl, a sin they haddic opioid -- anacin they h synthetic opio.

-- you are up to date. that's the news update this hour i'm glad i filed early >> it only seems fair that they would allow extensions >> absolutely. >> they seemed to have no problem extracting money from my account yesterday. >> exactly >> no problem whatsoever. >> and the fee portion of the website where you could use your debt or credit card, interestingly enough, that worked >> yeah, well they found my money. >> they always do. >> sue, thank you. >> you got it, guys. let's get a check on markets. it's been a choppy day, stocks swimming between gains and losses dow is in the red, the s&p 500 and the nasdaq looking at their third day of gains if this does hold oil is soaring crude hitting its highest level in more than three years on falling inventory. bond on the move yields on the two year hitting fresh nine and a half year highs. check out the mexican peso following kayla tausche's report that the u.s. could have a new

nafta deal in the next weeks good news for mexico lululemon stock is up 20% in the past monday alone. and transports are rallying led by csx the railroad on its best day of the year united airlines riding high on its profit beat. and ibm shaving 75 points off the dow average. >> a day after a deadly incident on a southwest airlines plane sethors are trying to figure out how it happened. phil lebeau joins us this is the same engine linked to a 2016 event? >> right because of that and because of other issues the investigators are zeroing in on whether or not there is a systemic mechanical issue with these engines which are really the workhorse of the 737s they suspect that metal fatigue likely was the cause for this engine failing yesterday the fan blade came off

that's when the engine had an uncontained failure. debris flew out of the engine one of the pieces shattering a window the engine is built by ge and saffron. ge issued a service bulletin on these particular engines in june of last year remember, in 2016, there was a similar type of zebaccident, thh nobody is saying it's exactly what happened in this case as you look at shares of general electric, keep in mine that this is an engine that more than 300 airlines around the world are using. it is the workhorse of the 737 look at shares of sweatt it announced already it is accelerating engine inspections inlight of this accident we heard from other airlines, united announcing today it will increase inspection of these inspections. american has been doing this following the service bulletin issued last year delta says it will be in

compliance with changes instituted by regulators the airlines are zeroing in on whether or not there needs to be further inspections and another air worthiness -- or an air worthiness directive issued for this particular engine. >> sound like they are focused on the older planes. i would think it would be -- >> it has to do with the number of cycles in the engine and how many of these cycles have taken place since the last inspection that took placement remember when they do this it's not just look liking in there and saying everything looks okay to me. they do an ultrasonic inspection of a number of fan blades and it gives them a sense of the health of the melts in those fan blades many people are saying when the ntsb gives us an youp date this afternoon, will they say there should have been more inspection of this engine. >> those engines take off somewhere in the world every two

seconds. with those odds, how safe is travel right now given these engines are a mainstay of modern commercial aviation. joining us, john goalia. welcome. how more or rare are engine failures, and how much more common do they become as those engines age. >> well, first off, with the modern generation engines, engine failures are really rare. like especially like, uncontained failures the last one was two years ago and that's, you know, do the math, a couple of million of flight hours ago so the engines today are unbelievably reliable. they are just built with the west materials, and they are just -- i wish my car could run as far -- or as reliable. >> do they become much more common by a factor of x as the engine passes ten years in service, 15 years in service,

whatever it is >> no, because of the required inspections that are on them during tear downs, they really get a good-looking at. so it's -- i can't explain how reliable they are. they are data driven everything that's done on an engine is data driven. so what we are now seeing is there is some data to indicate that we have fatigue issues with the fan blades and thousand they are going to dig into it. this isn't new they have been looking at it for a while and just didn't have a good handle on it. apparently, what they found on the scene in philadelphia has given them a good indication that it was fatigue. you know, the ntsb investigator, the engine investigator that's there is a very, very capable individual, and i'm sure that's going to look at this with great detail and maybe shed new light on it. >> sir, tell me if i'm crazy i her his report and i thought, gee, the next time i fly i'm going to check to see if it is a

