Skip to main content

tv   Power Lunch  CNBC  February 4, 2019 2:00pm-3:00pm EST

2:00 pm
that's not a good long-term solution we need a permanent foundation for housing finance which touches 20% of the national economy. >> we'll see if we head this way. thank you so much for joining us pretty much better insight than anyone else on this. that does it for "the exchange," everyone i'll join tyler and melissa in just a moment on "power lunch" which begins right now i'm melissa lee with tyler mathisen backlash over buybacks should there be limits on what corporations do with cash? plus, a big move in bonds signaling stocks or a painful u-turn pats are super bowl champs, you know that but crown the cnbc stock draft champ. the winner and jim cramer will join us live "power lunch" starts right now >> thank you very much, melissa. i'm tyler mathisen welcome to "power lunch. stocks near session highs. s&p 500 for a fourth straight
2:01 pm
day of gains nasdaq the biggest at this hour, up 1% even crude oil hitting the skids and natural gas dropping to the lowest level since mid april as you see there. big story brewing in washington sparking fear and anxiety on wall street with enormous potential ramifications for american business. a major fuel source for the stock market rally over the past ten years and your investment. senators chuck schumer and bernie sanders, they're not the fuel but out with a new op-ed in "the new york times" today they want to prevent companies from buying back their stock unless those companies invest more in their employees, their communities, their businesses. bob pisani at the new york stock exchange with the buyback stats but let's begin with ylan mui in dc >> senators say this isn't just talk but aiming to get a vote on this new plan to put tough restrictions on corporate buybacks now, this bill would ban
2:02 pm
companies from buying back stock unless they can provide certain benefits to workers. a $15 minimum wage seven days of sick leave, pension and health binenefits as well in the "new york times" op-ed, they should, americans should be outraged that these profitable corporations are benefitting the wealthy few. the white house is not a fan of this idea. on cnbc earlier today and accused democrats of playing politics >> i just think some would explain how buybacks work. it's disappointing that over and over again, i see the democrats pursue really economic i illiterate proposals because they sound good politically. >> it sounds similar to what bernie sanders said in the fall, applying to walmart but any company with at least 500 workers. these senators may go further than this, considering using a
2:03 pm
tax code to limit dividend payments as well i'm sure we'll hear a lot more proposals like these headed into 2020 back to you. >> ylan, thank you down with a closer look at the biggest culprits in the buyback binge, bob >> telling corporations how they should spend their profits is not going to go over well on wall street. but these arguments really are fairly old so schumer and sanders say of the roughly $8 trillion in corporate profits made between 2008 and 2017, 53% went to buybacks these are the profits. 30% went to dividends and only about 17% went to capital expenditures and other forms of reinvesting in the business. corporate america's response to these accusations in the past is that buybacks and dividends have been the most efficient use of capital. implying that opportunity to grow the size of the businesses had been fairly limited in the last decade. 2018 was a record buyback year topping $1 trillion and while
2:04 pm
some companies like ibm, exxon and here you see in particular, ibm, big buyback monsters, they have significantly reduced their share count size by buying back stock. the total shares in all the companies and the s&p 500 actually should remain fairly constant at a little over $300 billion in the last decade why is it going down well, both companies issue sizable stock options to their top management that eventually increases the shares outstanding so the buybacks often just reduce the share's outstanding the same level as it was before and this is one of the arguments that, again, enriches the management at the expense of everybody else. >> robert, thank you very much is buyback regulation good or bad idea talk about it with andy green, managing direct for and james petekukis. let me begin, andy, with you do you think the approach of mr.
