Transcripts For CNBC Power Lunch 20170316

Recently, good afternoon, everybody, stocks are steady, a couple markets are minuscule amounts lower as you see the dow and s p. Nasdaq up onethird a point. A ton of households names hitting record highs in todays session. Priceline, alphabet, home depot, lowes, and netflix among them, and take a gander at goose. The stock soaring today, and right now, canada goose making the pricey coats, shares up 30 there, up 3. 50 at 16. 29, michelle. Im michelle carusocabrera, this is whats happening at this hour. Mortgage rates hit the highest level of the year, freddie putting the 30 year at 4. 3 . U. S. Airlines saw a Record Number of passengers last year, 823 million in all. Thats according to new data for the transportation department. President trump hosts the irish Prime Minister today at the white house, brexit and immigration on the agenda. Stocks struggling to gain traction as theres a breather from yesterdays rally. Heres the money question of the day. How much of the rally is because of the fed and the economy, or has the fed been completely trumped thatll make you grimace by the president s promises of lower taxes and deregulation . We got steve leisman, and bob pa sanny. The rally started five weeks before the december rate hike. Seeing the fed, indeed, was trumped, but what are the pros saying . Well, look, the markets have been comfortable with the fed raising rates because they believe that the trump agenda can deliver 3 growth rather than 2 , and issue dine ed, this is quite a feat. Heres where we are, the fed is moving from data dependence who sort of are going to be raising rates for a while, and the markets fine with that, but only because of the trump rally, the question is has markets continues to give the trump rally the benefit of the doubt. The answer is yes. Are they fully discounting the effects . Some argue theres not a bumpup because its front end loaded. I dont agree at all. A tax cut has enormously beneficial consequences on the s p 500. Earnings, reports out, one from reuters, the effective tax rate for 20 p 17 is 26 , not 35 , cut to 20 , they estimate the s p 500 earnings go up 8. 7 . Thats enormous. Two years weve been going down on earnings. 910 increase, thats enormous. No analysts raised numbers on this, and no company has come out and said, our numbers are going to be higher because of a tax cut. They are awaiting specifics. Once we get that, theres another boost for the market. Its a speculation. People anticipated it. Once it happens, a boost. In my opinion, to answer the question, brian, is that this is not the only cause for the rally, but it is the principle cause for the rally that we have seen. Okay. Bob, thats one view. Steve leisman and the fed, what say you . So i think the market here wants it both ways. They want pasani and leisman to be right. They want their cake, scone, and donuts and eat them all too. They want to trade here based on the belief that donald trump is going to enact all wonderful policies. Yet, they are trading on the belief that the feds only going to do three rate hikes. I dont think both are compatible. If you get first of all, a survey work we did on just this question you have. You have it here. Which is the biggest influence on the forecast . Fiscal policy. Thats driving it. Until its not. Until the fed gets involved. Remember the question that janet yellen yesterday does this forecast include fiscal stimulus, and she said no. No. Youre saying, essentially, that if the trump agenda gets enacted, get Corporate Tax reform, major boost to the mark market, that means the fed feeds the number of rate hikes this year, and so, therefore, derail or throw a wrench in the markets in that way. My main point is the markets calculations do not add up on both sides of the equations. You cant have this and that at the same time. By the way, a lot is dependent on the kind of stimulus they come up with. Yellen wants stimulus to increase productivity, essentially saying noninflati noninflationary growth. If you get growth in nominal, nothing in real, thats even a tougher bit. Okay. Extraordinary that the market is now comfortable with the idea of instead of data dependent, were going to keep raising rates for a while, and they did have three in 2017. The market did not flench. They are comfortable. Thats the forecast. Can we say this, though, steve . I called the say anything you like. I call the Federal Reserve the l. A. Rams of the market. They exist in the league, but not relevant. How about this . Is it Interest Rates or is it the reduction of the Balance Sheet where the Federal Reserve is the most important . I think the reduction of the Balance Sheet will be a trial for the markets and for the fed. I dont know if they can you know, if theyll get there. I think for a while, its going to be mostly an Interest Rate story. Brace yourself. There is a story coming, and my goes is that sometime around the fall, where the fed will come forward and say, this is how we think about reducing the Balance Sheet next year. All right. Thank, guys. Theres the analysis. Lets get to the action. What should you do with the money given what we just talked about . We have guests differing in opinion, boston private and eric, chief investment strategist with russell investments. I have a pop quiz. A multiple choice question for you. What is the most important reason for the rally, a, fed normalizing, b, Overall Economic growth, c, promise of deregulation and tax reform, or, d, all of the above . Well, i think the main premise is why the markets been rallying since the election is because way trump is proposing, but in reality, its a combination of both. Economic data has improved. Look at things like the manufacturing data, the chicago pmi, the Chicago Purchasing Managers index, Philadelphia Fed index, ism manufacturing index, which is pointing to, right now, somewhere about 3. 