increase. >> we're not talking about big business here either we're talking about, you know, the businesses that dot the country and what a huge impact that could have. guys, thanks, james and john, we'll hear more about this tonight at the democratic debate that does it for the exchange. i will join them for "power lunch" which begins now. >> we will see -- welcome, i'm tyler mathisen here's what is new at 2:00 tocks racing toward record high, just inches away, but how long can this rally last? what are the real fundamental foundations? we got a bull/bear debate on that plus, the pompra cannabis getting smoked after missing revenue expectations, the chairman michael singer will be here to tell us what he th k thinks wall street is getting wrong and smildib going public today and nba champ

d draymond green is an early investor "power lunch" starts right now. on track for its longest winning streak since may of 2018 check out the names hitting records across sectors home depot texas instruments, sherwin-williams and duke energy for more on what's powering the markets down to bob pisani on the floor of the new york stock exchange. >> hello, melissa. we are approaching an historic high, 3027 is the intraday high, 3025 is the closing high that goes back to july. the check list, the reasons that got us here is really very short. just take a look at what we've been moving, what's been moving. we got first of all momentum on trade talks. that's the most important thing

we've been seeing. decent economic data in the united states as well and we've had hopes for aggressive central bank action as well. and that's about it. that's the whole check list that resulted in somewhat lower concerns about recession fears out there and the i remember packet on the markets in the past week has been rather dramatic just take a look at what's been happening. we've seen bond yield nast lifted the single most important thing but after that we've had a very big crowded trade that has unwound somewhat that involved going long defensive sectors like consumer staples and utilities and shorting economically sensitive groups like retailers, banks, energy and industrials that's all reversed and helps that all this happened on very low volvolatility. the vix at 50. you will likely have to keep up the drumbeat of better economic news and not just to the united states, guys, that would include europe and asia and did not get a tremendous report from mario draghi this morning. >> the top thing it's concerned

about today is trade progress on it, by the way, eamon javers is standing by with more. >> the market has been following the bouncing ball. earlier we saw this report which suggested that administration officials might discuss an interim deal with which some tariffs might come down but we might not get all the way to a total trade truce. i texted a senior administration official to ask if that report was true the two words i got back were, absolutely not, so officials keen to pour cold water on that today and get that story line out of the headlines that's, of course, part of the reason for that is that they're going into this negotiation at the deputies level next week in which all of this stuff will be on the table so what we don't know is what really the united states is prepared to offer here in that series of talks next week but you do get this sense that there are officials trying

to create a sense here, ultimately, that things are going well we saw the treasury secretary, steven mnuchin on cnbc earlier today. here's how he put it >> we've had a series of principal level conversations. we have a deputies meeting planned in the next two weeks where the chinese will be coming here and they'll be working on material in advance of the vice premier coming here to meet with ambassador lighthizer and myself and look forward to making progress over the next few weeks. >> we also saw peter navarro on television today suggesting that the president's tweet from last night in which he postponed a round of tariffs two weeks was a goodwill gesture toward the chinese. the idea here is to bring everybody to the table in a deal-making mood we'll see if that works. >> eamon, it certainly does seem that the market is really captive to the latest trade headline, whether it's positive or negative.

it is the tail that's wagging the dog. >> the thing to be aware of here, there is a lot of nuance in all of these report, right? you just can't say this is binary, zero or one and a lot of factions on the chinese and u.s. side which are all talking to a variety of people, a lot of that word is filtering out. some of it is whispered down the lane some of it is entirely accurate and what you get is sort of the blind man with the elephant as we were all having a giant toenail in our hands it's hard to tell so i think as market participants watch this they should be aware that there are a lot of different people involved here who are saying a lot of varying things with different levels of nuance then as's not as simple as a zero buy or sell decision. >> one person involved, the president, if nothing else, has been mercurial in his approach to this issue. fair to say? >> absolutely, tyler the president has two almost entirely conflicting goals here,

