Transcripts For CNBC Power Lunch 20180226

Thanks ge aside, its rally on, garth the dow and s p up again today what correction . Because at session hides, the nasdaq wiping the 7 a 5point loss from the february 1st close to the february 9th low . Off the books. Stocks may be being po receding a bit today as many of you listen on this sirius xm, this is for you, shares up after more than a decades. The barrons article, this is cooler than the lithium channel. Bobbi sani is on on the floor of the New York Stock Exchange hey, bob. Hello, contessa we are seeing some nice moves up, near the highs of the day. I just want to point out this is the second day in a row we moved up. This is opposite of earlier last week when we went down in the middle of the day. So s p is sitting near the highs second day in a row. Theres three things that are happening. First, we are healing fast we moved down 10 . That second circle there is the bottom on the ninth we havent seen this in a while about amazon, netflix, adobe, and jpmorgan with a 52week high list third important thing, the cyclical groups are the ones moving again technologies, industrials, and consumer staples, defensive stocks are lagging in fact, you pug it all together, and its starting to look like january again. The cyclicals have been performing since the bottom. Techs up almost 8 since the bottom financials have been doing better, these are the cyclical names, and still up, but lagging. Remember, this is since the bottom, the bottom line here is the market seems to be telling you that the Global Growth story is still very much intact. Guys, back to you. Thanks, bob to the big interview on cnbc with berkshires Warren Buffett. Becky quick tacking with the oracle of omaha. Becky . One of the cake takeaways from his annual letter to shareholders this year is that Warren Buffett and Berkshire Hathaway are sitting on 116 billion in cash. Thats cash he would rather by using to buy businesses, but he says its tough finding prices that he thinking are the right price. Thats because Berkshire Hathaway is looking to buy an entire business. That doesnt mean that he thinking the stock market is overvalued. If you had to choose between buying longterm bonds or equities, i would choose equities in a minute now that doesnt mean i think the stock market is going to go up or anything us if i was going to own equity for 30 years, i think equities will considerably outperform that 30year bond in fact theyve been net buyers of stocks, buying in additional stocks, but thats the same thing hes telling investors however, there is one situation he would warrant you should never be doing if you are buying stocks that would be buying stocks on margin, borrowing money to buy stocks thats a huge problem he thinking theres a story on the lead talking about how margin bets in part fueled part of the set jolt we saw earlier this year that story points to the idea that theres 642 billion thats been leveraged against investors portfolios buffett says as far as hes concerned, he and charlotte munger have said thats the wrong think to do. My partner charlie says theres only way a person and when somebody says how they came back and made a second fortune, im not impressed, because why did they lose the first fortune . Theres no reason theres just no reason to borrow money except youre in a hurry to get rich and ear risking going broke. They find that 1. 31 has been bought on leverage, the highest since Goldman Sachs has been keeping track. Guys, ill send it back to you so heres the question, is Warren Buffett right as usual . Shaun ohara, and kevin heres a softball, because youre a stock guy. That had suggest that stocks ten to do better over the long run i would tend to bet along with them. That stocks would fall 25 . Thats a big number. It gets your attention do you agree with that that bonds in many ways control stocks yes, but you just played a trick on me. You changed the time horizon from thats what im known for, playing tricks hes trying to say over the long run stocks are the play to put your money for that kind of duration, but longer term when hes finding things hard to find, hes reflecting a shorterterm outlook. Hes saying given the prices today, its difficult to find something attractive to buy, and he would prefer to buy cheaper. Shorter term, though, sean, were seeing that they both and that seems to be driven by this this the yield in the tenyear, which has actually gone lower. So to brians point, if theyre being held hostage, we sell off thats the pattern. Ite not its how high rates may go, thats the real issue. Youre buying the current cash flow and that value of future earnings is affected by in large bauer borrowing cost, debts, and whether that cost will go up or down wage and wage growth, which were the two big culprits now were able to digest the fed will not be as accommodative, so we have to get back to more normalized level on the market. The overall fundamentals and under pinnings are solid we look at free cash flow, and we see lots and lots of companies generates huge amounts of cash, but earnings continue to come in above what the estimates are, and weve had another solid quarter of earnings all of that i think so long as we dont go crazy and have rates spike up or inflation somehow come around or a huge wage growth i think were okay to move forward from here. Is is it time to accept the new our conflaying issues, right . The volatility in part was created by certain markets that were pegged to volatility. And thats a fairly complicated thin there has not been any normal e normalized volatility, so we got used to it being around 10 and sitting. Thats not normal. It moving around do i expect to go back to 50 on volatility in the next 30 days highly doubtful. I think well settle down a bit, but well see a more normalize the pattern, as an event that drives it like a blowup from the two inverse and short vix products are you tomorrow with the jay possibly testimony at the house . Not really. Whats more likely is youll get a transition here that is going to try to be consistent. So if anything its probably more likely youll get some sense of calm one of the things we learned is the rate expectations are moving with the storm, as it ran up through january into february, so too did the rate expectations. As the stock market ran into turbulence, the rate expectations backed right off. Its interesting to see the relationship between the new fed chair and rates and the storm. I would expect to see a local of attempts to show continuity between what Janelle Yellen was say and the incoming fed chair. Kevin, sean, thank you very much see you soon. Thank you. Thank you very much the dow is up now, but ge getting slammed against, the stock hitting its lower level since 2010, the company restating earnings and could be facing legal act just how much more bad news could be out there we head out, check out this rally. 3 leading the dow right now. At holiday inn express, we cant guarantee that youll be able to contain yourself at our breakfast bar. Morning, egg white omelet. Sup lady bacon fruit, there it is but we can guarantee that youll get the best price when you book with us. Holiday inn express. Be the readiest. Welcome back to power lunch. The dow transports participating in this rebound we are seeing, no doubt helped by Warren Buffetts upbeat comments about the airlines he also has stakes in the railroad industry, of course with berkshires ownership Service Burlington northern santa fe the dow transports still about 6 from the alltime high which was said back in january. Thank you, seema mody the dow is rallying, but ge getting hit once again, the stock hitting its lowest level restating two years of earnings and may also face legal action by the justice market. Lets bring in rob cox, global editor at reuters, and james gray from dean, ill kick it off with you do you feel you have a handle on what ge . Thats the question that everyone is asking with ge, we said this at the beginning of year, because news has been coming in in installments we got another install after the close on friday, as you pointed out. The latest bad news was a potential doj action, on a legacy business so were still not seeing a bottom. Rob, thats bad news. You think its dead money. Is there a possibly a case that can be made for an investor whos looking for a deep, deep, you know, bargain . I think its a classic value trap General Electric is untangling what is almost 40 years of Financial Engineering. So it was the creation of ge capital, the financialization of the industrial one of the greatest industrial businesses in the world that took place, you know, from jack welchs tenure, to jeff immelt in 2001, and really john is coming in trying to disentangle a giant conglomerate right down to the level of these liabilities still on the books it may not take the 40 years to create this mess, but it will take a