Transcripts For CNBC Power Lunch 20171207

Schools closed live on the ground with the very latest power lunch starts right now thanks, mel. Welcome back im Brian Sullivan dow hitting session highs up 110 points s p 500 trying to make a fourday losing streak, industrials, energy and tech leading Consumer Staples and utilities lagging. Individual companies to watch include lululemon. Shares soaring beating estimates, boosting outlook. Dollar general a nice bump topping expectations and check this ut. Ge up 2 unfortunately, because the struggling industrial giant saying it will lay offanother 12,000 people. This tile, tyler, in its power division. Thank you, brian. Bitcoin, bitcoin, bitcoin. A rhyme i could make but i wont. Wall street and main street getting caught up in the frenzy. Bitcoin, hitting 16,000. 16,000 for the first time today. Then just moments later, 17,000. And then 18,000. Then 19,000 on coin banks. Right now, on somebodys base, its 15,360. Mr. Pus pisani at home base. Keeps going up and up, firms involved in futures getting nervous. Ahead of the Futures Industry Association sent a letter to the chairman of the cfdc laying out their members concerns saying more discussions are needed among regulators and exchanges in clearing houses and firms what the right margin should be and trading limits clearing firms are especially concerned because potentially they could be absorbing excess losses from what they call a volatile bitcoin market. Simply put saying wait guys. This thing is moving 1,000 an hour margin 30 and bitcoin drops 50 we clearing firms are potentially on the hook for part of that money. It could be a lot. This is only part of the debate. The main issue is, whos regulating bitcoin in general . We know the cfpc regulates Bitcoin Futures but the cash market what we quote every day is unregulated, folks. The s. E. C. Already turned down bitcoin bcs because they are unregulated. Not clear if this is satisfy the se ecke. And the wallet guys, between investors and bitcoin and the actual bitcoin itself is another whole gray area of regulation. Bob, i mean, the fia represents the big firms like the Goldman Sachs, citi and morgan stanley, et cetera. Is there the risk potentially these institutions do not step in and, therefore, the liquidity will not be there when the futures contracts start trading . Because of the perceived danger the fia lays out no. Remember, weve never really talked about clearing. Its very important. Basically the intermediaries step in, you bought something . Sold something were guaranteeing these people talking be representing the clearing firms themselves probably 60 out there saying, wait we want more consultation whats the margin levels that they should be here obviously saying we think a lot higher, because if things blow up and the margins dont cover what is necessary, potentially those people in the clearing firms themselves could be on the hook for what is left over thats a legitimate issue, when bitcoins moving 1,000 an hour. Normally you dont have these discussions because you dont have this volatility coming out. Here its a legitimate issue. Thank you. And bitcoin and other things one of six things concerned about for the next year. Joining us first on cnbc with his 2018 blaybook, bill gross. Bill what do you think at bitcoin . Good morning. Well, bitcoin, it goes up, doesnt it doesnt go down. For bitcoin you know, being looked at as an investment to be a functional currency, really, its place in this future society, it has to earn the historic currency of any country, its got to reduce volatility similar to the pound or to the euro relative to the dollar, and has a long way to go with regard to that in terms of volatility i wouldnt buy it here until the lava cools i guess, until volatility comes down and becomes clear governments are not going to regulate it. Would you buy it al all not here at this price, but you can do whatever you want youre unconstrained, after all, bill would you buy it you know, the unconstrained fund is a very conservative fund so its not bitcoin related. Let me give you examples for those speculators and might see sfla value in bitcoin an alternative to the dollar or alternative to the Global Financial system, and supposedly theres only going to be 21 million bitcoins in existence and theres 52 trillion dollars worth of m2 and m3 on a global basis. Divide 52 trillion by 21 million i dont want to tell what you that number is, but its not 18,000 its much higher so if bitcoin ultimately and im not saying it will, dont think it does. If ultimately it become as global currency and replacement for some of the currencies we have now, then, you know, its got a way to go in terms of its value, and in terms of its limited supply the most incredible stat ive heard this week came from bank of America Merrill lynch that said, bill, stocks have out paced bonds for a year and a half now first time thats happened sevenyear streak of outperformance faculties since 1928 and third time ever in 220 years of American Financial systems. Does that worry you at all i mean, when i hear those kind of comparisons, 28 was not the best year to compare anything to. Well, you know, it all worries me bonds worry me, too, because all asset prices, in my opinion, brian, perhaps bitcoin as well, are artificially inflated based upon the creation of credit and the you know, the presentation by Central Banks of buying 1 trillion worth of bonds or Corporate Bonds on an annual basis and until that stops, then this artificiality, not just the bond market with negative Interest Rates in parts of the world, but artificiality in terms of high pe ratio relative to that, you know, it is going to be suspicious. So i would be very cautious from this point forward ive been cautious as you know for 12 to 18 months and unfairly so i guess relative to the market, but i think at this point were reaching a point where future returns are going to be limited. You know, artificially inflated could be a good thing in the short term pap good thing in the long term or terrible thing in the short or long term. It everybody continues to buy, we keep going up, bill, do you have an idea when were going to see if there is this artificial sort of central bank bid under so many assets, when that comes off sure. We know that to a certain extent we know the feds cutting back and basically selling in a limited way in terms of their 4. 5 trillion portfolio we think the ecb will cut back in a month or two the end to this infusion i suppose of credits is certainly moderating and at some point in the next 6 to 12 months will flatten out. At that point its up to the economy and up to inflation nominal gdp growth to point the way towards valuations Going Forward. Up to this point, Central Banks, corporations, brian, back there with the stock those two primary factors are diminishing. Lets look to the economy Going Forward and tax cuts for value or lack of value. Quickly, with the yield curve flattening do you see recession in the next three years in the u. S. No, i dont i think fed funds should be capped at 2 higher than 2 , which might flatten or invert the yield curve, then a problem. Until that point, no, i dont think well see recession in the near future. All right bill gross have a happy holiday see you in the new year. Thank you. Thank you, brian, you too. Coming up in the next hour, more on what else . Bitcoin with bart chilton, former commissioner. Tyler, see if he thinks the governments are going to ultimately come down on your favorite bitcoin. Thank you. The big story in washington, watch closely, meantime on wall street, will there be a deal to keep the government open in two hours, senator Charles Schumer and Representative Nancy Pelosi or as the president often calls them chuck and nancy, will head to the white house. Eamon javers is there. And Kayla Tausche from capitol hill. Chuck and nancy are coming to the white house meeting with paul and mitch, the republican leaders. All on a firstname basis. The big four leaders a bipartisan meeting they couldnt execute last week because of a flap over the president s tweets democrats pulled out of the meeting, but a lot to talk about and are back today including this Government Shutdown showdown some fighting on capitol hill over exactly what theyre going to do here with a twoweek extension. Socalled continuing resolution, whether they want that to punt from tomorrows deadline to just before christmas or just after christmas and democrats want to see action taken on daca, the immigration provision given so much attention and a fight about defense