Transcripts For CNBC Power Lunch 20240714

Dominating the weekend and it could be just the beginning of disneys total takeover. Power lunch starts right now and welcome to power lunch. Im melissa lee. The nasdaq, the big winner today with tech stocks taking the lead as chip stocks rip higher, and check out the dow downers today. Boeing falling after fitch cutting its outlook for the giant to negative. Pointing to the uncertainty around the 737 max grounding and Johnson Johnson taking a hit about 1. 5 as the Company Fights thousands of claims around its baby powder well have much more on that story much later on. Kelly. Thanks. The fed is entering its blackout period ahead of the july meeting next week, so there will be no more fed speak before that decision but its not stopping the president from weighing in he tweeted earlier today in favor of a rate cut, saying the fed raised rates far too much and too fast it appears the great rate debate is still raging. Steve, what the data reveals, to cut or not cut that blackout period applies to fed officials, not journalists. There are two powerful but opposing arguments out there to cut or to stay on hold. Lets look at the case for a cut. Research says act early, act forcefully when youre near the zero lower bound even sometimes it pays to surprise the market. Take out insurance against a trade war, brexit, capx being slow, and a debt sealing potential problem here adjust Inflation Expectations upward and you would be normally expecting a weaker economy if you were to argue for the fed to cut rates. How about the case for no cuts jobs have been strong. Unemployment is low. Consumer very strong by the retail sales report. Growth estimated at, take the first half average, youre above trend of 1. 8 . Core inflation, less than half a point below the target range besides low inflation, a data dependent fed doesnt have a lot of data upon which to base a rate cut growth looks solid outside of manufacturing. We think any rate cut is a mistake, but Jerome Powell has the vote to cut rates at the upcoming meeting, but he has some opposition with which to contend. Five are against the rate cut. We dont know exactly how they would vote, but five, of which two are voters you can see the v we have, and then you have some folks on the fed, barken and daly from fran nine seem to support a rate cut. And i believe eight of those have the vote, if you include michelle bowman, whose views we do not know. The market has pretty much decided the fed will cut 25 basis points fed funds futures trading at a 76 probability of a 25basis point cut, and one out of four folks or 24 say theres a probability of a 50basispoint cut. Of the eight that are for a cut, how many are for 50 basis points or is that unknown i did not do that calculation. I believe its unknown i dont knethat anybody has spoken explicitly about a 50basispoint cut i think there are some who could be convinced maybe rich clarita, maybe a few others could be convinced. A good question, i dont know that i can answer it steve, thank you very much. This week marks the second busiest week of Earnings Results and well get the results of tesla, amazon, facebook, just to name a few you put that facebook, amazon, alphabet, and tesla, you have faat bob pisani joins me with what to watch for. Tyler, about a quarter of the s p are reporting. I want to show you the ones i think will be the most important. Ill break with tradition and argue its not fang. Global industries are what i want to hear from. Take alook here. United technologies is in there. Caterpillar on wednesday, boeing, 3m on thursday 3m had lowered its guidance in april for the full year. Disastrous month there, was down, what, 25 in the month of may. Caterpillar also had a tough time, united tech. We want to hear whats going on with the Global Economy and the trade wars with them a auto nation. Companies have had trouble recently genuine parts was weak last week texas instrument, most of the semiconductors have had poor guidance 3m is there. Lvmh, the biggest luxury goods maker. Historically highs, rich people are doing fine, and we have amazon and alphabet. Where are we right now were kind of flattish for the year we do not see an earnings recession, not the data were using. Second quarter, up about 1 . Third quarter is down mildly and theres hope for rebound in the Global Economy in the fourthu th quarter. Thats why we have it up 6 . Put it all together, 1 to 2 Earnings Growth for the year, but that could change if theres any dire warnings from any of these big global industrials thats why im watching what they have to say thank you very much as earnings season kicks off in a big way, the s p is up 19 so far for 19 and Goldman Sachs says the gains might be in for the year is goldman right lets fire up a bull bear debate Peter Anderson says goldman is getting it wrong were going higher from here, and eric is global chief inve investment strategist with russell investments. He doesnt think the markets will go much higher from here. Gentlemen, have it peter, why dont you go first, and explain why you think things arent as bad as some others