couple years to wind it all down so i mean, if you really want to even some of these have exposure to the aircraft engine bess, power, whatever it is, there are a million places to go rob, you mentioned Financial Engineering with the undertone theres something wrong with it. Companies every day engage in Financial Engineering, even if youre calling it a stock buyback program. Youre not suggesting something illegal but something ftc coming out on friday night, but its for the s. E. C. And regulate aror to figure on the there was something untoward im just saying they make unfortunate greatest products in the world. They are the leader with jet engines. They make incredible lock motives. The problem is you have this overlay of finance, which is again, its not necessarily illegal or wrong well, i should say its created so many problems that built up over 40 years that John Flannery is spending all his time just fixing it, just so you can get a pure view and insight into these businesses. Dean, what have we learned about jeff immelts tenure i think one of the biggest stigmas against that tenure has been Capital Allocation decisions that have not worked out for the company. I agree with rob that theres a lot of repair that needs to happen at ge we did get good news, this has been almost a year coming before we saw a positive catalyst, but i think the announcements today about three new board nominees can be a game changer, both in investor sentiment, but actually making real change. Deane, im saying this was supposed to be one of the most wellrun, and after the crisis we learned that ge capital wasnt all that. Theyre talking about restating two years of earnings. How much of it has been a facade fooling investors and analysts alike. Lets be clear, on the restatement of earnings, this is new, the suggestion that smun you toward, thats not the case. The stock is down 50 in a year, deane. I agree were neutral on the stock here. Theres still a lot of repair that needs to go on, but i think your focus needs to be more forwardlooking than backwa backwardlooking at this stage and i point the to the news of the three new board nominees. Thank you both. Many folks are mad about the state of College Basketball. The money scandal is plaguing ncaa as we head out, you have a big rally on wall street take a look at some of the names eye ring the dow thrall up nicely. Thrall up nicely. Power lunch is back in twoite. Quite a lot of colleges to pay for though. A lot of colleges. You get any Financial Advice . Yeah, but im pretty sure its the same plan they sold me before. Well you. Situations totally changed now. Right, right. How bout a plan that works for 5 kids, 2 dogs and jake over here . That would be great. That would be great. That okay with you, jake . Get a portfolio that works for you now and as your needs change from Td Ameritrade investment management. While stocks are in full rally mode, Berkshire Hathaway, america expression, state street Goldman Sachs and wells faro. March is supposed to be the best time of year for College Basketball fans, but the scandal is sending shockwaves throughout the sports world he wall street a talking about a 100,000 payment, miller did not coach on sad, but the players he did play. All of this stems from an fbi basket from andy miller. Hes negotiated over a billion in nba contracts for many stars. He documented payments to more than dozens to dozens, indicating top schools like north carolina, duke, m. Gan state, kentucky and texas. This led people to call for major reforms. Remember s. The big tournament makes over a billion in revenue. So this is a big story its tricky, because they didnt suspend this coach just dont coach this one game and well figure it out. This story has a long way to go partowner of the steelers, but may want to buy a different teams . He he reportedly had a deal, because Jerry Richardson got in trouble because of the harassment accusation, franken lorenzo fertitta, the cousin of tillman fertitta, have reportedly hired a company to talk about selling casinos so youre not allowed to have casinos if you own team. You get into the club, the league and the other owners get family with you, with your 5 stake and you use that reputation to buy a bigger stake later on. When youre talking about selling casinos, make the whole Supreme Court case thats up against sports gambling will change the whole culture which the changed the whole world. A year from now, would they have to sell their casinos leagues could still say we dont want you to have both. Thats a good point to watch, if it becomes legal, could an owner own a team and a casino . A lot of that depends on whether the nfl decides to succumb to the pressures that go along with this yen for sports gambling nationwide. Have there been cousins who own sports teams eric, thank you. Thanks. Rebuilding Americas Energy infrastructure, a ceo weighs in and more back december lash against the nra. Delta and unedit, the latest well talk to a ceo who is standing his ground. Match guarantee too. And if thats not enough. We should move. Our home team will help you every step of the way. Still not enough . Its smaller than id like. Well help you finance your dream home. Its perfect. Oh, was this built on an ancient Burial Ground . Okay. Then well have her cleanse your house of evil spirits. Well do anything, spiritual chatter seriously anything to help you get your home. Ally. Do it right. We have one to two fires a day and when you respond together and you put your lives on the line, you do have to surround yourself with experts. And for us the expert in gas and electric is pg e. We run about 2,500 2,800 fire calls a year and on almost every one of those calls pg e is responding to that call as well. And so when we show up to a fire and pg e shows up with us it makes a tremendous team during a moment of crisis. I rely on them, the firefighters in this department rely on them, and so we have to practice safety everyday. Utilizing pg es talent and expertise in that area trains our firefighters on the gas or electric aspect of a fire and when we have an emergency situation we are going to be much more skilled and prepared to mitigate that emergency for all concerned. The things we do every single day that puts ourselves in harms way, and to have a partner that is so skilled at what they do is indispensable, and i couldnt ask for a better partner. Hello, everyone. Im sue herera, heres, President Trump having lunch with 39 of the nations governors at the white house today. He told them he would have run into the Florida High School during the deadly shooting, even if he didnt have a weapon some deputy sheriffs this weekend werent necessarily medal of honor winners i really believe even if i didnt have a weapon, and i think most of the people in this room would have done that, too because i know most of you. The national westerly service surveying the damage in murray, kentucky, determining a tornado touched down on sunday at least 40 homes and four businesses were damaged with dozens of trees uprooted, luckily no injuries reported. Iowa basketball player jordan bo hannon being praised for missing a free throw on sunday he was tied with the former hawkeye for the most consecutive free throws made in history, however street died in an auto accident in 1993, and bo hannon wanted to honor his memory contessa, back to you. That is an incredible sacrifice. Out of goodness of his hard to keep that other record stanton. He got a lot of applause. A lot of people got on his feet. Sue, thank you. And gains hoping the dow and s p wide occupy about 80 of the losses in recent sell jot, the nasdaq racing financials, tech and industrials the leading factors, and berkshire heart away leading it. Peter costa, empire executions president and cnbcs contributor. Peter, you got to help mess out here, brother. I was told that stocks collapsed because of interest fears. The Interest Rates and inflation scenario is the same as it was a couple days ago. Why the sudden optimism. If you look at the bigger picture, and i think thats what investors are starting to do the economy is still doing well. Its not gangbusters like it should be at this point, but its still doing well, earnings continue to grow you go back to the basics. If you have a continued earnings growth, stocks should do better. What add to the great rate hate debate. Interest rates were going to destroy the rally and everything is terrible. I didnt buy into that. We know what the Interest Rates scenario is going to look like most likely thus tee i mean, theres no proo froo surprise there. Me but i think its the earnings picture you go back to the basks, what you learn in economies, and about the potentially for what are you expecting from powell hes the fed chair, a lot of what he says will be torn abash. I dont think there is going to be much of a change in policy from janet yellen and powell if