737 and if it has an engine, the cfm 56 and i'm going the wonder about it should i not do that >> you should not do that. i'm flying friday morning on one. i fly on them every day. that airplane -- there is many thousands was them in service. like they said in the lead-in, there is a takeoff every two seconds with this engine on it this engine is unbelievably reliable unbelievably so i'm not the least bit concerned about getting on an airplane with a cfm engine on it it's not just the 37 by the way. >> phil lebeau has a question for you. >> can you walk us through the process for a air worthiness process to be issued. >> people are going to be looking at this situation and saying it was proposed last year but one was never officially ordered and made mandatory what is that process in washington so that airlines are told, look, you must inspect these engines? >> all right normally, normally the manufacturer will put out a

service bulletin that has a recommended practice in it most operators comply with that recommended practice but if he have continued occurrences like we had now one repeat from that -- when that happened, you are going the find that the faa is going to say, make it mandatory. we don't have any indication yet that southwest airlines complied or did not comply with this. my gut tells me that southwest complied with that service bulletin so the amount of d. has been a little bit redundant on their part but the faa also has to worry about all the other 20,000 or so engines that are out there, not just southwest's so they are requiring everybody to take look at this part. >> john, over the weekend we heard about aleak ant on 60 minutes, we heard about this southwest flight incident. should consumers be concerned about flying on discount airlines do they for instance skimp on

maintenance? how they do maintenance. i don't know if they outsource maintenance. maybe maintenance takes shortcuts. should we be worried when we fly on a discount airline? >> well, we should always weigh the options and look at the record all right? so that's what i did this the 60 minute piece i looked at the record and the record caused me some concerns about the way they are operating. i wish -- in my heart i wish that they could get a handling on their operation most airlines invest a good piece of the money they make back into looking, measuring, and making changes to the operation. from the outside, i don't know exactly how much of that has happened at aleej ant. but when you look at the facts of their operation, it causes you some concern. >> are there other airlines that you have looked at where you would have similar concerns? >> not that i have looked at there may be others out there but not that i have looked at. >> john, thank you very much, john goalia and phil lebeau.

moments from now, president trump sitting down with japanese prime minister shinzo abe for a working lunch. trade a big topic on the menu as the president seems to go back and forth on tpp up next we will break down some of the big myths about trade stay with us ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it.

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we'll listen. we'll talk. we'll plan. baird. i'm all-business when i, travel... even when i travel... for leisure. so i go national, where i can choose any available upgrade in the aisle - without starting any conversations- -or paying any upcharges. what can i say? control suits me. go national. go like a pro. president trump meeting with japanese prime minister shinzo abe in florida today.one of the topics up for discussion, trade and tpp. kayla tausche reporting the u.s. may have a nafta deal in three weeks. our next guest says much of the international trade debate is

joining us now with the trade about citi group's special economic adviser bill dowder nice the see you. >> thank you. >> what is the biggest falsehood out there right now when it comes the trade debate. >> there are a handful of them but a big one is that exforts and trade surpluses are good and imports and trade deficits are b bad. in fact, the only reason you want to export is -- -- there may be an argument for wanting to boost demand. so that's just one of the myths. >> it's also -- i mean we should say though this is something that the president has said repeatedly most of the economists say that a trade deficit is not necessarily a bad thing. when you are talking about the

tpp and the president makes a u-turn on his u-turn and as a global economist is health caring for growth, is that disappointing? >> anything that reduces the intensity of global trade, so artificial means s a bad thing the tpp was a multilateral i will regional if you want step in the right direction of greater trade integration. the fact in a u.s. decided not to join was a steb backwards having some hope that the u.s. might change its mind was a positive but now we are back where we were before, where the ratification process is going ahead without the u.s. playing a part in it i doubt we will see any action from the u.s. before the midterm elections. >> good to have you on again, it's michele i feel bad for all of you economists we have a big electronic wall here cnbc paid for. what i have decided we are going to put a photo of every economist who comes on here and

expresses the same frustrations that you do, about the president being so focused on the trade deficit. we hear this day in and day out from the entire economic community. clearly he is fixated on this. we could put larry kudlow on that wall. and he is advising the president right now. i don't know what to do at this point. what about the fact that they are talking about a nafta deal potentially within weeks according to kayla tausche and the president wanted to walk away from nafta? >> well, nafta, the new nafta, so to speak s basically a super imposition of much of the tpp onto the old nafta so the u.s. will get a quarter of the tpp after all and it is a jolly good thing, too. the end of nafta would have been a regional disaster. >> i guess more explicitly my question is if we can actually see a nafta deal, maybe the human cry about tpp is the same thing and eventually we get to tpp. maybe the negotiating path seems similar there.

