And welcome to power lunch. Eye melissa lee, your money carving out some small money today, and russell 2000 at rosh highs. Its a global rally. Lets check out bitcoin is bouncing back after falling below 10,000, Goldman Sachs say its a bubble bigger than the dotcom era and famous tulip bulb mania, and p g was down travelers rallying by almostsh topping expectations tyler . Thank you very much, melissa. Welcome, everybody we begin with a major decision from the white house the administration saying it will slap tariffs on solar panels and washing machines. If youve got a solar powered washing machine, you are not, kayla, going to have whiter whites Kayla Tausche is at the very white house with more. Reporter those tariffs are steep and final. For companies outside the United States empowereding washing machines into the United States theyll sue new tariffing between 20 and 50 , depending on the number of washing machines they are importing. For components that 50 . For solar part manufacturers outside the United States, they will see tariffs of 30 . That decrease over the next four year the assumption by the administration is what they consider malpractice and flooding of the market with cheap products will start to decrease over time the tariffs are a result of complains by companies in these industries, whirlpool, and suniva and solar world in the Solar Industry the issues were studied for much of 2017, and President Trump and his top trade official, ambassador robert ligeithiser its not wow backlash, Companies Say prices will go up, will hurt competition and ultimately the consumer will breer the brunt, but gop lawmakers are pushing back as well i want to show you a quote from republican senator from New Hampshire nebraska ben sasse. Tariffs are taxes on families. Moms and dads shopping on a budgets for a new washing machine will may for this. You dont fix eight years of bad Energy Policy with with bad trade policy these relatively lowhanging fruit, but well see if this is a precursor for more well hear from the president later on this hour guys, back to you. Thank you, kayla. Is there a rick of retaliation . Lets bring in larry kudlow, Libby Cantrell is head of Public Policy at pimco. Welcome to both of you larry, you go first you are a free trader, also a fair trade. Its unfair practice . I havent seen all the stats from the itc theyre pretty reliable, but i dont like this as a general rule President Trump has done so much things to restructure the economy toward the private Business Investment sector, and its all working the tax reform and deregulation is all working, so i hope he goes light on these kinds of protectionist issues its kind of strange you talk about washing machines and solar panels, right . So one of the big lets see the Solar Panel Company is a Chinese Company operating in the United States. Theres a german company, solarworld is a german Company Operating in the United States, samsung wants to begin a Washing Machine Company with 600 workers operated in tennessee. Well, they are. Who are we harming and who are we helping here . Thats what id like to see a more broadbased approach rather than one nick at a time. If you dig into this, and im kind of disappointed the number of mainstream publication that havent mentioned that samsung and lg are going to be manufacturing them here very soon it makes a difference. Heres why heres the political optics we know everything is optics, you slap the tariffs on. The majority of the washing machines have likely already been imported. Both samsung and lg are starting factories samsung first, lg next year, i dont know if this is a Tariff Program it seems like youre going to do it, what is it on posttalk fallacy, after the fact truth . I want to answer that, but lets get libby into it. Thanks, larry. We viewed trade as one of the potential policy risks, since President Trump was elected. We think this is going to be a real focus in 2018 not only is he going to talk about it at davos, likely hell talk about it in the state of the union, but in some ways this is the beginning i think its a precursor of other trade actions. This wont likely be a more isolated action, youll see mislike section 232 on steel and aluminum, and on never transfer in terms of intellectual property. Those could actually be a quite significant, and i think its how china reacts. Section 232, which is military, all our equipment is domestic kevin, has be metzic co back to sullys point, because president has done magic on the tax reform, you can see the explosion in response to what hes done. All these companies, new investment projects, wages, even stock giveaways, and minimum wages. Look, this you dont know in the modern wage, we are low tack low regulation now, so these companies will come here thats the thing. To manufacture. They will come here, because we are going to be the most hospitable investment environment in the world, and therefore the need for these oldtime 1950s, 1960s trade deals i think is being blown away. Ill tell you this, larry if the president is get somebody to come and do my iranly, hes got my vote. I dont care which machine he uses look, on this stuff, its scatter shot, washing machines, solar panels, i think the question is here and its a gigantic question is nafta as i said, nafta neither a refurbishing after 20 years, no question about it, but my hope is the president stays in the game we have smart people to negotiate and we negotiate with mexico and canada. If he walks away, i believe that will have an extremely bad effect on the stock market and an extremely bad effect on the economy large sectors of the economy will rebel mr. Trump has the confidence of the Business Community they may not love him, but they like his policies and theyre working toward them. Walking away from nafta would be a business mistake. We would agree. In terms of what we think is an indication is just the administration acknowledgement that the dispute resolution process at the wto is not working. Whether we agree or not, we dont agree, but i think that is what is being expressed here, that they dont feel like going through this bureaucratic longer dated wto process is working, so theyre going to use the unilateral ability they have under trade law, which is extensive i. And the wto often rules against the United States, so i think thats an important point. Again, to me, mexico, canada, nafta is absolutely the key, litmus test. I happen to think the president is going to negotiate. I dont think hes going to withdraw i think he may say such a thing in davos when he speaks. Tax reform is wonderful, regular torrie reform has been wonderful. Trade reform is necessary, there are bad players on the other side china stealing our property assets, so forth, that has to be fixed, but lets fix them, now throw the baby out with the barth water. Bhirl pool has suffered through a lot of stuff to stay here they could have had cheaper manufacturing, on maybe a shoutout to them, but the point i was trying to make is lg and samsung have already announced theyll make many of their washing machine in the United States beginning this year and next year, so youre slapping a tariff on companies who have already agreed to come here you get my point absolutely i think people in the market has discounted this. You have to take President Trump seriously and literally on trade issues hes been incredibly consistent on trade his entire life nafta, china, sent to the wto. This is a Public Policy issue that i think he very sincerely believes, whether it necessarily makes sense. Libby, i want to cap this real fast. I worked with him in the campaign on economics, trade, taxes, whatever, he is not against trade, and we had an example before the Detroit Economics Club speech, we are working on the speech. I said, sir, would you accept the suggestion of the benefits of free trade and world trade . And quick, snap, he said yes, i will i believe that, too. He was ross porosity i would like to see fewer of the willy nilly tariffs and broadbased strategy libby, larry thank you very much we have a news alert in the bond market. Rick santelli, it seemed like a pretty decent auction. Yeah, more than decent. I gave it an aminus and almost a straightup a. This tranche two years, 26 billion, 2. 066 was the yield at the dutch action that fits right nicely in the been and offered market. That was good, just not spectacular. That was the highest yield at a dutch auction since sages februaand 15. 