4 gdp growth. Personal income, the initial unemployment claims, nonforeign payrolls, all improving economy. Eric, same question. Yep. I dont want to read that like brian did. Look, i agree with bob. Basically, i think the markets pricing on the expectation of political perfection from the Trump Administration, a lot of policies, very creative for the u. S. Economy. We are less hopeful that all of those things are going to come true. I think the economy has been improving, although, that accelerated growth is stopping in the last few weeks. If you are less optimistic that happens, do you sell here . Is too much priced in . We are underweight the u. S. Equity market. We think the u. S. Equity market is poised for a pullback because expectations are too high. Its price for political perfection. If trump gets Corporate Tax reform, health care reform, and now a massive reallocation of the federal budget aggressive agenda since Lyndon Johnson in the 60s, enormously powerful legislative agenda. I dont know hell get it all do. Bob, two quick questions, if i might. Yesterday, the fed raises Interest Rates, stocks and bonds go up. That does not happen. Why do you think it happened yesterday . I think the bond market looked at the fed statement and saw it as more dovish than what they might have been worried about, and so you saw a little bit of covering on maybe some of the shorts of that. I think the stock market also had maybe short coverings, but i think, as eric said, you know, trump is being aggressive, but hes been able to accomplish you know some pretty easy hurdles right now, but what hes proposing as far as tax reform, as far as deregulation, these things are probably going to be able to get done, infrastructure spending, fiscal stimulus take time. The easy work has been done, but i think the harder work really comes down a little bit more in towards the administration is deregulation the biggest and best tonic for stocks . Think about it. If youre a Small Business worker and want to start your own business, sorpt ted bogged n by regulations, only so much capital, and if they remove some of the overhang, now, all the sudden, you start business and hire people. If you are required to spend so much money on lawyers and filling out forms for the federal government, you cant start a business, and so it puts a big overhang on the market. Eric, do you feel youre the only one underweight u. S. Equities at this point. Are you lonely being underweight . Difficult position to hold because theres a fear of missing out men ttally in the market now creating extreme positioning to the long side on u. S. Equities. In the short run, its been a difficult time so far this year, but, look how long have you been underweight . Weve been underweight at least six months. Ouch. So youve missed a lot. Yeah. You missed a lot of this. Well, yeah. I mean, we are seeing in other parts of the world are doing reasonably well. Today could be what happens the rest of the year, europe having a better day than the u. S. , emerging markets better than the u. S. Emerging story for the u. S. Equities. Suggested pe is over 29. When that high, future returns are low and potential drawdowns are big. We just dont see the semitry in the risk as an investor, not a trader, but investor. Six months ago, there was not a notion of everything being priced for perfect because policy was factored in, right . Yeah. Well, no, but the u. S. Equity market was still extraordinary expensive on the basis versus the historic pattern. Earnings at highs, effectively, through earnings recession, Profit Margins high, prices high. You look, its a valuation argument for us at this point. U. S. Equities, we dont think juices work the squeeze to be heavily weighted in u. S. Equity. Leaving it there, bob, eric, thank you. All right, bond market, rick, heard the market discussion, what struck me is skepticism about the president s ability to get these things down. I mean, everybodys underestimated him every step of the way from the primary to the election. Can he get it done with governance . Yes. I think theres actually part of the story thats a big part that usurps that. Im a stickler for what are markets watching . We never know if were right, but i disagree with all of this to some extent. Im still a firm believer. Theres others that think this way. I think the current rally in equities is every bit as much about the fact that hillary didnt win, the last administration liked regulations, last administration and a Hillary Administration most likely wouldnt have put a halt on creating new ones, and they most likely wouldnt have cut taxes at all. I think part of the euphoria in the stock market is at david said. Theres not going to be new regulation. If they repeal many more, thats a positive. With regard to taxes, we are optimistic. One thing we know, its now in