2:05 pm
sanders and schumer is the right approach is there a problem with corporate boards and companies deciding to buy back their own stock to decide what they want to do with the capital >> yeah. i'm generally in agreement that there is a lot of pressure on boards and executives, in fact, coming often from executives themselves to pay out more money to the shareholders and their executives and there needs to be a lot of other countervailing forces to make sure that boards and companies are focused on the long-term needs, their workers, their communities. and things like this buyback legislation appear to be one part of the puzzle not going to, on its own, solve the whole problem but a wide ranging set of forces that will counter the very, very powerful pull of 1% on corporate earnings >> okay, jim let me get you to respond here and to address particularly and i like to have andy do it as well if you went ahead with this kind
2:06 pm
of proposal to limit buybacks by forcing companies to quote invest in their communities or pay a certain amount to them, what would the the right amount of reinvestment in the community be and who determines that jimmy? >> oh, i don't know, perhaps it will be a new corporate reinvestment board, but focus on what this argument is. senator schumer, sanders, said this has been a long-term chronic problem. so to believe this argument, you have to believe for decades, american corporations have been engaged in self-sabotage where they have chosen to not invest in the future of their companies and i would think if that were true, some of the worst companies in america would be american companies, after decades of not investing in their workers, not ninvesting an
2:07 pm
in actuality, america has some of the best companies in the world and highest ratios and highest profitability. you know, these same people also hate the big tech companies which do tons of investment. there is no evidence here that american companies have been underinvesting in fact, the business investment as a shared gdp is high as it ever was this is a non-issue that maybe it's good politically but there's no real evidence here. >> andy, isn't this sort of a back door way of making s&p 500 companies publicly traded companies pay a higher minimum wage if there is real political will to do this, why couldn't they raise the federal minimum wage in congress? they can't right? there's no political will to do that they wouldn't be able to get that passed. >> look, if we can't raise the minimum wage, i don't think we're going to pass a bill like
2:08 pm
the one schumer and sanders approached it's a series of things that proppr provide countervailing force from the pressure that exists. >> there's no evidence this pressure exists. >> there's plenty of evidence. >> where's the short-term? hundreds of venture capital. america's most successful companies spend billions and billions on rnd. this is a fanciful issue >> what i'm saying is something different here for the last 30 or 40 years, we have dismantled tons and tons of the powers that used to exist that created a middle class in america. unions and collective bargaining things like the minimum wage have gone down in value. financial regulation, anti-trust, even the 2017 tax bill by the time the 2017 tax bill was done and implementation, 80% have gone to the 1%. we have seen a massive power shift in this country away from the middle class, workers and communities towards the 1% and there's plenty of companies doing just fine under that
2:09 pm
i'm not arguing that point i think they can do just fine like they did in the 1950s and '60s and '70s when they're actually competing, innovating based on rising demand >> most are poorly -- most american companies are poorly governed and they're engaging in self-sabotage by not investing in the future. that is the argument here. that's the schumer argument. said this is causing long-term damage to the companies that's been going on for decades. where's the long-term damage to corporate america? it doesn't exist >> the major threat right now to corporate america is from middle class collapsing and workers being terrified. we have rising authoritarianism. i think we need to look at the real crisis. the opioid >> let's talk about the -- >> the opioid crisis
2:10 pm
>> on that point about whether companies are investing, what does the research show >> the the research shows that business investment is at historically high levels the research shows that public companies, the kinds of companies really under threat from these evil shareholders actually invest more than private companies who are not under threat in their shareholders a great federal reserve study out august that said this. listen, i've taken a long look at this issue over the years i thought there might be something to it. as the evidence comes out, year after year, there just isn't >> andy, you could also say you could cite many of the evils of the country and have a source very different than corporate buybacks >> i'm not going to say corporate buybacks will solve our entire problem but they are evidence of the reduction of economic forces in this country that used to pull the earnings from the economy out of the hands of the 1% and into a more broadly distributed set of hands. >> broadly distributed, andy, to shareholders who receive the
2:11 pm
capital and then are free to reinvest as they choose. tyler? >> why shouldn't, i mean, i'm not going to dispute that capital broadly defined as done better than labor over the past 35 or 40 years i'm not going to argue that point but i am going to question why the owners of capital as represented by the boards of the companies that those owners are shareholders in, why they should not be able to deploy capital as they see fit in the way that benefits shareholders best isn't that their fiduciary duty? >> i don't understand how that would limit their possibility. there's still plenty of ability to provide vidividends and othe things. >> it's conditioned on -- >> right. >> and limited by the proposed legislation and the proposed legislation hints at the idea of capping the amount of dividend
2:12 pm