right? on the one hand, he wants a sweeping deal with the chinese he wants to reset the relationship for decades going into the future. this is one of the principal reasons he ran for office in the first place, his big appeal to the base the other thing he wants to do is get re-elected in 2020. if this trade war drags into 2020 and causes economic pain for his voters or for voters generally that could work against his main goal of re-election so at some point he's going to want a deal more as we get closer to 2020 than he wants it now so where is the tipping point where the president is willing to agree and the chinese are willing to agree and they can find a middle point to meet at we don't know where that is going to be. >> that is the needle that must be thread. thank you very much, eamon. as we approach record highs can the rally keep going in the stock market let's bring in principal strategist with bessemer trust so, rich, you're more bullish on this market and on this rotation

this week that's put value finally having a little bit of a breakout here. you think that is part of the reason to be bullish on this market or is that just going to be kind of a mini event? >> just to be clear, we have been riding this bull for all it's worth the last couple of years. we're not necessarily plowing new moneys into the market but there are always opportunities in the market and this latest rotation represents another one. but as the economy and earnings continue to dwindle lower, there's going to be opportunities both here and importantly overseas you > sound like a bearish bull. >> how about a baby bull. >> but what is the landscape you're expecting we've got stronger inflation data this morning. at the same time that fed rate cuts have arguably fueled some of the rebound so what factors lead you into your sort of bias for the market >> nominal economic growth i mean we'll have economic growth on the order of maybe 1.5%, 2% next year

it's judging by the consensus view overseas maybe a little weaker but possibly bottomed out over there so some opportunities there, so we could muddle through this and, again, there's always going to be opportunities in the stock market here or domestically if you're in the right sector and on the right side of the growth valko nun drum. >> we can circle back. how much is simply dependent on the trade headlines going favorably? >> i think a lot of this has been dependent on the trade headlines going favorably and let's not forget from the beginning of this year, a huge part of this market rally has been really created by extremely accommodative monetary policy and the 180 the fed took relative to where it stood in december i question how much further this market rally can really continue to move up considering the reality that economic growth has decelerated around the world it is stable here in the u.s., we don't believe a recession is

imminent but it is likely to come down even further next year you have corporate profits really, you know, flat, we're not seeing a whole lot of earnings growth. margins under pressure it's just difficult to imagine another leg up here unless you have a meaningful improvement in the economic data and we just don't see that yet. >> could the yield curve steepen? i ask this, joe, because while we may not have seen terrific headlines out of trade certainly in the past month, we have seen an increase in the ten-year yield. a dramatic one, 30 basis points in about a month is nothing to sneeze at. that's what caused the markets to bounce. >> yeah, i think over a short time frame there's no question interest rates can back up again even a little bit more on the longer end of the curve than the ten-year if i take a medium term outlook, look, the reality we're now in the longest bull market in history. this economic expansion is getting long and tired and when we do eventually enter a recession, i would actually

argue interest rates are probably going to come back down not necessarily move up so i think the move directionally if i take a longer term outlook is for interest rates to come down under pressure it's hard to imagine the yield curve steepening without again an improvement in economic data or inflation expectations really picking up. >> rich, i'd like to you pick up on something that joe mentioned. that is corporate profits. what do you see? because the stock market fundamentally is discounting corporate profit in the future what do you see for that as we head into next year? joe sees them as a flat. i think you do too if they're flat, then what's the driver >> oh, it's going to be interest rate related no doubt, lower interest rates at the short end of the curve lower discount rate makes those corporate earnings flatter, otherwise, more valuable today but there's no question earnings growth, grinding to a halt across all of the major sectors and it's a matter of you have to be very selective.

where are -- if that's a hard environment to make money in. >> yeah, but it's all relative in our business as we all know. >> selective if you could be specific on a couple of things just quickly before we go what would they be? >> value stocks. definitely move off of -- i think this is where we agree, move off the momentum stock, high growth, the f.a.n.g. stocks and move over to the more value oriented sectors, no pun intended and get over to banks as the yield curve steepens, the fed is lowering interest rates a prime area for banks to do well. >> rich weiss and joe tanious, thank you. coming up, draymond green will be here to talk about his investment in one of the biggest ipos of the year, smile direct club. plus the trump administration is pushing to privatize fannie mae and freddie make and talk to the man federal housing finance agent dry director mark calabria