>> everything is possible. we started off with the threat of a withdrawal from nafta it turns out we are very close to finishing the renegotiation of a extended nafta. the same could happen with the tpp. i don't think it's think it's go happen any time soon it will be a matter of years >> before we run out of time since you're busting some of the myths on trade, one thing we hear a lot from this network, from strategists, economists, basically, anyone who's commenting on frayed, if we see the tariffs that have been threatened from the u.s. and china. and we see some sort of escalation of a trade war, it's going to be harmful for the global economy is that true and what kind of damage are we looking at if that happens? >> a serious trade war valving starting with the u.s. and china. but then spilling over into europe, japan and other countries would be the end of the global recovery. it would be very disruptive, both for exporters and for

importers, and it would be a major cyclical downturn depending on how intense and how long lasting this episode would be i myself don't think it's the most likely outcome. i think talk is louder than action, and fortunately -- and so i think we'll escape that, if it were to happen, it will be the biggest self-infliblgted room since the great financial crisis >> hard to imagine it would get to that point or the president would let that happen, but there's a risk thank you so much for joining us >> my pleasure baseball season is in full swing and millions of americans am be attending games this summer and they're being watched. your privacy and data not just a concern online but at the good old fashioned ball game as well. most etfs only track a benchmark.

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request. the subject of a cnbc story earlier this year. the sec declined to comment. stock lowered today by a little more than 5% >> if you're angered by facebook invading your privacy, you may not want to go to the ballpark when you walk-through the turnstiles your picture is taken. >> it's all about data, that's the four letter word and how much of it can companies extract from a photo of your face. go to any sporting event, it's likely your picture will be taken and used to sell an ad back to you. one company doing this other companies started with security experts data analytics, who is sitting in which seat.

the algorithms can give demographics for everyone at the stadium, ethnic balance et cetera a team might know they have more young women coming to games tuesday nights that data affects what ads appear on the jumbo kron the information is being used for big picture decisions like this, individual privacy is still a sensitive subject. >> data is a sensitive subject right now. we anonymize all of our data >> the back of your ticket has a disclaimer not to use your photo. make sure to smile the next time you're at the game >> it's more than just the kiss cam following you. scary. >> all right the -- thank you, eric the spread between the two year and 10 year yield

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the dow is down slightly, the s&p 500 up two points. the beige book is out, let's get to elan in washington. >> the fed relesioning its beige book, showing trade and tarrish talk being mentioned in nearly all 12 federal reserve districts. across the country, manufacturing, agriculture and transportation sectors were particularly concerned about these tariffs many several districts reports rising prices due to the newly imposed steal and aluminum tariffs 7 of 22 manufacturing companies. brought up the tariffs businesses in cleveland and virginia are stockpiling materials to guard against higher prices in the future.

kleins are concerned about moving forward with production because of the cost. two districts admitted seeing some benefit from these tariffs. they're reopening plants and calling back workers the mining sector is particularly strong right now. outside of trade, the fed found that economic activity is continuing to expand at a modest to moderate pace labor markets are still tight. inflation is moderate despite those spikes in steal prices the fed finding the outlook remains positive >> the last two things elan mentioned are the typical use of the beige book what is the fed hearing about inflation in the economy when that starts to -- when the beige book starts to signal red

in those regards, that's when you might be concerned what did she just say. there are price increases, but they're not all that great labor shortages, they're not translating into strong wage gains. i don't hear that very much in terms of signaling any change at all in fed policy. there's been a dissidence between a stronger economy and a beige book that calls it modest to moderate expansion. right now we are in a bit of a downtown in this first quarter the other story is this trade story. it's the anecdotes, the thing that's fed folks are hearing from all over the country you see how significant the trade story is around the country. >> there were a lot of areas, very worried about the effects of it, there were districts where they have mining and steel, and those places are seeing a better economy. >> those are not balanced, right? almost all -- >> no, would i never argue that.

>> there are more users than people that would benefit from the input. >> winners and losers, right there in black and white >> you saw the number of people lined up to get out of this steel exemption. that's something that increases government power in that regard. >> 14 or 15 manufacturers in philadelphia are concerned about higher prices of inputs, and are stockpiling materials to protect against that that tells you there are some numbers that -- >> i can't say this enough, which is, the president has done so much for business confidence and done what needs -- someone needs to take larry kudlow's place here, he can't do it any more you can see how all this trade and tariff talk takes it away. >> it's not just steel prices rising aluminum prices are rising

>> all these commodities around the world. >> what did you think was going to happen? >> you're in -- right with some steel. aluminum wrapping. there's also the story i'm hearing from the agriculture sector, which is minnesota, those areas there, i'll get a chance >> that was chicago, which would embrace a lot of that. steve, you're going to stick around we're going to bring in chief economist with natixis kevin, i've said your name a million times, i don't believe i just must haved it there first question to you, are you as concerned as some of this anecdotal reporting seems to be about trade and tariff raising the price of inputs?