that can be paid the shareholders profits >> let's not jump to conclusions about what the ultimate legislation is doing it's different than changing the tax rate on the dividend it is absolutely the case that we need our companies to be making investments in the future we have an economy that is powered by productivity and i absolutely believe there are shareholders, there are long-term shareholders that have a very important role to play, many of whom are pension holders and union holders themselves what are going to be the forces that are pulling out of the 1% into the middle class? >> search for a problem. >> we have to leave it there guys you both made your cases forcefully and well. we appreciate it we'll probably revisit this, later today, i suspect >> when it gets proposed. >> the whole thing, two democratic senators and of course, mitch mcconnell has run the senate in such a way, he
2:13 pm
doesn't bring up any bill that he doesn't like or, "b," that he doesn't think will get a presidential signature >> changes over, this gives you a sense of the kind of policies that might genuinely be on the table. >> you're right about. >> this is a proposal that tests the political wind it gets out there and speaks to the democratic base, so this may not be a proposal to actually be passed at the end of the day >> not in this congress. stocks at session highs right now. dow up triple digits remember december? seems so long ago. s&p 500 falling almost 15% from the first until christmas eve. a lot of that on recession fears. so a recent snapback assigned no one is worried about a recession anymore. plus, the 2018 stock draft is over and we're about to crown the champion we'll hearrothwier ming up on "power lunch.
2:14 pm
2:15 pm
2:16 pm
it may seem a long time ago now but the pre-christmas sell-off sparked by a fear of a recession. is this a sign those fears are over steve liesman has been looking at that for us what did you find? >> fickle markets but the data
2:17 pm
may be more consistent the december downturn forecast is coming, that suggests it didn't start at least in january. hfe writes, what slowdown? j.p. morgan sees some slowing but says things could pick up now that the shutdown has ended. talking specifically about business survey data that's improved lately. j.p. morgan does see gdp slowing to 1.9 and the consensus on the street is for a somewhat weaker quarter. here's the cnbc rapid update 2.5 tracks on the fourth quarter and still above trend. and then 2.2 in the first quarter of this year no tracking data for the machine right now. not the only strong data last friday manufacturing, up to 56 consistent with strong growth and another strong jobs report like january and growth forecast will tick back up, especially if turns around troubling news from the fed in the last little bit.
2:18 pm
the senior loan office released a significant number of banks tightening lending standards for commercial and industrial and some less alone and that's the kind of stuff that could have an impact if it does come to fruition and morgan stanley in a report i was reading is expecting something of a sharper downturn this year and their whole story is fiscal stimulus running out and that's a huge question that i have economists on both sides of that debate this year. >> for the next segment to talk about, but never mind. thank you, steve we're around session highs right now. stocks and bonds rallying together and that usually doesn't happen is the move in bonds signaling a u-turn is ahead? the portfolio manager with gradien investments. whether that's changing right now and maybe fiscal stimulus but is the keyword patience? just the fact the fed said they'll be patient and they're
2:19 pm
not doing anything for many months no matter what the data says >> the fed can be patient, kelly and i think you read the situation where the fed by being patient, pausing, not increasing interest rates, can continue to cycle a bit longer but i don't think they can prevent the recession, put it off to the middle of 2020, that's probably the most they have done. in terms of the jobs numbers, take a look. january was supposed to be very good at 304,000 but the december figure was originally 312,000 and it was revised downward by 90,000 to -- >> very strong still for this pace, we only need to add like 75,000 jobs a month to do well. that was much better. >> that is true but what you did have and what december showed is a big division in the whole year and the second part is that this january, you were doing it with
2:20 pm
a lot of shutdown and i expect that number also to be significantly divides down the only aspect is the 0.1% increase in average weekly earnings that we saw this month and at this time, that to me is a more important indicator of economic slowdown than the number of people employed. >> are you as cautious about the economy as sri >> i don't think so. i think the lower interest rates is very positive for the housing market and for autos which have been a concern of late i think the u.s./china trade agreement will lift the uncertainty that has been keeping businesses from taking on the loans and doing the expansion that they'll probably have to do so just looking out for the full year, we think that earnings growth this year will probably be about 8% and with the better,
2:21 pm
lower interest rate environment, we'll have an expansion in that p.e. multiple and probably get 10% for the full year in the stock market >> what point do lower interest rates signal something nefarious in the economy we've had three consecutive monthly declines we haven't seen that streak since 2015 when there's a china slowdown and the markets here in the united states also turned. the muscle memory of the market is to go back to that time, but it's not a concern of yours to see this ten year yield declining in the face of what you say is a strong economy? >> we see the whole yield curves shifting down together, so there's not an inversion going on and so we think that the lower yields will just be better for the economic environment and for those stock valuations as i said, but it's not disheartening to me, in fact, to see the interest rates come back in,
2:22 pm
should prop up the confidence. >> 40% over the summer and weakening significantly, if you look at what happened september 2015, we were all set to increase interest rates for the first time since the financial crisis the jackson hole meeting in august had basically signaled and we postponed it. so what we are trying to show is that the bond market has been a better predictor even more important, if you look at the great recession, november of 2006, the ten year yield, actually, the yield curve inverted and we had the recession start exactly a year later the stock market was rallying into the first half of 2008.