theres a chance for a change, you wont see it tomorrow i think its his first shot and hell be as bland and almost as nondescript tomorrow, and then well see how fed policy is going through the year i dont think youll see much of anything. Peter, good to see you. There assist showdown, saying it will shut down power plants in new jersey unless lawmakers agree to raise utility bills. The follow company this fall the companys earnings beat last friday joining us is roth izza. What is the latest on this i dont want to say showdown. I dont want to think of it as a showdown, either. In unregulated markets, externalities are not being priced in. So absent those external were okay at the moment, but as we look to where the forward price is pointing, that wont be the case. Theres no way for a Nuclear Plant to recover it is longrun costs. This is sort of a story of all alternative energy theres got to be subsidies, or can you see a world where you dont have to subsidize these . The world that we would prefer to see is a National Price on carbon. Do you need to raise rates . This is not an issue of survival for the utility what we have said to the state of new jersey, absent federal action, new jersey could consider life with our without the Nuclear Plants we have seen several constitutionsies that without those plants, rates will go up even higher. Its literally cheaper to make them economic. If theyre the will of the people to keep those Nuclear Plants up and running safely first of all safety is number one, far and away. Except for our competitors, no one wants to see the plants go away in my town theres beautiful trees, but a deer farts, and they fall over and everybody loses power for days if there is an infrastructure plan, what can pseg do to prevent these ridiculous power losses trimming the trees is much cheaper. But power lines are like 100 years old. Number two, the energy they use is cleaner, and number three, they dont suffer interruptions. With 100 million what would you do we spent 3. 1 billion last year number one was the transmission system, but basically what youre worried about is the stability of the overall grid. Does tax reform enable you to spend and upgrade your system and immediately deduct its a secondorder benefit every penney we reduce in terms of taxes goes right to the customer, so the expression we use is because the bill came down we created some headroom that were referring to. President trump has outspoken about his support for big coal new jersey has been one of the leading states on solar. How does the Administration Support for coal affect how you operate. We have two remaining coal plants one will be retired in about 18 months the other we own a slice of. Were not investing in coal going forward. We dont think it has a strong environmental future roth, thank you. Roth izzo, ckreismceo of pseg. How is the bond market going . Its not acting very volatile today. That is considered the pivot today. Weve had a downward drift since last wednesday ease cycle close. Lets look at some charts that start out in july of last year theres our tenyear weve led the charge globally. Lets look at france july and october, left and middle, whatever is higher is what traders are paying attention to, so were at 83, theyre looking at 88 basis points from july the guilty in the uk, its currently at 151 finally the bund, definitely july 60 basis points currently trading 65 were leading the charts for other Central Banks and others they have turned a bit, but make looking at other contessa, back to you. Thank you very much. The list of companies distancing themselves with the nra getting longer and longer. Mpll talk to the head of one coany standing by the nra, when business and politics collide, next. Big thinking in the finger lakes is pushing the new new york forward. Were the number one dairy and apple producers in the eastern United States supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov welcome back lets talk about guns in corporate america, shall we . The list of Companies Severing Ties with the National Rifle association continues to grow. Over the weekend companies united airlines, enterprise, allied, north american van lines, just to name a few. Saying theyre going to edge their partnerships some of these are basically a couple percent off to the flight to the Nra Convention in dallas. You name it. Pay the 40 annual fee, get some discounts, it will pay for itself in other words, First National bank of omaha was really the First Company on to do it. That was on thursday, but note every company is following suit. So star there are some companies who either have a Partnership Deal or some kind of business relationship with the nra that are sticking with it fedex probably being the biggest among them hole planner, they have either not ended or havent said anything so far about this by the way, amazon, apple, roku and youtube, thats kind of different. In fact theres a lot of talk theyre not in Partnership Deals. Its mostly the nras Online Tv Network being broadcast or streamed through these platforms that people have an issue saying they should prevent that as well those arent Partnership Deals, more streaming content deals the nra is not taking this lying down in fact they fired back in a statement say, in part in time these brands will be replaced by others who recognize that patriotism and determined commitment to constitutional fremont doms are characteristics of a marketplace they very much want to serve. There you go thats the nra coming out. Lets talk with soming who is sticking with it the ceo of Hotel Planner youre one of the companies thats stuck by the nra. Why . Well, you know, we are just a classic hospitality company. You know, we came from roots of hospitality where hotels welcome all guests its not political you know, if anybody comes to your drawer, regardless of what theyre wearing or whether theyre from, you welcome them thats classic hospitality thats where we come from. My grandfather was a Hotel Developer and owner. My father is a Hotel Developer and owner, a longtime executive with hyatt my mother was the founder of a major tour Operation Company that brings millions of people into the u. S. From all countries, and we just believe in classic hospitality if you ask us to be part of your boycott war, thats not what we are about. Were about welcoming all guests. So, tim, lets get down to the numbers. How much of your business relies on the nra or its members for revenue . Nothing i mean, the numbers are insignificant. Its not about money its not about any of that its about bringing people together, which has been about our core business, you know, thats what we started the company 15 years ago for thats why well do 900,000 groups worldwide Everybody Knows that we care about people you make it clear that you want your company to be aglobal force for good i read that you personally support more gun control so how do you maintain those stances and still maintain your relationship with the nra and what it supports abu were pretty intelligence over at Hotel Planner. Were always innovating, and i see where one side is digging in heels and where the other side is digging in heels. Its time to bring those parties together i would love to be the facilitator to bring them together the amount of hateful rhetoric thats got back and forth is just wrong if they would reach out, we radio happily make this come together if you look at history youre leaden an employeeowned businesses, your employees have a vested interest in your company doing well if you face a massive boycott and you see your revenues declining it would hurt your employees. Whats the role of a ceo in staking outintersection between politics and business. Theres that intersection every day. Businesses have to take a stand where politics are concerned you know, our employees are like family. Going back to how i was raised, if you treat your employees well, if you treat your customers well, people will come to you, and all my employees, and i have spoken with them about this when this first came out, sent out a statement. We have all come together, because we all want to help. We want to make this world a better place so theyre on board with my mission, and our mission as a company to bring people together its not a new slogan. We had the slogan before anyone else adopted our facebook is up to 1 million followers of bringing people together thats all our mission when we bring people together, powerful work gets down. Thats in our commercial for a reason we dont put it out as a statement. We truly believe in it thats why after all the heat that ive taken over the weekend, i will stand by the statement that we bring people together for good. And we will do great things together we appreciate you so much sharing your conviction with us. Thanks, tim. Thank you. Is amazon a threat to u. P. S. One analysts take on that stock. Well hear from washing buffett on the topic and a reminder, fast money is back no more curling, sorry, guys more power lunch in the meantime is straight ahead energy is changing fast and were changing with it. Building a smarter grid, investing in new technologies, thats aeps road to the future. And the International Brotherhood of electrical workers helped make that happen. The ibews Outstanding Union professionals have the skills and training to get the job done right. Thats good for our customers and for our bottom line. Ibew members are our power professionals. They should be yours as well. