>> i think there would be a big surprise if the president calls for a permanent dacca in exchange for a border wall or calls for indexing capital gains to inflation tonight both of those will be big events >> thank you, dan clifton joining us i'll join tyler and melissa on "power lunch" which begins right now. >> yes, indeed, you will we'll see you in a moment, kelly. welcome, everybody i'm tyler mathisen with melissa lee over there president trump set to give his state of the union speech. we'll tell you what's on the agenda, what to expect tonight stocks pushing higher but are gains for 2019 mostly in the rearview mirror? we'll tablglook at that 190 miles per hour and 200,000 price tag. it's the family car for the 1% or higher. you'll be surprised who is fueling demand for this vehicle right now. "power lunch" starts right now

welcome to sh"power lunch." i'm melissa lee. dow is off more than 180 points. earlier in the session, trying for its fifth straight day of gains. boeing fueling the dow and hitting an all time high today and topping $400 a share for the first time ever. we begin this hour in dc where president trump takes center stage in just a few hours to deliver his state of the union address. all day on cnbc, we take a deep dive into the state of the american economy and the factors that drive it. steve liesman is with the key indicators and ylan mui with the growing and kayla tausche with the trade negotiations we begin with steve on the economy. >> thanks. the state of the union's economy is strong. the trump economy going 2.98% compared to 1.6% in the six quarters before that let's look at the sources of

growth we look at the difference in the contributions with various factors. inventory is a big factor and equipment spending a lot of that happening before the tax cuts maybe there's more to come consumer adding a bit. federal government adding a bit. you could see that from the bigger deficits, but residential spending has been one of the standout negatives there job growth under president trump, 209,000 per month on average over the course of his presidency compared to 204,000 before that. the unemployment rate down 0.7% and more americans come in to the workforce. the question is not whether the state of the union's economy is strong, it's the question of whether it will stay that way. looks to be some weakening in the fourth quarter may be a little bit in the first but most forecasted growth above 2% i like saying that the state of the economy is strong when i was growing up watching, i always waited for that line. >> what do you think they said

at dinner last night >> i think they said the economy is strong and powell talk about the head winds they see the dallas president kaplan talked about, global uncertainties and when the stimlis rulus runs off. a bigger dive on the effect of federal government and the tax cuts, all this stuff expected in 2019 because that could be critical. >> do you think president trump thanked him for being a low rates kind of guy, making that pivot we all detected? >> maybe maybe. thank you for the pivot, mr. chairman, maybe that was one of the comments and then the chairman would have said, thank you for the steak, mr. president. >> and tomorrow, you have a special guest. >> special guest tomorrow. former federal reserve chair janet yellen live at 2:30 eastern. i guess it's on this show, is it not? >> indeed. >> big interview, i'm excited to talk to miss yellen. >> look forward to that. america's growing income gap is becoming a very hot topic for

the 2020 election. it may be the top topic and democrats hope to ride that wave with a slew of new proposals aiming at leveling the playing field. ylan mui is looking at why inequality is becoming such a polarizing issue ylan >> you see it with the buyback bill, all the new ideas to tax the wealthy. everyone trying to address this idea that economic inequality. so we decided to take a big picture view to find out how big is the gap between the rich and the poor in america today. take a look at these numbers from the cbo between 1979 and 2014, incomes for all households did go up but not by the same amount for the bottom 20%, incomes went up by 26% but for the top 20%, incomes rose by 69%. and for the wealthiest households that top 1%, incomes went up by a whopping 221% so it's very difficult for anyone to argue that there isn't a big gap here in america

between the wealthy and the have not nots but the way we view the rich shifted in recent years the pugh research said 71% of republicans say rich people got rich because they worked harder. 22% of democrats believe that but instead say people got rich because they had more advantages than other people. you see how this is becoming more of a partisan issue and politically polarizing and why we hear so much heated rhetoric about this on both sides of the aisle. back to you. >> ylan, thank you very much ylan mui in washington one of the main pillars of the trump agenda, the u.s. negotiated a new agreement in the u.s. and canada but no deal in china with the possibility of more tariffs ahead kayla tausche with how it's all playing out. kayla? >> reporter: melissa, the state of trade for this union is busy. the trump administration has made minor changes to a deal with south korea and laid the