the venue. Its being discussed. This wouldnt have happened unless donald trump didnt have a surprise victory on november 8th, so, to me, anything moving forward, we get in those two categories, thats going to take the dow much further and as far as rates coming down on the fed yesterday, listen, they are already moving back up. Less than tenyear closes a good solid week under the 240 level, it doesnt mean a lot. I think youre exactly right, rick, and we dont need to ask the question in a way because the market presented us with the answer. Guys, the stock market rally took off on november 7th, the dow rose 250 points roughly that day, but bring up, and i dont know if we have time, a tenyear chart of the market, one thing is clear, rallied off the lows for seven years for 18 months in the election, the campaign, i should say, nothing happened. Nothing happened. A year and a half. We took back off once it became clear to the market, anyway, what the outcome might be. A temperatun year chart shows, see, but very clearly. Rick, thank you. Thank you. All right. Deregulation nation, how the Trump Administration could cut the red tape and green light a megamedia merger. The tweet having everyone talking today. Mcdonalds and the president of the United States. Tough mixup. The tough hack. Were just getting started. Power lunch back in two minutes. Youre watching power lunch with melissa lee, michelle carusocabrera, tyler sullivan, and brian mathison. Flrs welcome back, Corporate Tax reform is not the only driver for the postelection rally. Its also deregulation, not just financial deregulation or environmental deregulation, but all kinds of deregulation. Just one example . The rules about how Many Television stations a company is allowed to own. Take a look at the stocks of sinclair. Up 56 since the election. 20 since the election for tribune media. Why . On the belief that ownership rules will be reinterpreted or relaxed, and that the two companies could be allowed to merge. Heres the deal. Right now, theres a 39 cap on percentage of the household a company can reach with their tv stations. Sinclair owns 173 stations in the United States, and reach 38 of u. S. Households. Tribune owns 42 stations, they are bigger, reaching 44 of u. S. Households. Legacy issues why they are above 39 , but the new chairman. Fcc, pai, he says the rules are antiquated in this day and age. Theres more choices for consumers because of the internet. Our next guest says the hookup between the two broadcast jiegis is the next big test for the fcc under President Trump. Lets bring in the manager. Theres reports out today that a merger and nounouncement could t as soon as tomorrow by the two companies. Do you think thats going to happen, and is it going to be allowed under the Trump Administration . Well, i think there are three types of change. Theres legislative, judicial, and regulatory. The first two are pretty tough to call. The regulatory particularly when you have strong statements by the chairman of the Regulatory Authority that you just quoted become easier, and i think the companies are betting on favorable regulation and mr. Pai has the ability not to change the broadcast cap, the 39 , but to reinstate the discount for uhf stations. Can i explain what it means before going further . Sure. The 39 cap is congress. That requires change in legislation, however, people over 40 remember when there were uhf channels, and these stations control them, and because your people used to watch them, even if you had a uhf channel, it was, oh, you only get 50 credit for the people in that area because there just arent that many people. He could change that, right . Yep. We think its highly probable hes going to change it, and probably within the next month. I dont know about the merger being announced within the next day, but within the next month i think its a very, very high probability, and the second thing thats a high probability, especially after the fed meeting yesterday is that Interest Rates remain favorable, and you look at sinclair, inkwiring company here, trading at seven times cash flow, depending how you define it, they have just had an equity offering, a lot of leverage capacity, and the cost is dead at the margin somewhere in the neighborhood of six, but 600 point spread. They could do it. That works every time. Off to the races. Bottom line question, do you like this business, the station operating business, or is it a shrinking one, ultimately . We like the business because what you say is correct, but what is not said is really the important thing, and its the free cash flow. If you bought Phillip Morris . 