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Lets get to our market flash. Two of the socalled faang stocks hitting record highs, helping bring the nasdaq back to more than a threeweek high. The two names continuing to outperform is amazon, up nearly 30 so far in 2018 netflix is up a whopping 52 this year. Those two stocks alone have made up more than 40 of the nasdaq 100s 9 gain so far this year big run there, melissa thank you time for street talk. Analyst recommendations on the stocks you need to know about. We kick it off with target the analyst says the retailer is positioned as a survivor after its aggressive strategic changes. They have been a key driver of the stock. Theyre setting a 86 key stock target upside of about 13 from current levels your second stock is u. P. S. Laptop markets upgrading it from a bye to a hold. They say the amazon phobia is overblown. Fears are overdone they note concerns about u. P. S. Spending on things like new planes are real, but theyre optimistic the company can do well their tarkt is about 131. Not everybody agrees Deutsche Bank downgrading it to a hold on friday the amount of capital spend, the real concern some say they have underinvested over the past decade thats a lot of catching up to do third stock here, intel increasing the price target from 50 to 60, maintaining the buy rating after it exceeded analyst expectations they believe the trend will continue expects the segment will continue to out perform. And your final stock is guess. No, its guess the Clothing Company they upgrade it to a buy they see significant upgrade in the next few years apparently, retro tees and denim are making a comeback. Whats next . Roller skates . Theyre going to be big for guess because theyre hot in this, and the companys channel check shows improving trends in north american retail. Google search trends Shows Consumers are responding well to new guess looks and they added the recent stock buyback is a great entry point. I feel like you have retro tees well, for me, theyre not retro. Im old so theyre just old. Theyre actually real. I mean, just you know. Theyre vintage my mom went to hawaii and all i got was a tshirt thing. The never big trend, no lie, dad jeans. So youre right in there with the retro tees just saying. This is how its going to go . Pretty much this is how its going to be. Dad jeans . Great to have you with us here i really enjoy myself here a big rally on wall street right now. The dow up travelers, 3b, and boeing leading it higher. Much more in the second hour of power, and more from Warren Buffett on stocks, first, on where he likes to eat lunch. Have you been to taco bell or chipotle neither one neither no, i go to kentucky fried, i go to mcdonalds, burger king. Skirting the question skirting the question. Taco bell no, im forhiev o wcherne serves cocacola each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Im contessa brewer. Heres whats on the menu. Finding value. Warren buffett says stocks arent overvalued. We debate. Taking Flight Airline stocks moving higher. Warrant buffet says he wouldnt rule out owning an entire airline. Should you follow him into the sector and cost of School Security the idea of hardening schools to protect against shooters is gaining a lot of attention, following the florida massacre, but is it realistic . Power lunch starts right now we would have to call it air hp maha. Your money is looking good this monday the dow soaring. Its gained back nearly 80 of the losses from the recent drop. Right now, the dow is up 1. 3 . Thats 340 points in todays parlance if you have invested in technology, telecom, or financials, youre probably making money today netflix and amazon continue to print money for their investors. Those stocks, yeah, alltime highs yet again. Netflix up 52 this year we dig a little deeper in Tech Semiconductor stocks on the move micron, intel, qualcomm your highs. Jpmorgan, mastercard, and the chicago mercantile exchange. If you dont like losing money, look away. Ge falling yet again its actually up. 4 overall earlier, the stock hitting its lowest level since 2011 ouch 13 and change earlier today. For more on this market rally, lets bring in bob pisani and mike santoli mike, ill start off with you because today is kind of an interesting anniversary. It marks the onemonth anniversary since the markets meltup peak but surprisingly, even though the markets went through this bout of volatility, not a lot has changed in terms of the fundamental characteristics of the rally we have seen one of the things thats pretty striking about the recovery is the leadership profile in the market has been roughly what it was going into the peak its not been as broad a rally but definitely been very solid and led by things like financials, technology, industrials. Those sectors that in fact were more cyclical oriented and basically say good things about whats happening in the economy. Down 3. 5 from that alltime high, but up 3 for the s p 500 for the year to date it seems like the market has found its footing. A little narrower. Its a little more of a selective recovery two points. First, were healing fast. Brian mentioned we are almost 80 of the losses have been regained number two, starting to see a lot of old friends show up on the high list. Amazon, netflix, jpmorgan is there. This looks a lot like january. Number three, to your point, the cyclicals are leading the rally, from the bottom that we saw. Tech and industrials are leading the way. That tells me that investors believe the underlying growth story, the Global Growth story, is still fairly intact right now. 80 recovery, is that actually believable . Do you feel confident in the stunt of this . It seems like whenever we get rate shocks, we had the fomc minutes last week. Theyre perceived as more hawkish. Perceptions that the rates, the tenyear yield was going higher. It seems like whenever were go above 2. 9 , that causes problems for the markets. Here we are, 2. 8 and change and things are fine. You asked the right question, which is this a reprieve from the rate story or a pardon i dont know that thats clear at that point. I also dont think people should say, well, up 80 . We go back to the highs and up and away from there. You never know how these processes are going to play out. Its probably key to look to the year to date up 3. 5 year to date, two months into the year, its not too bad. Its really just a matter of the contrast with where we were sitting a month ago. These are stutter steps if we suddenly went over 3 , we all know that the market is going to have problems with that if it happens suddenly if mr. Powell comes on this week and says these gradual moves up, and he calls them gradual or downplays it, i think the market will get more acustoms to sitting at 2. 8 than it has been in the past. Thank you the oracle of omaha, Warren Buffett, appeared on squawk box and made the case for stocks over bonds if you had to choose between buying longterm bonds and equities, i would choose equities in a minute now that doesnt mean i think the stock market is going to go or anything else, but if i were going to own a 30year Government Bond or equity for 30 years, i think equity is considerably outperforming the bond over the 30 years lets bring in laura, head of equities with rpc capital markets, and steve wood. But you think, steven, that equities are too expensive i do. The 30year time raise changes ones calculus in the near term, u. S. Equities are expensive. The cycle looks good a little better after the tax stimulus we think in the near term, fundamentals look good earnings are also going to look good, but you need to substract off the fed reaction function. I thinkthese valuations in the u. S. Given where we are in the cycle is just providing predominantly u. S. Dollar based investor to ability to trim the u. S. And rebalance globally. So in a shorter term timeline, not 30 years, but maybe in two years, what do you like better than american equities i think right now, we like European Opportunities in equity space. Core european fixed income looks expensive, but relative valuations are there much earlier earning cycle ill be in japan in two weeks. Theres some opportunities in japan as well. I would say global multiasset, and also active strategy is something, this has exposed some of the value add that active strategy can provide he is a packers fan but clearly hates america. Do you feel like europe and japan offer better investing values we have heard a lot of our european clients make the case that europe has a little better valuations and im not going to argue with that, but the u. S. Still looks great from a valuation perspective. Were still sitting at a rage where youre up about 10 , and typically up about 82 of the time from the levels were at. Why arent you concerned about valuitions we had this massive improvement, and a lot has been tax driven, but we have see a lift to revenue expectations the economy is very, very strong we dont see any kind of imminent signs of recession or crisis coming up and the valuations are giving you room i mean, i think we really got some breathing room from this tax reform i think the information were looking at as well, when the stock market and bond market disagree, you go with the bond market you have a twoyear note right now that is 2. 