groundwork for a new deal with europe but the president tonight will likely focus on trade with nafta partners and with china. he will call on congress to pass the u.s./mexico/canada trade agreement where there's not the political will to do so and update the country about the relationship between the u.s. and china but may stop short of announcing a breakthrough or a potential deal which is still currently in the works and then there are tariffs this has been the president's weapon of choice for the last year in particular where we have seen tariffs placed by the u.s. on everything from washing machines to solar panels to steel and aluminum and potentially automobiles down the line and the president wants more power in that arena asked his allies in the republican party and congress to pass a bill that would essentially give him unilateral power to put tariffs in place and gop critics want to limit and say there's damage done to the economy by the tariffs he's already put in place but one thing is very clear. the president wants to smooth

the runway to go into the 2020 reelection and everyone looking for the trade kerfuffles to smooth out in the coming months. >> thank you, kayla tausche. looks like a beautiful day down in washington. how should business feel about the state of our union melanie senona, and mike, welcome to both of you what are you hearing about tonight's speech >> a couple of themes important to business. this is from my colleague. the president will talk a lot about foreign policy getting out of endless foreign wars this is when he'll bring in his comments about venezuela in this hemisphere, but now, perk up your ears. the president is going to tie the border to health care and prescription drugs he's going to say there's a lot of illegal drugs pouring across the border and then become a problem in america this is an effort by the president to make a relevant to

americans. talk about trade through the eyes of the american worker, so again, an effort to personalize it for people back home and the president is going to continue the push for infrastructure. something of great interest in the markets. >> melanie, your thoughts, is what you're hearing consonant with what mike is saying >> yeah, absolutely. obviously, immigration is a major theme of the night but not the only one in addition to foreign policy, expecting the president to speak out against abortion and also lowering prescription prices unveiling the proposal last week wall street reacted a little panicky initially to the proposal but a lot of details we don't know so we could get clarity on that proposal and of course, we also are going to hear a lot on foreign policy the president is very sensitive right now to the reaction from is that the republicans who

yesterday just adopted amendment expressing disapproval against pulling troops out of syria and afghanistan. also, trade. in the midst of negotiations with china and march 1st deadline coming up and trump is also going to use the platform to pressure congress to revamp nafta and may reiterate he's willing to pull out if congress does not approve his new rework of that trade deal. >> is there hope, for infrastructure at this point or what we saw in terms of funding for the border wall and the fight over that? did that sort of preview the animosity we'll see in congress this year making infrastructure an unlikely scenario >> i would go with "b" on that, a little bit of leading the witness there as you suspected but here's part of the reason why. there's such a dissonance between the president's message of being the great unifier and how politics are going in

washington so a democrat said to me when the white house was leaking the idea that unity's going to be a big feature and a big theme of this speech, a top democrat said to me, this is the perfect message? but the messenger is preposterous this isn't the president's reputation or the president's experience with these democrats. so our experience with the president in these big speeches in the house chamber, he does stick to his and proud of the fact he can pull off these big moments and stick to his script, but what this democrat said to me is what happens if by 10:00 a.m. tomorrow, the president has done something that's at odds with the spirit of that speech >> let me turn back to you, melanie, and ask the following question in one of his prior addresses to congress, i don't know whether it was last year, state of the union or before that was not called a state of the union

address right after he had given his inaugural address. he expressed some disappoint or pique at the idea that the democrats did not applaud what he thought were the appropriate moments. did you think there will be bipartisan applause lines in this speech and might they come out of the section that you just mentioned a moment ago and that is talking about curbing the prices of prescription drugs could that be a rare moment of bipartisan enthusiasm? >> i think that would probably be the only instance in which we could see some applause from democrats is when he talks about infrastructure, lowering prescription drug prices as well as eddying the hiv epidemic. i would keep in mind this is the first time president trump is delivering a state of the union address when democrats are in control of the house you are going to have nancy pelosi right over his shoulder as a stark reminder of who is in control of that chamber and when he looks out at the crowd, he is also going to see a number of senate democrats who are vying to take him out in the white