1972 when cigarette consumption went down, if you held it, youd be a wealthy person. While broadcast tv is probably a 01 growth industry, the industry generates mountains of free cash flow. Theres free scale economies from operating multiple groups of stations issue and as long as sbraes ra Interest Rates are low, use leverage. They created great wealth by using leverage, and they created great shareholder wealth. Larry, running out of time, jumping in, before we go, theres a thought if we get Corporate Tax reform, other countries that have high taxes may also have to respond, japan has the highest Corporate Tax rate in the world. Do you think theres a chance if we do it, the world does it, and is that part of the reason why sony is your Biggest Holding . No. I think the reason why sony is the Biggest Holding is the value of the game business. If you put the similar multiple on take two in the electronic arts, the game business that sony is worth more than twothirds of the market cap, and sooner or later the markets going to figure it out. They have a sensor business as well that we think will explode with the new iphone camera, which is camera intensive, and sony has monopoly on cameras. Corporate tax reform is not a factor forsony. Appreciate it. A twitter troll, a twitter clown trolls the president using mcdonalds account. Were guessing that he, the president , not loving what was said. Full story straight ahead. Why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. Experience exceptional offers on sales event is here. Our most refined models ever. Get up to 2,500 customer cash on select 2017 models for these terms. Experience amazing at your lexus dealer. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade welcome back to the tweet everybodys talking about today. This morning, the official mcdonalds corporate twitter account shocked everybody by sending this out, quote, real donald trump, you are actually a disgusting excuse of a president , and we would love to have barack obama back, also, you have tiny hands. The tweet of the pinned to the top of the mcdonalds corporate twitter page. That means thats the twitter equivalent of highlighting one specific tweet. Now, shortly after mcdonalds sent out this half hearted apology, quote, the account was compromised, we deleted the tweet, and secured our account. Some people find it funny. Heres the thing, number one. This may be more about twitter than mcdonalds, could have been a rogue employee or a hack. If corporations are too nervous to send up tweets, twitter may be in trouble, and mcdonalds corporate, apologize, even if you were hacked, say were sorry. That was a weak were investigating kind of thing. I will say this. Im stunned that no one has hacked Donald Trumps twitter account yet. Stunned. Youd hope that theres even more security there, right . One hopes, but i hear its his regular social account. Its important to separate where hacks happen. Corporate level or individual level, thats our security. If its the twitter level, thats another issue. That means anybody who uses twitter could be vulnerable to a hack because thats twitters security, and thats the problem. My point was twitter needs corporations to tweet. Yeah, yeah, of course. If they take they cannot trust twitter security, then the risk is too high. You know, the president has thick skin, it did not bother him. Rolled off him. Do you think mcdonalds should still apologize . Absolutely. Yeah. Even somebody in another country that did it, its your account, say sorry. Staying focused on deregulation, Home Builders excited about the prospect of less red tape. Why arent they building more . That is straight ahead. They jus. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. May not always be clear. But at t. Rowe price, we can help guide your retirement savings. So wherever your Retirement Journey takes you, we can help you reach your goals. Call us or your advisor t. Rowe price. Invest with confidence. Experience exciting offers on sales event is here. Our most thrilling models ever. Get up to 2,500 customer cash on select 2017 models for these terms. Experience amazing at your lexus dealer. Hello, everyone, im sue herera with your news update. President trump welcomes the irish Prime Minister to the white house telling reporters he loves ireland. This evening, hosting the Prime Minister and his wife with a reception in the east room. In miss morning briefing, House Speaker paul ryan praising President Trumps ability to negotiate and mediate with the Gop Health Care bill. He is making a easier and better for us to pass health care. The president , his involvement, engaugement, his listening, and his negotiating skills are bringing people together so that we can pass a bill. We have a bill to pass, get consensus on and make good on promise. Google has software that gives parents control over what kids watch online, family link, allows kids to establish a google account, track screen time, and set limits. Now its only vail on android. Thats employed at my house, i think. Back to you guys. Yeah. All right, thanks, sue. All right, treasury secretary is speaking right now in a meeting with germany, and heres headlines interesting. First, he said no decision at the white house about whether or not they like the border adjust. Tax, and, in fact, says its one alternative under study. They keep us in suspension whether or not theyll back that, and he says the stronger dollar, strengthening of the dollar is a good thing in the long term, a sign of increasing confidence in the u. S. Dollar as reserve currency, running a little bit against what we heard from President Trump who, i think, sometimes just likes a weaker currency in order to help our exports. Well see if the dollar moves on that. Treasury stand that a strong dollar is in the best interest. Exactly. Latest read on housing starts, slightly above expectations after a huge jump in home builder confidence. The two seem out of whack. We are joined from washington to explain why, diana . They are. Look, Single Family was great, real driver of the jump in housing starts, a good thing because thats exactly what the market needs right now. Single family up 6. 