"power lunch" will be right back

the future of fan think and freddie getting more clarity steven mnuchin telling "squawk box" the plan to privatize the mortgage giants. >> that's something that the fhfa and we are working on we're actively negotiating an amendment and i think our objective to try to get it done by the end of the month. this is going to be a big priority we want to make sure they don't stay for another 11 years in

conservatorship and go through another period where they put the taxpayers at risk. >> fannie and freddie currently guarantee roughly half of the $10 trillion home loan market. how close are we to seeing them recapitalize and relieve some government control let's head to diana olick sitting down with mark calabria. diana. >> thanks, melissa and thank you, director calabria for joining us you are on the other side of that negotiating table from the treasury secretary do you agree with him on the time line for ending that treasury sweep will you get it done by the end of the month >> more color to what the secretary said we're hoping to increase the current number in the letter agreement. you may remember in december 2017 fannie and freddie were allowed to retain 3 billion in capital each we want to raise that significantly and then after that we want to agree to make a change to the underlying share agreement that would hold a whole other host of issues and

that would set us on the path of ending conservatorship which we talked about in the past process driven, not calendar driven. >> but the treasury secretary did say that he wants to see taxpayers compensated for this government backstop. that would mean an additional payment to the treasury. fannie and freddie have already paid over $110 billion more than they initially drew. do you feel they need to pay more to treasury >> you may recall under the december 2017 letter agreement that when the -- when their capital was raised to 3 billion the preference so the senior preferred treasury gap was raised by 3 billion and will likely keep a similar framework but do want to emphasize the secretary and i are still working on this. >> h much do you think they need to retain? 3 billion is not even the heari0 billion >> that's in the long run in which i should say the next couple of years. what this letter agreement will be by the end of the month should get us hopefully the next couple of years to give us some maneuvering room to get them this will set the path so, again

this, is not going to be the end. this will be a further step. >> any rodblocks in these negotiations with the treasury secretary. >> not with the treasury secretary. of course, getting time is always a focus on it but we're making a lot of progress the secretary and i think very much see eye to eye on this and we'll get out done soon. >> what happens to the common shareholders of that stock now >> there's a couple of different options that are still on the table and, of course, treasury laid out a number of options in the report under most of those options if we end up doing a rebuilding of capital even if it's raising capital in the markets, then it would trade again. the commons might not but we're not rat a point where that's been determined. >> would any of these payments to treasury, all this refunding, recapitalizing would it trickle down to the mortgage market and make them more expensive for borrowers? >> the plan the treasury put forward i think will decrease mortgage rates so, again, because bringing more competition to the market, again, it's been a long time

since i was in grad school but learned monopolies and duopolies don't tend to lower prices but raise prices so bringing more competition will benefit borrowers and keep in mind if you look at the cost of mortgages during conservatorship it's been higher than historically been the case, not lower. >> you think it could be lower, interesting. could you respond to a court decision last friday that said not only was the sweep illegal but that your position as direct director is unconstitution tall like the argument they're having with -- >> i intend to serve the remainder of my term i worked on the legislation when i was in the committee staff and believed it was constitutional then and i believe it is constitutional now. >> you would have to have investors step in. do you feel investors are ready to step back in? >> we have a number of things we need to do first i think it is important to have a number of months where we're

retaining earnings and building them up before looking of having an ipo of any sort and seeing where the appetite is so we got to build the track record of building capital earnings before we start looking at a market. >> you believe we could see lower mortgage rates >> i believe as they spread over treasuries let's keep that in mind. >> director calabria, thanks for joining us, back to you. >> diana, thank you. diana olick and mark calabria. straight ahead, two big industrial giant, caterpillar and deere getting a hit after a downgrade. is it time to pump the brakes or a buying opportunity our traders will weigh in plus the nba champ draymond green excited about today's big ipo, smile direct club. >> this is the picture on the front page of the newspaper. all you can notice is the braces >> the man has a nice smile, you'd have to sayen. an early investor in the stock and will join us next on "power