house in 2020. you saw trump came out on twitter bashing schumer, if that's any indication about what mood he's in while he might stick to the speech and the teleprompter, talking about unity, it's actually a different story underneath that roof >> the house of representatives in the joint session of congress, mike, is not the house of commons which can get very, very raucous and entertainingly so do you suspect that this evening, the democrats will be on their best behavior or that speaker pelosi will have cautioned the democrats to be at the very least respectful towards the president? >> so, it was two years ago we had the you lie moment where house republican called out president obama. this is going to be for sure a quietly hostile yenaudience i wouldn't expect it to be overtover overtly hostile, agreeing with the point about prescription drugs but also i can tell you

for sure, this is something you would take to the bank, the president's biggest applause line of the night, i think, at the top, you can expect him to greet madam speaker and that's the one thing that everyone in that room will applaud on. after that, the speaker, as was pointed out behind him, speaker pelosi knows how to look stone faced behind a president she doesn't agree with she has some experience with that >> mike, thank you very much on that note, we leave it. melanie, thank you as well we'll all be watching this evening. thank you. stocks are rallying right now but are the gains for the year already done? we'll discuss that plus, disney reporting results after the bell today what investo arsre watching for in that report that's coming up on "power lunch. (indistinguishable muttering) that was awful.

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my name is tanya, i work at the network operations center for comcast. we're working to make things simple, easy and awesome. >> dow up 183 points climbing back up there with 151 point gain right now been a nice rally so far this year the major average between 8 and 11%. but goldman is saying if you miss the january run, you might have missed the games for 2019 slower growth and profits the rest of the year what do investors do from here chief market strategist with national securities, welcome to you. should investors wait this out what do you think? >> you have to make an assumption we're not going to have an earnings growth at all this year.

trading between 15 and 16 times. fair valuation. >> i don't mean to jump in but more than last year. we had great profit growth but the market priced it in and didn't go anywhere are the expectations low enough with poor growth this year or flatness, we could do okay >> for the s&p 500, come down from $182 to $170. so growth would be at or about 5% or 6% this year another significant move in the s&p 500. not a linear but what makes it not work and not getting trade right. we thought the government shutdown would last a couple of days and lasted 35 days. that's taken some economic growth away from us, so i think the third thing is what we don't talk about what does a hard brexit or no deal brexit look like? does venezuela actually blow up into something much larger than right now? we're so focused on trade being

the biggest head wind but other things could disrupt that. we'd have to take that down and goldman would be right. >> am i wrong to think an awful lot of the risks that you just enumerated reside in the first half of the year and if by a dent of luck or skill, the second half of the year could be much clear er and can we turn head winds into tail winds, and we have actually created the problem by getting into the trade confrontation in the first place. we can accept a deal sometime in the first half of this year. if we get to the end of the 90 day truce, have constructive conversations, do not escalate and walk away with something, not perfect but something for the administration that certainly could use a victory here and a chinese economy that could certainly use some stimulus, so i think it's

possible that we have a better second half but i think those things could happen and make th that happen. >> cyclical would be the way to think about it i think we hear more about, okay, if trade is behind us, what's the next frontier for this administration to go after it i truly believe this is the other one to do something with infrastructure i know we talk about that all the time i've been waiting for that fool me once or twice. >> the metric system, but yes, i think there's a desperate need for it i think bipartisan support and actually stimulative through the economy. >> the president said i believe or someone close, they don't think the public/private partnerships can work on infrastructure where does that leave us in terms of how that gets billed? use some of the taxes raised for that purpose for that purpose. the reason that we pay the tax on gasoline is for that. unfortunately, that piggy bank

gets rubbed for all sort of things all the time. targeting funds meant for this. >> thank you so much good to hear from you. all your data, pictures, videos, probably in the cloud but are there profits there as well the "trading nation" nation team puts heads in the clouds and the pulse on the consumer with the ceo group. a pretty nice car outside right now. we'll check it ut. rp's a lamborghini with the surising demographic fueling sales. stay with us on "power lunch ♪ ♪ let's go from being on-call... ♪ ♪ to being on-line. 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.