versus nondefense spending all of that to be talked about here at the white house at 3 00. Well get a briefing from Sarah Huckabee sanders at about 1 30 you can expect they will be asked to weigh in to the controversy over al franken. Senator from min mine announced earlier today hell be resigning in a few weeks a lot of stuff swirling around here at the white house. Well wait and see what they say on any of those subjects watch the body language in that meeting to get a sense whether or not were heading for a showdown at the end of the week or end of the year. Eamon, thanks very much get to Kayla Tausche for more on what a yield could look like. Reporter both chuck and nancy said separately on the hill this morning they dont want to see a Government Shutdown n shutdown that has not been the democrats position historically. Republicans are trying to whip the votes making sure they have enough to pass this continuing resolution within their other party. Gop leadership has been working with the Freedom Caucus back and forth over the last several kays and House Speaker ryan feels good where they are now leading into a vote this afternoon to that end, mark meadow, chairs the Freedom Caucus, believes the Freedom Caucus will give them the votes to get just over the line of 218, what they need. That vote coming later today the senate could also vote as soon as today, if that is something that leadership chooses to do. What happens next is really the variable at this point, because this continuing resolution which will likely be two weeks would set up a potential Shutdown Scenario just three days before christmas, but one of the points that the Freedom Caucus has wanted to make sure to negotiate is longerterm funding for defense. That would most likely gee through the fiscal year in september and also buy republicans time on tax reform so they can worry about Spending Priorities after they go ahead and get that conference done well see exactly how that pans out and what exactly theyre voting on today. Interestingly, Minority Leader Nancy Pelosi said that she hopes the president will bring a new deal to the table. We were concerned when the president started mocking the meeting, saying there would be no deal and all that and i thought, well, if youre not ready to talk, then were not ready to come. Now he has made the overture for us to go hopefully that means hes more receptive. I assume since he invited us he will have an offer to make. Reporter the white house wont comment on what exactly the president plans to offer. Thank you, kayla. Your next guest doubts it will come down to a showdown. Saying its not in anybodys real interest. Maya, welcome good to have you with us. Thank you. Explain your reasons here on the face of it it would seem nobody seems to win when we have these temporary Government Shutdowns, but how meaningful is it, if youre going two weeks at a time in terms of funding that doesnt feel responsible to me. No that doesnt feel like how we should be budgeting, does it . We often do this massively short term moments on budgeting and should certainly not be bog thadoing that it is no not in the democrat or republican interests to have a Government Shutdown. I think well get through the next deadline without a problem. Thats not to say things will go smoothly here in washington because we have so much Unfinished Business and about to switch from the process with tax reform, which went stlu reconciliation, can be done with republicans only, moments that have to get done but need bipartisan support the mood here is not bipartisan at all. You dont think why do you think that, maya . So what are among the things identified there a lot of things that then have to go through what i call regular order or whatever is the term of art, but what are those critical things that will require some bipartisanship . Right and regular order should not be budgeting two weeks at a time as pointed out. Right. After we get the tax bill done and they still have to work out differences in conference, that opens wounds. People feel things important to them and were promised they didnt get this important issue of the spending sequester on Discretionary Spending how much on defense and how many on domestic Discretionary Spending will be increased above the sequester caps because the truth is, nobody want to comply with those caps but theres a difference between republicans and democrats between how much increase should go to defense or other parts of the budget thats very expensive, potentially, and going to be very important its not negotiable to a number of members but on top of that, theres a, another sequester people dont know about, but because if the tax bill goes through and planned and adds 1. 5 trillion to the debt at a time we cannot anoord, an automatic sequester to a lot of programs we assume it will be waived but maybe not without issues as well other things the c. H. I. P. Program needs extended and obamacare that people dont want. So many variables, no goodwill and very little time. Maya if there were one issue that could derail the whole process and do what you think is unlikely, cause a Government Shutdown, would it be one of those actual budgetary issues or Something Else efforts, for instance to tie this to immigration, the daca issue . Yes more likely to be some of those less budgetary related issues, which are more important, less in the dollar sense, less in the budgetary sense and more in that there are a number of people, those are their top tier ish i and ask and that could been heated and charged and a whole lot of external events going on as we see every day watching the news that could blow up any one of these very sensitive negotiations. Maya, thanks. Appreciate your perspective. Thank you. Coming up, how will tax reform affect the appreciate equity and real estate markets well ask a bill nionaire next. And jim cramer speaks and a live report from the sce onef a los angeles wildfire when power lunch returns zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Three quarters of the year private equity fundraising jumped to rising levels. The number of deals executed during that time was down 11 year on year what can we expect in 2018 and how will the new tax bill mean for the industry bring in one of the largest voices, foe founder, ceo tony wrestler thanks for your time thanks for being with us. Thanks for having me. What your anticipated outlook for appreciate equity given an expected major tax cut for corporations well, i think generally speaking as you mentioned, theres an enormous amount of dry powder in private equity i dont think were completely clear on what this tax reform will mean, the ability to borrow its pretty clear that 23 youre if youre a reasonable Company Borrowing as reasonable rates, not a big impact. Accessibility to borrow, which is the target of the legislation. Generally thinking we think of private equity as continuing to be a very strong industry. Low Interest Rates, high prices. Whether in private equity or real estate. Most Asset Classes in todays world. It mean as focus in private equity for those in this business for an extended period of time is to focus on companies that can grow their cash flows in a meaningful way. Youre not making your investors money by buying attractively in todays world. Youre making your investors money by building the businesses that you buy to become better to become more efficient, et cetera nap is the key to the private Equity Industry. Tony, to drill down on what youre saying about the ability to take on debt. Is it because there are provisions now that would eliminate the ability of companies to deduct interest and companies reliant on the debt market have to effectively pay more more ability to lever up a company you buy is going to be more limited or going to impact your returns well, again, as we tried to highlight at the outset, those companies that are able to grow its cash flow, i think are going to be far better off and yes, Certain Companies and buyout shops that will not be able to use that last turn of leverage far as im concerned thats good for the industry it might have an impact on certain borrows, issuers but generally speaking the private Equity Industry was built and should be built on companies bought, yes, using modest leverage and trying to make those Companies Better make their cash flows grow meaningfully and, therefore, become bigger and better and more valuable businesses to me the impact on the ability to borrow passed a certain multiple i dont think its going to have a terrible impact on the private em kuwait