9 in directs was almost a full percent over the ten auction average. Solid auction top to bottom. Tomorrow well have 34 billion fiveyear notes. Melissa lee, back to you. Rick, thank you. Shares of netflix soaring today. Can it go even higher . Plus a new payment plan for elon musk, tying his compensation to the companys performance, are there pitfalls thats coming up next on power thats coming up next on power lunch. Has exposure to Energy Infrastructure mlps . Think again. Its time to shake up your lineup. The alerian mlp etf can diversify your equity portfoli and add potential income. Bring amlp into the game. Before investing, consider the Funds Investment objectives, risks, charges, and expenses. Read the prospectus carefully at alpsfunds. Com amlp your top story is shares of netflix on a big beat in the number of subscribers, but with years of making investors money already in a market cap now around 100 billion, is this a stock thats priced perfection rob, its a good quarter lets move on from that, whatever was your estimate in marketing costs, 200 million in investing in i. T for a company thats doing so well, why spent more on marketing . What do you think theyre spending on with regards to Technology Good questions. I think theyre putting up a very significant investment in content. The increase in marketing spend is very much related to promoting those brands, those stories, and building more attention to the content itself. I think putting dollars behind it does make sense they clearly see a much bigger global audience the ease of use of this palace form, compared to other alternatives is night and day. At the end of the day when youre sitting on your couch, looking to be entertained, ease of use matters a lot, and the netflix app is by far the most easy, and theyre taking it to another level with these Technology Estimates rob or, two, the whole pie is growing. The number of hours streamed war actually up 9 year on year. People are watching more on their netflix memberships. Whats going on here is it netflix at the expense of others or is everybody winning here i think it is clearly netflix at the expense of other Entertainment Options the interto consume mere in at the same time. , not necessarily other Internet Television options, but other Entertainment Options. You know, rob, this stock has had a great year this month. When does it start to get note bleedy for you . You know, for a long time i thoug thought. You know, im still a firm bull that the global opportunity is there never has existed for an entertainmenter to reach the old world those in tens of millions, because it was a local assets that only could scale to tens of millions the internet turns the econveys upsidedown, so i think we have a lot in front of the it rob, to tylers point, why doesnt anybody seems to care about the growing negative cash flow issue i mean Business School 101, you need operating and Free Cash Flow theyve never had it, it doesnt like they over will, and nobody seems to care. The question is not what is the cash dynamic in the investment period. The question is, what does it produce on the other side . That is the fundamental debade on nearterm valuation versus longterm earnings power clearly there is an expectation the company will produce very meaningful cash flow as the subscriberbased scales. I have High Conviction that that is the case. Rob sanderson, i guess in the red is the new black [ laughter ] rob, thank you thank you. Melissa with an eye roll. Hes like no thanks. So much with the annoying airline fees you hate are adding up for one good way to make money. Plus you can hate the tax bill, but some jpmorgan employees likely very happy today. Well tell you what moanjprg just did, makes some pretty doggone happy. Still around 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. Notheyre not investing iney commoditiesies. Or fixed income. What people are really putting their money into is what they hope to get out of life. But helping them get there requires a real refusal to settle for average. Because when you approach investing with a tireless desire to beat the status quo, Something Wonderful can happen. Those people might just get what they wanted out of life. Or maybe even more. Sploo jpmorgan the latest to announce a spending plan. The highlights include wage increases of around 10 , 22,000 of the lowestpaid employees, who will now by paid between 15 and 18 dollars per hour. 4 hounds new jobs, as well as increase toss lendsing targets to Small Businesses and Affordable Housing lets assess deeper. The wage increase is relatively small, hits just 13 of the u. S. Workforce, but jpmorgan were already paying a minimum wage above the rest the 4,000 new jobs relates to a current total head count of 252,000, a 1. 6 increase, and u. S. Headcount of 170,000, so a 2. 3 increase. From 2016 to 2017, head count did rise by 9,000, that said, the broader trend for both jpmorgan and the has been cutting of head counts the 400 new branching relates to a total of 5,130, so this is a 7. 8 increase, and is most definitely a move against the trend for the industry, which has been reducing branching. However, the move is not driven by the tax bill, rather a desire to move into new marx where they currently have no exposure this requires approval from regulators, the occ in particular, in that sense it could be said to be aid i had by the president s push to reduce regulation, but not the tax bill itself jamie dimon will join squawk box tomorrow live from davos. Thank you very much. Tesla saying elan musk will only get paid in stock and only if he meets financial targets, including market capitalization, do you want a ceo managing to please the stock market so purely we will debate this coming up on power lunch. You might take something for your heart. Or joints. But do you take something for your brain. With an ingredient originally found in jellyfish, prevagen is the number one selling brainhealth supplement in drug stores nationwide. Prevagen. The name to remember. So what else is new . Humm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. A suspect has been taken into custody after one person was killed and nine others injured at a Rural High School in southwestern Kentucky Police say the School Remains on lockdown and the fbi says it is working with state and local Law Enforcement in response. Thestate department confirming tlup u. S. Citizen fatalities and injuries from the Taliban Attack on Kabuls Intercontinental Hotel the death toll has risen to 22 six Taliban Attackers were killed turkish soldiers preparing to enter combat and join an offensive on a kurdishheld enclave in northern syria. It plans to secure a zone down there, the operation is straining relations with turkeys nato allies. Sothebys says a print of the declaration of independence by Ezekiel Russell sold. Three are in private hands while others are in institutions, including the Boston Public Library and the harvard library. You are up to date thats the news update brian, back to you. Sue, thank you very much. Guess what, guys hitting another alltime high. Weve never said that in the last couple years. No, no, this is new. New alltime new news, not fake news. Real estate, utilities are the leaders, utilities pow, telecom and materials are the lag guards travelers, ibm, even ge is recovered. J lag guard. J j, p g and Goldman Sachs. Phil le beau joins us. I think people will be focused on what they have to say, but its more what do they say about 2018, and where they are positioned relative to their competitor so when youre looking at the three things to watch for when united reports earnings after the bell, lets start first off with passengers Revenue Growth it probably did improve in the Fourth Quarter, thats the expectations, not likely up to the level of their competitors the capacity forecast will be fascinating, because many believed that they have been adding too much capacity too quickly. Does that continue and that always gets into the issue of their margins versus their competitors. They have said for a long time they would like to get up to the level of american an delta they are nowhere close right now. Do we get any sense that will improved in 2018 that also speaks to how investors feel about the stock yet its moved higher, but this shows you everything right here. It is not keeping pace with the growth from delta. Delta outperforming it just a bit, this is at the crux of the earnings, then an analyst called and investor update. What investors think is one thing. What customers think is another. Where does united fall improving, but nowhere close to their competitors yet there was a time when it was an absolute joke. You would talk with people inside the company, they would admit were not that good with ontime set oscar munoz has gone a long ways towards addressing that by working with the flight attendens union, the pilots, et cetera. He deserves kudos no that. Having said that, they have a long way to close before theyre close to american or delta they in essence had a head start what did you hear was the issue . We all fly united a lot. I always talked to the cabin crew and they would say the Computer Systems it was a culture clash, its this what do you think it was it was definitely a culture clash. The continental people did not like the United People when the merger too place i would hear from your continentalbased flight crew wow. This was a couple years, and i said something, what does that mean and they were like we were part of continental does that mean that youre special . He did not get along for a long time i have not heard that for a while, but it was at the crux of the poor performance did united tell us what to expect from tax reform in terms of the impact . They have not, and i expect that when oscar munoz talks withagists and investors, that will be a key component of what they discuss, im sure. Kind of helps boeing, too, they can depreciate planes a lot quicker. Make theyll get a surge in odds now is the time to buy it . Youve also got a big backlog there. Look, delta