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meets the street >> investors clearly want a piece of the action. >> are some growth stocks coming back into vogue. >> "squawk alley" is live. >> announcer: 11:00 a.m. eastern on cnbc. welcome back to "power lunch. i'm mike santoli at the new york stock exchange check out deere and caterpillar. analysts expecting weaker u.s. demand for construction and farm equipment next year. let's bring in the team. j.c. o'hara and erin gibbs of gibbs management j.c., both of these stocks have been on the defensive for the better part of two years how do you size up the prospects for either one of them making a comeback >> well, i think it's important to take a longer-term view of the technical setup and right here i prefer caterpillar. if we go back to 2016 many

forget caterpillar doubled to the 2018 highs and often when stocks have that sort of move there's time needed to digest those moves and that's precisely what we believe happened in 2018 and for the better part of this year however shorter term, you know, caterpillar stirred up some demand around that $110 support level and now it's inching closer to up overhead resistance if it breaks above 140 the next 10% will be higher to our $160 price target. >> all right, so we'll watch that, see how it treats those levels and, erin, there is a lot to consider. aside from how the straight talks are going, farm demand is related to all that and then the general i guess condition of the industrial economy at this point in the cycle where does that leave you. >> actually when you look at these two stocks, deere isn't bad at all looking at 12% growth for next year, which is ahead of the overall market expectations. there's a lot of positive

sentiment ever since the new ceo was announced back at the end of august and they're just implementing a lot of cost-cutting technologies so out of the two, i think though they both have a lot of exposure to the china trade on the supply side, deere is a safer bet and has good things going for it over the next 12 months >> all right well, both of them at least appear relatively inexpensive based on projected earnings. we'll see if that offers a cushion to both. j.c. and erin, thanks very much. for more trading nation follow us on twitter @tradingnation. wall street's root canal smile direct club's ipo landing with a thud. all the details next. plus, we'll sit down with nba champion draymond green. he was an early investor in smile direct talk about the ipo and so much more. shares of aurora cannabis down 10% the company's chairman joins us live to react. all this when "power lunch" returns.

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welcome back, everyone i'm sue herera your cnbc news update. america's new ambassador to the u.n., vowing to defend u.s. values and interests kelly kraft attending her first security council meeting outlining her mission as ambassador >> i come to the united nations not only as the president's emissary but also as a voice of america's unwavering commitment to democracy, freedom, human rig rights and whenever possible the peaceful resolution of conflicts. >> hong kong police denying

planks for another anti-government protest planned for sunday they're objecting to the application for a demonstration out of concerns for public safety, order and the rights of others and here at home, mike "the situation" sorrentino a free man. he was seen leaving federal correction facilities this morning. the "jersey shore" star serving it for tax evasion melissa, back to you. >> now he can get back to gtl. gym, tan, laundry. >> you can't make it up. >> sue, thank you. let's get a check of the markets. off the session highs. all three major averages up. s&p up half a percent or 15 points and the nasdaq is higher by 46 or 0.6%. oil markets closing and we go to the commodity desk.

>> the big thing putting pressure on oil prices is that decision out of today's meeting to keep supply cuts at current levels that is definitely something that's led t disappointment among investor, i am told. they will work instead to bring countries who produce too much like nigeria, iraq and russia into compliance, saudi arabia's new energy minister also saying a decision about deeper cuts won't be made until december, wti, somewhere around 0.59, a barrel down more than 1%, brent not quite a percent, 0.7%. kelly, i'll send it back to you. >> rahel, thanks. smile direct club may be misaligned with expectations leslie picker has the latest are they disappointed? >> it looks that way, that stock now trading about 19% below it's ipo price. the worst unicorn ipo debut this year with uber as the runger-up.

this is surprising and unique because smiledirectclub was above range and now grading below that original range. we sat down with the co-founder and cfo right after that stock started trading to ask what happened here. >> our investors are with us for the long run, right? this is day one, you know, it looks like it opened up lower but we're focused on 12 month, 24 months and creating value for our investors. >> smiledirectclub make teeth alignment devices at a fraction of the cost of original orthdontia it was around $9 billion representing 21 times last year's revenue align, the maker ofinvisalign is trading about a third of the multiple well high both start-ups trade at a premium usually the premium should be a little

lower. >> leslie, thank you very much golden state warriors power forward draymond green is an early investor in smiledirectclub and a customer and three-time nba champ who signed a $100 million extension with the warriors. draymond is with us from new york good to have you with us. >> thanks for having me. how are you doing? >> you do have a lovely smile. >> thank you i appreciate that. >> you must be -- we've been talking about how the ipo debut did not go maybe as well as some had anticipated. but you were an early stage investor and you've made some money today, right >> yeah, i have. you know, but i think, you know, with the way that i've been with this company and the relationship that i have with the company is it isn't about just making money today, you know -- i feel that, you know, i'm a part of this company and i've been in it since the beginning and, you know, it's about the long-term success that i'm betting on and i look forward to, not necessarily just