business and will help those businesses that grow and those buyout shops that focus on growing businesses. Tony, its Brian Sullivan we know a lot of real estate stocks came back in the last six weeks or so. Structural problems with real estate exists. Are there distressed sellers creating great buyer opportunities poor equity buyers like you in real estate i dont think weve seen a world of distress in todays market, but if you start with the premise, we certainly do that with very low Interest Rates for an extended period of time you have reasonably high asset areas across the mix in the real estate world, in the corporate world, in the stock market if you believe, which we do that you have high prices, generally high asset values, you have to be a bit more creative we described what one has to do in the private eck feat situate. I. E. , buy companies with more ebitda cash flow growth and understand, we look at the selforigination of credit we look at direct lending in the u. S. Direct lending in europe certainly structured credit or private abs. Real estate lending. All of those as Asset Classes selforiginated direct lending product to create alpha. You have to be a bit more creative and away from the more traditional and more efficient markets. Tony, hang on we know youre based in los angeles and wanted an update on the wildfires there. Aditi roy is in ventura, california thats the latest . Reporter hi there, melissa started out this morning in los angeles and traveled about an hour north to ventura where we are now and came across this neighborhood first, it seems like theres only a few charred trees and things but then you turn around the corner and take a look at this devastation this was once an apartment building, and you can see its just turned to rubble. Dozens of units here, firefighters are trying to put out the last of the embers here. The real culprit, the winds. They are high. You can see it on our live shot. Fanning flames further west closer to the coast. 150 structures destroyed that includes homes and businesses tens of thousands of people have to flee, not knowing whether theyll have homes to come back to some only have minutes before they have to pack up and leave for many, even getting out has been a challenge with major road closures overnight a big chunk of 101, a major freeway that runs up and down the state, that was shut down north of los angeles. Also we spent time at a local red cross shelter where we met a woman named Patricia Camden who talked to us about the terrible moments before she and her boyfriend had to leave. It was absolutely surreal there were fire trucks everywhere, smoke so thick and the fires so huge. People running everywhere. It was scary reporter when we met her, patricia talked how she only had 20 minutes to pack up everything and leave and basically had the clothes on her back. She actually lives in this neighborhood and knows that she doesnt have a home to come back to, that its burned to the ground we also want to mention to you more about l. A. And the fire theres. We talked about them earlier this morning it appears that that threat has subsided a bit and the bigger challenge for firefighters now is in the area where we are here in ventura again, about an hour northwest of los angeles back to you. All right aditi, thanks. Back to tony wrestle rewrer. Whats the latest there and the impact on your home town as you point out, this is an extraordinary human tragedy. When you have dry hillsides and extraordinary wind gumpts, thats a terrible combination for metro los angeles, for the state of california when it comes to fire season this is horrible under any scenario my house is remarkably close to the skirball fire up on mulholland drive people are on evacuation notice. Its a horrible situation. Im not sure what kwun say except we need a little help from the weather out there, and i dont know if were going to get it doesnt seem we are today. Well keep our fingers crossed and hope for the best. Our fingers are crossed as well tony ressler. And the stock absolutely soaring today. Tell you more about the biotech bounce coming up. Plus, putting a lunch in power lunch. The ceo of taco bell joins us, a lot to taco about. Melissa . Oh. Expect massive delays. radio channel changing news anchor 2 all lanes on highway 50 remain closed at this hour. news anchor 3 the stats are in and this city leads with some of the worst traffic, with the average driver sitting in gridlock the equivalent of three days a year. For every hour that youre idling in your car, youre sending about half a gallon of gasoline up in the air. That amounts, over the course of the week, to about 10 pounds of carbon dioxide. Growth is good, but when it starts impacting our quality of air and quality of life, thats a problem. So forwardthinking cities like sacramento are investing in streets that are smarter and greener. The solution was right under our feet. Asphalt. Or to be more precise, intelligent asphalt. By embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to study and analyze the flow of traffic. Then, we will take all of that data and we use it to optimize the timing of lights, so that traffic flows easier and travel times are shorter. And sacramento is just the beginning. With advances in cameras, sensors, and network speeds, we have the ability to make cities smarter, and happier. What excites me about this technology is that were using some of the most cuttingedge machinelearning, and ai, to help solve the most fundamental challenges that cities face around the world. Who knew asphalt could help save the environment . lani and the possibilities are endless. Your new brotherinlaw. You like him. Hes one of those guys who always smells good. His 5 oclock shadow is always at 5 oclock. You like him. Your mom says hes done really well for himself. He has stocks and bonds. Your dad wants to go fishing with him. Your dad doesnt even like fishing. You like your brotherinlaw. But youd like him better if you made more money than he does. Dont get mad at your brotherinlaw. Get e trade. Hello everyone im sue hair herrera senator al franken will resign for inappropriate sexual behavior saying he will not give up his voice, though, and will continue to address issues as an activist then he took a swipe at President Trump. I of all people am aware that there is some irony in the fact that i am leaving while a man who has bragged on tape about his history of Sexual Assault sits in the oval office. A federal judge sentencing larry nasir, the former usa Gymnastics Team doctor to 60 years in prison on federal child pornography charges which grew out of a sex abuse investigation. Nassar has been accused of sexually assaulting more than 100 gymnasts. And former Police Officer Michael Slager sensed to 20 years in prison for shooting an unarmed black motorist to death in 2015. He pleaded guilty to violating Walter Scotts civil rights by shooting him in the back as he was running away from a traffic stop thats the news update at this hour. Brian, back to you. Sue herera, thank you very much. A check on markets higher ay cross the board. Boeing, talking about with jim cramer in a moment nike and caterpillar fueling the dow. The dow up just under 100 points mel . And therapeutics soaring today up by last check more than 74 on positive results for its treatment for depression joining us now we have more, meg . Reporter right analysts call the results as good as could be hoped for the experimental drug approved, prozac, zoloft, better treatment is needed. Estimated 16 Million People in the u. S. A year are thought to have depressive disorder this offers a potentially new approach the company ran the trial on 89 patients comparing medicine to placebo and found after two weeks patients taking the drug had a reduction on the depression scale of 17. 6 points compared to 10. 7 for people taking a placebo analysts noted the effect size is larger and reached more quickly than generally seen for other medications in depression. No serious side effects reported in the study the next step, of course, run a larger trial to learn more about the medicine including its safety its not a sure thing it will sail through fda approval. 