>> eventually tariffs will become a big problem it's really in the beginning phases of this, we would expect in a rhetoric to fade and end up with something softer eventually what i heard in the beige book was a lot about moderation i didn't hear anything about acceleration or inflation, an overheated economy that's basically what we've seen in the data. we've seen the data moderate, manufacturing, retail sales, et cetera sell etting down, and we've taken down our equity allocation a couple notches we're seeing a more modest kind of growth to start the year, that's what we heard from the beige book, with no inflation problem. >> did you hear the same thing joe? >> yes, pretty much, tyler, i mean, the beige book has to say something, and it always seems to be the same thing i don't -- if we took the cover

page off the beige book, it would say the same thing today as it did five years ago >> that's not true, joe. >> i just don't find this report to be particularly worthwhile. i think it's probably pretty useless. on the trade side, look, we made a big deal over the trade stuff, this is old news, we're moving past the administration. >> here's what wouldn't have been in the beige book years ago. manufacturing, technology, construction businesses generally anticipate further price increases in the months ahead >> we haven't had a 2% inflation rate in this cycle you're going to find a couple areas where prices are going up we've basically been in a low inflation or disinflation world

for a while. >> it's picking up steam maybe it's not a problem at this point. but i think it's something investors are watching right now. >> i worry that the lack of a 2% inflation is sort of a random walk you go back to this time last year, telecom prices were cratering, if not for that, we would be in a 2% world i don't know if something random comes along again that brings down prices. and maybe that randomness is the result of technological change, globalization, that kind of stuff, it seems like every now and then something comes along and bails us out of that inflation. maybe that's a trend or it's a random walk and you can't rely on a random walk all that often. >> sarah raisesthe point about industries slowing signs of price increases. that's true, there are prices that go up, go down, if we look, since this recession ended inflation has been consistently

below 2% if we go back to 95. the core pc has grown 1.7. i would argue, steve, prices will soften in the months ahead, we're going to see housing prices, rents come off i know i would argue these are one off things that bail the data out we've had consistent inflation i don't see it, steve. >> i feel strongly about a lot of things. arguing inflation and where it's going, i don't feel strongly about. i could go either way on this. i have sympathy for both arguments. >> something we have not seen for more than a decade, that is a flat thing yield curve >> what is a flattening yield curve? this is what a call a generic yield curve. this is time, this is the yield, this is what you pay for money if i lend you a dollar overnight, i'm probably not

going to charge you much interest i'm pretty sure you're good for it two years you want to wore row that money, i may charge you a little more interest who knows what's going to happen that dollar is not going to buy as much, you get hit by a bus and you can't pay me back, at least you paid me interest in the meantime, all the way out here to 30 years, i'm going to charge you more. there's so much uncertainty built in this is the typical shape of the yield curve. the further out you go, the more you pay, there's more uncertainty. sometimes the yield curve inverts. long term money becomes cheaper than short term money, often times this means bond investors think a recession is coming, in a recession, there's less demand for loans, they believe the fed will have to cut rates to stimulate the economy. money willing get cheaper. right now the yield curve is not inverted, but it is flattening, the cost of money for two years

getting close to the cost of money for 10 years, that's why people are worried maybe we're on the verge of the yield curve going from flat to inverting. let's get some reaction from our panel. robert, what you do you think, you're a bond guy, are you worried the yield curve is going to revert and we're going to have a recession >> i'm not in the past, we've seen inverted yield curve, you're literally looking at short term interest rates, substantially higher than long term interest rates and the fed choking off the economy. we're seeing a really solid economic expansion and the money is not a problem, the fed is not choking this economy. so there are a lot of different moving parts here, there's the splooi and demand of money, and how much people want to borrow, versus how much people want to invest we're in a world that has an aging demographic, and there's a lot of savings going on. especially in foreign countries. and also you see in the institutions that are related to

the pen chant universe in our country. that are basically applying more demand to the back end of our curve. relative to supply knew think about, the amount of borrowings have soared the curve is flattening, it's not near inverted. and investors perception of what is normal before you invert is really off kilter, because of the last 20 years and how much extraordinary accommodation we've seen >> so -- >> normally have you to expect a flatter curve. >> i think you explained it but because i'm a little thick, explain it again the yield curve is flattening right now, not because it's suggesting a recession, but because the demand for long term money is lower than it had been. am i right about that? therefore, it's not necessarily worrisome so you >> it's not worrisome, i mean, things are pretty stable opinion you go back to right after the

taper tantrum. the treasury was north of 3% here we are five years later and we're a little below 3%. the -- >> why is it flattening, why is it taking that posture >> the fed has this view that they need to make sure they're not too accommodating. when they were at 0, doing qe. pumping liquidity in, they want to make sure everyone knows they want strong growth and they're going to stay at low interest rates. now they want to make sure they don't overdo it. inflation is approaching their target and all their theorys are telling them less accommodation is more. >> you're going to get a much higher yield in the u.s., even when it's low on the 30 year compared to what you're going to get in germany joe, are you worried about the yield curve inverting? >> i am, because even though