about making money today. >> you know, we had on a couple of months ago in association with his book, your former teammate andre iguodala. and it occurred to all of us that there seems to be a culture on the warriors of guys who have gott gotten entree and met venture capitalists and let's just say active investors, maybe more active than players on other teams. do you think that the proximity to silicon valley and vc world and all of that in san francisco has helped you become a better, more active investor than you otherwise might have been? >> absolutely. you know, i spent a lot of time with some great mentors, you know, sky and bill lee, jason c calcane at the top of the top and spending time around those guys that i do, you can't help

but to learn and i enjoy being in the room with them and just really learning more about the business you know, it's a great place to invest your money and it's a great place to continue to learn and more importantly to help change the world and, you know, that's what i have interest in and it's been really good to me. >> you got big money goals, you want to be a billionaire by the time you're 40 and got more than a decade and also founder of 100k ventures. how do you think about investments? for instance taking smile direct is just an example did you use the product and think, hey, this is a great product, let me find out more or did they come to you how did that become an investment for you >> oh, well, alex was a close friend of mine and i was in the marketplace about to get braces or something and a close friend of ours danny was like, finkel is tarting this company. you should try it and so once i tried it, very successful, had great results and it was like,

wow, this is an amazing product and so danny and i kind of was talking finkel into letting us invest into the company and finally we got him to give us an allotment and invest in the company but, you know, for me, when there's something that i can have a direct impacton or, you know, i can use the product an see how well it performs, it definitely gives me more incentive to want to invest my money in those type of companies. >> did you make money on smile direct it's down 20% on the open here. >> yes, i did and, you know, like i said before, it's not necessarily about what the stock's raised at today. i'm not selling my interest in smile direct i'm betting on this company long term you know, i have a great management team and i know david and the rest of the team will use today to light a fire back up under everybody in the company and continue to take this company to new heights as they've done over the last five years. >> let's switch a little bit to talk a little more about the

business of basketball and the league more generally. in california yesterday a bill i think was passed to allow college athletes to get compensation for the use of their likeness or for endorsements or presumably for public appearances how do you feel about that >> i think that's a great step in the right direction for so many years, myself included, made these universities a ton of money and you don't profit off that at all. you get -- if you're eligible you get a pell grant and, you know, you get a few dollars for food and that's about it, yet some of these colleges are bringing in $2 million, 2 $3 million a game off the gate and the athletes aren't able to profit off that at all so i think this is a great step in the right direction. i'm extremely excited about it and excited for the kids of the future to be able to profit off their likeness the way they thud be able to.

>> i have to say not that it matters that i'm inclined to agree with you i remember the o'bannon case where his likeness was used on i believe it was a video game and, of course, got no compensation and it was forbidden under the rules and the colleges sell a lot of jerseys and somebody is making a lot of money with likenesses let's talk about the nba i don't know that it's ever been healthier and yet there are some people who worry about the idea that there are five or six super teams of which the warriors have been one and may continue to be but 25 teams that really aren't competitive enough what do you think about that >> i mean i think it's kind of that way in any sport. you know, if you look at the nba, the nfl, any other sport there's usually maybe three to four teams a year -- really competing for a championship and

that's just the nature of the sports that we play. you know, i think, you know, we definitely had a great run and i don't think our run is over but there's also some other teams that's trying to put it together however i think the nba is probably in the best place that it's ever been as a league adam silver is doing an amazing job and, you know, all the times are doing a great job and, you know, taking this game and making it a global game and so there's no complaints from our way. if you, you know, if people feel that teams aren't good enough or xants compete, i mean that's on that particular team we all have the same salary cap. we abide by the same rules, it's on you what you decide to do with it. >> what about a white elephant stadium. you're past your prime pump us up about the warriors. >> there's not much that needs to be done we still have a great cast you know, obviously steph curry leading the charge, we're bringing deange'angelo russell