2:23 pm
prices peaked at $145 and the european central bank thought the global economy was very strong anything but increased interest rates, have to backtrack later on the message is look at the bond market, don't trust the market in forecasting the economy >> mariann, do you want to respond to that? >> i would say exactly right and we try to do grassroots research and look at things that are happening really at the grassroots level in order to, you know, confirm or predict, so what we're seeing at the grassroots level is pretty positive but i would say right now, we're just trying to figure out what that slowdown in january with the weather, what kind of impact that had and hopefully, we can put our finger over that part of the chart and just move on, you know, with spring because really, like for retail sales and restaurants,
2:24 pm
january, end of january is not very important we'll continue to watch from the ground up. >> mariannsri, thank you. we'll explain and it's been a rough run for nvidia down 40% in six months but the stock leading the chips higher today so is the worst over there the earnings parade after the bell what you need to know before google reports today that and more coming up on "power lunch."
2:25 pm
his family. his steinway, which met a burst pipe. so grant met his insurance: you are caller number 12. which didn't quite cover the steinway. but what if he'd met pure insurance? owned by members. he'd have met: lisa, your member advocate. who'd introduce him to gustav: leave it to me. a temporary address, temporary ivory, and help him get tickets to the mozart festival. excuse me, grant likes beethoven! uh, the beethoven festival. pure. love your insurance. ♪ ♪ our new, hot, fresh breakfast will get you the readiest.
2:26 pm
(buzzer sound) holiday inn express. be the readiest. has been excellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today. ♪ yeah, i've had some prettyeer. prestigious jobs over the years. news producer, executive transport manager, and a beverage distribution supervisor. now i'm a director at a security software firm. wow, you've been at it a long time. thing is, i like working. what if my retirement plan is i don't want to retire? then let's not create a retirement plan. let's create a plan for what's next.