do. Boy, where do i start i mean, first off, when you talk about averages for Earnings Growth, i mean, that really distorts the picture, does it . You have to look at individual stocks the stocks that i own im very confident theyre going to have earnings that are greater than 1 to 2 growth over a year period thats a blanket statement that really catches a lot of eyeballs, especially now when everybody is insecure about where the market is headed thats easy to sink your teeth into but i will tell you this on individual basis, there are many, many stocks that look very promising, their valuations are good the fed funds futures market, all those things that are really distorting looking at the individual details and i encourage your viewers to look at the individual details of stocks and youll find some gold at that end of the rainbows implicit in what you just said, peter, is maybe a little hesitance about the overall market trend in other words, if i have to be very particular and pick certain kinds of stocks, that feels like a little bit of faint praise for the market more broadly. Am i reading you right well, maybe but let me just add this certainly, the trade war, im not turning a blind eye to that, so what im talking about are the large multinationals, if you have a short attention span, say, investment horizon of a year or so, i would stay away from those obviously because we know the trade war is going to continue there is no end in sight its going to be protracted. All things i thought, by the way, were going to play out anyway so thats the only hesitancy, is being more selective the days are gone when you just buy an s p etf and sit back and watch your profits let me turn to eric, and get a rejoinder there. Youre concerned about what you see in the Economic Data you are concerned that stocks are fairly fully priced. Tell me why you feel that way and what i should do about it. So we think theres a 1 in 3 probability that the u. S. Slips into recession in the next 12 months thats a pretty high probability out there, a warning sign. You have very low ceo confidence that collapsed in the Fourth Quarter last year and has not rebounded. That has begot low capx spending which has generated poor manufacturing numbers across the globe the global pmi in manufacturing is below 50 right now. The u. S. Is just slightly above 50 you know, i think the fed is going to cut 25 basis points because all the markets expect it and they need to do something to combat that negative kind of confidence channel thats coming through the ceos and i think thats largely because of trade i think the path for a big booming equity market is pretty narrow stocks are very expensive. Earnings are under pressure because wages are raising higher than prices and you have a reality where its a very thin line you need probably a trade resolution to actually occur for the market to really pop in the next year or so. So how do you invest and that doesnt seem likely. How do you invest if youre cautious in the markets . Where do you put your money . This is where being a diversified multiasset investor makes a lot of sense i dont know whats going to happen in the course of ineconomy in the next year no one knows actually. Theres a lot of uncertainty, a lot of highly valued Asset Classes out there. I think the best strategy is diversify your portfolio broadly. Stay close to your policy, to your Investment Plan dont deviate a lot from it, and hopefully that will ride out the storm better than making a precipitous decision that can only be right in a very narrow band of probability. Eric, thank you very much eric and peter, we appreciate your time today. And still ahead, oil prices are climbing today after iran seized that British Oil Tanker we have the latest details and what the tensions mean for the Energy Sector farther out. And disneys Avengers Endgame is the biggest fist omall time combine that with the lion king, can anything shake disneys Box Office Dominance power lunch is back in two thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Technology executives from suppliers to huawei are heading to d. C. Today to discuss relaxing restrictions around doing business with that company. This as a report emerged that huawei allegedly helped north korea build out its Wireless Network. Ylan mui is in washington with the latest hi, ylan hi, tyler the president spoke about huawei this afternoon in the oval office during his meeting with the Prime Minister of pakistan he said that he wants the u. S. To be the Global Leader in 5g. All about huawei, i know all about 5g and were working on it, and we have companies that are now getting very, very strong in that department. Were going to have 5g, the best 5g in the world, just like we have Everything Else our Silicon Valley cannot be competed with. Theres nobody that can compete with Silicon Valley for the brain power or what we do. Now, trump said he also wants the administration to find out more about that report in the Washington Post that huawei helped north korea, but already, that is sparking bipartisan outrage on capitol hill. Republican senator tom cotton