rates are low, an inversion of the yield curve even at low levels will disintermediate the financial services industry, which is why we've seen financials trade poorly despite excellent earnings the future lending prospects are not great with rates low >> the financial system, the average bank pays me very little for my deposits, but charges me a lot more if i'm going to get a mortgage from them suddenly, if they have to pay me more for my deposits, they can't make any money >> they'll have nonrashening of credit this curve, given the fiscal stimulus and the inflation threats that sarah might be worried about, and steve is impartial too. >> i remember when you were so bullish, joe >> that curve should not be

flattening, not with the fed unwinding the balance sheet and all this supply coming >> that's one of the issues here, picking up on joe's lack of concern the fed is in the process of making a big mistake here. i brought a chart, i don't know if they have it here it shows you why people get freaked out about the yield curve. every time it goes to zero before recessions, the spread between the 2 and the 10 goes to zero almost every time but it has to go to zero to signal a recession >> there it is those shaded bars in the middle are recessions >> it has to completely flat, not just narrow to 40 basis points >> what you see before every one of those shaded bars, it goes negative the orange line going across is where we are now we've been there before, we're not on a great trajectory to avoid zero, one of the ideas, if inflation is not a factor, then it could be an expression by the

bond market of concern that the fed is going to go too far here. >> does an inverted yield curve make you necessarily concerned about stocks there is research showing on -- after the initial date of inversion, it takes about 8 months for the s&p 500 to hit its peak and that peak is on average 21% over the last seven cycles or something like that, are you worried? does in a necessarily mean the death for this ralphly >> the point of it, when you get deep into a cycle, when capacity gets tight if the fed feels they need to slow the economy, they hit the breaks the main point is that when you

have more debt in the system, it's increasing risk so there's one other thing when the fed is raising short rates, it's creating a risk frias et that competes away in risk assets like stocks. if you have a stock portfolio and you thinkstock values are too high, we don't particularly think they're very high, but they're a little high, all of a sudden, you have a -- maybe a better risk adjusted return by holding some cash than keeping it all in the stock market that can create temporary drops, temporary recessions in the economy, but it doesn't ultimately mean the end of -- it doesn't ultimately mean that the economy has to buckle. it means that there may be more of a chance of volatility and some choppiness in the water and that's what we're preparing for. >> kevin, joe, robert, thank you. >> we went deep there, that was fun. here's what's coming up on

power lunch. mike pompeo met with north korean leader kim jong-un. what was accomplished and where does the u.s. go from here >> growing pains, it's the 112th an verse i of san francisco's great quake. could the city's buildings with stand another one? we'll try to separate fact from fiction ahead. stick with us on power lunch about people any 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 i'm not really a, i thought wall street guy.ns. what's the hesitation?

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welcome back president trump holding a working lunch with shin do abe set to start in a few minutes. one topic that is sure to come up, the revelation that mike pompeo travelled to north korea for a face to face meeting with kim jong-un. what kind of deal could on worked out if the united states and north korea come to the table. joining us now bill richardson a man who has been to north korea more than once good to have you here. you wrote an op ed that said kim jong-un won't give up their nukes. trump should meet with him

anyway >> i think kim jong-un and the president should meet. they could diffuse the situation, the only worry i have, michelle it's a substantial worry, the president keeps talking about denuclearization for the north koreans it means something different. for the north koreans it's possibly reduce them, find a way to curb their use. you're going to have to pay a big price, that's my only worry. i think this development of pompeo meeting with kim jong-un is good, impressive. it means the summit will take place. >> the president is hosting prime minister abe right now are we co order 2345i9ing enough with our allies when it comes to these future north korean negotiations and why is that important? >> we are communicated with south korea.

japan has felt they've been left out. they weren't happy with the steal tariffs, japan felt south korea was getting all the attention, we weren't consulting with them. so this is a way for the president to say to the japanese, look the nuclear umbrella, we're going to consult you, you're going to be protected. the japanese felt they had been left out and we have 50,000 american troops there. >> how worried or how important do you think it is -- how worried will the north koreans be that the president has threatened to pull out of the iran deal. has in fact pulled out of the paris climate accord has scorched ideas about the tpp, does that make him a

reliable deal partner in their eyes or is it different because this particular deal if there is a deal would be one that he, president trump would certainly get involved in negotiating? >> the north koreans are very tunnel vision oriented they look at themselves as along with the u.s., ironically is the leaders of asia. i do think did the president ops out of the iran deal, the north koreans are going to notice. one president makes a deal, the other president can opt out of a deal is this what president trump is going to do to us? the north koreans are very good at getting out of deals themselves have you to watch them, if we make a deal with north korea there has to be inspections by the international atomic agency or it's a senseless agreement.