5 for the month. Still only about 3 higher compared to a year ago. This all on the heels of a stunning jump in home Builder Sentiment to the highest level in 12 years, but heres whats weird. Look at sales of newly built homes compared to the confidence of the guys that build those homes. It tracks closely going back several decades. A few exceptions like in the tech bubble, but look all the way to the right to today. A huge historic gap. Bi builders feel good, but selling few new homes, and that is the trump bump of deregulation. Last month, the president signed app executive order on the waters of the u. S. Rule, an environmental role which costs builders in both time and money filing permits for new homes. They pass that on to buyers, raising the price of a new home. The Home Builders say the cost of Regulatory Compliance today 25 of the selling price of a home, up 30 since 20 is. Deregulations making sentiments high. Builders are feeling good, but not building. A matter of time i think its a leading indicating, the sentiment, and building catches up. Well, youd think it is, but its other factors in the market, and number one is the cost of land and labor. We saw sentiment drop on a different executive order, you remember that, immigration thing, which hurts builders when it comes to labor, in short supply. They get very excited about deregulation. You see this huge jump in sentiment in march, but there are so many other factors playing into construction now. All right, thank you. Lets hear from one of those Home Builders on deregulation and what it means for the industry and his company. Joining us exclusively on power lunch is steven hilton, steven, great to have you with us. Thank you. Good afternoon. Diana walked us through how Home Builders these days feel optimistic. Are you feeling that . How do you feel the pushpull of deregulation in the Trump Administration . You got some regulations that will directly help your industry, such as the waters of the u. S. Rule, repeal of that, but also things like a travel ban, immigration ban that could hurt your supply of workers. Melissa, were seeing a lot of reasons to be on tptimistic right now. First and foremost, the spring selling season started six weeks ago. Theres good traffic on the ground, in the offices, a positive increase in sales. Thats why we are feeling optimistic now. In the top 20 housing marketings in the country, in the sun belt, job growth is substantial. Job growth is the number one indicator of housing sales, jobs growing dramatically, especially in the sun belt markets, and then number three, another positive reason is the return of the millennials. The entry level buyers are coming back. Its prif been dormant, but they are now entering 30s, mid30s, they are having kids and settling down and need a house. Reasons for growth, but what about deregulation . Additional 20 of costs . I dont know if its that much, but it is significant. We are starting to see progress in that area. Some regulations enacted in the last administration are talked about being rolled back. There was a couple that have actually happened, but i think that is a big positive impact for the industry, and were excited about it. Which regulation of all the ones that impact your business, whether in some markets or federally would you like to see rolled back the most . Which specific one . I cant tell you one specific regulation, but theres regulations in the epa. Regulations in osha, regulations in the department of labor. Theres regulations throughout the government that impact our industry. Did they go up a lot in the last administration . Absolutely. They did. 29. 8 , to 84,000 the volume the dollar cost 84,671 per home. That includes local permits, local regulations, state regulations, and federal relatio relations; i wouldnt tell you theres 84,000 in federal regulations in the home, but its a significant number. When you deregulate, pull back from the regulations, savings are just yours, not the consumer . Better margins for you . No, not true. Okay. Provide a more competitive product pass that on in lower prices, and able to increase profits for Home Building companies. Theres an argument to be made for regulation, keeping the environment and workers safe, keep the home safe. I think that a lot of people here, hey, deregulation, okay, that means the chipnys going to fall in, workers work 30 hours a day, 8 days a week. Balance the goals of society and making sure not a stupid amount of paperwork and jacking up the price of the homes and attorneys. Free market will not accept that. Customers will not accept that. They require Energy Efficient homes, environmentally friendly homes, require us to treat workers safely and fairly, so were not going to be able to sell homes if we, you know, abuse the system. Weve been building homes for a long time. This is a mature industry. Theres just too much government interference and regulation, driving up the cost of housing, and lowers the ability to Profit Margins. You mentioned factors as to why you are bullish about the industry and your business right now, steven, whats the biggest constraints on you . Is it finding the land available to build . Well, land and entitlements are an issue. Its harder and harder to find Land Development ready with services and entitlements, but the