2:27 pm
i like that. get a plan that's right for you. td ameritrade. ♪ nvidia trying to put last week's troubles behind it. the continuing rebound from the massive decline a week ago nvidia burned last monday after cutting guidance for q4. eddie and sanchez to figure out where it might go next this stock cut in half over the course of three months is this rebound just kind of a reflex bounce or do you think more repair is happening >> i think this is going to take
2:28 pm
longer to play out down 50% and retraced 62% of its prior bull market. looking at the chart, that level lining up with the low at around $2500 would make sense but, however, we want to see more of it with the stocks 200 day moving average, trending lower and well above current price level. i think upside is limited to the november gap at around 185 basing, yes, more ahead. >> gina, one of the growth stories in chips is 40% or 50% sale on it is this something for a patient buyer right now? >> i think this is up in line with the s&p but no more i really don't see this as an interesting buy at all here because you still have significant slowing in the cloud market you see not only nvidia but
2:29 pm
across chip makers and also was the darling of the crypto craze which has now fallen off so to expect that will not have an impact on nvidia's earnings over time, i think this is the stock to stay away from right now. >> even if it's basing, it might be take a little while that seems to be the consensus ari, gina, thank you very much for more "trading nation," head to our web site or on twitter. over to sue herera for cnbc news update. >> here's what's happening at this hour. a judge has been giving instructions to the jurors at the u.s. drug trafficking trial of el chapo. they'll decide the fate of joaquin guzman after hearing three months of testimony. 21 savage taken into custody by u.s. immigration and custom enforcement officials. authorities say he's a british citizen who overstayed his visa that expired in 2006 after
2:30 pm
entering illegally in 2005 bank robbers use a heist technique usually reserved for movies dug a tunnel system that connected to existing sewers undisclosed amount of goods from safety deposit boxes who doesn't like puppy video take a look at that. over 1,000 golden retrievers getting together in, where else? golden, colorado, on sunday, it was celebration of international golden retriever day it was also a new world record for the most goldens gathered in one place at one time. there you go, back to you. >> but they get sick, right? >> don't all dogs get sick >> they don't have very long life spans. >> they do but there's a concern their life span is shortening a little bit they used to average between 10
2:31 pm
and 12 years and now closer to 8. >> wow >> but they're so worth it they are adorable. >> way to be a downer, kelly >> cute dogs, but they die fast. >> every time i see one walking on the street too. anyway, sue, thanks, sue herera. ahead on "power lunch," unveil the 2018 stock draft winner it was a blowout the champion will join us live plus, wihat a crucial component is signaling and alphabet after the bell latest earnings. be right back. >> and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> a good first step of any risk management strategy is to determine the amount you're willing to risk on any given trade. some traders use the 2% rule where they try and limit their loss on any given position to no more than 2% of their total trading capital.
2:32 pm
2:33 pm
2:34 pm
it is now time to crown the champion of the 2018 stock draft. after nine long months, we've got a winner and also a host of,
2:35 pm
well, losers too and that's where we will begin. todd flash scored and thought he struck gold with bitcoin and struck out his pick down 30%. he finished dead last. last year's champion, kevin o'leery, he didn't repeat. blue apron dragged him down. down 10% in fifth place. on the plus side, another strong performance from the beards town ladies, up 3%, doesn't sound great but a lot better than the s&p 500 over that span they finished in second place and the winner is, a kicker. nick lawry takes home the win of the 2018 stock draft on the back of amd which doubled during the context, worth noting that amd was the second to last pick in the entire draft here now is our stock draft 2018 champion nick lowery with jim cramer and maybe a position for next year.
2:36 pm
your chiefs didn't make it to the big game but you did today get to raise a trophy with the win here congratulations and must feel great. but i want to get down to brass tacks. how much of your happiness today is the fact that you rested the trophy away from mr. wonderful >> it just makes it extra special. what can i say you know, mr. wonderful will always be mr. wonderful but he's just going to have a little bit of a sad face for a couple of days but it was fun. you test yourself against the best kevin o'leary is a standard with the insight and interest in chemistry. it's a lot of fun to beat him. >> next to last pick in the draft, that reminds me of a player named brady who was picked in what, the sixth round of the draft >> exactly. >> the other thing that's interesting is that a year prior in our, in the earlier edition of the draft, amd was the choice of charles way, another football player from the giants and it was what was the weight around his ankles
2:37 pm
so you got it at the right time. it shows you that timing matters here >> timing is everything. i like to think that amd is like julian edelman, right? and perhaps amazon, which was my first pick is like bill bill belichi belichick, got core values and looking for intelligence and talent and look at edelman, a quarterback in college who knew he could be that threat but had that too look at intelligence and talent. that's what amazon and jeff bezos have done. look for intelligence and talent and filled this company with incredible core values and then, of course, with goldman jacqusa, it's like robert kraft, their dominance in mergers and ak we sig -- acquisitions. you'll see a lot of $100 billion mergers from goldman sachs robert kraft is the owner that
2:38 pm