and democrat Chris Van Hollen have put out this statement saying that at every turn, we learn more and more about what a malign actor huawei is they also call for the passage of their legislation to tackle the growing National Security threat posed by huaweis efforts to dominate 5g theres no official word on whether the president will take part in that meeting with the industry executives. Well keep you posted as we learn more back to you. Thank you as we count down to the big meeting of tech executives, lets talk about what is in place. Tony and john, john is the one who cowrote the article reporting huawei secretly helped build north koreas Wireless Network. Gentlemen, great to have you with us. John, President Trump said he wanted to find out more about your report. Has anyone from the administration called . Well, we have been in discussions with a number of u. S. Officials in advance of this report. Obviously, we have been working on it for several weeks, collecting all of this information. A lot of it leaked by a former huawei employee that talked about the years of secret operations between north korea and huawei in building their Wireless Network some of the officials that i talked to said that this might be information that the u. S. Government doesnt even have, and it might really shake the tree as one official said. So there is a lot of new information in this report, and it certainly could provoke a strong executive branch response, as its already provoked response you found huawei partnered with a chinese stateowned firm, panda international, and between the two of them, they worked over a span of eight years you mentioned this is something that the government does not know is it simply because youre the ones who managed to get those spreadsheets that were not released to government, and are you sharing those spreadsheets now . Yeah, absolutely. We published the spreadsheets on the Washington Post website. We shared this information with government officials and the Commerce Department has had an investigation into the links between huawei and north korea since 2016 we have also been told by officials that this investigation is ongoing we dont have perfect knowledge about what the u. S. Government has, but a lot of people thought this was very eye opening. Especially the information that we have about huaweis efforts to install bay stations and antennas and how far back it goes in the maintenance its done and the other chinese firms that its gone through, and the efforts to conceal these efforts. Obviously, north korea is one of the most sanctioned countries in the world. And so its likely that a lot of these efforts to conceal their activities were done to avoid sanctions. We have asked huawei, you know, a lot about this they say they always follow rules and regulations from different companies. They say they dont have a presence any more in north korea. But they would not respond to followup questions about whether the business continues, so theres a lot of questions that remain. So at the very minimum, huawei, i mean, you know, its interesting because you probably did this reporting in parallel to huawei being blacklisted and then huawei sort of finding a reprieve potentially from the white house. At the very minimum, you found that huawei helped north korea violate sanctions or get around sanctions. So sanctions are very difficult. Theyre very complex, and what constitutes exports control violations, so were going to leave that to others and regulators there are very serious rules on the books that come along with many penalties when it comes to sanctions violations and especially if it involves u. S. Components beyond 10 because there are u. S. Components in huawei technology. Were going to leave it to the regulators to decide whether or not it constitutes a sanctions violation. But certainly, there are a lot of analysts who have looked at these activities and say they raise a lot of questions tony, is huawei a National Security threat . Its either a National Security threat or its an economic threat, or maybe its both we hear conflicting views from the administration we talked to them. I can tell you that my firm, for example, over the past ten years have been approached multiple times about working for huawei to help them explain themselves in washington. What have you said to them . We havent accepted those my first calls were to friends in the Intelligence Community saying their problems arent communications problems. Their problems are these kinds of problems that john unearthed and the team at the Washington Post. And iran problems, and other kinds of problems. Those issues are there but you get conflicting signals from the Trump Administration as they talk about it you have the china hawks both within and outside the administration who are very, very concerned about the National Security threat from china. You hear the president , as he just heard him earlier today, where he sounds like hes talking about, you know, thinking about the american producers as national champions, and we want to see american 5g firms succeed, which of course, we all