65 to 40 clearly off to a promising start and wall street appreciates that. A total addressful market is potentially enormous. Absolutely huge the dollar size analysts put on that as well look at drugs like prozac, cymbalta, multimillion dollar a year drugs competition but existing drugs dont solve all the problems still need more. Note coming up on power lunch tomorrow, ceo jeff jonas joins us. And boeing has been one of the biggest drivers of the dows record run this year well hear from the companys ceo what this tabi cld anoroeing. Ou see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade announcer cnbc news update is sponsored by shares of boeing moving up yet again today by about 2 leading the dow and for the year stock up more than 80 a short time ago jim cramer wrapped an exclusive interview with ceo Dennis Muhlenberg one of the key topics, Corporate Tax reform. Tax reform is the gel most important thing we can do in this country to unleash Economic Energy it will unleash growth first thing were going to do with benefits of tax reform, invest in ain innovation create more manufacturing jobs Shareholders Benefit too improve dividends, shared repurchase number one, cash here invest in innovation for the future. Jim is with us now to talk boeing, bitcoin and the big, bodacious rally. What were the other takeaways from your conversation first, thank you for having me one of the things that you get a sense from is this Iconic Company, and its always trying to do better so whatever dollars come in, it will give you a very good return 3w506 boosted the dividend over the past four years over 20 but have so much to invest in. Dollars, put new shifts on, train new people a lot of times we have gotten cynical. In the old day, we did that repatriation, whatever, companies paid it out to shareholders a lot of companies have paid a lot to shareholders but are anxious to grow and have more opportunities. Boeing is a primary example, wow, they do better with the money than the government would. They have real demand with their products. Oh, boy, yes. That is, to me, one of the distincts between some of the companies that might take some of that windfall and reinvest it. So true. They have demand. They put up more plants and build more planes, they make more money not like build more planes and build if they come, they need to meet the demand. The backlog is years . Yes argue 41,000plus. These guys, i dont know if ive been to a boeing plant, used to make five a week they have to produce triple that and these are gigantic they arent widgets. A guy like that is saying, boy, to we use the money and its refreshi refreshing not saying use the money like an activist, buy back more stock . He needs the money because he needs to compete against airbus. But going to do it all. For shareholders, thats key repurchases, dividends and reinvesting. So right, melissa he is saying, you can get a triple play here this would give us a chance to be able to boost the dividend more, buy back more and, thats what well do with what left after we can make enough planes to be able to beat bombarde, they think are dumping and airbus because its competitive. This company is a best of breed you would call it. Yes. If im assembling a portfolio of individual stocks, there are some companies i think are mustowns. Is this one of them . Yes and i have to tell you before doing the work, ive always been intimidated fact it keeps going higher something well talk about keep going higher but does so in a way perhaps not exactly whatwe would like, but after speaking with dennis i realized that the reason it goes higher, its no longer cyclical. The demand, how they set up with business services, do spare parts. The fact that in asia so few people taken place but says only a fraction of people around the world have been on a plane. Yet travel, a few dollars, a middleclass issue this is not the boeing of, when i first started trading. How much they making thats over. When you get a stock that a crick iming now secular deserves much higher trivia time ready . Didnt your dad work for boeing aerospace trw. Secret stuff, like. All doing this longer than we care to admit. Do you, and i know you do, melissa. I call it the acromous. Go up it 50 every day. You just dont understand. What dont you understand about the fact our stock goes up every day . Stocks dont go up every day thats really what you think. Were the new model one guy calmed himself, i remember, the internet zibotsu we know what happened. Critical of bitcoin. It hurt. Well i think it actually could end when the three definite exchanges make a twoway market to do that you have to produce sellers. Thats whats been lacking in the interim, yes. Weve had people onair correctly say you could go the 40,000, 50,000 why not . Theres no real sellers, but no real transparency. Why i believe in block chain as a concept that is not the rebuttal to transparency pip thats even less transparent we dont know who created it, who kept it back we dont know where it is. But we all by the way, its not a curse. Can we its not. Its an instrument. An asset. Like gold isnt it isnt that the best you dont buy shoes in gold, but its worth something. Right, and gold they find, say, 1 each year, find more gold in the country. Gold in the world, and this obviously, through mining, via nvidia chips and amd chips cant saying it cant go up. Everybody on the street wants to buy bitcoin and wanted to buy cmgi and then and then throw them out. Dont just sell dont sue us. Not kidding writing a remake of mr. Ro robo. Bitcoin, and perform it on that. Second part is live. Im writing it. And online make let this continue offline. Thank you. Thank you, and i do think that boeing is a true Iconic Company that people should feel better about. Speaking of boeing, my entire interview tonight, mad money 6 00 p. M. Eastern time. To the bond market Rick Santelli tracking all the action hi, rick. Reporter hi, melissa lee a fed meeting is coming up think well see a tightening twoyear captured the 180 handle but seems to be going sideways here. A lot of the actions on the long end in the other direction. September 7th chart of a 30year bond fighting to hold out because basically hovering at the lowest yield on a closing basis since about the first week in september finally, it was all about breck it and the pound and then all of a sudden it wasnt the pound is making a bit of a resurgence you see on the september 1 chart. Look at the chart going back to june on the pound versus the euro, tell you, this is interesting. Intraday now taken out a level we havent seen since about the middle of july it hasnt closed yet but i continue to say, euro a great currency to monitor and dont change your monitor, femi lchrerninun tus a w nutes. Welcome back to power lunch. Im Michelle Carusocabrera at new york stock exchange. Google mexico and tourism, first page, recent stories about crime waves near the famous beaches, concerns about tainted liquor causing american tourists to black out. One reportedly drowned after she drank tinted liquor, and mexicos secretary of tourism is here in new york city to meet with tour operators, trying to assuage concerns, in d. C. Meeting at the state department. Good to have you here. Thank you. A lot of people are worried going on vacation to the bu beautiful beaches of mexico is unsafe because of this tainted liquor no evidence about tainted evidence there is no evidence i know the story and the case. Studied it, and unfortunately, we found out that that is not related to tainted alcohol it has to do with excessive alcohol. We know in u. S. , as in many parts of the world, there is an issue of binge drinks, excessive drinking, and that is the reason for why many people die in the u. S. As in other parts of the world. So theres no tainted alcohol evidence in mexico. So when the state Department Says theyve gotten reports from people who say they drank very small amounts of alcohol and still blacked out, youre saying, those people are wrong thats not true . We have to see case by case the case that ive seen, where i have medical evidence, evidence that the amount of alcohol drunk was excessive, by the way, once you have 0. 