22, on its way to 2. 25 if we get a little drift back in the tenyear, you have a spread right now thats getting closer to 55 basis points probably closer to 50, so that flattening yield curve, even though the fundamentals are strong, but because the fundamentals are strong, that curve could be an amber light. At these valuations, a global rebalance gives you more opportunity. How closely will you be watching what powell has to say tomorrow were definitely keeping an eye on it. At the end of the day, we have new leadership at the fed. Its coming at a time where rates are starting to move more quickly than people would like i dont expect any nasty surprises, but i do think its important. It will be interesting to see how he addresses the recent market turmoil in response to rising rates thats what happened since the last fomc meeting. We dont know how the fed as a body interprets what we saw in the stock market in february absolutely. If you look at the feds path coming into the current chairmanship under powell, the fed was very comfortable normalizing rates into mediocrity now that we are seeing an improvement in the economy, an improvement on inflation, a twohandle is more likely than a 1. 5, it may be more likely 3 is a more comfortable policy path for the fed than two in the next year and a half, up front, i think you get a lot of shortterm good news, but then the delayed function of the fed, when you look at a year and a half, two years out, is just a Good Opportunity to diversify. What could powell say tomorrow that would scare you . I think hes probably not going to say anything thats would be unexpected. Steady as she goes, but there are more hawkish members, so maybe of the vocabulary, if its more in that camp, i think the market would notice that, but i think right now, the paint drying in the background, the Balance Sheet issue. If he says something that changes that, that would be something we notice. Its interesting a lot of the consensus is were seeing him sticking to the rivers and lakes the fed is used to, just to quote an old song. A little tlc on a monday. Thank you very much appreciate that. The latest data on new home sales coming in much worse than expected are higher Interest Rates hurting the Housing Market diana olick is live in washington diana. And the short answer is yes the new home sales number is based on signed contracts during the month. So people out shopping and inking a deal with a home builder, its the most current read really on demand, and heres what happened Mortgage Rates, first take a look at where Mortgage Rates went from january 1 to 31. Up about a quarter percentage point. In addition, the new tax bill was signed into law. It takes away nice breaks for homeowners, especially in higher cost markets so new home sales took a tumble. Down over 7 for the month after falling even more in december. New home sales are now down 1 compared to a year ago thats the first negative annual read we have seen in a long time we also saw the supply of newly built homes for sale rise to the highest in over four years just over a sixmonth supply thats usually considered a healthy supply indicating a balance with demand, but when you have the supply of existing homes for sale at half of that, a record low, you can see that theres going to be a problem there. That problem is affordability. People may want to buy new homes, but they are being priced out. Back to you guys all right, diana, thank you very much. On deck, America Needs infrastructure ideas we also need money australia wants to help. With both. What can we learn from our friends down under australias ambassador to the United States will join us next. Plus, new fed chair Jerome Powell headed to capitol hill for his first testimony as head of the fed will he shake an increasingly nervous market and unstoppable amazon, another alltime high today. No wonder Warren Buffett is a big fan of jeff bezos. Im amazed at the managerial talent of jeff bezos, but i have been a constant fan really almost since he started. The more i see of him, the more impressed i have been with what hes accomplished. But ive blown it in terms of making money on it so youre not investing right now. No, but i i would never bet against it thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to Wealth Management. 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. We have a big market rally on our hands heres a look at names hitting alltime highs jpmorgan, estee lauder, salesforce big news there President Trump wrapping up a visit from australian Prime Minister Malcolm Turnbull over the weekend. One of the key topics, infrastructure its one of trumps favorites and one of the things australia does best. Australia helping to invest some of the countrys 2 trillion pension fund for our infrastructure for more on what it could mean for both countries, lets bring in the australian ambassador to the United States, joe hockey. 2 trillion is a lot of money. Its a generous offer, but what does australia get out of that deal well, its not what australia gets out of the deal its a deal for both parties and that is we have a lot of experience in Infrastructure Investment currently, sydney has the second highest number of operating cranes of any city in the world. Equally important, its got 48 tunnel boring machines operating under the City Building new pipelines, building new railways and roads and the fact is that in partnership with the private sector, you can get a lot of infrastructure built and america has a 4. 5 trillion infrastructure shortfall by 2025 so in saeven years, it needs to find an additional 4. 5 trillion for infrastructure and even President Trumps initiative is a long way short of that. Im sure you met with the Prime Minister following the meetings with President Trump. Probably a lot you cannot talk about, ambassador, but did the Prime Minister come away optimistic that the United States would be able to indeed get some kind of infrastructure plan passed . Well, brian, i was in all those meetings with the president. I can sayto you that the president is very aware of the infrastructure needs of america. And so, too, are all the Administration Officials the fact is, if you do not get new infrastructure in the United States, your Economic Growth will slow down and if your Economic Growth slows down, that costs jobs. So what webring to the table i our experience in Public Private partnerships thats one of the reasons why our Prime Minister spoke with the National Governors association here in a landmark contribution last weekend. And it was focused on what we can do in Partnership Levels importantly, at a state level in australia and a state level in the United States, because lets face it. Washington doesnt build a lot of infrastructure, nor does camber in australia. It really is localized where the Development Process is in the control of the local counsels, the local governments, and also importantly, where they know where the demand is. This is where your model is a litt little controversial here, which is called asset recycling, which i think we can agree needs a new name, which is basically you sort of outsource the infrastructure to not the government, to groups, and they decide, airports or roads or bridges are going to be leased out. Hold on no, no, look, you have counties and cities and states in america that have probably around 2 trillion of stateowned enterprises. Often people talk about it in the context of china, but america has a lot of stateowned enterprises. Mainly, all its airports almost all of the major airports in america are owned by a state, a county, or a city. And quite frankly, theyre not great shareholders small cities that own enormous airports, and those airports, they pay no tax, they pay no profit, and a lot of them need Additional Capital so what the british have done, what europeans have done, what australia has done is leased out