want to see american 5g firms succeed, but we want to make sure its fair and fair competition. Then you also hear him say things like maybe we can get some concessions out of the chinese and their negotiations if we go soft on huawei. So the messages are really conflicting. The tie to the trade war, that seems like a very troubling aspect of it because at this reporting holds true and the Trump Administration agrees with the reporting, et cetera, then it would seem that, you know, that sort of bone that they can throw to the chinese, thats off the table. It horrifies the chinese hawks in the administration and the senators like tom cotton and marco rubio and others when they hear whispers of that. That we would go easy on huawei in order to get concessions. Yeah, this idea of trading economic concessions for National Security concessions. We should have a strong line on National Security. All right is huawei effectively an arm of the Chinese Government . Thats certainly the view of the Intelligence Community, the United States, and some of our allied governments john, is that what you found . Certainly especially, you know, the hawks in the administration, the china hawks. They view the company and the government as working hand in glove. Obviously, its not that simple. Its a complex system in china, and the relationship between governments and corporations, but a lot of the firewalls that are obviously in place in the United States and other western cont countries arent in place when it comes to china. Gentlemen, thanks so much we appreciate if Johnson Johnson is facing two huge legal battles one over its talcum powder, the other over opioids what it means for the future of the company is coming up first, amazon getting a vote of confidence from analysts and one trader said amzaw is s teto break out from here. Thats next. Welcome back to power lunch. Im mike santoli at the New York Stock Exchange amazon hovering below its record highs ahead of earnings later this week. One trader says the stock is primed for a major breakout. Craig johnson of Piper Jaffray and mike are your trading nation team today so craig, this is your call here the stock is still three or four percent below its old highs. Take us through why you think a breakout might be here when i look at the longer term chart on amazon and look at really the big consolidation range we have seen in the chart from about 1360 to about 2030, if i was to stand this particular base up, measure it out,ia could look at a move toward 2700. And mike, this aligns very nicely with mike olsons call who is looking for 3,000 by mid2021, and from our perspective, the moon and stars seem to be aligning here technically and fundamentally. It wod be a pretty big move up to 2700 probably not in a straight line, but mark, do you see the fundamental makings for Something Like that. Were still pushing a trillion dollar market value here with amazon all right, sorry, mark mark cant hear us were going to have to leave it there, guys. We will get marks take on amazon another time. Back over to you guys. Thank you very much mike santoli ahead on power lunch, tensions with iran heating up. What it means for the oil and potentially the Broader Market next plus, its disneys world and were living in it is it cornering the film market, and how one opioid manufacturer is looking to the lessons of the crisis as it deals with mounting legal troubles well explain all of this when power lunch returns. And now, the latest from tradingnation. Cnbc. Com and a word from our sponsor. Overbought and oversold indicators are generally used differently depending on whether the stock is range bound or trending look to buy a range bound market when an oscillator such as the rsi falled into oversold territory and then moves back above it look to sell a range bound market when the oscillator rises into overbought territory and then drops below it. Im lee bohl and schwab is the better place for traders soft music when i see obstacles, i create opportunities. When i see adversity, i find a way. When i hear never, i say now. [announcer] Southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. Mno kidding. Rd. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Hello, veryone. Im sue herera President Trump meeting with pakistans Prime Minister at the white house. He told reporters his administration had very positive correspondence recently with north korea. Our relationship with north korea has been very good we have really established a Good Relationship with kim jongun. I have personally. Theres no rocket testing. Theres no missile testing were getting our remains back we got our hostages back and we have a very, very Good Relationship, the two of us, and thats very important. More evidence that a plantbased diet is indeed good for your health. Harvard researchers analyzed nine studies involving more than 300,000 participants those who strictly followed a diet focused mainly on fruits, vegetables, whole grains, and thuts were less likely to develop type 2 diabetes. And chaos in an ohio courtroom this morning a Juvenile Court judge learned that she would have to serve a sixmonth sentence for a 2014 conviction for sharing confidential Court Records when deputies started to escort her out, there were screams from the spectators she was then dragged out with her heels dragging on the floor. You are up to date. Thats the news update this hour back to you. Sue, thank you. Sue herera the oil markets closing for the day. Lets get to leslie picker at the commodity desk largely green on the screen today. You can see wti up about. 