establishes the core values that sometimes invests money more than they actually have, knowing in the long-term, you build a champion >> jim, i like what tyler was saying about the timing of this is everything. >> congratulations, of course, to nick. i've got to tell you when i was listening to what you say about edelman and amd, the ceo, one of the people you can tell us what this means because you're from the nfl. she's about getting the assignment done and doing her job. and that is exactly what belichick is taught, right >> the other thing is for everybody listening, to me, to have the persistence and the endurance and the character to tick with it, to get it right, to have your standards and never compromise even though they were late on their cpu chips, microchips, they weren't ready a year ago, they were ready now and killing intel. so here's the big news in the next year, they're going to be taking more and more market share from the big giant
2:39 pm
intel. that's an achievement and it's only because lisa sue, we affirm their balance and persistence to get it right. >> let's talk about last night's game i know you're disappointed the chiefs didn't make it. that's an exciting semifinal there. there have been three or four. >> and it would have been more exciting game too, right >> might have been but three or four very exciting super bowls in a row this one, not so much. there was not much offense there. at all >> great defense great defense. great defense. but it looked like jared goff was just not ready for primetime and he's a talented guy, and looked like sean mcvay, indeed one of the great new coaches, no innovation, no movement. the thing that andy reid had with patrick mahomes was movement before the snap to allow the team to see what the defense is going to do they had no movement they had no imagination or creativity and it's too bad. it was a very close game for the
2:40 pm
final four minutes but in the back, bill belichick, intelligence, talent, character, in the end that's what wins. >> thank you so much nick lowery, 2018 stock draft champion we want to get some advice for positioning in the next draft. for that, go to jim cramer >> it's something, melissa i was there when mr. wonderful picked blue apron and he told me, look, how can you lose with a couple dollar stock? my lesson to people out there is look at how you can lose he lost his crown because of a couple dollar stock. how much is there to lose? there is quite a lot and i want to emphasize that. i happen to like cannabis, but the cannabis stocks are like, how much can you lose? canopy is good i actually want to be more cautionary blue apron, please do not confuse these stocks with intel.
2:41 pm
do not confuse them with proctor and gamble >> these were all equally weighted we're talking about goldman up next to blue apron, someone said, okay, it's just a couple of dollars of my huge portfolio next to these behemoths. >> it's so right a lot of people do and weight it i'll put a lot of money in blue apron. in five days, kept buying and buying and three years, we bought it and bought it. and then went back, it was worth nothing. but kept saying, how much can we a million shares, let's buy a million shares when we were finished, a million here, million there, a lot of money. >> you could lose 100% of $2 >> mr. wonderful did not pick the right risk/reward but a very nice article about it. >> in terms of timing, everything is all about timing so at this point, if you were to pick a portfolio for the next
2:42 pm
stock draft, would you rather the losing portfolio, bitcoin and nvidia and netflix or winning portfolio, amazon, goldman sachs? >> i like every single one of those. i think they can work their way back to 30 and goldman sachs, putting out individual money, that's actually good, not bad. the market interpreting that and amazon, look, i think it's going to end up down today but down 100 points now everybody hates it amazon, they've done absolutely nothing. last year, this team lost to the eagles did they come back and just do the same thing no they innovated, innovated, innovated. the only thing -- >> embraces change. >> which one of these is tony romo and i don't know he turned out to be the only real bankable guy yesterday. >> he was here >> he loves this, by the way >> romo was amazing. really good. >> he probably kept more tv sets
2:43 pm
on single handedly >> one guy and his name is kevin on radio a little bit of westwood he can make a dull game come alive. there is nobody else >> listen to the radio on the way home, it's fantastic >> let me get your thoughts on the schumer/sanders, not wealth tax, but position of rules on buybacks. >> i think that when you're on these, and it's nobody's desire to make that the number one % priority it's always, listen, we love to innovate, we love to expand. a lot of companies just don't have a chance to innovate and expand they're kind of tapped out so they end up buying back stock. but like clorox, they bought back stock and innovated they do the right thing. i think if you really wanted to do the good thing for mankind, so to speak, take that one, 1% of your time or money and the company gives 1% and given away several hundred million dollars
2:44 pm
and i think that's a better thing to do. >> the money internally should go to the workers, jim, instead of to the shareholders >> i've always felt that it was a shame that the fed chair is upset the workers are making a little bit more because it's finally happening. there's been a lost generation i think it's great that the workers should be paid more but no unions and the only thing you have is mobility we know that you can go somewhere and make more money. >> you're saying it happens organically. >> yes look, i was going to say something bernie sanders is not, but that's what trotzky favored. the workers should own the means of production and i'm not saying what the flcio wants but in this current generation when you hear what they're saying, it sounds like trotzky they're trying to make it so the workers make more but that doesn't fly this our culture anymore. >> having employees on board >> that's another thing that doesn't fly. it's just not going to happen.