had a big order with airbus a couple months ago or last month, but you have such a bag lock right now the Airlines Want to be careful about adding capacity, but not too much. I wanted to ask you while youre here, phil, about elon musks Compensation Plan which tesla released this morning, tied to both market cap and performance. If you look back at the last five years, its the same thing, very similar maybe not the exact same metrics. I remember when hi last Compensation Plan was put together, people said hes nuts, hes crazy, and as they have hit the benchmarks and he hayes received his compensation, then you hear the other comment, boy, theyre paying hem a lot of money. Look, this is what you want a ceo to do. I think thats why shares of tesla got a bit of nudge, investors are saying hes not going anywhere if he hit the benchmarks we all win. If he doesnt, he doesnt get paid phil, stay with us, we want to talk more about whether this is a good idea for tesla and its shareholders with us is david cite cert, and betsy, is a board member of volvo cars phil just ended our part of the discussion by saying its a win win. Would you agree here i dont know if its good for tesla or not betsy could speak to that better what i like is they can do it. We dont have a bunch of people saying, no, we dont want people to be rich, we dont want lots of restrictions. Well, this is a Great American story, rolling the dice, theres a great chance he gets nothing, but if he performs, he gets a huge payout. We should applaud that im glad the board can do that and a ceo willing to take the same challenge. Whats interesting about this plan, betsy, one elon musk is awarded stock, hes got to hold on to it to five years, so lets not get it up to this market cap or get these metrics up here and then im going to sell that stock. Hes got to be a holder as well. S thats true, but hes being paid like a tech company ceo. Whats wrong with that, betsy . Well, you have to look at the metrics that would be important to someone who was buying a car or buys shares in a car company. Metrics like quality, meeting production requirements, safety. Those are other important metrics that Auto Companies tend to measure pen to market cap, profit and revenue i would argue you start cranking out a bunch of clunkers, five years from now the stock wont be where they want it. But with a very highvalue stock, the tendency could be it could be a risk to shareholders that if there was bad news on qualities or safety, that you might mitigate that news you know, Compensation Plans that are heavily reliant on stock price introduce risk, and i think its important to account for that, and i think thats why other plans are more balanced and why when you look at picking your Peer Companies as a compensation chair, you should consider automotive companies, not just tech companies. This Compensation Plan is pretty much a pure tech company comp plan. Is one of the your main objectives, betsy, that he gets paid on a total amount, what is equivalent to a tech companys compensation do you think hes just simply being paid too much . I think the equity is way high he currently has 22 , and in this comp plan, he can gain, earn, another 12 . 22 plus 12, thats an enormous amount thats know shareholderfriendly thats a lot of dilution 1 or a little more per year for a ceo to earn is a huge amount thats an outlier Compensation Plan. David, thats a fair point. Would you be concerned the bigger picture, tesla is not disrupting the Automobile Industry doing the same way the other companies do it. Hes bringing something different. Hes not even the same as the other electric car Company Makers he used the cell phone model he didnt start out saying how do we make cell phones for the homeless they started making them for the captains of the university, and finally all the sailors have cell phones. Same thing with this car fee theyre doing it a completely different way. I think its great will it fail i dont know, but thats what i like about it. Let industries, firms, people make decisions if its works theyll thoo they will by copied, if it doesnt, theyll be right. I mean, phil, do you think theres any shot that any other companies you covered no, no, none of the tradition all auto makers will doth, in part because of the how the Stock Holdings are set up and the institutional controls there is also no other company that is run by a ceo the way tesla is no other company Sergio Marchione has the same amount of influence on chrysler, but its set up different. At the end of this year, hes probably going to hand the reins over to somebody else. This is singular to both elon musk and to tesla. I think thats a good point, betsy. Part of it is to keep elon musk as ceo for longest he a eluded once it gets up to scale, he my kit other opportunities. With a company thats so entwined with the cult of this ceo, isnt it important for him to stay in place and is compensated for that you certainly want to keep an inspirational ceo, but you also need balance, when you have a charismatic ceo that you are considering all of the other things that could impact your company. Ultimately theyre making a vehicle that should be safe, that they can produce reliably theyve had a lot of production issues if i was looking at a comp plan, i might be looking for metrics on shipping, because they havent been able to fulfill their requirements i think its important to keep an inspirational ceo, i think with a disruptive new manufacturers, being software centric, thats all very, very important, and you can see in their comp plan, that they reword their chief Technology Officer ford rewards their north american operational leaders, but still you need other metrics, i think, in addition. I think that not accounting for safety and production in your metrics would be an oversight. All right were going to leave it there, guys thank you so much, and thanks for phil see you at 5 00. Coming up, two tom female venture capitalists will join us to talk about the culture in Silicon Valley. Plus apple releasing its own exme Voice Assistant ala, are you worried power lunch will be right back why are you so good at this . Had a coach in high school. Really helped me up my game. I had a coach. Math. Ooh. So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at Td Ameritrade, we offer free access to coaches and a full education curriculum just to help you improve your skills. Boom thats lesson one. Education to take your trading to the next level. Only with Td Ameritrade. Hi, im and im johnny bench. And weve spent our whole lives around professional sports taking hits and catching our fair share of aches and pains. Which is why we use blueemus pain relief products. Blueemu products; nongreasy, deeppenetrating formula that works down into your muscles and joints and works its magic. Its comfort that wont leave you smelling like a football gym bag or an old catchers mitt or a shower mat in the locker room. How about an old pair of socks after an extra inning game. Blueemu, it works fast and you wont stink. Where can investors seek pin an uncertain world . Pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Apple releasing its home pod. Can you start presales on friday josh, tell me why i need another assistant. Its going to be available february 9th ma mart speaker missed the initial ship date in december buyers will be able to use home pods to stream apple music, check the news, sports, traffic and control a range of smart Home Accessory apple will be playing cashup like amazon and the popular echo speakers, as well as googles line of home speakers. They dominate 92 of the market but there are key differences. Within wouldnt the price homepod will runs you 349 the lathe its echo and apple is very clearly emphasizing the highquality sound of this product with an appledesigned would havish, betting that will give it a competitive it advantage, but ben behairen said sound quality will not make or break this products. Consumers are obvious obvious fine with its going to come down to the value users find in siri, which the company says is actively used on 500 million devices. Maybe a big competition to google there thank you, josh. When can the future when new technology are being used to modernize a number of aging industries here now, treeso goh and jennifer phonestat, cofounders of aspect today they announced a Capital Raise from investor, including Melinda Gates, cisco and others. Congratulations. Thanks for coming on power lunch. Brian, thank you so much for having us. Hopefully you got my riddle, that theres so many Old Industries, we just focus on new stuff like electric cars or uber or ridesharing, but hope Old Industries are ripe for destruction or new value creation, based on the technology thats around a. I. And other times of Innovative Technologies youre absolutely right were sees a number of industries really harnessing a. I. In a new and novel way to boost and improve their experience for the customers for example, health care is one of the areas we invest in it focuses on using a. I. In managing chronic care and conditions, in other areas, Something Like your inbox with email with a Company Called astro, where how hard that is for us, with a combination to manage that in a way thats