i'm glad the cia can get someone in and out of north korea without anyone knowing he's going to be secretary of state. it shows that kim jong-un himself is deeply involved he is the nuclear negotiator, in the past, under the father he was a nuclear negotiator, it seems kim jong u.n. is the guy that's going to run the whole show for the north koreans >> it sounds like you're optimistic, there was a report out of asia saying the u.s. is seeing to seek denuclearization by 2020, i'm wondering what your reaction to that time frame might be, given the progress we have seen. i don't think anyone thought a year ago, we would be talking about the cio going into north korea having secret meetings with kim jong-un >> i never thought i'd hear you

say anything positive about the president. a 2020 denuclearization. it's not going to happen if they curb their weapons, stop the export of nuclear materials to syria, to chemical weapons, missile exports, you know, there's a lot of good things that can happen. releasing the three americans, the remains of our soldiers from the korean war you know, so -- i'm giving them credit i know you don't think i do, but i do, i think this was great the cia comes back, and flies somebody in and no one knows about it >> how prepared is san francisco in case of an earthquake some experts question the safety of the city's buildings. how much would you pay for this property we'll give you the answer next

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anniversary of san francisco's great quake some experts are worried building codes have not kept up with the times adedy roy is in san francisco with more. >> reporter: the brand new sales force tower, that opened for business in january. right now it's the tallest building in the city, can you see it's surrounded by a cluster of high rises, all part of san francisco's rising skyline many worry that's creating a crossroads of controversy. san francisco's skyline is moving up. 7 out of the 10 tallest buildings were built in the last decade real estate in the city is limited. tech companies expand they're building vertically. but with eight fault lines cutting through the bay area, some experts worry the explosion of tall buildings could make the

city unsafe during a catastrophic earthquake. the kuwait quake of 1906 hit the city 112 years ago today earthquake experts say even if buildings stay standing during a big earthquake, some may not be safe to re-enter >> a lot of buildings will be heavily damaged they can't use them afterwards. a lot more than if there are collapses. many, many more buildings will be red tagged or yellow tagged so you can't legally use them or there's some part of them you can't reoccupy officials tell me engineering is not a perfect science. and modern buildings are being built as well as engineering permits. >> aditi i want to talk about

another san francisco real estate story that involves a condemned building selling for how much? >> this is in freemont, california it says enter at your own risk, it's condemned it was listed for $1 million they were audacious enough to ask for cash offers only guess how much it sold for. >> 1.2 because that's what it says on the screen >> everywhere else in the country people would be outraged as they are probably watching this now we were talking about this in the newsroom yesterday, people were so unfazed by it that's how bad the housing inventory is the lot was 9,000 square feet. they're going to raze the house and build on it.

the land here is just gold >> remember those mobil homes lined up on the street >> the owner should tear it down and rent it to the mobil home guys >> a lot of money to be made >> thanks, aditi strong earnings for banks financials are still negative through the year, what's holding them back. maybe it's that yield curve we talked about earlier a rather unusual police chase involving a miniaturhoe.e rs the video straight ahead n't kno 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.

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hi, everybody, i'm sue herera, here's your cnbc news upgate at this hour. investigators are findi ining ps of yesterday's southwest plane

in pennsylvania. a federal appeals court blocking an ohio law that would block funding to 28 planned parenthood clinics they imposed unconstitutional conditions melania trump taking japan's first lady to historic palm beach florida's mansion. they toured the flagler museum, which was originally part of the whitehall estate president trump and shinzo abe are meeting this week. a train load of human waste from new york city heading to a landfill in parish, alabama. it smells like death, the stench is so bad, recreational activ y activities are being rescheduled. people are staying inside. i'm sorry i had to bring you that story i really am. but it's in the news, back to you guys >> thank you, sue.