the airports and in our case, thats just the airports could be ports, could be a range of different pieces of stateowned assets and you lease them out to the private sector it could be Workers Pension funds that buy them, buy the lease, and what we set out is a plan where if a county or city leased out its airport to the private sector, the proceeds that it received for the lease out of that asset are then redeployed into new infrastructure that was what asset recycling is its a massive windfall for the county and city. It gets more efficiency in the assets, but importantly, you have 2 trillion of companies out there for the first time would start paying tax i was suggesting in some corners of american discourse, privatization is a dirty word. Same in australia same in australia. On a different note here, you were a member of Australian Parliament when they passed the laws in the late 90s basically restricting gun ownership in australia. One of the safest countries, one of the least amounts of gun violence of First Nations in the world. Youre an outsider looking in to the american political process do you think anything can or will be done about gun laws in the United States, ambassador. Its a very tough issue its a very tough issue here in the United States. The entire culture around guns, the history of the second amendment, a range of Different Things its its very different to australias experience we dont want to lecture our great mates about gun laws our own experience is quite clear. We have banned semiautomatic and automatic weapons back in 1996, and thank god, and you know, for a range of different reasons, we put in a whole lot of other initiatives such as Mental Health checks, delay between the time you purchase a gun and when you actually can receive the gun, a whole lot of Different Things that came into play but i want to emphasize that its a very different environment here than the United States and a very different history and really, you know, your safety is in your hands, appropriately, and were not going to give you a lecture from the other side of the world. Australian ambassador joe hockey, we appreciate your time. Thank you for joining us great to be on with you the president wants to make our School System safer by increasing security, but how much will it really cost and do stes vetaha the money do do that . We have a special report weve been helping you prepare and invest for retirement since day one. Why would we leave now . 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Hes at a high school in california with more on this story. Scott. Hi, contessa. Were in newark, california, in the bay area, but it could just as easily be newark, new jersey, or newark, delaware, or any American School district, all now reevaluating their security after yet another masdz shooting in fact, the superintendent here says that has become the top Priority School safety is always our biggest concern. If i had to pick one question that we get from anyone is really how safe are schools . Thats kind of the question that people ask before they even get to academic questions. This is pretty typical suburban high school, and the security here is already very visible. Perimeter fencing, security guards, cameras, and a cutting edge Monitoring System that can detect the sound and pinpoint the location of gunshots anywhere on campus but sanchez says theres still room for more, bringing this district with 13 schools and 6,000 students up to speed would take about 3 million to 6 million, thats as much as 5 of the total budget now, the Partner Alliance for safer schools is a nonprofit funded in part by the Security Industry it says at the very least, schools should look at lighting and signage, better doors and windows, surveillance, communication. All of the training that goes with that. And all of that can be had, the organization says, for about 100,000 for a typical Elementary School or 170,000 for a high school. Now, of course, every school is different. Just as rekeying the locks here at this high school, they say, would cost about 100,000. And a lot of experts we have talked to says theres always an overemphasis on physical security when the real key is better communication between staff, students, and Mental Health personnel so im a mom here, and i send my kids off to school every day, so when i look at school shootings, it affects me personally there are those who propose that instead of hardening the school up, what they should do is invest more money, as you said, in Mental Health that means in Guidance Counselors who are really paying attention in Early Intervention programs that deal with kids with problem behaviors, that deal more effectively with bullying at a young level. At that school, where you are, is there any talk about those kinds of more social programs . Absolutely. And thats what they say is one of the keys here they have a lot of that in place. And the superintendent, who actually comes from colorado and was working in aurora at the time of the theater shootingering has kind of a unique perspective on this and he says that the key throughout his career has been better communication between staff and students, and its not necessarily about violence, about Mental Health, about bullying its just developing those relationships and also beefing up the educational programs. Funding is tight, though, and thats part of the issue when these kinds of incidents fade from the public view, nonacademic programs become on the chopping block first including School Security. Scott, thank you. You know, one of the things here is that if youre talking about Better Communications with staff, with the teachers, as you add more students to any class, it becomes harder and harder for teachers to make that oneonone connection and to really try to intervene, and again, what we saw in florida is that there were adults who were trying to intervene with the alleged shooter. And he just still kept falling through the cracks yeah. Good point there all right, tomorrow, an important day for the markets. Jurole powells big debut. The fed chair set to make his first appearance before congress what could he say about rate hikes, inflation, and rising deficits plus, Warren Buffett is standing by wells fargo saying the new ceo is, quote, working like crazy to clean things up. Should you consider buying well debate that. Hello, everyone. Im sue herera heres your cnbc news update a gun control rally held in tallahassee. Hundreds of people braving the rainy weather, marching from Florida State university to the State Capitol building protesters carrying signs and chanting slogans, calling for stricter gun control measures. An incredible crash on a canadian highway between a semi truck and a greyhound bus, shutting down the highway. The moment of impact was caught on camera. Dozens of people were reported injured. Some critically. 29 people were transported to local hospitals. Severe storms across arkansas spawning tornadoes over the weekend. Security camera video shows the exact moment thetornado hit in oseola winds up to 90 Miles Per Hour ripping off a motel roof and actress Heather Locklear arresting sunday night at her California Home on suspicion of Domestic Violence and battery on a Police Officer the incident involving her boyfriend. She was checked out at the hospital before then being booked into the Ventura County jail youre up to date thats the news update this hour back to you. Thank you, sue. Sue herera stocks in full rally mode, hitting session highs. Nasdaq erasing the losses in the recent selloff, now turning positive for the month of february dow and s p have recovered about 85 of their losses. Technology and financials are your winners utilities the only sector in the redd and the oil market is closing for the day. Lets get over to Jackie Deangelis at the commodities desk good afternoon. Crude logging another positive session, alongside the movement, were seeing in stocks today the closing price, just under 64 a barrel session high, 64. 24 interesting, the session low was 63. 06 so holding over 63 to the downside now, prices continue this steady march higher as we head into the spring the feeling is demand is strong, supplies will tighten, but expectations are it may be stronger this year with trump tax policies taking effect look for a cross of 65. 50 to get back to the highs we saw earlier in the year. Thank you Jerome Powell testifying before Congress Tomorrow on Monetary Policy. His first appearance on the hill since taking over from janet yellen given the Interest Rate concern on wall street, this is shaping up to be a hugely important testimony. Could there be surprises joining us, the former Deputy White House secretary to george w. Bush. Jared bernstein, economic adviser to joe biden, and steve, what does everybody want to hear do they want jay powell to say the most bland thing possible . I dont think he can. I think he has to answer some salient questions out there, including what he thinks about these tax cuts and the impact theyre deg to have on Monetary Policy i think thats the key we want to hear about his inflation dynamic and what he thinks, does he think inflation is going back to 2 . Is he okay, cool with the idea it may float a little above 2 , 2. 