lot of young talent. i plan on trying to play at the best of my ability this year and then also obviously with klay coming back around february, no one is going to want to play us in the playoff, that's for sure. >> no, and, you know, one of the things that's interesting, we remarked on this in the past, the anticipation for this season is really very high and one of the things that think the nba has done well as the nfl has is to make the league a year round conversation topic it's partly the summer league. it's partly the draft and so on and so forth but the player movement this year has been really significant and has people talking >> has a lot of people talking and obviously that's a huge and large credit to lebron james you know, with what he's done in his career that's kind of shown everybody else the power that you have as a player and that's, you know, that's why you saw the

movement this year the athlete, the basketball players have taken control of their own future we've taken control of our destiny and i think a lot of people hate that but i think that's one of -- everybody celebrates lebron for his basketball career and the things he's been able to accomplish i think the doors that he's opened for athletes and especially basketball players is his biggest accomplishment. >> what's the deal with carmelo? why isn't anybody picking him up >> i mean, not sure. i'm not in the front office. obviously i think carmelo is a great player who has had a great career and looks as if he still has a lot left in the tank you never know what's going to happen whether he'll get picked up before the season or not obviously, you know, as a player, as someone who's won a gold medal with melo definitely want to see him in the league and getting what he deserves he's given so much to the league and so many great moments. i think it's kind of crazy that he's not on an nba roster.

there's a lot of players that he's better than that's for sure. >> that usa team that lost yesterday to france could have used him potentially let me ask you about the olympics next year do you hope to play, and do you think that a lot of the nba stars who sat out this year's tournament will play in tokyo? >> i do hope to play and i think a lot of guys will want to play. you know, this schedule this year was a little treacherous with the games that was in america and also traveled to australia which is why i think a lot of guys dropped out. a long way to china. it was just a lot and it's also -- it leads up right into the season, you know, those guys will be coming back within the next couple of days and we'll be two weeks away from training camp so i think you'll see a lot of guys participating next year in the olympics and i hope to be 1 of those 12 guys. >> i would put my money on you, draymond thank you very much for being with us. you guys have a really tough division this year good luck. >> thank you thanks a lot thanks for having me. >> draymond green.

and speaking of ipos, uber fighting back as california sets a new set of rules how they regulate the bumpy road ahead. "power lunch" is back after this >> announcer: this cnbc program is sponsored by pimco. the right tone. ut setting

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uber is fighting back after california passed a bill design it had redefine the gig economy. we have more from san francisco on how they're planning to do that >> uber wasting no time reminding us that the passage of the bill is no magic wand changing everybody's status to employees. that's how tony west put it on a call to reporters yesterday just after that bill passed the assembly and also outlined uber's strategy going forward as the bill does get closer to reality and ride sharing still doesn't have its exemption uber will go back to an argument it has used plenty in the past but one that we haven't heard a

lot of since dara took over. that it is not a transportation company. west said on that call yesterday that, quote, drivers' work is outside the usual course of uber's business which is serving as a technology platform suggesting some have said that drivers aren't core to the business and that may be a wise legal move in the case of ab-5 and how it will fight it going forward but an argument unlikely to go over well with the actual drivers, of course, the most important part of that platform. lyft on the other hand may be interesting to note is facing the same challenge to its business but has certainly kept more mum since that ruling yesterday. kelly. >> all right, deidre, thank you very much. deidre bosa. our cannabis getting crushed after its earnings report. could a crackdown on vaping mean more pain ahead for the pot stock? we will ask the aurora chairman

michael singer after this quick want to ma exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ ♪

may not seem like it s&p 500 is just less than a third percent away from an all

time high. 3019 is the level of .6 of a percent. the dow industrials up half a percent the nasdaq is higher we'll have much more on the markets and more on "power lunch" stay with us i can. the two words whispered at the start of every race. every new job. and attempt to parallel park. (electrical current buzzing) each new draft of every novel. (typing clicks)