Biggest Issue is labor. There just is not enough labor heading into the Residential Construction industry. Worried about restrictions on imgrants . I am. Our industry is has a lot of immigrants working in it, millennials today are college educated, and dont want to work in Residential Construction. We rely on imgrants. Look where the homes are, arizona, texas, florida. Border states. Exactly. Immigrants are our big part of it. We need a comprehensive immigration bill, guest worker program, provide jobs for immigrants that other americans are not interested in. Are you actively talking to the Trump Administration about these issues . Absolutely we are. In what way . How are you engaging . Through our trade group that has a line of communication to the administration and to congress, and were talking to them about the issues all the time. All right, good to have you, thank you. Thank you very much. Beautiful, isnt it . Live shot. Gorgeous. First federal dollars dedicated to building President Trumps border wall, how much, and which companies could profit from that . We are live in washington with that story. Elon . 4 billion, thats how much President Trump is asking congress for to Start Building his big beautiful boardser wall. More than 600 companies are interested in bidding on this contract. Some of the publicly traded names are Martin Marieta and more. The wall is controversial, and democrats threaten to block any bill providing funding from it. Two industries are staying away. Others expressed interest but withdrew names, so most of the businesses that have applied appear to be smaller, local outfits, from nearly every state in the country, but concentrated in california, texas, and each with more than a hundred, a fair number up there in new york where you guys are. The numbers changing every day. Latest analysis find 133 minority owned Companies Want to build the wall, including 39 owned by hispanics, 27 owned by women, 80 are veteran, and 13 foreign interests. The owner in mexico sells led lighting from china, the chances of winning the bid are slim. More up on the web, guys, at cnbc. Com. Mexican company in the first place applying to build the wall. Its an interesting case. Someone born in egypt, became nationalized american, and then moved to mexico in his retirement and now runs a Family Business selling led lights, so hes one for globalization. No experience in constructing anything other than lightbulbs . He sells the bulbs. Maybe hes the perfect guy to build the wall. Who knows. Shines driebright. Interested in building a wall on mexicos southern border as well. Hes a fun company. Interesting to prevent all the movement of the Central American imgrants from coming up that they complain about themselves. All right. Thats right. Thank you. No problem. The basketball Industrial Complex in full swing right now. Okay. I jest a bit, but this time of year means one thing. Big money betting on the big dance, and coming up, well ask wynn resorts top betting man for his take and long shot pick or two on hoops right after this commercial break. Hundreds of millions wagered in march madness, only legally in nevada. Million mores through other means. Who are the gamblers picking to win if . Lets bring in head of the sports book at wynn las vegas. Good to have you with us. Thank you. How is business on the ncaa tournament . How big is it for you and comparing this year with last . Well, its a big event. Takes place over the course of three weeks, and not a weekend like the super bowl, so the business itself exceeds the super bowl. In our state for this past super bowl, we did 138 million, and we cant give you exact figures on ncaa basketball, but looking at basketball for the month of march, it usually does around 400 million, and i would feel comfortable saying the ncaa tournaments going to do somewhere between 200 and 225 million of that. So who is the betting favorite now . Well, remember that thats called the future book on who you can bet to win the entire tournament, and thats been up for 11 monlths now. Duke was the initial favorite at 4 1, now second choice behind north carolina. Two acc teams are the favorite at 561, and theres a lot of other teams that follow them in, that you know, 71, 101. Uva, virginia tech, we play today and going to win, both of us are going to win. Do you notice any correlation between the stock market and your betting . Snor in other words, markets up, michelles family is going to buy a new boat for the mansion in New Hampshire. The mansions in New Hampshire . Do people bet more if the target goes up . Maybe thats the betting, the stock market. Theres no correlation between those two at all. You know, we got a versus b, handicapping one side or the other, and it is, you know, we the you have the control in the sports market whether you want to play a, b, with a point spread or a money line to win the game straight up. We have a theme today about deregulation and how its helping drive the stock market rally, maybe more than Corporate Tax reform. If theres one industry thats really regulated, its gambling. Is there anything under the Trump Administration that might change or help your business when it comes to deregulation . I dont know if trump has anythinged to do. Theres been a push from the American Gaming Association and its members as well as others, you know, to put sports gambling