2:45 pm
what would have been better is, here's a code of priorities and you should do this because otherwise we're not going to give you another tax break but i find there are people like, look at the mission statement from sales force. everyone should go google. it's about making mankind better not more spiritual but ethereal. and end buybacks what you do sen courage compaiso have a higher mission than making money for shareholders. so well for the stock, don't we have to think because they attract the right talent when i got out of school, how much money can i make. when you meet these people now, when do you want to save the earth? there's a lot of things past money. >> thank you, jim. >> thank you >> kramer, and of course, he'll have the ceo of clorox benn
2:46 pm
bennbenno do benno dorer. 2019 draft is a couple of months away. april 25th 2:00 p.m. on "power lunch" but don't worry, we'll remind you often. >> incessantly. >> every day, probably >> let's go out to the bond market where rick santelli as usual is tracking the action in chicago. >> good afternoon, tyler one week of tens boy, do we have a quick ten basis point reversal 2.72 opening it up today we're within striking distance but it's not that way around the globe. whether you look at yields, look at this chart going back to october 16 you realize on friday, if the lowest yields since november 16, at least soft on yields. the 10 year, also, fridays close at 55 basis points the lowest going back to november and only bounced 3 basis point today and finally,
2:47 pm
the lqdtf, the investment grade, the best level since february. and the reason that that is so important is because at the end of the day, the securities market spreads are narrowing this is a green light. things are calming down. just look at the vix tyler, back to you >> mr. santelli, thank you very much we continue to talk to jim here because fascinating stuff always one economic indicator you might not be familiar with frank holland is live in toledo, ohio he found the indicator there he's got his eye on big rigs frank? >> 70% of the things we buy in the stores are delivered in trucks like these. at cinupary numbers. th'somg on "power lunch. lunch. see you thenuction. ♪ ♪ let's go from being on-call... ♪ ♪
2:48 pm
to bne. american express can help move your business forward with loans, vendor payments and buying power. chat with one of our 4000 specialists and let's make it happen. the powerful backing of american express. don't do business without it.
2:49 pm
the powerful backing of american express. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside...
2:50 pm
...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react... big rig orders have long been viewed as an indicator of where the economy is going a sharp decline in december and an expected decline in january but frank holland is telling analysts for a different story frank, are you in that truck >> reporter: kelly, i'm driving
2:51 pm
it nobody else in here but me doing it by myself. >> do you have a license for that you are not going very far. >> not moving. >> reporter: let's get down to this report. new orders for big rigs, could be misleading. as you mentioned, three months of declines are expected when the final january number's reported, very shortly, and many people see this as an economic indicator because 71% of the things we buy in the stores, delivered in trucks like these, big rigs or tractors or whatever else analysts say that decline is due primarily to a record number of orders in 2018 and the backlogs currently sitting at a 25-year high right now the wait for a new truck is at least nine months. in fact, that wait is so long to so many truckers and companies, dealers like here in toledo where we are who let me drive this truck, saying a lot of customers buying stock trucks off the lot. that's certainly not the industry preference.