much more effective for how we use and operate today. Give us a better example of that thats i think email pollution is probably a problem that the majority of our cnbc viewers have, right . About 3 of your emails are actually meant for you or important . Maybe thats just me how does a. I. Fix that problem astrowas started by a group of folks who started zimbro which is the first platform that sorted started the problem now theyre trying to help fix it theyre using astrobot, which a Smart Digital assistant to do exactly what you said, brian it reads through and parses through your email, automatically prioritizes the things that are most it relevant based on whether its important, jennifer senting me an email and further it integrates like slack, if you want to integrate into your slack channels, as well as siri on amazon, alexa and the echo, which i find super useful i know i never email or text when im driving, but i can now speak to my astroastrobot app and read me emails only from vips, and ill get just jennifer and not only to hear them, but i can respond. Ive done that using siri. This is way better, trust me. Siri, its like sentence thursday, june 3rd from, and by the time you get to it you crashed into a tree. So hopefully that would eliminate that i want to ask about the backlash on big tech. Over in davos, mark ben oioff sitting with Andrew Sorkin listen to this. You do it the same way you regulated the great industry heres a product, cigarettes, theyre addictive, you know, theyre not good for you maybe theres all different kinds of forces for you trying to get you to do certain things. Is that how you feel, by the way, about social media . For the most part, yeah thinking about it as like a cigarette, in that kind of addictive way . I think that foe shush technology has addictive qualities and product designers are working to make it more addictive, and we need to rein that back as much as possible. Theres mark benioff, a big name in Silicon Valley sake that facebook is kind of like smoking, what that marc is very interesting he said several things im going to start with that but i want to tie to trust as well theyre two sides of the same coin i was fortunate enough to be one of the three people who walked down the street and gave Mark Zuckerberg his term. Im biased a facebook fan i think its more addictive, but i think its more like, say, sugar, than nicotine so there are different ways we regulate i think theres a range of ways the government has tried to help people help themselves from being sucked into various, whether Technology Platforms or other things which are not so great for them i think, though, why i want to get back to what he said earlier in the conversation on his panel about trust when he was on a panel with dara and others, saying you need to put trust ahead of just growth for growths sake. By trust, what he really meant, and what i heard from it was leadership and we take that very seriously to heart at aspect we believe that setting the right culture from day one, and we invest in companies from the very earliest days, is critical. And by right culture, we think that data is super clear cultures and companies and teams that embrace diversity across all dimensions and operating backgrounds see that they have better investment results. They do better, they make more money, and fundamentally, thats our job, to help our investors like bill and Melinda Gates and cisco make more money. If i might ask you to give a quick answer, how worried are people in Silicon Valley that this year or next year may be the year that the government gets much, much, much more interested in the scale and activities of Big Tech Companies . Whether its facebook or google or amazon. Is there a concern there i think we have seen an increase in activity in regulation in a number of areas in technology. Much more naturally, because of the nature of working, many of these businesses are now large multinational corporations, and so they are now adept and understand that theres a lot more regulation that plays into that but i dont think that we worry about that we certainly have developed capabilities for focusing on that, and how we think about that is by bringing in diverse teams that understand, now you have management teams that actually appreciate and understand those perspectives of how the government may think about or approach that problem, so thats built in from the ground up, and then when we think about our teams, that is what diversity really means for us its making better decisions because you now have that capability inhouse when youre thinking about that from day one. And regulation is one aspect, but we find those companies that think about that from day one deliver better returns overall thank you both very much. Well see you soon again on cnbc take care. Cheers. Thank you so much. Thank you steak and gambling two of the things well be talking about intrt seetalk blus, how difficult is it to take a Company Public . Got a couple Analyst Recommendations on the stocks for today. Wynn resort raising the price to 199 from 176 both mass and vip volumes accelerated in january from what were already better than expected levels. Steve wynn on the call reaching levels of 5 million a day they expect these trends to continue into february 5 million a day on ebita two stocks today. Your last stock, your second one, texas roadhouse, the restaurant chain credit suisse, the latest to jump on the food upgrade bandwagon. They upgrade to outperform from neutral. They say taex reform is a big part, and they also think the fundamentals of texas roadhouse are Getting Better big target to 65 from 48 still, its about 10 more upside by the way, redbush began coverage on texas roadhouse last week with a 67 target theyre bullish on steak, tyler. I get it. Thats good. I dont want to steere viewers the wrong way. Coming up on the second hower of power, what investors are saying on the markets, and another slide for bitcoin. 5 billion of tequila. Sounds like a good hour. Come on back after the break many Small Businesses, from kitchens to factories to contractors, rely on their equipment to serve customers every day. When equipment is broken, it means lost revenue. Trusted choice independent Insurance Agents offer special protection that could help replace or repair damaged equipment and provide lost business income. They represent multiple Insurance Companies and customize coverage to help businesses get back to work. Announcer to find an agent, visit trustedchoice. Com. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Years. Many many decades, really, and were very proud of it thats why the stock market is reacting the way it is thank you all very much. Very proud of this thank you. Im not at all concerned. Did you talk to him about it . No, but im not concerned thank you very much. Thank you. No, he didnt at all. He didnt. He did not even a little bit no and hes going to do a good job. Thanks, everyone. Were looking at it were looking at a lot of things are you concerned about the new lets see how it all works out. Are you concerned about thank you all very much thank you all thanks, everyone thank you. There wont be a trade war, by the way and that is the president concluding his brief extemporaneous remarks, saying there will not be a trade war. He had been asked, i think, what was being questioned there was was he concerned about the reports that attorney general Jeff Sessions had been interrogated by investigators on robert mueller, the special counsels staff, and he said no, he was not at all concerned. He does say, i guess earlier in that, that he was going to davos. He says the nafta negotiations, hell be talking about investing in the u. S. When he goes to davos later this week. I believe his speech is friday and that he said nafta negotiations are going well. Kayla tausche is at the white house with more. Hi, kayla. Hi, tyler interesting to hear the president say there will not be a trade war because normally when a country institutes tariffs on a product category for the first time, that is the first thing that people talk about. Many International Headlines are calling this potentially the first salvo in a trade war but importantly, these tariffs are not targeted at a specific country. Theyre targeted at products imported from any country from outside the u. S. So that makes them unique in that aspect. Last month, the president told the wall street journal if there is a trade war, there is but he certainly seems this is not the issue that would spark one if in fact it were to happen all right so he says, and any more color on his remarks on nafta . He just says its moving along pretty well. And used a familiar refrain, saying that if it doesnt go well, and doesnt go the way the u. S. Wants it to, that he will terminate it thats what he said about the deal over and over and over again. Leaving sort of both options on the table. But he has said that hes willing to be a little flexible, understanding that mexico has an election coming up this summer but we did hear from the canadian Prime Minister, justin trudeau, in davos, who expressed his concern that the u. S. Would withdraw from nafta and his basically voicing how important it is for the economies of all three