on the forefront, you know, its been in the state of nevada only. Its gone into a few states like delaware. Theres a couple with lotteries, but i think over the next three to five years will be in other places. Right now, theres a monopoly, a lock on sports gambling that takes place in the United States. Once deregulated, it could take place across state lines. Thats okay. You know, i dont think nevada loses the market share, and then theres opportunity for others in other areas. Hearing you say you expect that there would be much more widespread multistate, maybe national at some point ability for individuals in new york, florida, wherever to legally play Sports Betting . If you asked me that question about ten years ago, i would have said no. Hi a change of heart. Things are moving in that direction. Is the driver of that the need from states and municipalities to raise revenue . Well, yes, that has something too with it. In order to do it, there are some obstacles still. You know, theres the wire act, theres a lot of things that we can get rid of that. Yeah, sure we can. Executive order tomorrow. Johnny, before you go, have fun. Dont say south dakota state, thats 5,000 1. Money line moving to the not a long shot, but a ucla 10 1, top six or seven team looking better . It always looks that way. You know, even when theres upsets early, when we get down to the time four, youre usually, you know, two ones in there, a two, a three. So we always say its wide open, but the one of the top eight teams is usually prevaling. If you want to go a little deeper in this tournament, look at smu or notre dame. Its hard to go youre taking notes. Crimson beating notre dame. Thanks very much, man. Appreciate it. Good luck. You guys are struggling out there in vegas. Im kidding, take care. Thanks for having me. 102 degrees and wearing shorts. All you need to hear about today, daily dose of street Talk Straight ahead. The, th live tracker board brought to you by the cme group. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. upstate new york is a good place to pursue your dreams. At vicarious visions, i get to be creative, work with awesome people, and we get to make great games. what i like about the area, feels like Everybody Knows each other. And i can go to my local coffee shop and they know who i am. Its really cool. New york state is filled with bright minds like lisas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Welcome back to power lunch, gold up 25 now. Seeing session high 1234. Move in gold today, traders sa , because of the slightly dovish tone with yellen yesterday. Moving higher with the commodity, but the mining stocks are low erlower. Confidence is not there that the gold trade lasts to the upside, technical, 1250, downside, 1190. Back to you guys. All right, thank you. Time for street talk, exclusive daily segment where we comb through piles piles. Piles of wall street research. Finding you the four most interest calls tea. United therapeutics, underperform. The stock is 20 overvalued because of the acquisition of a uthr competitor driving the stock up, acquisition, according to the am is, unlikely because the company mentioned dealing themselves, risk to hypertension drug franchise like generics launching in 2018. The company is the fast company, we had the ceo on power lunch, founder of siris xm radio. Literally a genius. Yes. Literally. Now very deep in quickly, more sell ratings or higher profiled ones so theres cognizance about it . More ratings out lately. Just in general. I dont know. Are we gravitating to them in the pile . Put an intern on that. Second stock, blackhawk, starting coverage of the company with a buy rating, secular tail winds drive up growth segmentings, specialty gift card margins, retail related stocks, analyst counts somewhat on a return to retail by consumers. Bricks and mortar. Gift cards are there, at the counter, people in stores, dont use them, theres a 44 target, by the way, on hawk, the tick ir. Thats 23 upside. Third stock, lululemon. Interesting note, sti stick at rating, mkms seventh proprietary survey shows bullish reads on the strength of the brand and fending, surveys 1,000 shoppers conducted in the second week of march. Daily wearers, people who wear this every day peaked at 12. 2 versus just 5. 7 last march, which they say is more stable for athletic wear trends. You made my year. You wear it every day. Peak yoga pants my dream. Roomy bottoms. Now in. Which, by the way, does not go with the yoga pant theme. Just throwing that out there. Analysts say they will be caught offsides because the trend is not tight bottom, but roomy bottom. All right. Carpet steer tech, using aircrafts, defense calls, securities upgraded from a buy, recent pull back, more attractive. The company is a huge facility in athens in the south, and only been running at 50 unitization because they work on oil rigs. As they picks up, the facilitying investment should pay off, 5 target on crf, 20 less, stocks doing nicely today. Upside. Michelle . Talking about the pizza trade, guys. Guys. Ladies. Gentleman. Shares of dominos up 40 in the last year. The companys ceos laying out the growth plan for the next 40 , amazon upped the bet on booze. Good move . Well talk about it as the second hour of power lunch gets started in two minutes. Welcome to the second hour of power lunch, stocks breathing today in the