8 ice present up more than 1. 3 or so nat gas up 2. 6 heading into the close. Brent tends to move more on events in the middle east than texas intermediate crude tensions in the gulf have led to concerns about the potential for supply disruptions in the region the dispute between western nations and iran was elevated on friday after irans revolutionary guard said they seized british flagged tanker. Still those tensions have yet to lead to a sustained really in oil just yet, thanks to skepticism surrounding demand for crude worldwide. Guys, back to you. Leslie picker as she mentioned, moves in the oil market follow continued tensions with iran well have more on that in a moment well have more on that right now. Lets bring in helima croft to talk about whats happening in the oil space. I thought it was interesting, the oil price is not higher. Given all of this. How serious are these tensions really i mean, i do not think oil is in any way now a leading indicator of stability in the middle east. Its now become a lagging indicator. The situation in the region, we have had multiple tanker attacks, infrastructure attacked, we had drones shot at, taken down, and yet brent is really not moving in the way we would expect it to five years ago, oil was above 100 when isis overran fallujah, mosul, and it wasnt at risk then now you have key waterways having attacks and oil doesnt move this does reflect demand concerns, reflects the view that the u. S. Is such a large producer that we have shock absorbers to deal with any major outage in the middle east, and i think right now, the market is more focused on a trade war than a shooting war in the middle east does it mean that in a way were not paying enough attention to the developments there . Because ordinarily, we would say, oh, my gosh, the oil price is up 10 or at such a level, we have to talk about this issue and how its going to be resolved instead, everybody can kind of ignore it. You can sort of shrug off the potential for a war. I think these events are remarkably serious i think were looking at further escalation i mean, i think its amazing the market sold off 4. 5 on tuesday when secretary of state pompeo suggested the iranians might come to the table, when minutes later, the iranians said were not coming to the table, and we didnt recover from the selloff. We really are looking at a situation of escalation. The iranians just keep insisting theyre not going to sit down until we start removing sanctions. And the white house continues to pile on sanctions. I dont see any off ramp right now to this cycle of escalation, and if there is a situation where u. S. Servicemen in iraq are seriously harmed, that could be a red line for President Trump. If the iranians really kick start their nuclear restart, thats a red line for President Trump. And so i think the market believes theres no way we could get to a war, but i think theres a path to one. You just really nailed the point i was going to ask, and that was what does iran want they want sanctions relief specifically what would they like to get and what do you think will happen if they dont get it i think the iranians are at a minimum looking for a resumption of oil export waivers. There are some studies out there saying basically iran needs to export around 720,000 barrels a day to cover their budget, to import goods, to stave off social unrest. I think that is something that the administration could potentially offer to get talks started. But again, the administration now is sanctioning china for importing iranian oil. So were not seeing a situation where the u. S. Is putting any carrots out there get the iranians back to the table again, i dont see any path to deescalation. At the same time, im curious, where do you think brent would be if there were no tensions in the middle east . I ask that because as you mentioned, theres so many other factors involved holding that price down i mean, i certainly think this is putting something of a floor under prices but also, theres the issue of the fact we have taken 2 Million Barrels of iranian exports off the market, thats also providing support. The question is, would brent be potentially in the 50s if it werent for this thats something we could talk about, but you think about if we didnt have a resumption of the trade wars, think where we were in april in terms of prices and then you had the trump tweets about the trade war and that stopped the rally. I think the question going into remainder of the summer is what story is going to be dominant, the trade war or the shooting war . Thank you for joining us. Helima croft thank you lets get a check on the bond market rick is tracking the action at the cme. Hey, melissa lee. It was global patch we live in, theres so many big events yet to affect our marketplace. You can see Interest Rates are somewhat idling. Look at the 24hour chart of 10s and realize we settle at 2. 