countries. So certainly, its on the mind of Prime Minister trudeau. Were waiting to hear whether he will have a bilateral with President Trump when he gets to davos this week. You and i were going back and forth on email. You make an important point. I was making a point about how the factories for lg and samsung are done or close to done, but you point out they announced these plans in 2017 after a complaint from whirlpool, and now maybe these companies are saying hey, if we have these tariffs, maybe these plants arent such a good idea. And im talking about in the United States. Right so the investigation was first opened up in may by the International Trade commission the samsung announcement came in june, and then lg broke ground on its plant in august so the companies, im sure, would say these plans were under way for long before, but if whirlpool felt that it had reached a point where it needed to bring it to a higher authority, then there must have been complaints going on for some time. Samsung says that its plant in South Carolina opened on january 12th, thats its already hired 600 American Workers and some lawmakers from South Carolina are concerned about what happens to that plant if in fact the price increases negatively impact those investment plans. But well see. Certainly, they are trying to manufacture those appliances here so that they can avoid those tariffs. Kayla tausche at the white house, thank you sure. Meanwhile, we have a news alert on disney. Julia boorstin is here with that disneys ceo bob iger announcing 125,000 disney employees will receive a 1,000 cash bonus and the company is also launching a new 50 Million Higher Education Program bob iger saying that the two new initiatives together, thats more than 170 million of a commitment in this fiscal year iger saying i have always believed education is the key to opportunity and opens new doors and creates more opportunities matched with a 1,000 cash bonus, these will have an immediate and longterm positive impact and they say they have another Educational Reimbursement program which is open to all of its employees that will remain unchanged. Disney shares down just half apa percent on this news President Trump is set to speak in davos switzerland on friday some of the worlds top Business Leaders are there weighing in on the state of the economy and the markets. Lets take a listen. The real thing we benefit by is the general economy, and its in pretty good shape in the United States. We project it to grow at 2. 7 versus say in this year, low 2s. The stock market has outrun our expectations in the short run. The concern i say we have at this point is that you could be a little bit set up for maybe a 1994 type scenario where corporate earnings are up 20 plus, but the stock market already had its run and therefore is uneventful or flat. To think that economy of 20 trillion can grow at 3 or 3. 5 consistently is hard to believe. Were going to be, i think, inundated with cash. I think thats going to produce a lot of stimulation, and i think perhaps a market blowoff in other words, were in a situation if youre holding cash, youre going to feel pretty stupid. Lets bring in two market experts with their take. Dave, cio of cibc Atlantic Trust private Wealth Management. Michael, president and Portfolio Manager with the permanent portfolio family of funds. Michael, what say you. You heard ray dalio, who is among the most respected Hedge Fund Managers in the world, say that maybe there is yet another sort of blowoffstage coming in the market maybe were in it now. What do you think . Well, all the people commenting were reasonable sounded reasonable, but i think hes right i agree with him that you can do better in cash he runs a diversified fund similar to something we run. I think if you do have a blow off or a period where you need to hedge your bets, so to speak, i think you can do better than cash by being in a diversified portfolio. I would agree with that. The blow off situation, i dont know if you look at the stock market right now theres a reason its going up granted the moves have been bigger on the up and down side a little more volatility this year than last year so far you look at corporate earnings you look at the impact, the expected impact of the tax cut the way the corporations appear to be spreading around the benefits of that tax cut some going to shareholders some dividends, some to employees. Some business development. You look at excess depreciation coming out of this tax plan. Theres a reason for businesses to be optimistic, and theres a reason for profit expectations to go up and profits are the foundation for higher stock prices. So its a reasonable market. Not cheap, but its reasonable dave, this is one of the most sort of death defying bull markets of my lifetime, frankly. And the president , i think, deserves a fair amount of credit for creating an environment where business feels much more comfortable and so do investors. Comment on that, if you dont mind and also, on the trade sanctions that he introduced today and whether trade is something that you worry about and factor into or trade restrictions are things you worry about and factor into your investing decisions yeah, our view on d. C. All through 2017 was follow the policy not the tweets. And the policy we got was progressive deregulation of Many Industries obviously, late in the year, the significant tax cut, which i think will end up being more of a boon to the economy in 2018 and 2019, even than most people realize. And an environment in which the economy was already beginning to do better. So we have had from a market perspective, positive policy momentum i think to your point on trade, things get a little more dicy here in 2018 i dont expect a lot to happen legislatively. All the oxygen has been sucked out of the room by this shortterm budget wrangling and now immigration is going to take up a lot of time in washington the actions we do see are going to come through president ial executive order or perhaps through the courts some of those things i think will be market friendly. Continuing down the path of deregulation and probably a positive interpretation and implementation of the new tax law, but trade is the issue were watching most closely. The news we got last night was the easy decision to make on those narrow industries. Things like chinese intellectual property and nafta are much bigger deals for the market. The two, washing machines and solar panels seem rather random in the grand scheme of things, but whatever michael, another thing i think investors are going to have to Pay Attention to this year much more than in recent years is Rising Interest Rates and some signs, as wages go up, of incipient nflation is that one of the tells that investors need to be paying closer attention to this year . Definitely. We have not really had a growth economy in a while you know, you think back to last 10, 15 years or so, and policy is now configured for a growth economy, and a byproduct of that is Rising Interest Rates and inflation. You know, ray dahlio mentioned a lot of cash going into the economy. Some will go into stocks and bonds, but a lot will go into the productive economy as well, and thats going to be increasing money, which has been dormant over the last several years and that could potentially impact inflation the risk with inflation, gradual inflation is fine. The risk is it overheats too quickly, the fed has to act too quickly and flattening and inverting the yield curve, which leads to recession the other problem with Interest Rates that im also concerned with is you have global Interest Rates beginning to turn and move in sync with the u. S. In terms of rising. And thats a positive. It likely will weaken the dollar over time if its allowed to continue, and that makes u. S. Exports it makes a Better Climate for u. S. Exports to the degree you ruin that climate with restrictive trade, it offsets the potential growth from Global Economic production. And that would be something i would keep an eye on as well it is really, dave and michael, a fascinating time to be doing what youre doing, doing what were doing and watching the economy and you guys having to put investment dollars to work. Dave, michael, we appreciate it. Thanks. Volatile day for bitcoin, after falling below 10,000, the crypto currency or crypto commodity making a comeback, and now reports say 10 of all money raised through socalled ico, initial coin offerings is either lost or stolen by hackers. Seema mody joining us with more on this intriguing story. Brian, nearly 400 million lost in stolen from sales of new digital coins. Thats the takeaway from this jawdropping earnest and jung report which analysts over 370 initial coin offerings researchers point out the typical ico has no customers, no revenue, and in most cases, no working product. Plus, Different Countries have varying levels of restrictions for ico. A growing number of startups are citing total ico proceeds are approaching 4 billion, thats twice the volume of venture capitalist investments notable investors have joined the craze, sequoia capital, mark cuban have participated in rounds, which some say lends credibility to this controversial fundraising method the market is now earrigerly awaiting telegrams open, looking to raise 1 billion in its own token offering seema, thank you. Lets get to Morgan Brennan for a market flash shares of Norfolk Southern are halted i reached out to the company for more theyre scheduled to report earnings tomorrow morning, but we will bring you more once we know what this news pending is back over to you morgan, thank you heres whats coming up on power lunch as we head into the big spring buying season, will rising Mortgage Rates crush home sales bicardi is buying patron as tequila sales soar plus, why some of the biggest stars in aivctist investing may be fading. All that coming up on power lunch. Contemporary cockpit, 360 Degree Network of driverassist technologies and sporty performance whats most impressive about the glc . All depends on your point of view. Lease the glc300 for 449 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Real estate brokerage redfin out with data on the health of the Housing Market according toilities new report, the number of homes for sale dropping 14. 