2:52 pm
more proof that demand is still high used truck prices spiked 28% in 2018 volume's almost the same amount and they expect the economy to keep on trucking sorry for the bad pun. again, the final january numbers, expected very soon. >> frank, we appreciate it will you pull the thing? do the horn. can you do the horn? >> reporter: i don't think they have them in here i didn't mean. i was looking for them for a while. i'll look around and just breaking stuff. >> we'll come back for check please. >> doesn't have a horn. >> come on. >> we'll come back and have you blow the horn. frank, thank you very much you have about three minutes alphabet ready to report after the bell let's dig deeper into what to expect with an analyst at jeffries brent, welcome good do have you here. what are you looking for you have a buy on the stock and a price target of $14.50 what are you looking for when the company reports today? what could be the soft spots in
2:53 pm
the report >> yeah. i think the street's looking for close to 19% clothe. $11 in earnings. we think the core search business remains strong. you have seen the other ad names, facebook, do well amazon in that business. and then around hardware, aon the mouse, youtube and the home we think is emerging this is one of the cheapest names at ebitda of the big tech names, only single multiplier on ebita and we believe amazon is not killing the core search business number one question is taking the share of goog sle we think absolutely not. we remain very encouraged by the position and what we think will be good results. plus you have 115 billion in cash the buyback's expired. we think google could buy more stock back and they haven't been
2:54 pm
active in m & an in four years i would be asking them to them give me the cash back. >> all right so you do not see google as under threat in the advertising world from the likes of amazon or facebook. you just think the pie's going to get bigger and they will have commiserately larger revenues. >> exactly going to a trillion dollar industry in advertising, half online and half offline, it's a tailwind for all of them thinking of amazon's ad business has the most momentum, best growth makes sense. you are right at the checkout. but every day we're going to continue to use google for core search, maps, for all the technology that they're delivers we don't think that core proposition's going away so we think, you know, like facebook, going into the print was effectively the most hated of the fangs we think google's in the middle
2:55 pm
only amazon and facebook but we don't believe the core is under as much duress as the street believes. amazon will benefit. >> they pay for traffic r. the expenses rises in an alarming way? >> they willcontinue to rise but i think as google puts more hardware in your home and more phones and more devices out there, effectively over time they can mitigate that because it's their platform and we think again there's a giant subscription model i subscribe, 35 bucks a month and thinking about the recurring revenue for them, we think there's recurring subscription business that will be helpful to advertisers off the new nu initiatives to launch. we don't believe that this is just the company that's search built. we think there's new initiatives that are under way that they're
2:56 pm
not getting credit for. >> thank you very much and happy you watch cnbc any way you can get it, baby, we love this. >> thank you. check please is next we'll see fnkou tifra fndhe horn so, servicenow put your workflows in the cloud, huh? mmhm. your employees must love you. [ chuckles ] thank you. you could say that. i love you. servicenow works for you.
2:57 pm
incomparable design state of the art technology makes it brilliant. the visionary lexus nx. lease the 2019 nx 300 for $339/mo. for 36 months. experience amazing at your lexus dealer. sometimes, they just drop in. obvious. cme group can help you navigate risks
2:58 pm
and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪ check please ♪ >> all right let's go back out to toledo.
2:59 pm
frank holland has been looking for the missing horn on the big rig that he was piloting there frank, what can you tell us about the missing horn >> reporter: tyler, i went old school i thought it was a pull horn and notified that this is 2019 the horn -- right there. >> why are the windshield wipers going? >> center of the steering wheel? >> reporter: yeah. the most obvious place to look, yeah >> well, thank you, frank. >> i did figure out the wipers. >> we're delighted that you were able to find it. >> one more beep. >> listen to that. >> not as deep as i'd like. >> did you have to take a course to drive that truck, frank >> reporter: a crash course, yeah absolutely. >> a crash course. okay. >> we fit in the curriculum and behind the wheel now. >> all right >> all right, frank holland, thank you very much. frank on the truck beat. >> hard to top that live shot now. >> absolutely. especially with the horn stock draft.
3:00 pm
that was fun already looking ahead to next year what stocks should we include in the draft? >> we can solicit ideas. >> cannabis i say. >> probably some commodities. >> how about berkshire >> sure. all right. >> we'll get the suggestions in. thank you for watching. >> "closing bell" starts right now. ♪ good afternoon welcome to the "closing bell." i'm wilfred frost. >> i'm sara eisen. we are an hour away from another round of big earnings. we'll, of course, break down the numbers as soon as they cross. big question on alphabet, can it keep the tech earnings going >> economist david rosenberg will join us we'll ask him if he is bearish after the big january rally. starting with an s&p 500

157 Views

info Stream Only

Uploaded by TV Archive on