i have no follow-up on that. >> there really is no follow-up on that. >> it has a very special name which i refuse to say on camera. >> we'll talk later. >> let's get caught up on the markets, folks the dow struggling to turn into positive territory basically flat right now, down 2/3 of a point shares of ibm shaved more than 80 points off the dow right now. the dow would be positive but for ibm's difficult day. steal stocks gaining with the xls on pace for its third straight positive day. we just heard steel prices are moving higher transports on a tear >> the transportation stocks up about 2% so that are today, the group is on a three-day win streak as well

shorter long term trend lines. that surge in the stocks today, thanks in part to better than expected earnings after the bell yesterday those shares on pace for their best earnings since last year. you got a look at the top two percentage gayners today, guys >> the oil market is close are for the day. >> big day for oil crude oil crossing the height for the first time crude and gas saw draw downs that were bullish. crude up almost 9% in the last month. retail gas prices are up as well that's higher by 32 cents when compared to this time last year. that's a big jump, guys. the market is seeing stronger

demand in terms of what they're balancing here than the rise in u.s. production. the good weather hasn't even started yet. >> here's a report from morgan stanley after recording profit and revenue for the first quarter. despite those solid results and a rising rate environment. financials are still lower for the year what's holding them back joining us now is jason goldberg thanks for joining us. >> morgan stanley is up a% here. generally the theme this season has been poor reaction to lower news >> buying the rumor, selling the news i think investors thought banks would have good quarters, which they did the stocks being sold off.

the two most factors we heard most often were the flat thing yield curve and then loan growth to that, we point out that the curve's been flattening for several years now. banks margin's have been expanding. as long kaz the fed continues to hike, which they're slated to do, we think there's room for energy margins and income to grow we look for pretty good improvement, you look at the weekly data from the fed, loans have been up each of the last 10 weeks. you haven't seen that since part of the financial crisis. >> right >> so while investors are not so thrilled today or tomorrow, we think the stocks will work overtime >> the beige book indicated the business district saw strong demand for loans in terms of your earnings model.

let's separate fact from fiction. there's so many people out there that say, it doesn't matter that the yield curve has been flattening it's been flattening for a long time in your earnings model, do you have a section nor -- for the spread >> banks are much more levered to the short end and long end. we would say three quarters of that sensitivity is tied to the short end and one quarter to the longer end it would be beneficial if the yield curve deepened the short end going off the long end staying where it is, banks would still do quite well. we think you'll see growth about in fact, we haven't seen three years of expansion since the 1970s. so this certainly would be a welcome phenomenon couple that with growth in the early part of the year

we think that bodes well for interest growth. >> it soundses like you're saying that the fundamental business of the banks is doing good this quarter was really, those blowouts were driven by capital markets activities i know morgan stanley saw the jump in fixed income you strip that out what does the difference look like >> if you think about it overall, credit quality continues to be really really benign these banks are actively repurchasing shares. we get the next cycle results in june, we think another heavy buy back, another 5, 6% of its shares revenues are outpacing expense growth the revenue side, with loan growth picking up, you're going

to get fairly healthy earnings growth this year and next, and that's even prior to the benefits of tax reform, which this group benefits from >> we'll see if the stocks respond. jason, thank you very much >> an unusual police chase in texas to tell you about, the tiny animal kept police busy friday night in holtham city in the end a 17-year-old competitive roper who happened to be on a police ride -- how really -- got out his lasso and caught the runaway little -- that's a horse, that's a pony, a miniature horse. >> where did the pony come from? >> we don't have that information. >> a little girl's's birthday

party? >> we'll have to get back to you on the origin of the pony. >> running away from the glue factory. >> another day, another headline on tesla's model three production if you're an investor, should you just tune out the noe.is the trading nation team takes a look next. hi! i'm mike ditka.

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time now for street talk we're taking a look at shares of tesla. tesla's aiming for a new production goal of 6,000 cars per week until june. is this possible, what does this mean for the stock joining us now is colin rush and matt delorenzo managing editor at kelly blue book this is interesting, because shortly after the company acknowledges a production shutdown all of a sudden this memo sent to employees leaks out a 6,000 vehicle target let's say they do hoyt it, does that change anything in your

model in terms of your expectations for a capital raise? >> no, first, we think the memo hit the media before it hit the employees inboxes. the real bottleneck is not the model 3 production, it's the bottleneck around the model three. the concern for us is about how many batteries they make that meet the specs we think they have a model issue they're accumulating batteries and hitting run rates on the assembly for the car after the fact that's the number we're going to be looking at the null run rate on the batteries, and that being the factor for those cars. >> does tesla know what it needs to know about production and managing production? or should they perhaps partner with somebody who knows production really really well?