06. The high yield in our time zone has been 2. 04. Were sitting there now, but were still down a couple. The 2s and 30s, the wings on the yield curve, are dow less, 1 basis point, but the curve hasnt been in positive territory. Look at one week of 10s. We have dropped a bit, but we really are idling. What are the big events . Our first look at Second Quarter gdp. Lets see what mario draghi does with regard to the ecb as he counts down his meetings to retirement, to pass the baton to christine lagarde, and of course, well, exactly how are the equity markets going to behave as we get ready are they going to like the news of more easing they certainly seem to be idling just like treasuries and finally, lets look at a month to date of tennis. You can see, first couple days of july, we were in the 1. 90s. We bounced a bit, but we have been idling ever since it really is the quiet before the storm. Tyler, melissa lee, back to you. Rick, thank you very much not just the Dominican Republic where american tourists are dying. The latest tropical hot spot you may want to avoid. Plus, the most satisfying job in america has been named, and it will surprise you. And one former nasa intern is now a multimillionaire well tell you who that is and how they did it. Thats all coming up on the tasting menu this is hal. This is his family, the world hes built, for 72 years. This is hals heart. Its been torn. Broken. And put back together. This is also hals heart. This is the cardiologist his brother recommended. And this is hals relief, knowing hes covered. This is hal. His heart and memory keeper, and its beating better than ever. This is what medicare from Blue Cross Blue Shield does for hal. And with easy access to quality healthcare, imagine what we can do for you. This is medicare that cares back. This is the benefit of blue. New concerns growing over some popular tourist destinations, in costa rica, alcohol tainted with toxic levels of methanol led to the death of 19 individuals. The government has confiscated 30,000 bottles of alcohol. In mexico, the murder rate for first half of this year topped 14,000, making it a record high. At current rates, the country is on track to surpass 29,000 by the end of this year no wonder everyone is trying to get north like canada no, i mean, or the u. S. You know geez i thought you meant tourists. Even though theyre constantly throwninto danger, firefighters have the highest level of job satisfaction, according to a new report. On the flip side, mail clerks and sorters had the lowest satisfaction, followed by court and municipal workers. Mail clerks make approximately 10,000 less than firefighters, but theyre more than 3. 5 times more satisfies with their jobs the only thing ill say about mail clerks, a good way to start a lot of careers that go to good places people who work in the mail room, not necessarily mail clerks in the postal service, but work in the mail room at William Morris and so forth. Finally, a tasting menu first. We go for a second helping on a story earlier this month we discusses a former nasa intern planning to auction apollo 11 tapes he bought back in 1976 gary george bought the audiotapes for 217 or approximately 980 adjusted for inflation. Over the weekend, those tapes were sold to an unknown buyer for 1. 82 million. That is a longterm holding that they sold is that good inflation adjustment so in real terms, i mean, youre still only talking, you know, its good, ty, but its not great. I dont think the guy expected anything, so this is pretty good. Lets talk about another success story. Disneys the lion king remake roaring at the box office. The film became the highest opening ever for a july opening. The lion king racked up 185 million in the u. S. , 269 million internationally. To make it the highest opening in july ever despite relatively poor reviews ahead of its release seems like everything the light touches is disneys as the Company Controls 35 of the studio market share in 2019 so far. Disney also announced that the Avengers Endgame toppled avatar as the highest grossing film of all time with disneys constantly growing catalog, can the stock keep rallying to the tail end of the year joining us now is bernie mcturnen, a Vice President of rosenblatt, holds a bullish buy rating on disney with a price target of 175 bernie, if i am of a mind to own individual stocks, and i Like Companies that are good steady growers, is there any reason i wouldnt have disney as a core holding . Yeah, certainly disney is our top pick in media right now. We have a 175 price target. The way we get there is valuing the disney plus huh llu plus esn side of the business and its 15 times earnings, which we think is reasonable. We think theres certainly more upside to go here and this is just the beginning what happens if and when bob iger steps away . Yeah, its a good question. I think theyre going through