5 from a year ago december also marked the 27th month in a row of inventory declines glen is the ceo of redfin, and he joins us in a power lunch exclusive. This is quite a streak here. 27th month in a row of inventory declines what does that tell us about pricing right now . It tells you that were going to continue to see price increases. So were just printing money much faster than we can build houses thats going to create a longterm seller mfs market where theres an inventory shortage that continues into 2018 where is the crunch seen the most im not talking necessarily geographically, but kinds of homes, types of homes . Affordable homes. We need more affordable homes. And the luxury market, you sometimes see a glut, but mostly its in the 300,000, 400,000, 200,000 home that we see demand outstripping supply, and whats unique about this particular rally is that its not located in one or two coastal cities its across the entire United States were seeing bidding wars in almost every American City so tell me about you know, usually, higher Mortgage Rates, as an offset to higher housing prices because a whole entire payment theoretically needs to stay the same for any typical home buyer are we starting to see that the consumers are a little concerned on price because theyre thinking Mortgage Rates are higher i think we will see that as Mortgage Rates climb but the increases that we have seen so far have only gotten people off the couch and into the market so people are worrying that they need to hurry and buy a house now before rates go up further so actually, i think its had a perverse effect of driving more home buyer demand, not less. The last time we had you, the tax bill had not been signed into law and we were sort of asking you, theoretically, what you thought the impact would be on the housing mark now that it is signed into law and we do know about the deductibility of mortgage interest and also the limits of the size of the mortgage, what are the impacts, are you seeing any impact at all right now . I think the major impact is going to be this transformational migration from hightech states to lowtech states you still think that . Were seeing people going from new york and california to the center of the country, to texas, to the American South even when wall street people, Silicon Valleyicon valley and wl street, thats a sign of things to come. We see a lot of Movement Across the country as people react to this tax change. Are they finding jobs in those places because you know, basically, house prices are tied to job growth and Income Growth and the areas that you just mentioned, Silicon Valley and wall street, theyre the homes of Specialized Industries that are largely concentrated there yes, there are obviously branches of bank of america or jpmorgan in st. Louis and chicago and elsewhere. But those are where the jobs have been. Well, i think the employers are going to chase Affordable Housing. We saw that with amazon and hq2. We see that now with apple almost every Silicon Valley company is looking to open another campus the has a lot to do with how wall street accounts for stockbased pay. Harder to pay engineers through the nose to afford a home in seattle and San Francisco. Youre seeing google and almost every other Technology Company exploring pittsburgh and everyplace in between so they can employ people who can afford the house. And slack and gethub and all these other technologies for letting people work remotely is also having an effect. So we just see a lot of technology workers, a lot of jobs that used to be centered in new york or San Francisco moving to other places in the country and its not going to happen overnight, but it is certainly the longterm trend driving the real estate business right now glenn, youre a rich guy. If you could move one place, not where you live now, pick one city you would invest in with your own money where would it be . Nashville or san antonio. Thats two, not one i know. I cant decide theyre both so good this is a game show you have to pick, actually not a game show. Ill go with nashville. I think its a city on the rise. On the rise based on what, glenn . Is it just your personal preference for nashville well, i do like the grand ole opry, but mostly its based on the fact that so many people are moving there its got good liveability, good affordability. No state income tax hot chicken good music its been a very hot market for Us San Antonio is right behind it glenn, thanks for your time appreciate it. Always fun thank you we just want to show you shares of mattel, the stock is popping. The rise right now is just about 8 well bring you more information on this move as we have it, but again, you see that spike there in shares of mattel. Something were watching all right, coming up, from homeless to making money off a 5 billion tequila deal, incredible story around another big booze deal and why companies are going all in on agave. Plus, the first etf to use Artificial Intelligence to pick stocks well tell you exactly how it works. Stay with us the rum giant bicardi expacts in tequila business. Landon dowdy joins us with a look at the deal bicardi is buying patron in a deal that values the company at more than 5 billion one of the biggest liquor deals in years this comes as more Companies Scramble to own more top shelf spirits. Theyre credited with producing highend tequila, and sales have soared more than 700 from 2002 to 2016. Patron west cofounded by a billionaire who also cofounded the Paul Mitchell systems Hair Care Company its the first major deal under the man who was named bicardis ceo in october by the family which has controlled the Company Since its founding in 1862 patron will join grey goose vodka, bombay gin, and st. Jermaine in the bacardi pote folio. It will become the second Largest Spirits Company in market share buy value in the u. S. According to iwsr data. Put tequila has been hot not only for m a, but deaugio agreeing last year to spend up to 1 billion to acquire cosamigos founded by george clooney. Its not just consumers who cant get enough of the highend tequila brands here, guys. I presume this follows the trends tequila consumption is growing 700 since 2002 to 2016 but guys these valuations are unreal. 5 billion for this one. 1 billion for cosamigos which had like 100 million in sales the valuation, 10 , 11 , whatever sales thats a fat multiple. It values the case at 1700 for case, and 6,000 for case amigos these companies are willing to pay to get in on this tequila. I didnt know tequila is that popular. Its hot. Its that hot i thought it was Bourbon Bourbon as well those are the two leaders in the segments but tequila is just i wonder if the rise in uber and lyft coincide with the rise in consumption of hard liquor. Tequila . Its trendy the cocktails, milelians are loving in and willing to pay up. Lets have a few shots. Satans little conconscion. Straight ahead, where are we . Exclusive interview with jeff curry. Well bring you his 2018 commodity call straight ahead on power lunch, and tune in tomorrow for our annual event at morning star morning star will announce their top Fund Managers of the year. Well talk to all the winners. Im out of here in just two minutes, but power lunch is ba itwckn o. Hello, everybody im sue herera heres your cnbc news update at this hour. Secretary of state Rex Tillerson meeting with the French Foreign minister in paris. Afterwards, he joined diplomats from 28 other countries to launch a new plan to punish anyone who uses chemical weapons. He blamed russia for chemical weapons attacks in syria theres simply no denying that russia by shielding its syrian ally has breached its commitments to the United States as a framework guarantor it has betrayed the chemical weapons convention, and u. N. Security Council Resolution 2218 five gas rig workers missing after yesterdays explosion in oklahoma are now presumed dead Officials Say the search for the missing men has ended and they now have switched over to a Recovery Mission a new survey from creditcard. Com says 23 of those surveyed admitted to keeping secret accounts from their current or previous partners and when it comes to financial versus physical cheating, 31 said hiding money is much worse than having an affair. Theres some food for thought for you. Thats the news update this hour melissa, back to you i think both are equally bad. They are. You are right. Tushea very nice. Thank you lets get a check on the markets. New record intraday highs across the board. Literally, dow, s p, nasdaq, and the russell 2,000 as well sitting closer at intraday highs. Dow down by 17. 