2 alcohol in your blood you have the likelihood of losing control physical and mental and can have an accident and can die. What about this report that you actually rounded up thousands of bottles of illegal liquor that was being distributed to hotels, for example, in the cancun area . Two things. We have to clarify the dist between tainted and illegal. For us illegal in mexico is alcohol not paying taxes but the type of alcohol sold and given in the allinclusive hotels in the cancun area, that is good alcohol and good quality. What we should all pay attention, the u. S. And mexico and we will work on that is to give a more responsible drinking of alcohol thats what we should work on. So the liquor rounded up was not tainted . Its not tainted. It is not tainted. I think that we had a problem of communication. We wanted to be clear. We wanted to send a message were paying attention, and the message that went out incorrectly is that it gave the perception we have tainted alcohol. It is not tainted alcohol. There is no evidence and were going to analyze case by case, michelle. Because we do not agree for people to create stories and have a bad perception of our country. We received 38 million foreigners into mexico every year 20 million americans that go to mexico, have a great time, come back safe into the United States and repeat so i mean, we have decided to give the correct information, accurate information, but we do not want misleading information. What did the state department say . Could you convince them to get rid of their warnings and what are the tour operators no, no. We wanted the state department to get rid of the warnings what my responsible comment has been, is saying, that sometimes that information is misleading wh try to pull a paragraph and imagine that you have to describe the u. S. From the point of view of security in a paragraph, the picture would not be very nice so it is misleading i dont think it is a wise way to help americans make an intelligent decision thank you so much for enjoying us hes mexicos secretary of mexico and tourism the taco bell change is unveiling a dollar menu. Taco bell ceo is joining us next cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley we cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. It is fast food, the yum brands the stock prices is up 30 and yum china. A good part of yum success, taco bell introduced on a dollar menu and working on it massive worldwide. Lets have lunch with ceo brian nick kyrgi nichols. So dollar menu, how do you make money selling food for a dollar i was going to say fortunately, we sell a lot of dollar items and a lot of customers choose to buy other things on our menu so it works out great. You come in and take the dollar item and you add and embellish it some how or how way. You are adding to the number and it is a large number of items that i can get at a taco bell for a dollar you are expanding that thats right. Well be launching a new dollar staffer in a couple of weeks and we have our dollar cravings menu of all textures and flavors of taco bell and we have a Breakfast Menu so you can get your day started with a dollar whats your favorite dollar item the beefy bowurrito and some cheese it is not complicated mcdonalds has a dollar menu as well. Their items are pricing one, two, and three dollars are your dollar menu item are one dollar across the board . Yes, surprisingly, it is a dollar we are breaking ground here only on cnbc you will get this brian, i have a serious question, whats the average, does the average check size goes down when you have an expensive dollar menu, what is this doing for your business . What we see is our customers coming Electoral College and they access the dollar menu and access other pieces of menu. For us, it is really tremendous value. We have a lot of items for 2 and 3 and you know on average, our ticket is and the 6 or 7 range. What we see is people getting the variety that they want at the prices they can actually afford and it becomes assessable of the entire menu lets be honest. You scarf down a burrito in two bites. But, a serious question, brian. I am sure you are aware of chipotle problems. Do you view chipotle as a competitor or is a different customer is there any noticeable uptake from your business from chipotle woes t the situation for us is we are competing for various eating occasions, breakfast, lunch and dinner they actually the bulk of their shoppers are a different cohort. Sure, we are competing with anybody. We want to be at the top of the line and we want to be the brand they associated with thats why we have the right Value Solutions and right flavors and experiences that you want the burrito you scarfed down, i want to make sure others are excited about it we learn that a dollar is a dollar at taco bell and a beefy chip burrito has chips and burrito. Bitcoin, 19,000. 7,000 gain . Just two days . Is it panic fine . You cannot miss this i am covering a world of gift cards where it helps fuelling the Opioid Crisis. Power lunch continues after this ation that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Welcome everybody, i am tyler mathisen, the second hour of power lunch. Local and state Tax Deductions depending on where you live. We dig into the number to see what it will do to the economy a deadly gift how gift cards are helping to fuel the Opioid Crisis as bitcoin continue to smash records, are regulators moving too slowly and exchanges moving too fast power lunch starts right now lets get a check on the market right now the nasdaq is leading the game here, and s p is embracing a four day losing streak materials are your winners we got some movers for you today, talks are ongoing with disney and lululemon are jumping in strong of sales speaking of retail, the spdrs pr retail are up bitcoin as tyler have mentioned, the story of the day crossing 19,000 on the coin based exchange for the first time. It is now soared at 33 this year alone not bad. This is a bit Stamp Exchange quote, price thank you, mel congressional parties heading to the white house for a meeting with President Trump the next hour this is a possible government shut down eamon javers is in washington Sarah Huckabee sanders just wrapped up her briefing. She reiterated of a clean pr, clean means they dont want any Political Writer on this they want to pump the deadline to allow negotiations continue republicans on capitol hill is voicing their opinion and there could be a deal to be had here here is paul ryan talking earlier today. It would be nice to get back to the table and start negotiating caps and all other things that we have to do. So when we come back to the table, well start conversations and it is going to take some time and accommodating all of these things reporter nancy pelosi is laying out what she sees as a democrats preference here democrats never supported shutting down government and we dont do now the republican leader in the senate does not see a government shut down happening this year. All of that begs the question though, what is the deal here that can attracts some democratic senator to vote for in the senate but dont move conservative members in the Freedom Caucus of the house of representatives. They need democratic votes in order to pass spending measures later on this year if that something loses votes from conservatives in the house, they may have a problem of getting it passed. Thats what we are seeing play out in washington. Well see it play out inside the white house in about an hours time back to you. A controversial part of the gop strategy is the push it is known as salt. Critics calling it a tax hike on the blue state Steve Liesman with a look of the impact of salt it is high anxiety and high tax states over the possible economic fallout from losing the ability to deduct states and local taxes. It is salt deductions in short ending deductions is the biggest revenue razor in the tax bill would bring us 800 billion to trillions of dollars over decades. Thats offset taxes elsewhere in the economy unfortunately, there is not a lot of data on the specific impact theyre moving around chairs on the deck of the titanic just to make sure everything fits the way it is supposed to. If you ask any of them, what are the economic consequences of the individual provision, i am sure they have no clue. Whats known is this will hit those states high taxes and including california, new york and new jersey and illinois. Senators say by itself, it will hike individual taxes as 2,500 or upward. It does not include other offsets like the effects of lowering taxes many state cannot or wont lower taxes in response. Suddenly, you cannot deduct those property taxes both versions allowing 10,000 property Tax Deductions. There is talks because of politics allowing income taxes republicans and lawmakers are pushing it behind the scenes it hurts you in the wallet and kicks you in the asset how long does it take you to think of that . Thats very good. I will say though the people i have talked to, it is a good chunk of change but it does not move the National Economic i adpree wigree with that it is a hyper local issue there is a little hyperness about that just remember that. It hurts in the wallet and kicks you in the asset a lot of people are affected by this so they maybe getting a little extra we are not self observeabsore are just not late yesterday, citi gro group do investors and other banks have to worry the same joining us jeff owe deal it is confusing of many who are not bank analysts. Explain why Corporate Tax cuts may hurt earnings or Balance Sheet because they have to write down certain tax in assets pulling forward . Thats the big part of it sending out the tax assets there is going to be of the way things are set up now if this bill becomes law deemed to r repatri repatriotuation you will pay a tax fee with that, too. There is going to be about up front hit. It is going to be bigger and the more dtas you have and a lot relatively to any other. And depends on how international you are. The more international are, the more profits you will return back the key for all banks are a lower tax rate is good for business Going Forward i advise investors not to lose sight of the force here. The issue is 14 or 14. 