5 what were doing here is resetting, rediscovering, finding anew the reaction function of a new fed chairman to the economy glow know him. What can we expect from him . Will he be whats he like whats he going to do . I think hes a very studious person but hes not an economist. Hes going to be sort of learning a little bit on the job. Hes had five years to learn some of the economic stuff, but hes not an economist by training i think the key is whether or not hes more of a supplyside guy. Do we hear him say that the tax cuts are going to lead to productivity growth, which should keep inflation down, or is he more concerned on the other side, which would have been more of what yellen said, the tax cuts are a keynesian stimulus and create inflationary threat what i want to know from jay powell is how he interpreted the mark markets tumult in the month of february and how that might influence the course of Monetary Policy in the past, the fed led by janet yellen has indicated the markets are an input in total of what they look at. Where does he stand, right exactly, thats what were all listening for. The way you teed it up is exactly right. Its very common for fed chairs and fed governors to signal the following to the market. Were watching you we care about you. We certainly dont want to surprise you we would like to give you Forward Guidance to tell you what were up to, but were not going to be driven by you. Theres a certain independence there thats really important. While i agree with everything steve said, i think hes right on point, its not just the tax cuts its also 300 billion in spending that we havent heard from a fed governor, since thats been implemented. Remember, on the tax cut alone, they kicked things up in terms of their forecast a bit, very much on a keynesian, not a supplyside thing. I think were going to hear a steady as she goes presentation. I think hes looking over his shoulder more at janet yellen than the Financial Markets dont surprise anybody tony, at this point, how much emphasis are you putting on what he says about the pace of rate hikes . Look, i think thats what everyone is looking for, right are we going to get some clue that the fed is thinking about an additional rate increase in the year to 18 months ahead. And i think its a difference between new york and washington. This testimony markets in new york will be paying attention to his clues on potential rate hikes and his views on inflation and whether theres some evidence of overheating. The politics in washington, though, are going to be where republicans and democrats on the committee are going to be trying to use jay powell to make their points about either the deficit in tax cuts or, you know, the republicans will be asking what do you have against growth we havent seen enough growth and wage increases in a long time how thin is that ice . How thin is that ice . Yeah, when youre trying to delicately balance its tough. Yeah, its a thin its thin ice or a thin spit of land for him to occupy. But hes not the first fed chairman to have to play that role and you know, we have seen greenspan was masterful at it, and bernanke learned to do it really well. And janet yellen even did it well i have confidence jay powell will do it well also hes got good staff helping him anticipate those questions but thats its almost irrelevant because democrats and republicans will be making their own points just a quick point on that. Jay powell may well get asked, especially since the economic board of the president has just come out, do you really think the economy can grow at 3 , which is the ten year projection of the Trump Administration . Most economists, the vast majority, think thats a way optimistic estimate. And i think hell dance around that much like tony suggested, but look for that question, probably from democrats. What do you think, steve . What are the land mines you see potentially for jay powell tomorrow you know, i think what powell has to do is, as tony said, balance what washington wants to hear versus what new york wants to hear. I think also that hes in between a rock and a hard place on some of this Economic Growth stuff. As jared said, 3 is not the consensus of most economists i think the inflation question, whether or not he sides with the idea that if markets get too tight, well have an inflation reaction, if labor markets get too tight, we have an inflation reaction i think that creates a problem for him in that it starts to ratchet up the expectations for markets, for greater interest. At the same time, i dont see the downside as that great because at this point, i still think were talking about, is it three or four rate hikes this year i dont think, at least i hope not, that were looking at a 350point rally on the dow, that people think is no good if the fed does 100 basis points versus 75 basis points. I look at the market, and i hope its more rational than that i agree with that, by the way. I think we put much too much emphasis on the 25basispoint hikes, at least in terms of their economic impact. The place where the rubber will meet the road, i think, is 2019 i dont think hes quite ready to talk about that yet because i think the market is comfortable with three or four this year but if you start getting into a 2019 forecast, which the market will come around to discounting, say, halfway through the year here, maybe june or july, and we start looking at a steeper rate hike, in that year, thats when it could really trouble the market we talked about the impact of tax reform hitting full stride potentially later this year in terms of capx spending and the impact on productivity, et cetera so 2019 does seem to be like thats the year where it could this is the big question. Theres a keynesian impulse that happens initially. Theyre going to be spending more people will get more in their paychecks. Its an aggregate demand function the other side, if theres going to be another side, its going to come through greater cap x, greater productivity, and thats a supply side function that 2019, if it happens is when its going to happen were going to leave it there. Thanks, guys tony, jared, and steve we just talked about tomorrow, jay powell giving his first testimony to Congress Since taking over as the head of the fed. This will kick off at 10 00 a. M. Eastern. It could very well be market moving so keep it here on cnbc. 10 00 a. M. Eastern time is when it kicks off Warren Buffett says he continues to be bullish on the sector atnducmo aadn power lunch. nadia white the moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. dane chauvel sometimes the product arrives, and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. tom villa we took our world class network, and we developed devices to track environmental conditions. This device allows people to understand whats happening with the location, but also if its too hot, if its too cold, if its been dropped. Its completely unique. dennis woloshuck if you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Who knew a tiny sensor could help keep the food chain safe . And i recently had hi, ia heart attack. It changed my life. But im a survivor. After my heart attack, my doctor prescribed brilinta. Its for people who have been hospitalized for a heart attack. Brilinta is taken with a lowdose aspirin. 