that right now, tom stags is the heir apparent before hes since left the company. And i think it matters how disneys streaming services are going to do. That may be where the new leader comes from certainly, bob leaving the company in 2021, i believe hes been great and great at making accusations. Thats what some of the stuff youre seeing this weekend on the content side but hes bun pixar, made lucas film acquisitions and made those work, not necessarily making them so bobs been great, but im sure theres someone else on the trajectory next. Bernie, how concerned should i be that disney stock really played catchup, so to speak, when we got more details about its streaming service. It gained about 30 a share, so 30 a share is built on the prospects of the streaming service, and theyre going to charge 6. 99 or so per subscription i mean, how much is already built into that stock just simply based on the projections for streaming service . Yeah, absolutely. I think what youre seeing before the investor dade when the stock was trading at 110, there was a negative value for streaming services this is a Company Valued on pe, and it was negative earnings from the streeling services. Now theyre starting to get positive value there look, the company came out, beat expectations of 60 million to 90 million subs globally by 2024. And we have 90 million in our estimates and we think that could be conservative, so we think that theres still ways to go if they beat expectations why is that conservative . Its interesting you said the company beat projections they beat projections . This hasnt happened this is snow where near happened in 2024 forecast, thats way out there. Thats completely fair, but they beat where the buy side was in terms of what they were going to come out with so look, the way we think about what the company can do, we think that their domestically, which is a 20 to 30 million guide, a third of the 60 to 90 million subscribers, and we think that we looked at ticket sales for star wars movie, marvel movie, and p pixaeromovies and said theres about 50 million homes that have demonstrated they want to engage with disney content and the box office, which we think is an indicator that they would like to in the future as well only penetrated about half of those subscribers, thats why we think there could be up side bernie, thanks very much. Johnson johnson shares falling today. The Company Makes its case to dismiss thousands of lawsuits alleging its baby powder causes Ovarian Cancer this as the company also faces a suit for its role in the Opioid Crisis the latest and what it means for j js bottom line. And be sure to tune in to the closing bell today the equifax ceo will join in a scrst on cnbc interview to diuss the companys data breach settlement. Dont miss it. Hi. This is the man thats going to check your eyes grandma. Cognizant ai solutions are helping Healthcare Companies advance diagnostics and prevent blindness in patients with diabetes. Everything looks good. You have beautiful eyes. Prpharmacist recommendedne memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Ive done all sorts of research, read earnings reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. Welcome back shares of mallinkrodt falling before rebounding slightly theyre lower by 70 this year, falling. Meg tirrell joins us now they announced a plan to split it into two. One would take billion products including acthar and others, oxi code dont and hydrocodone in a mass erv dea database and key part of a legal case where 2,000 towns and other communities are suing the drug industry to recoup the costs of the Opioid Epidemic some considered a settlement and other cases are moving forward as well. Their potential portion is unclear. There are estimates it could be from 1. 5 billion to 5 billion or more. If sfes Tulsi Gabbard likes would split from the Main Business its been considering how to separate its two businesses for the last few years and dont list the liabilities a driver but to have it separated from estimated opioid risks would be better they plan to put some debt on it and use that cash to delever the acthar business. Pretty interesting what they could look like. Sacrificial lamb business next, speak around. Another case care name facing legal problem. Johnson johnson now today facing a key hearing which could determine whether these suits will proceed to trial. The stock took a big hit last december on a report that the company was aware of issues with its talcum powder. Its now heading back toward down levels once again joining us to discuss the risk is damion coniver. Great to have you with us. Im sure you and other also make the case that talcum products make up a fraction of their revenues so therefore is a tine part of the business yet have seen the stock move desizically on the back of these news events what do you tell investors in terms of how you should think about these potential liabilities . Yeah, its a good question especially when the stocks move soap and i think whats important to keep in mind is you cant really just take the first few cases and see how those verdicts are read and how much payment the firms are on the hook and take that cost times all the outstanding cases because that is just going to lead a very high number. A number thats really not likely at all to get reached to. What is more likely is youll see these cases litigated one by one over a long period of time where the Companies Really try to wear down the different plaintiffs and at the end of the day usually settle for a much, much smaller amount than what the market capitalization in this cases with lost by j j at a much smaller amount. If you took the big settlement and sort of extrapolated that that would be unrealistic talking i assume about the 2018 verdict they were required to pay 4. 