5 . Tax cuts will get more money into the private sector and thats good for business thats good for business and thats good for banks. Yeah, so this i guess i am trying to explain the Market Reaction yesterday maybe algorithm and pulling the numbers. They estimated to be 15 billion back then. So we are talking about 5 billion more and makes the number seemed a lot less intimidating most investors on the intuition side that i am talking to are not surprised of the proposed tax rate going up 25 or 20 you figure it would be higher. Not a lot of surprise that people are paying attention to at citi group. But, it was a headline number that spooked many people yesterday. You hadoes less regulation ad lower Corporate Tax rate offsets which what we are seeing right now, and as well as a flattening yield curve. Yeah, the thing with trading revenues is it is hard to extrapolate and the First Quarter of the year is the strongest quarter. I dont think that gives us any in sisights on how next year wo be thatll help one thing thatll keep me bu bullish on a lot of large banks is their exposure are much more of the short end of the curve. With short trends going up, it is banks that are exposed to the later part of the curve. I think universal banks are well positioned for that. Jeff harts. Thank you. Thank you bitcoin is smashing past 19,000 today on the coins. It is having an insane run and not everyone is happy about the news a few Industry Association in a letter claims the launch is happening too quickly. We remained apprehensive with the lack of transparency and regulation of under lining reference. We are asking in launching these in the future. Joining us now is bart, great to have you with us thank you, melissa. Great to be ywith you he kept on saying it is greenfield we wanted to signal this launch, is it too greenfield in your mind when you have a product itself is not regulated, is that safe for the system it is safe, michelle. And for years and the first time i talked about this of four or five years ago on cnbc and on squat box. I said these things need to be regulated. It does not have to be a full thrown in regulations. I support Digital Currencies there needs to be some protection i am pleased as the cme group as you said and nasdaq will offer a future contract. They know what they are doing in these markets and cme is the most liquid diverse traded future contracts around the world so added trade parecurreny that we do not have, the transparency and the Counter Party risks so if somebody goes bad on the other side of the deal, they can get paid. We saw it today where there is a record of millions of dollars were loss in a text messadigitat it cannot happen soon enough to the fias point. There was not a lot of discussions of mechanics of how these future contracts will work let me ask you about a real life scenario in just the past 40 hours, we are seeing 40 move in bit coin. That could happen over the weekend. When future contracts are not traded and bitcoins are traded, what happens then . Somebody is holding the bag on mondays morning. Margins are adjusted when things are volatile and things going up and down. Theyre very adapted setting these margins and they know what the risk is. Now, will this be a little bit more challenging or keeping a closer eye on it absolutely. They know that going in. Let me address your first point when i was at the agency for whatever it is, probably too long in some peoples mind you know this happens all the time as a Self Certification cme is not going to cold in and hey, we are going to do this without talking to the agency and they are weeks of discussions and there is a ten day approved process the agency can stop at any time. The quicker we can get to some transparency or who we know of the market i think that the under line will also have a little bit more stability than we see now. And i said for years that we need not just the regulatory apparatus but something should be based upon the physical and something thats tied and you can touch and feel and i am pleased as a major announcement coming up tomorrow and something that i am involved in called oil coin which is fully regulated compliant and be based on barrels of oil it is something i have been talking about for a long time and i am putting my time and energy where my mouth has been thats coming up tomorrow. Bart, thank you very much thank you. Here is whats coming up. Well ask the former ceo bill george and well tell you how a gift card scam is costing retailers billions of Financial Sales of deadly narcotics and why wealthy americans will not flee the tax cut all that and more when power lunch returns im an outdoorsman. So ive asked chase sapphire reserve cardmembers to find my next vacation. Chile, whats going on . Im at the el tatio geysers. Geezer. Geyser. Geezer. Geyser. Enough. Geezer. Whoaa, wooooo. Dude, be careful. I think you should come camping. Why would i camp in the atacama desert . Oh. 3x points on travel and restaurants on every continent. Sapphire reserve, from chase. Make more of whats yours. It is now surprise that americas healthcare problems are finding challenges, how do you fix it bill, it is always good to see you. Explain how innovation can help us fix the healthcare issues that we face what are you specifically driving at tyler, it is clear that politicians failed to do this. All the talks on the new drugs coming out well see the Delivery System moving from downstream and hospitals and clinics awaiting for people to get sick to upstream and keeping people healthy and well see it move out of the house and clinics in to drugstores like walgreens and cvs which you heard of the aetna bill i think well move it into places like imca and taking care of the income level and more people going in and getting health plans and working on their health we know lifestyle of 50 or 70 of the healthcare cost if we can improve the lifestyles across all social economics, thats going to be critical. What does it mean . I want to ask you an uncomfortable question and bill, i dont want to articulate it. Do americans want to live healthier in. I wonder. They do it is awfully a lot of people that have access to mean that you see working out at fitness clubs and eating healthy these days and buying organics at glutenfree products a lot of people dont hav have thats why it is so important. You are working at a major project for ymca and it will spread all over the country to focus and bring people in and frankly to learn about nutritious and have an opportunity for a really good exercise plan and dont know how to reduce stress for mindf mindfulness. You see a whole lot of tools going on i think americans do want that we are going see self care may come the new primary care. Rather than spending all of our money reinventing it, we need to move it to the individual and surrounding them by the health team thats where well see big breakthrough coming and i see major changes coming through the innovation Delivery System you saw United Health bought n invida care. I think ai is going to do this people like united having an enormousme enormous amount of data. Theyll use it feseffectively. I am sorry, finish your thought. Healthcare has one of the worst used of information of any field. Yes, well see new break through devices and a good example, in the old days, you have to come in and have your pacemakers checked every 90 days. So i think this will change where healthcare is and go i think to the home and the community setting. Thats going to be a lot at coast and more importantly of a better health. That th thats the key issue here. Bill george, thank you. It is always good to see you coming up at march, cnbc will host its First Time Ever healthy returns. Well