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♪ (classical music playing throughout) >> aurora cannabis is falling today. the pot company pushing back its profitability targets for 2020 the stock has been under pressure the this years down 50%

from its 52 week highs joining me now is michael singer the chairman at aurora cannabis. what's wall street missing >> you know, i don't know. we think back of what we just delivered. we deliver 99 million net revenue for the quarter. that's significant i think where we missed is we provided guidance between 100 and 107 and our business is where we fell short. it wasn't because that business isn't generating revenue they generated a lot of revenue. for on a consolidated basis that gets back. that's not a significant part of our revenue. what is significant is our cannabis revenue we delivered at the top end of the rage at $95 million and that's the biggest posted number in our sector. we're very proud to show that 61% growth quarter over quarter. in addition to that we delivered some very important key performance indicators that indicate our company continues to grow at an alarming rate.

our gross margins are up close to 60% far exceeding any of our peers our cash costs to produce has fallen another 20% to $1.14 even as much as a $1 at our sky facility and that drives future margins in our business. our patient numbers super. we're very excited how we see the future based on how we're tracking quarter over quarter. >> i asked you the question what the wall street is missing since you can't identify it i'll go right to the heart of the matter and that is there's concern about the need for capital raise, michael it has been said we believe aurora cannabis has to come to the public markets by the first of the year. what can you tell us about your cash needs going into next year? >> so, we certainly haven't made that decision that we need to

raise anything materially in the early part of 2020 we have a strong cash position at year end. subsequent to year earned we upside to $360 million we have not drawn fully on that facility we sold what was a strategic investment initially that put on a nondiluted basis so coupled with our year ending cash plus the cash we put in the bank subsequent to year end, we're in a very good position to continue to execute on strategy. you know, we're, obviously, i think our cash needs are more driven towards our cap x requirements but we have the ability to ramp our capital needs as we see market demand. so, you know, if we see market demand increase, of course we'll accelerate our cap x requirements and inject capital in that part of our business we'll do that in a very careful and thoughtful way so we don't

put ourselves in a position where we have to raise material money in order to continue to fund our business. >> let me underscore what said in the first part of the answer you haven't decided whether to go back to the markets and ask for more money that's still on the table. >> look, at some point, you know, in the future as we continue to grow our business internationally we believe there may be a need for future capital. we're going to need expand and build facilities elsewhere around the world that's a future idea for us so that there's at some point we believe that may be true i don't think we have the need to do so today and, obviously, we're planning to continue to grow our business with the existing capital we have >> let me focus in on the back last of the year particularly in canada r whe canada, where cannabis and vaping becomes legal won't you have to ramp up spending going into those launches, those legalizations

towards the end of the year and can you tell bus your need to spend on cap x it seems like it will go up fairly significant to 9% from 1% last quarter >> so, yeah. we've already started investing in the sales and marketing efforts that we're going to need to launch our derivative products we're producing the products we're going to launch later this year one important point to note is, you know, why we think is going to be very profitable for the business, you know we're trending very well in the consumer market in canada. we're number one in some of the key provinces of ontario, quebec, b.c. and number two in alberta. we believe that there needs to be a greater role out of retail outlets. we're encouraged because that seems to be happening. with those thing playing out and the launch of our derivative which is higher margin products we're confident we'll have the right or the ability to generate

in the second half of our fiscal year some significant revenues so that's where we're focused on we're investing in that infrastructure today to ensure we have what we need to deliver some real, you know, some real sales numbers in the second half >> i need a 30 second answer how worried are you about the health concerns that have blossomed up around vaping most recently >> so, personally i'm very worried of what i'm reading in the u.s. in canada we're different. we're heavily regulated by health canada. we work closely with health canada to meet or exceed the health requirements. when it comes to vaping or vaping products we're launching we'll test every one of our products to a rigorous standard to ensure the products we offer to consumers are safe, and we feel comfortable we're not in anyway putting at risk our customers and our patients with regards to our new derivative

products >> michael, thank you so much for joining us we appreciate it >> thank you very much >> michael singer, aurora's chairman >> i'll be watching the ten year for the rest of the day into tomorrow 179 in the last hour >> what a change >> s&p 500 back over 3,000 >> thanks for watching power >> close bell right now. welcome to the "closing bell". i'm morgan brennan on the floor of the new york stock exchange where today momentum is back we're just inches from a new all time closing high. will the market make history in the next 59 minutes >> you got a lot of notes there morgan i'm looking forward to a super well prepped co-anchor >> big show. >> good afternoon to you let's look what's driving the action trade optimism as u.s. and china have extend an olive branch each in purchases and tariff delays but