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socks! & you could send him a coupon for that item. . box shares getting a boost today after goldman pegged it as a buy adobe joining box in the clouds. up double digits this year is the sky the limit for this year with miller and with suscrahana. one of the groups that outperformed into the highs, it actually was resilient relative to other parts of tech once we had that pullback in the fourth quarter. now we're recovering where does that leave some of the names like box

>> i think it's kind of funny because the big names that have exposure there like microsoft and amazon have fallstalled out here i think box is very indicative of what's going on look at the chart. they made a great double bottom back in the fourth quarter and bounced off the line going back into the 2016 lows and rally today above the 200 day moving average and in fact, two lines i couldn't put on there because too busy but moved above the line of the head and shoulders pattern. but the stock looks great on a long-term basis. that said, very overbought on a short-term basis look at the bottom, it's up almost 50% in just five weeks. you don't want to chase it up here pull it back a bit but the long-term basis, it looks back but indicative of a lot of names in the cloud area. >> maybe let them cool off but are well positioned.

stacy, how about the sort of trader positioning around this area either in box or any related names? >> mike, this is a great question what we've seen today in box particularly within the options is actually profit taking. there was some positioning towards the beginning of the year that on this bounce here with the recent initiation, we're definitely seeing some profit taking out there. what's interesting is if we take a step back and just look at the broader cloud space, it's actually quite mixed and this is much more consistent with what we've seen in the market as a whole. it seems as if the market is taking a much more active approach to its investment it's not as passive or by the general market as things are going up here. we've seen correlations come in and stock pickers return to the market the cloud space is one of those areas. and what we wouldn't consider a direct peer, if we're going to pick a name, being the stock picker, we definitely look towards amazon for the cloud exposure relative to some of the other names. this is a name we think it's a game changer over the next ten years. plus you're getting two other

big growth segments here within amazon this obviously is e-commerce and internet analysts, one of his favorites. >> all right that is the big capway to play for sure matt and stacy appreciate your time today head to our web site and follow us on twitter, @tradingnation. >> thank you very much ahead on "power lunch. the state of our union we'll look at some of the biggest industries around the country. weed yes, it's a big industry manufacturing and cars, plus, an suv with more than 600 horsepower and a $200 price tag. great to go to soccer games. we test drive the lamborghini and disney earnings on deck. will it be a magical quarter >> and now, the latest from tradingnation.cnbc.com and a word from our sponsor. >> position size and risk/reward

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. hello, everyone. i'm sue herera here's your cnbc news update at this hour. president trump blasting senate minority leader chuck schumer saying he's already criticizing his state of the union even though he hasn't seen it this in response to schumer's speech on the senate floor criticizing the president's call for unity. >> perhaps even more empty than his policy promises are president trump's calls for unity each year. every year, the president wakes up and desires unity on the morning of the state of the union. then the president spends the other 364 days of the year dividing us and sowing a state of disunion. >> the representatives of the taliban including the former president hamid karzai gathering in moscow for a two day meeting.

the talks aimed at resolving the 17 year war in afghanistan the meeting excluding president's government lunar new year celebrations for the year of the pig. kicking off in china thousands of people in beijing watching traditional parades and ceremonies many flock to temples across the city to mark the first day of the new year that is the news update this hour, kelly, back to you >> thank you very much about 90 minutes until the closing bell check on the markets dow is up 183 at session highs close to that now. up to 160. s&p and nasdaq, 46 2% gains after the now and tdow the nasdaq church & dwight, the beginning of the financial crisis more than a decade ago, in fact profit fell for the first time in two years shares down 7% oil market is also closing for the day. dom chu has more at the

commodity desk dom? >> here, wti crude $53.72 off and ice brent crude futures off. demandworries still linger weaker u.s. economic data with regard to goods and factory orders that sort of thing that's putting pressure on the oil prices as well supply always a concern earlier this week. we heard some traders echo some concerns about gen scape data and build in inventories we'll get the official inventory data coming out tomorrow morning at 10:30 a.m. eastern with a little more of a view and private sector, american petroleum later on this afternoon. we'll see if that moves those prices back to you. >> we'll be watching that. thank you, dom just a few hours until the president's state of the union address and ahead of that, cnbc is looking at the state of our union in some key areas. let's look at one growth area and one that could be facing some growing pains

kate kel kate rogers with the manufacturing and then first the state of the marijuana business. aditi? >> notable changes at the state and federal levels propelling marijuana reform the biggest federal development was the passage of the u.s. farm bill which paves the way for u.s. big box retailers to soon start carrying hemp-based cbd products that boosted cannabis stocks like growth that launches u.s. hemp operations in new york that stock up more than 70% year-to-date at the state level, new york, new jersey, connecticut and illinois appear poised the legalize recreational cannabis this year which could help boost multistate operators like green thumb industries and acreage holdings other key changes include u.s. attorney general nominee william barr's stance on cannabis. during the confirmation hearing, pledged not to go after marijuana companies which come