have ceos and news plmakes and entrepreneurs of the business of healthcare it is wednesday on march 28th, 2018, for more information, go to cnbc. Com heathyreturns. What happens if not at when but what happens if not at when but bitcoin craz well talk about that side of the story, coming up what we do every night is like something out of a strange dream. Except that the next morning. It all makes sense. Fedex powers Global Commerce with vast, farreaching networks. Deep knowledge of industries. And, yes. Maybe a little magic. Today on trading nation. Part of it is bitcoin crazed todd gordon with trading analysis. Com and michael, are you one of the buyers at the cme label . Lets start with bitcoin how many times have you heard, these cmoe is offering us. I like it like the new iphone comes out and everybody wants it and it shapes out and the real sale growth of it. It is the same thing with bitcoin going on with these two exchanges. It is good for them for having the capabilities to do so. You are not a buyer of the stock. I am going to sit back and watch it and see how it shapes out. When the under line security is not regulated and they are coming out fresh to the market, i would be skeptical if they make it work, theyll see some value there it is looking really good and where are they going longer term and what are you able to discern from the technicals . There are a high degree of anticipation of this future product. The correlation if you look at bitcoin over the cme, there is a strong correlation as we ramp up into this launch wech, well shu this the longer term, it is solid and we have broken into a 145 break. We are through that. It looks solid what i would say here is look at other launching, theyre launching a smaller profit i think this is more of a retail oriented product because bitcoin, there will be other retail orient customers. The chart you are looking is performing relative to the cmes. Okay, todd gordon and michael bapis. Thank you both for more information, go to tradingnation. Cnbc. Com. Contessa brewer is joining us now the scheme is simple. It goes like that. As shoplifter goes in and sees an item at the store. The shoplifters return theitem without a receipt to the same chain but different locations. They receive for the full value of the items and sales tax that was never paid every single one of them told us it is as common scheme to find a cripplinghabit our experience is that theyre going to commit tease crimes reporter we ride along with the lieutenant david Barney Fowler bowler dou the cdc ranks tennessee of the third highest of per capita Opioid Crisis. Deputies arriving at a jc penney to arrest someone involving gift cards they give chase through the malls parking lot investigators find a slew of gift cards on her front seat this is a vanilla card. It is pretty popular ywould you mind explaining to me with the gift cards or what you were doing neither suspects wanted to talk investigators have not linked their crime to drugs while one we are sitting there and another incident takes place. A normal tuesday. Just to break it down for you in knoxville, tennessee, investigators tied 85 overdoses to gift cards. Agencies nationwide are struggling to identify the frau and retailers telling me how they break it down to this effect, home depot knows it is a problem and we are changing policies. These are not allowed anymore to b redeemed online or be sold well tie it to your identification is that the next i get the gift card when i return the item from target and then it is 67 on it. I sell that to someone else for cash for discount. 25 or 50 or drug dealers sometimes accept those cards directly the drug dealers making a high market profit on it. The state is losing 17 million a year in sales tax that gets refunded and it was never paid so thats how they turn the card into cash, they sell it there is places online that you can legally resell gift cards. The simple solution is requiring a receipt when you return something but i imagine the slippery slope there is retails are going to be like whos whoa, most of our customers, buy the products and who keeps receipts some states are pushing legislation to register that resales or purchasing of these cards and whats their id and where are they getting it from now, theyre trying to beef up legislations and software exists i did reach out to target and they said, we take it seriously. We limit the amount of returns without receipts we have hightech measures in place to vet out back actors and now they start to partner with retailers and picture of pawnshop that collects them. Tens of thousands of cards at a time contessa. Thank you, interesting. Tax deduction is removed. A well flight from tie tax states picking up and moving is not easy fer easy even if you are really rich thats next on power lunch. Shorters short stocks when they think they are going lower. The number shares is called Short Interest a rising short invest can mane investors are becoming a bearish on the economy ckheraders are forced to buy ba tir short stocks and that could drive the stock much higher a wealth of information. A wealth of perspective. A wealth of opportunities. Thats the clarity you get from fidelity Wealth Management. Straightforward advice, tailored recommendations, taxefficient investing strategies, and a dedicated advisor to help you grow and protect your wealth. Fidelity Wealth Management. Elhello everyone, i am sue herrera. Three people are dead including the shooter and three students following a shooting at new Mexico High School officials are clearing all the building at the school and students are being reunited with their parents. Lauvrof is meeting the President Trump. Former democratic congressman harrell ford jr. Has been firefire fired. Video from the la county fire shows the view from the helicopter fighting the fire massiveme massives is movement thats the cnbc update at this hour. Over to Jackie Deangelis for the oil closing today. Thanks so much sue. Crude is closing at 67. 67. Not that high, the range is 55. 52 the weakness that we saw came from inventory report. We just keep on watching it getting higher thats one of the fears. Nocetime, the opecs anunment, they could not get a wti. Traders are telling me, expect to pay the range power lunch is back in two i used to have more hair. I used to have more color. And. I used to have cancer. I beat it. I did. Not alone. I used to have no idea what the American Cancer Society did. Research . Yeah. But also free rides to chemo and free lodging near hospitals. I used to maybe give a little. Then i got so much back. I used to have cancer. Call 18004944357 today. Your contributions to the American Cancer Society fund valuable research. But thats just the beginning. A cancer diagnosis can kick off years of challenge. And thats where your donation truly shines. You help us fund free rides to treatment. A live 24 7 help line, free lodging near treatment centers. And even efforts to expand access to insurance. So, please donate today at cancer. Org and help attack cancer from every angle. If the state and local Tax Deductions are eliminated, some predicting wealthy americans will flee high tax states. Many are suggesting numbers may not be large robert crane now is joinifrank h a closer look. The question is how many and how much money will those states lose ray dalio worning of out of california, new jersey and other high tax states. He estimates the effective tax rate for those making 500,000 will go up to 3 or 5 . Thatll cost between 2. 