7 billion to 22 women and their families. Why is it unreel tis tialistic . I think theres a couple of pieces one, it is realistic to see this gait award and have anybody to have they sort of relationship with talcum powder and any sort of cancer to try to litigate against Johnson Johnson. What youre going to see is all these cases have a high degree of validity and get these very high awards. Typically what happens a lot of times plaintiffs look for the cases that have the strongest case against these companies, start with those, with the realization a lot more are ambiguous. When you move towards settlement the overall number is much, much lower than it might seem at first. Johnson johnson claimed just over and over again that the product is safe, that the evidence is on their side. Are they right well, this is one of the cases where i think when you look at the data over the last, you know, several decades it looks pretty clean its trickier as you go further back in time and i think thats when theres more ambiguity. What i think would be likely, whats going to happen you will have a lot of these cases again go down this pathway of litigating out and litigating out again and again, but its going to be a very slow process that i think j j will control and when we look at past event, we think about the metal on metal hip recall thatter on the hook for for a lot of cousts tht got settled for something in the low single billions where the stock didnt respond in this case when youre seeing massive payouts right away the stock is responding and on those gaps down we think its a great opportunity to buy the stock. Damien, how are you looking at their potential risks in the opioid space it was left as that sole defendant in oklahoma. A judge is expected to decide really im hearing any day over the next few weeks about that case and, of course, j j could be a party to this big case a judge is pushing toward a settlement in cleveland whatsyour expectation first o the oklahoma case . Yeah, so theres a couple of things going on. With oklahoma its kind of a barometer for the rest of the country. Has similarities and differences to other states but somewhat of a barometer. What is true for j j, they have much less exposure to opioids in the branded Product Segment than a lot of other folks who have already settled and have much less exposure and in certain cases their open ode products are more control released so much less apt to cause abuse than the other cases of the raw forms of the opioid drug we think when we look at them its important to think of them differently than the other open ode makers still at risk for some payout there but probably not to the same magnitude of some of the other folks that have gone before. Damien, thanks for your time. Good to be on the line with you. All right, tech execs are heading to the white house to talk the huawei ban d wanweill talk about what to listen for after the break. 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Get to know geico and see how much you could save on renters insurance. Welcome back to power lunch. Mobilitys away from a major tech meeting over huawei at the white house. Key executives from the leading Chip Companies including qualcomm and intel expected to be there along potentially with the president himself. They, i think, would like to see some of the bans on doing business with huawei eased, right . I mean at some point you cant do your own business if you dont have that access i thought it was interesting, we talked about strategus is there some Forward Momentum coming back for those talks which previously looked like they were stalled and what is this going to tell us about that. Unless huawei is a National Security risk based on in part that the Washington Post story that we have a report on explosive stuff. This is something to watch. Thanks for watching power lunch. Closing bell will start in three, two, one seconds. Good afternoon, welcome to closing bell, 59 minutes left of trading im will fred frost. The equifax post, biggest ever data breach settlement find. We have the ceo joining us first on cnbc in 15 minutes time. Im sara eisen. Lets get right to what is driving the action higher right now technology is leading after some bullish analyst calls on the semiconductors and apple, investors awaiting busy earnings reports and the Federal Reserve next Interest Rate move, still pretty unclear joining us for the