p comeply with state laws. differing from jeff sessions back to you, tyler president trump has made protecting and adding manufacturing jobs a priority. nearly half a million since inauguration but could be a major problem with making that a reality and kate rogers is following that for us. >> that's right. despite the growth seen in manufacturing jobs, the industry has another issue and that's a shortage of skilled workers. the manufacturing institute projects some 2.4 million lulls may be unfilled in the manufacturing sector in the next decade due to a skills gap >> the economic impact of that shortage is significant. it's about at the end of ten years, could be $2.4 trillion impact on gdp if we don't fill the skills gap that's why this is a crisis. >> manufacturers like stanley black & decker trying to get

ahead of the problem recruiting new workers and up skilling the workers they have on site. >> two years ago, we recognized that one, the technologies were coming fast in the manufacturing space and then we quickly realized that we had to have these kind of reskilling and training processes in place. it's one thing to put the technology in but if you don't have people who know what to do with it, it can be very ineffective. >> 15,000 people work in the u.s. manufacturing division and looking to add 1,000 more. the company's goal to produce 80% of the products it sells to americans here in the u.s. they're going to get to about 50% of that number in the next 12 months. >> thank you very much >> thank you >> kate rogers. one part of the manufacturing business is autos. your next guest, third largest auto retailer in the u.s. with 30 brands of cars ranging from luxury to lower end. record revenue shares down slightly today but up 16% this year earl is president and ceo of group one automotive

always great to see you. >> thank you good to be here. >> what sort of trends are you expecting from the consumer in 2019 and i asked you this because the context of 2018 was that the consumer was supposed to be very strong, very optimistic the tax cuts that should have been the wind at the sails of the consumer and the stocks in general including your own didn't do too well last year and here we are in 2019 where there are more head winds potentially on the horizon >> i think we're probably down a little bit as a total industry in 2019 for some of those factors that you mentioned still a very solid market and project we'll be at or near best of auto sales. people are working in the u.s. and that's the key enabler to a solid car market we think it will be another pretty good year. >> there's an article in the journal. i've got to ask you about because pretty interesting numbers in terms of the number

of vehicles that are on the lots of dealerships across the country at the start of 2019 3.95 million vehicles on dealership lots at the end of january. an increase of 4% month on month. is that what you're seeing on your lots and why is there this seeming glut out there >> well, i think retail sales slowed down a little bit in january because there was a very strong december and i think our inventories are probably 3% or 4% higher than i'd like them but you can't tell much about the industry from january and february march is when sales really kick in, and so none of these factors are too alarming yet i think we're still in a position to have a solid year, even if it's not quite as good as last year. >> what's selling hot and what's selling less so and are you doing more leases or more purchases? >> trucks, trucks, trucks. and suvs that 70% of the market now we're quite strong in texas and oklahoma, so trucks are a big

deal >> if you can't sell a truck in texas and oklahoma, you've got a problem, right >> that's right, that's right. they're everywhere and then there's a new chevrolet truck coming out and that will probably stimulate the segment even more. >> how about lease versus purcha purchase >> leases flattened out primarily because the finance companies, they're getting a little bit cautious about residual values so i think the traditional retail contracts are probably a little bit more envogue at the moment. >> i want to ask your philosophy on share buybacks which i know you guys have done when you hear that they're now saying maybe they shouldn't be allowed or companies should be paying workers more, how do you respond to that? >> oh, i think capital allocation is critical to having a strong company and that's a dynamic situation. last year, we added $600 million in revenue through acquisition, so we grew our company

we invested more than $100 million in our facilities to expand them and modernize them but bought 14% of our shares because some time during the year, investors depressed the value of the stocks in our segment so it became more for us to buy our own acquisitions to buy back our shares but we look at that monthly and in continuous discussions with our board and capital allocations is how you keep your companies strong you have to have that avenue and do what's best for your shareholders. >> earl, you've got dealerships in the united kingdom, so i want to ask you what your scenario is, if there's a hard brexit, how could that impact your business what's the back of the envelope here >> i returned from there two days ago i wish i had some understanding of how it was going to be resolved a hard brexit would not be good for anyone it would not be good for our businesses because we have many german import brands audi and mercedes and bmw but i continue to believe that neither side wants a hard brexit