toy quote that, general motors, whomever >> i think they do, they've been doing this stop start thing the batteries may have an effect on that, if they're going to hit a 6,000 run rate, they're going to need more people and better management to get that throughput they were getting volunteers off the model s and model x lines. to me, that tells me they're understaffed and the automation isn't working. >> that doesn't spell well for potential launch of a model why. >> we think the real issue underlining that is the creditors. they promised they would reach profitability within a couple quarters, that's not the case. the cash needs from the ongoing development, the capital they need to spend to get to the 10,000 unit run rate, which we don't think they spent all the money, and the cap x from model

y is a big number 37 creditors have to be concerned about what the impact is on the stock with the delay of the model three, and their ability to raise money to serve those bonds >> colin, matt, thank you. michelle netflix shares hitting an all-time high today. one analyst says the stock has gone parabolic what does it go from here? don't move

time now for trading nation. netflix having an all-time high earlier today. it's up 10% in the last week 75% so far this year the best performer in the s&p 500. is it too late to buy in katie stockton is with boris sloshburg. it has been at the top before and that's where it stands now >> netflix is an outperformer. it's an established leader and does have strong positive momentum if you look at the chart here, it has accelerated recently to

new highs. that gap we saw just a couple of days ago is a promising development. it does suggest the uptrend is sustainable and you could arrive at targets that are several percent higher from here based on projection called a measured move really just assuming the same trajectory of the trend will maintain itself. so it still looks good to me from a technical standpoint. as you can see the relative strength, the ratio of netflix versus the s&p 500 is also quite strong there is that out-performance and shows no signs of exhaustion >> a bullish pair of charts there. boris, on the fundamentals, valuation never easy with this one because of trades on subscriber growth. >> right >> you think it should be at the same market cap about where it is right now as disney >> so i think the concerns are well founded yes, equity ratio, massive increases. but consider this. this a company that is in 200 countries already.

it's doing native content in 217 languages. i think the competition from disney is a nonstarter it's doing things that are unique now, it could pull back very easily the shorts could be right. 25, 30% from here. but long-term, it's easy to imagine that netflix could have 200, maybe a quarter billion subscribers in five or ten years. that will make all these problems go away short-term, yes, there's volatility in the stock. >> all right we're going to have to pause and go straight to the president and prime minister abe in mar-a-lago >> -- i got elected and right from the beginning we hit it off. we talked north korea, covered that yesterday a little bit today we're talking military and of course we're talking trade we're going to be doing now mostly is trade. as the prime minister knows they've done well with the united states. we have a big deficit and we're going to weed that down.

hopefully get a balance at some point in the not too distant future but we have a massive deficit. i know they're ordering large numbers of airplanes it's in the tens of billions of dollars. they'll help with the process of equalizization this is an exciting meeting for me i like this world the best i like the world of finance and economics. it's probably where i do the best but we will be able to work things out i'm happy to have larry kudlow with us. he's a special man he's been a friend i've been on his show many, many times over the years we've had a lot of fun together. we haven't always agreed, but i notice lately larry's agreeing more and more with me which makes me quite happy and john bolton, john was very

much involved yesterday with our meetings on north korea and our meetings on the military it's great to have you with us >> thank you >> mr. prime minister, thank you so much for being here and your representatives. the relationship has been so good with all of us. let's see how we do with the trade deficit. thank you for being here. [ speaking japanese ]

>> once again, president trump meeting with prime minister of japan shinzo abe there in palm beach at mar-a-lago owned by president trump. president trump bringing up the trade deficit as he always does. according to the u.s. trade website from the government, $68.9 billion with japan in 2016 when it comes to the goods trade deficit. of course always debatable as to whether or not that's actually a number we should focus on. >> shinzo abe saying how much he

likes larry kudlow, also that was a big part of his remarks there. and how he actually larry agrees with him too and that selling advanced military aircraft to japan would not only be good for japan, but good for america and help redress the president's obsession, let's call it, with trade deficits. >> and sitting next to him, the man who just went to north korea, we discovered this morning. mike pompeo. you get both with this guy, right? because he is set to fill in for tillerson. >> it sways people's minds in terms of people had before had concerns about his hawkish statements in the past whether having not been sent to north korea successfully completing this and could make people more in favor of him. >> especially those looking at

him for confirmation >> they may have more in common with north korea than they do on trade. obviously the japanese rightly are very, very concerned about a nuclearized north korea. obviously already is a nuclearized north korea. but as i think michelle you were saying yesterday, virtually every one of the missiles fired has gone over japanese territory. >> all right thanks for watching "power lunch. >> "closing bell" starts right now. hi, everybody. this is "the closing bell" at the new york stock exchange. i'm kelly evans along with scott wapner. >> good to be here thanks so much we are welcoming you to the final hour of trading right now, but are we going back right now to mar-a-lago and the president? all right. there's no q&a there, but you heard the president speaking there at that working lunch with the japanese prime minister sh