5 points. S p higher by 5. Utilities and tech, your sector leaders today. Consumer staples and telecom, the laggards hewlettpackard enterprises higher mattel and has bro, look at them spiking right now. No news yet attributed to this move, but this is something were watching mattel shares now higher by almost 15 Norfolk Southern halted for news pending. Well bring that to you as soon as that hits the market is set to close for the day. Lets get your final numbers at the cnbc commodity desk. Good afternoon to you crude popping today. Holding well over 64 a barrel about a 1. 5 gain. Brent managed to touch 70 again, but it didnt hold for the close. The optimism coming on the back of the imf numbers about Global Growth and demand. Those are positive, and also the notion that opec may be willing to extend its Production Cut even further than the end othe year a wait and see approach. Still, at the World Economic forum in davos, the Saudi Oil Minister said hes angsess about the fragility of the market and the potential for black swan by and large, were on our way, but were not there yet. Something to keep in mind. Thank you very much despite higher prices for both oil and some metals last year, not a very strong one overall for commodities. But your next guest says now is the time to bet on commodities theyll outperform here is jeff curry, edof Commodities Research at Goldman Sachs. We have a lot to talk about, but before we get into oil and metals and all that stuff, we were having a discussion in the commercial break about bitcoin in your mind, and i know some at goldman may disagree, in your mind, is bitcoin and other cryptocurrencies, are they actually crypto commodities . Absolutely. Make the case i like to think about the financial markets, we call them securities because theyre securitized to a real asset. Therefore, they have an obligation or a liability to that real asset. In contrast, commodities do not have any liability think of a dollar bill a dollar bill has a liability to the u. S. Government. A barrel of oil has a liability to nobody. So when we think about a bar of gold, an ingot of aluminum, they have no liabilities. Bitcoin is mined, it has no liability. Therefore its a commodity does that influence the way you think about price movements in bitcoin and volatility and whats going on in how its traded absolutely not. You look at the way its trading. Its trading similar to a nascent commodity. A Nascent Technology when we think about the bitcoin as a commodity, they have to think about its physical characteristics. Its financial characteristics and economic characteristics physically, its produced with a lot of power and very little labor. You have one guy on an oil rig producing a lot of oil from a lot of capital almost nobody is transacting with bit coin. I know you can, but i could probably go to tell me this, can i go to kansas and buy a car with bushels of wheat . I probably could just from kansas city, by the way, it would be inefficient the point is its me selling it to you selling it to you selling it to melissa. Its a commodity, not a currency does that even matter you could transact more. Will it change it from a commodity to a currency . Your first argument was the obligation it lacks the obligation even if you transact with it gold you can transact with. But if you think about its ability to be used as like gold or pressures metals, one thing that separates it from all other commodities, its very lowcost to store and very easy to conceal. Better than diamonds it naturally, if you thing about why was it created, what economic problem does it solve it solves an economic problem that are primarily for the under world. A really good quote, one of the founders of bitcoin years ago said something to the effect that gold not in jewelry because its expensive jewelry has gold because its expensive. You flip the idea being that way. Lets flip it outside of bitcoin. How do we make money on commodities in 2018 . What looks good to you and your team we look at the overall basket for the first time in years, we have a positive carry to own commodities more broadly so all the commodities in the gsci, the Goldman Sachs commodity index, is now a positive carry to own. Point number one point number two, we look at the macro backdrop, its the best in decades for owning commodities we think about the three rs. Reflation, reconvergence of Global Growth, and releveraging. Reflation, reconvergence, and releveraging you put those three together, they create a really strong positive macro backdrop. The best i have seen since maybe 2004 so how far along are we in the cycle . I read equity reports more than i read commodities a lot of analysts are bullish on caterpillar and say were at the beginning of a multiyear cycle which would imply the backdrop for commodities is very good you have to split commodities into the nonenergy sectors like metal versus energy. In the metal sector, they have 7 1 2 years of underinvestment in capx to produce new supplies of everything from copper and other types of core metals it has a similar supply story as what we saw in the 2000s overlay that demand story on it, you put the two together, you have a lot of potential price upside energy on the other hand, i have to say, the best thing that ever happened to base metals is they didnt have the best r d departments that created shale the problem with energy, its got a shale. Its got new technology and a supply source, which means the longterm story cant be as good as metals. Do you feel bitcoin and the other ones, they take attention and maybe dollars away from other commodity investments . No, you know what they take away, its taken away from commodity investments are the faangs technology really . People are buying facebook over palladium . Absolutely. The equity market, and i think it has a lot to do with the fact that the equity market has the wind in its sails. It had a great year last year, as you pointed out you started this, commodities had a miserable year history says commodities will outperform equities this year. Its equities, commodities bonds, cash. History says its commodities, equities, bonds, cash. I think a lot of it has to do with who had the wind in their sails. Jeff curry, Goldman Sachs good discussion. Thanks for rolling with the bitcoin stuff. Well see you soon appreciate it well, the market as we mentioned, full rally mode, but not everyone is reaping the benefits some of the biggest stars in the activist universe arent shining as brightly. One is willing to give up perks to try to make a comeback. Its a comeback that is laungs in the making here at this point. We keep waiting, thats for sure i wanted to give a headsup to my fellow new york city subway riders you may soon see this familiar face yes, thats bill ackman, the Hedge Fund Manager after three years of losses is laying off about ten people in his firm, including his own driver since 2015, pershing squares assets have been cut in half they did have redemptions at the end of the year, but that wasnt necessarily the catalyst for the restructuring. Its part of a longer soul searching within the firm to turn around performance. That means acuman plans to do less Time Marketing and more time investing as they say, though, misery loves company, and ackman has plenty of it in fact, many brand name activists posted returns last year that not just lagged the s p 500 but also the broader Hedge Fund Industry and their smaller activism peers these are names like nelson pel peltz, who was up 3. 7 , and davidine horns Greenlight Capital was up on the year Barry Rosenstein is only a third activism was up 5. 6 the bigception is third point, led by dan loeb. His firm reported returns of 18. 1 , and unlike his starpowered peers, he didnt wage any major activist pushes in 2017 aside from some notes about nestle trian, as you remember, essentially tied a proxy fight at p g, lost anyway, and greenlight lost its fight at General Motors however, as loeb tells it in his Fourth Quarter letter, that we got a copy of yesterday, the key to the firms success in 2017 was hiring sector specialists who he said just picked good stocks, guys its as simple as that, apparently imagine that. Picking good stocks. And ackman on the subway . Ill believe it when i see it. Make sure to have your iphone ready to get a picture thank you leslie picker. Can Artificial Intelligence pick stocks better than a human investor well discuss. Plus, shares of apple losing half their gains in the last few minutes. Why . Jpmorgan chase says they see signs of maybe a weakening iphone x cycle that news coming out straight ahead. Youre watching power lunch. Well be right back. 