it's not good for the european union. it's not good for the uk and you just have to believe that cooler heads will prevail >> thank you for your time earl hesterburg. >> to the bond markets now, rick santelli with an action now. right, rick? >> 38 billion which kicks off $84 billion in total supply with tens and 30s yet to come out of that, well, the yield 2.502. 2.5% and direct bitters was 18.5%. that's the best since 2015 i gave the auction a "b-." you see it on the right side of your chart we've come back with the solid jobs data. close to the 270s range even though we're at the bottoms of it tens minus twos, that's going back to november the reason i have that yield curve chart is because it's

going nowhere fast but not flattening anymore and steeper than it was. if we look at what's going on with the hyg, high yield, we could see the best levels since october and finally, and then the dollar index simple chart but it says a lot you see the way it sliced through once it went through 96 on the chart that's a key level let's monitor the close. tyler, back to you >> thank you very much it's now time for the part of the show we've all been looking to we'll check out the lamborghini, an suv that cost at least 200 grand. that's next on "power lunch. the ladies are already out there. i'll go catch up with them see you in a minute.

this is a treat, isn't it, tyler. >> this week and not last week when it was 8 degrees. >> in front of this beautiful car. this is the rob robert car of the year for this year it's a lamborghini urus and joining us to talk about it,

paul pratton. >> thank you so much for joining us it's a little different than what other magazines or awards for cars are done. how do you pick the car of the year >> 200 or so judges. these are the guys who buy the cars, race the cars. they know what they're talking about. >> they're wealthy, people that sort of are used to very expensive cars. >> yeah, at the end of the awards, invariably get people coming up and tell you about it at home. >> how many judges or cars >> ten cars and 200 judges split over kind of 8 or 9. >> what's amazing to me is this suv beat the brand-new b-12 ferrari and the continental gt how does an suv become the ultimate sports car? >> the secret is it's two cars in one so it's a luxury suv they call it the super suv all the stability, all the safety, the presence and pleasure of driving a luxury car like that but flip the switch inside and you're in a super

car. goes crazy and away you go. >> i got to drive it it's like a transformer. but does become a sports car when you punch the gas it's a v-8, 640 horsepower top speed of 190 miles an hour >> by the way, kelly's behind the wheel. i don't know if i would. >> it's just, i mean >> what's interesting about this car, also, lambeau is a male brand. this has attracted female buyers would you buy this car >> sorry, i've got an uber ride back here i picked up. >> hello >> you're a brave man for standing where you're standing right now. >> i tried to warn him >> several times can we show the inside of this car at all i think more and more to people, that is interesting as anything. come on in real quick. you've got to see this sports car feel in this car this panel, it's like operating a computer over here

>> tyler mathisen can fit in the back of a lamborghini. do you know how big that is? >> this is spacious. >> come on in. take a look and one of these different, they're strata, i don't know how to pronounce these words. >> it's italian. a sand setting, snow setting, and it's got an ego setting on the other side >> the whole thing is an ego setting. what attracts women to this car in particular? >> the stability, the saflt of it it has the attraction of a typical suv that you feel you're higher up, a little bit secure and get in the back, it's a good feeling but also, women like to drive fast cars. we have female judges on the panel and they love this car they feel home in this car. >> kylie jenner just got one, cardi b. just got one. >> cardi b.? >> cardi b >> whoa. >> 50 cent was one of the judges with the car of the year and loved it i think he'll get one. >> do you think we've got a glut starting at the high end of the

suv world? rolls royce coming out with one and lambeau, massarotti, ferrari, are there enough buyers for $200,000 plus fast suvs, do you think? >> i think you'd be surprised, certainly in a global market these are big markets and the demand for this level of car, we're seeing that increase >> the billionaires out there. >> people buy this it won't be the first lamborghini. >> of course what does this red button do >> the ejection to go from the roof >> don't try it. there's no key, there's no ignition there's just this power button. >> it doesn't really do anything >> that says it all. >> i think kelly is actually going to drive this thing. >> we're talking disney earnings, but more importantly, i'm taking tyler for a spin over the sand dunes >> i'm not getting in. you guys can go.