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The Airline Business is different. People can go in and form ultra low cost ones. Frontier is out there waiting to go public, perhaps so youve got youre not going to have these huge trunk carriers, necessarily, more of those, but you can always compete. But you cant be able to do railroad you can add a flight, if youre one of the airlines already there, or you can perhaps come in and get a gate and fly. So its a way different set of economics between the two industries i wouldnt rule out owning an entire airline but its a different business. A very different business. That was Warren Buffett discussing whether he would consider owning 100 of an airline. Berkshire currently holds steaks in four Major Airlines could you follow buffett into the sector joining us is brandon, Senior Analyst at barclays. Great to have you with us. Is there an airline that you could think of that could possibly be taken over by Berkshire Hathaway well, thanks, melissa appreciate you having us on. We have the luxury of covering transports and airlines here we watched buffett get active in the rail sector in 2007 when he took a position in union pacific, Burlington Northern and Norfolk Southern and owned Burlington Northern coming out of the recession. We think the game plan is similar here we got out of our miami conference, and airlines have only been there two or three years because the market cap has gotten to the level of large cap investors. If you look at the valuations of an airline stock, were about half, with cash conversion on 70 , and while i agree with mr. Buffett, you cant build a railroad from l. A. To chicago tomorrow, you can easily add a flight, the railroads also have to fund all that capital the airports are really public infrastructure, so very Good Business just not getting the valuation in the sector right now. So if you were to advise mr. Buffett, brandon, and he asked you, hey, brandon, what airline should i buy, what would you say . Were very biased here at barclays, we have our top pick on American Airlines but we like the Management Team and structure of returns at Delta Airlines we could argue maybe delta has the Better International network with their joint structures globally, but out of the four carriers, its hard to pick one. Southwest has had the tried and proven business model, but arguably, all four offer such tremendous value and we saw the railroads trade at five times ebitda going back ten or fifteen years ago thats where the airlines are today, and the sectors are similar in that regard were looking at american, southwest, united, delta, all having a good day today. What moves them back, you know, youre talking about weeks if not months since buffett first said he was hot on airlines. Yeah, its funny. We just had a big investor lunch here today the last Time Airlines were really in the news was this time last year when buffett announced the fourbug positions in the u. S. Carriers. Honestly, the stocks havent done much since then when the stocks went up Airline Investors are really hurting here we had some things like fuel costs go up, which are pressuring core margins and earnings this year united is growing capacity the next three years to the tune of 5 , but an Unnamed Airline executive said we love to dream bigly as humans and dread specifically, and theres such a lineage of bankruptcies and negatively equity returns in the sector that a lot of people dont want to believe these can actually durable Business Models thats probably why we saw the Market Reaction across the board when united said it was expanding capacity this whole fear once again that the airlines will be in this expansion mode and thats going to threaten pricing for the airlines and margins. Can you put to bed, can you put to rest, brandon, these fears that theres going to be overcapacity because so much capacity is going to be added . Have we heard enough from the various airlines to say this is a united issue well, of course, its hard for american, delta, and southwest to comment on what their big competitor is doing publicly, but i can tell you, uniteds strategy, specifically, has a lat of merit inside that company. They lost a lot of domestic share in the past decade if you look at what delta and american are doing, they havent reacted at all to uniteds announcements. Its all internally focused. Its not like theyre adding a hub in atlanta on top of delta you can add flights here and there, but the core Route Network is developed whats really important here is that we have had cost convergence. Every Single Airline now, major airline, has a pilot union that was not the case even a decade ago when we saw numerous startups all the time we have not seen a startup in this country, i think, in almost ten years now. Were going to leave it there, appreciate your thoughts. Moving to banking all the issues at wells fargo finally in the past . Up next, hear what Warren Buffett has to say on that stock. It is, after all, his biggest holding. Well also hear what our traders have to say on trading nation as well. Big wells fargo focus next i dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from Td Ameritrade. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Traus traus. Tradingnation. Cnbc. Com let us trade wells fargo because Warren Buffett speaking to cnbc about the banks recent troubles and what lies ahead for the company. I have competence in tim swallow, but wells did goes way back, but they they came up with some terrible incentives and incentives work in both directions, if you got the right inincentives and you do the same thing with your family and all kinds of things. They had some incentives, which incentivized bad behavior. Lets trade wells fargo ari, ill start with you, because the charts say stay away from this stock. They do you know, let me lead in that were bullish on the banks we think they need to be owned here we just dont think wells fargo is the one to own. The stock has been oscillating around this 59 level. Not much to glean from that. But i think its telling us its been underperforming versus its peers. That bottom panel is wells the wells relative ratio versus the kbw index. We think you want to look elsewhere. Buy the basket instead or buy the Leaders Within the banks, too so, technically does not like the name, but you think fundamentally this is a name that our viewers would want to own. How come yeah, its fundamentally sound. Necessity have over 1. 5 trillion assets on their Balance Sheet. As you move away from the rate repression environment that weve been in over the last ten years, theyll be a clear beneficiary of it. Also the u. S. Economy is doing quite well Credit Conditions on the consumer side are quite robust and then you look at the global environment, the Global Economy is doing well. Theyll benefit from that as well and, of course, the winds at their back because regulatory ie this will get into the short term, medium term issues Warren Buffett mentioned. If you look four to five years out, you can do quite well we like ari like the entire sector, the entire group we think overall over the next 24 months the financials could do well. Wells fargo, one more followup quickly, is part of a bigger thesis on the Financial Sector you are bullish on, correct . Yeah. Were optimistic on the u. S. Economy. In is a measurirror of the u. S. Economy with a tremendous amount of assets. The wind is at your back from the economic impulse to whats going to happen and Monetary Policy within the ecb. This should provide some support for all financials in general. The valuation gap, we believe, will close over the next three to five years as they get through this shortterm issue that theyre facing. And they are facing a real substantial issue, but we will get through it the franchise is in good shape. But ari technically says its not a stock you want to own. We appreciate it for more trading nation, go to our website, tradingnation. Cnbc. 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What is the best performing stock in any of those three this year i think thinking about dinosaurs a lot this weekend. Fossil group . Its fossil. Wow its up like 92 this year. Fossil. What did it do last year . Well, it went from 138 to 10. Oh, thats why. But this year anyway, my check please is this is interesting for the car world, volvo, saying its officially done developing internal combustion gasoline powered engines. Beginning after 2019, volvo, which said its going majority electric and maybe diesel, is done with gas engines. I think theyre the first major car maker to say gas is out. Times are changing. Yeah. Heres some news i found. Steve wozniak stole bitcoins from him on a stolen credit card hell never get the money back but wait, wait, wait. Im sorry. Somebody stole his credit card no. Somebody bought seven bitcoins from the woz. Which means he was a seller. And then canceled the credit card. So he never got paid and the bitcoin got transferred. And it was probably canceled because it was a stolen credit card. Oh, interesting. Remember when i gave you 20 bucks for lunch but it was pink, monopoly money like that deal. I dont give you money for lunch, brian. And yet the woz is still a believer, by the way. But he was a seller clearly he was a seller of seven bitcoin. He bought them at 700 each. Is it bit koip orbit coins . Is it like deer, myself, plural . Im not sure of the terminology. Speaking of cryptocurrencies your Central Location for crypto news is back, fast money. On the stocks you should fade on this bounce in the markets weve seen from the lows big show tonight thanks for watching power lunch. Thank you for being with us today. Thank you closing bell starts right now. Hi, everybody welcome to the closing bell on this monday. Im kelly evans from the New York Stock Exchange. Welcome back. Im bill griffeth. Are buybacks about to give stocks a new lift . A new note says we should see aggressive share repurchases, 23 higher from a year ago. Warren buffett speaking exclusively to cnbc. Find out the stock he likes more than others and his warning. Thats coming up. We have a rally