5 of those top learners to leave. That would save about 1 from state tax revenues Goldman Sachs is more pessimistic. The most thorough studies done found taxes at the top owners rarely leave when they do leave, it is fairly for tax reasons and only 2 of that group seems to move for tax reasons. We welcome our anchor in the community because of their employees and social network and philanthropy and staffs. Theyre getting a big tax rate and the pass through so they are less likely to move. Of course, losing any of the wealthy and are an outside impact and the top 1 paying 4 of taxes and new york and california andr andrew cuomo says new york will be destroyed if this happens. Right i think the key point is what you said i have no doubt that between 2 and 4 people will leave new york and new jersey to go to the past ten years and going to a l warmer climate and i am not sure of the real life changes to me absolutely, i think there are some people thinking and ready on the verge of moving in florida and a lower tax rate and this will push them over. Or it will strand them because they cannot sell their houses reevaluations bring evaluations down and sudden think, you are under water and close to it. It depends on what they do with this 10,000 property tax reduction. If they include up to deduction and i think that saves the suburbs. Well see what they do we had you on monday. As the crown prince himself yes so that was my props. The time we broke the story, his friends had no reported wealth and reported wealth and pays 450 million. I suspected he was a proxy for the crime prince who did not want to buy unusual they would buy a portrait of christ to be the most expensive future cast fascinaascinatef. What aim pact could tax reform have . Company on pace, finance and one every ten home bought nationwide less prilets bring in Kasey Crawford welcome, welcome. One of the things do. You bought a bank in virginia small bank and expanded. You are using data and analytics and art tisartificial and help to translate your ploot form yes, it is a great question it is everything in our lives and it is been trained for faster and easier and less expensive for technology the cost is procured mortgage largely driven by regulations. The opportunities that we have is an industry and step into that and incredible tools are being leveraging ape krcros the country. How does technology can help people people work like this. The cost is incredible as well our appraisal is going to cost 500 to 1,000. And so my congratulation pattern neighborhood did a predicted future value of a property than the praiser can get from todays snapshot. That could be done for half am second and 1 of the cost of typical faces, we node to get our ecosystem to buy in the evaluations. How could you get that interesting stack down to a kwa quarter. Allegation, if he will want to see your country moving towards the common i can environment. There is so much regulations i have been thrusted over the last year fives they dont and thats the change and documents are not thoroughly enough read we applaud that effort. We we think people need to know the opportunity is selecting technology helping people to understand this technology it is ham perred because of the equifax breached and having all the Information Online no, we have not seen that over 90 of home buyers are going to shop by home. We offer that and we find overwhelmingly that our customers love that platform again, it is think faster and easier in the privacy of their home last night. We are big contrary on this one. A lot of what lets talk about new jersey. There are different issues for home oefs over 1 million. People dont move for tax reasons and they move for life event. They are a child and job transfer a move like that the second thing is only 0 of americans are using oom pesticide deductions less folks are going to use that and we are at the senate bill for homes over a million dollars. So an overwhelming u. S. Homes in u. S. Will not apply to. More mortgage executives need to dress like you. [ laughter ] because the manner is up. Your tshirt has your company on it, we promise. Because of traffics, it looks like you are wearing a regular blazer a colleague of mind just emailed mip saying heli to the ceo. All right, kasey, thank to u hiking rates in 2018 one expert says that could have a terrible, terrible impact on one area of the bond market. Lots more power lunch coming ghuprit no matter how the markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. We are the driven. The dedicated. The overachievers. We know our best investment is in ourselves. We dont take no for an answer. We fight for what we want. Even for the things that were once a given. Going to college. Buying a home. And not being in debt for it for the rest of our lives. But were only as strong as our community. Who inspires and pushes us to go further than we could ever go alone. Sofi. Get there sooner. With the new tax bill ahead, what can we expect for the credit markets lending next year our next guest says currently were in a borrowfriendly environment. Joining us, david, great to see you. Likewise, thanks for letting me join you. So rates are expected to rise next year. What happens to lending, what happens to companies that want to is that pulling forward demand for borrowing you know, i think its pretty clear to everybody that rates are going to go up next year i think theres a meaningful question about how fast theyre going to go up and how much theyre going to go up if you look at the last several years, whats been really clear is that weve overestimated the speed of increases, and the absolute amount of increases so i think increasing rates is going to be a meaningful factor in bond prices i think high yield may be overpriced right now in part because of Interest Rate risk. I dont think its going to have an enormous impact on lending demand. Okay. In terms of the tax bill, Corporate Tax rate dropped, lets say, 20 oarr 22 , is prey meaningful to a lot of companies out there but is there anything within the proposed tax bills that could derail what you do . Youre talking to a private equity firm earlier in the show. He was centuessentially saying e part asbout not being able to deduct could affect his business to go in, buy a company, and lever it up. On balance, i think its good for our business the two good guys are reduction in Corporate Tax rates, enacceleraeand accelerated depreciation both of those should help our borrowers conserve cash, be able to repay our loans or invest in the business, thats a good thing. The one bad guy in the bill is this cap thats been proposed on ded deductibility of expense over etiba. Not sure whether thats going to survive the reconciliation process. There are conceptual problems with that provision. Our analysis says even if that moves forward, the vast prepo preponderance of our borrowers are better the types of industries impacted by that particular provision which you say might not even survive is small. I think the biggest impact of that provision is going to be on Cyclical Companies because, and this is where it can have an unintended consequence if a companys etiba goes down, it could suddenly find itself in a position of having a higher tax bill because more of its interest expense is not deductible i dont think people have fully thought through the implications of that provision on Cyclical Companies. Yeah, its a tricky one david, we appreciate your time thank you david golub, golub capital. He pas ineccklees xt most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Check please. All right, time your check please. Im not a bitcoin hater, no idea how this is going to turn out. Its interesting, why are we seeing the frenzied buying 1983, Cabbage Patch kid dolls. There was a limited number every parent wanted to get theirs, otherwise their kids would be crying at christmas. Was there a limited number there was a finite number i wonder because people are afraid the 21 million bitcoins are gone, going to be gone soon, that were seeing that sort of panicked buying. Who knows. I think its the fear of theres a limited supply, get while the gettings good. Right now as jim cramer said, there are only buyers, not really a big pool of sellers are. Right but there will be the other side of the trade come sunday night when the cbo relaunches its futures trading of bitcoin were going to have tonight on fast money a critic of these, thomas peterffy, said bitcoin feature futures could be the next financial crisis and get Interactive Brokers will be one of the few Online Platforms that will offer Bitcoin Trading come monday. Only thing more complicated to me than bitcoin is solving the Nations Health care crisis, okay talked about the value of innovation in doing so, i have no zout that is true i do question, though, how effective changes in lifestyle and prevention can be because i think americans like the lifestyles they have and getting them to change is a very, very hard thing thank you for watching power lunch. Closing bell starts right now. I feel like i should go run a mile all right. Welcome to the closing bell, im Michelle Carusocabrera in today for kelly ef vans at the e york stock exchange. Im Bill Griffeth President Trump meeting with congressional leadership from both sides of the aisle on a possible budget deal well be getting footage we think from the meeting shortly in the meantime, eamon javers is at the white house with more on to ex. Ekt from the meeting. Reporter the congressional leaders on both the democratic and republican sides but also see some of the other leadership lower down the hierarchy in the room as well