>> i don't know how to put it in drive. >> that's why i'm not getting it go ahead >> i literally don't know how to put it there's no gear shift. >> put that thing in the middle. >> we'll be right back >> there's no drive. it's time for the ultimate sleep number event on the

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disney will report earnings after the bell today wall street expects the company to report weaker results compared with-year and the focus on streaming as disney plus sets the launch sometime this year. joining us now is john hudlic. why will the numbers be lower than last year is it because of the invest in direct to consumer products? >> that's part of it we expect $1.56, 16% down year over year basis and in the median nets $100 million investment for espn plus and the bowl games, semifinal college games in the quarter to increase expenses and tough comps on the studio side. >> how about the fox merger? done is it helping? what >> that's not going to be in the numbers. expected to close late february

and will be reported as a partial quarter next year but all going according to plan. i would say took longer to get 'proved but we would expect to hear about it in april. >> talk to me about the direct to consumer investments and what it's going to mean to the numbers going forward. how it's going my sense is that disney has been one of the earlier adopters here >> well, there's a number of platforms out there. netflix, amazon prime. some would say they're late to the game and a shareholder of hulu we'll get a first taste this quarter breaking it out as a separate segment and could hear more color from the company of the costs of this new disney plus up. >> do you have any concerns, john, about the content disney puts on the direct to consumer content? a lot of that original programming, i mean, i guess you could say cannibalizes the

franchises in the theaters how do you view that >> i think that the box office is still a major focus but a question we have relates to the d to c effort is how was of that licensing effort is cannibalizes and shifter to the platform. and again, i don't think we get that color today. >> what do they have in the pipeline in terms of movies this year >> they have a strong slate. "frozen 2" is really the big one and relates to this quarter we have got the studio business down 60% because you're comping up "thor" and "the last gentlemjedi." >> the stock is 112 now. you see it at 128. that's what? little more than 10% move or

thereabouts. what would make you change your position on the stock and raise that price target? what would make you more encouraged about it? >> yeah. so i don't think we'll hear much or there's not a lot new this quarter. the key is the d to c launch we estimate that the company will have 5 million subscribers in 5 months. which would make it the fastest d to c launch of any of the larger platforms out there so we're putting value in that. we don't think the market is ascribing a lot to that but we think given the unparalleled iconic brands here we think you see that off to the races when it launches. >> thank you for your perspective. we appreciate it. >> thanks. >> john u o with ubs. check please is next by the way, kelly is not back. find out what she's up to. so, servicenow put your workflows in the cloud, huh?

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you should be mad they gave this tempur-pedguy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. check please. >> we spent a good bit of today's show talking about the state of the union, the speech it is always high drama. high political theater this time the president delivering it in front of a democrat-controlled house of representatives with i believe it is five announced presidential candidates in the audience in front of him. >> well, yes. >> he has a good story to tell on the economy a lot of the speech apparently

will be about foreign policy, trade, the fate of the north american free trade agreement. >> there's retailers if he mentions trade drug pricing bio techs and health care. very important in terms of what could move the markets tomorrow. we had a great time outside. >> we did. >> with that lamborghini suv $220,000 base. look she's still out there. >> have you found the gear shift? >> first of all, okay, this is supposed to be a car for women i didn't know where the drive thing was. robert keeps revving the engine like -- like -- did they put a microphone back there? >> they did. >> geez. >> it has a lovely purr. i heard it earlier it sounds like a fun car i don't know why you need a suv that goes 190. >> me neither. are we going somewhere

>> you should. >> my seat belt's not even ron robert there's cars. >> there they go. >> that's the fastest the car's even driven in the cnbc parking lot. >> there's the speed bump, ladies and gentlemen all right, everybody thank you for watching "power lunch. the "closing bell" starts right now. ♪ good afternoon and welcome to the "closing bell." i'm sara eisen. >> i'm wilfred frost very well placed speed bump there. i think kelly would have welcomed there >> looked scary. president trump meantime is gearing up for his state of the union tonight. we'll dive into the state of the economy with a panel of washington insiders. that's coming up. plus, 67% of analysts have a buy rating on disney only 67% it will report earnings an hour from now we are all over that first up, though, th