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 nfl commissioner Roger Goodell speaking at the Economic Club of new york this afternoon, weighing on nfl ratings and the ongoing controversy over the national angtsm. Ratings of the protest have been the leagues two Biggest Challenges this year commissioner goodell said hes trying to reach younger, more distracted viewers by signing more mobile streaming viewers like the recent one with verizon. Theyre probably more distracted they have more options, more opportunities to go get information whenever they want it and we have to adjust as the league for that. And we have been focused on that thats why were focusing on new deals with verizon, as an example, to make our game available on hand sets and phones and tablets he said he disagreed with the National Anthem protests but the ensuing discussions afterwards brought owners and players together we wanted to also listen to our players and understand what it is that they were actually protesting and what it is that they were concerned about. And it led to unprecedented dialogue with our players and owners in the league where we really even though we may disagree with the form of protest, it forced us to listen. The super bowl is just 12 days away. People will be watching for the rating numbers and if any players protest. Thank you you got it. Equal bot recently launched equibot, they launched a fund they call the worlds first Artificial Intelligence etf. How does it work bob pisani joining us with equibot cofounder . The machines are picking stocks now, brian. We have a big problem. We have to put microphones on lets talk to the man the important thing here is theyre picking stocks let me talk to the man in charge art, as you mentioned, the ceo of equibot, and also the etf itself, the symbol is aieq okay, a machine picks stocks explain this to us how this works. Yeah, so the highlevel strategy is that the a. I. Technology mimics the process of an army of Research Analysts working around the clock were processing about a million news articles every day as well as Financial Statements on over 6,000 companies. We combine all that information together to build a portfolio of 60 to 70 holdings. I have heard this before. Your point is a human being could never process 1 million pieces of information a day or a million news articles. We cant make enough sense of it an a. I. Can and somehow sort it out, is that the idea . Absolutely, and we believe there will be more information tomorrow than today. Does the machine get better over time . Selflearning that goes on absolutely. We apply learning in many fashions were better today than we were yesterday and well be better tomorrow than today. Somebody has to make an initial decision about what we call structured learning somebody has to tell a machine this news article more than this news artcome how does that happen, and at some point, does the machine decide itself what ratings to give the whole thing is autonomous the machine is driving the decisions on what has more important weight over Something Else our ip actually looks at the data and tries to find the truth and credibility behind the data so we can see how important the information is and how important it is to the Security Prices so initially, you gave it some rules to say do this, and then eventually, said you can now start setting your own rules . Absolutely. So we said, financial thats the amazing part, the unstructured learning, the learning youre saying is semiintelligence in a way. More than semiintelligent, bob. Lets talk about what the picks are, how brilliant you really are amazon alphabet, looks like the faang stocks here. You have a bunch of financials, you had t. Rowe, nasdaq in there, your capital one. These are a lot of financials. Can you explain what its doing here, whats the logic behind this and why are these the top picks right now . Yeah, as i mentioned, we look at financials. We build valuation models on over 6,000 companies the companies in here are undervalued companies but thats not enough the 1 million articles were processing, were looking for events or catalysts to push those prices closer to entrance values so whats the benchmark, how do we grade you . How do you know how do we know if youre doing well or not . You started october 18th, so its been three months i think the s p is up more than 10 in that time period. How is the fund doing . Were up about 11 over that time period. But actually, going back to what you initially said, initially, we were actually underperforming and now were actually outperforming a little bit so we believe that just like ibm, watson believes the a. I. Grows in value and well see it over time. The symbol is aieq. The primary claim, the machine is learning and gets better over time well hold you to that claim thank you very much for joining us this is not the end of this conversation i want to talk to this machine later on guys, back to you. Good luck with that, bob. Bob pisani you get plugged in here often . Hes going to talk to the machine later. Moving on, were watching apple losing about half its gains today, this after jp morgan saying they see signs of weakening iphone x orders. Is the prime for a pullback . Well debate that straight ahead on power lunch. Welcome back to power lunch. Im josh lipton with a market note on apple. A Research Note attracting a lot of attention from jpmorgan the title of that note, has apple gone sour . Analysts saying theyve picked up more signs of what they call weakening iphone x orders, they expect it to be down 50 billion, larger than the 8 line. They believe that weakness will continue in the first half as they say highend smartphones are, in their words, hitting a plateau this year. Atlantic equity downgraded apple because they saw signs of iphone demand starting to soften. Perhaps traders and investors will have a better insight next week when apple reports q1 results next week. Interesting stuff there, thank you very much. Let us trade apple now the trading nation team. Were going to bring you on to talk about apple kind of the last couple days has done well, despite a couple of downgrades now this max wolf, what is your reaction . Im not super surprised we think the 8 and 8 plus have been weak, underwhelming some people are going to pixel and looking at other eco systems. The 10 was the bright spot i dont think it hits this quarter but the bloom is tarnished on the rose here i dont think apple has had a great month but i think fundamentally people want their stuff. They command a high price. Theyre sitting on a ton of cash theyre not bad for the next couple of quarters, certainly not this one, but there are some storm clouds on the horizon for sure. Boris, max saying google and the pixel may be taking a little bit of apples cell phone business what do you think of this report i dont want to say in trouble, thats dumb, but do you think apples iphone x sales are slowing . I think its in trouble theyre basically betting on the fact that high, expensive products can be sold at this point. Its clearly becoming evidence that everybody else has caught up to them and some have surpassed them the home pod will be as big a failure as the 10. The functionality of those products is just nowhere near as great as it needs to be relative to the price difference. And this is a big problem. The key question is, can they make it up in services thats the very, very big tell if the whole conversation on the call is all about Financial Engineering and how much theyre bringing money back, thats a onetime story its not a business story. I think the market will be watching it carefully as we go forward. Were watching. Boris and max, thank you very much more more trading nation, go to our website, tradingnation. Cnbc. Com announcer and now the latest from tradingnation. Cnbc. Com and a word from our sponsor. Position, size and risk reward ratio are two important aspects of building a winning trade. You dont want a single position to be a too big percentage of assets additionally, you want to make sure theres enough profit potential to justify the risk youre taking. Adhering to your exit plan can help you build on trading successes. We took legendary and made it liberating. We took safe and made it daring. We took intelligent, and made it utterly irresistible. 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You know, critics of the tax reform bill suggested that the money will not go to wages, at jpmorgan today and a number of others proving that wrong but, rather, to shareholders in the form of buybacks and dividends what do the fast money think do they think this is a major trend and another lift to the market all of it can be a lift to the market in terms of the wages, thats obviously a good thing, more money in consumer pockets, that can help, Consumer Discretionary shares and so do bonuses share buybacks shrinks the shares. A big day tomorrow on power lunch, well be speaking with wppo sir martin sorrell, greg hayes, and chip brewer its a big show heres an update on the stock, thanks to mattel keep watching. Closing bell is next hi, everybody, im kelly efef evans at the new york stock exchange. Im Bill Griffeth big question for consumers and manufacturers, is our country headed for a trade war well have a debate on that in just a minute we begin with Kayla Tausche in washington President Trump and canadas Prime Minister both talking tariffs. Reporter the administration introducing new tariffs