record breaking trump rally. Forget healthcare overall and tax reform. One thing investors underestimate that fuel the market higher . Much higher. A 15 this year, up 40 in the past year, Dominos Pizza on fire. Dominos ceo tells us how to grab a bigger piece of the pie, and tez la on a tear. Go for the ride . Check out the movers right now. It is the ipo of the day. Canada goose soaring 30 in the debut. The Company Makes rather high end winter coats priced at 900, a limit less for some of them, but a big, big celebrity following, and a lot on the streets of the new york city these days. Shares of williamssonoma rallying 3 , beating profit estimate, revenue fell short. Company saying the Holiday Season was one of the best, and announced a 5 Dividend Increase to 39 cents a share. Check out the biggest gainers in the s p right now. They include oracle, nucor and wynn resorts. Those are the big winners now, up between 27 . The trump rally taking a breather today. Big question on wall street, though, washington and board rooms across america right now wondering if the biggest driver when it comes to business and weeks and months ahead is administrations efforts to cut lots and lots of red tape. All right. Allstar panel on this issue ready to break it down for us. Our guests are from the corner office, gordon, former content thenal airline ceo, jimmy, American Enterprise institute, and inside the market, mike ryan, chief strategist. Gordon, let me start with you. Deregulation, former ceo, how important is it that this president up like who could have won, Hillary Clinton,mentes less regulation, nots more. How much does that add, do you think . Well, theres a lot of confidence that a lot of nonvalue added costs will be removed from running your company. I think thats driving the optimism and you see that in the market caps of Companies Going north. Its given people confidence of change. I know change sometimes gives you trepidation, but this is positive change. Going hand in hand with deregulation is offense privatization where a government stops doing something, and instead hands it over to the private sector, and in the budget that the president put out last night, theres a plan to privatize air traffic control. How do you do that . Well, you just make it a government own corporation, but they have an ability to fund their need for technical upgrades. We work in a world war ii technical system today, but they always have to fight for the budget because it has to be funded all at once. If youre a corporate, you can issue bonds, do your Capital Spending like a regular company, and make the investments we need to privatize, and make it more efficient. You are sitting on the runway, the taxi way, 30 minutes wasted, and money wested with the current system. That would add directly to the bottom line of airlines . Well, it would add directly to the bottom of productivity of you and everyone else, plus the airlines. Wasted time in route, taking routes, securely and rather than run direct, technology is there, they just have to implement it, and they cant afford to do it under the current budget. Privatizing airports, does that help, tremendously, she asks leadingly . They have access to capital. They get a fee for each ticket, plus, airports issue bonds, so their capital con straights are not like the system that issues bonds and has to spend every dollar they spend. Its different. Got it. Gordon, thank you so much. All right, on to part two of the discussion. Obviously, Business Leaders like him are excited about the prospect of deregulation. What are the odds of it happening . Joining us, jimmy from aei. People believe trump signs executive orders meaning things get done. Thats not the way it works. Youre there. Explain to the audience, please, plain english, dotted line between what the president is asking for in his eos and skinny budget and how its likely to get implemented. Listen. Its depends on what area youre talking about. Lets say i mean, theres been a lot of conversation about doddfrank and Financial Regulation reform. That seen like goldman sach stock boomed and other financial institutions, like, thats going to take awhile within the first year or two. Theres conversation about it. The rule writing can actually be implemented, you know, more unilaterally, but talking about, like, dramatically repealing doddfrank, thats congress. Thats going to take a long time. Democrats are going to be against it. Theres things to do with the epa. Whats interesting is the areas where you can get the most economic oomph from deregulation, we have not been talking about. We talked about the environment and dodd frank, but not, fringe, about intellectual property reform, copyright to patent, oomph from that, repealing net neutrality, looks like its going to happen at the fcc, might get some more growth in other areas. Jimmy, is it kind of like a restaurant at peak dinner time . Right . Trump is ordering all this stuff, and its getting clogged up. Its going to be hard to get everything done, and the more stuff we go for, does that reduce the likelihood that anything occurs . The kitchen of congress is completely backed up. Right. Right. You get the entree, but they never gave you the soup you orderedappetizer. It was not what you ordered. Right. Theres a huge agenda, we want to do everything at once. Thats right. Theres going to be a priority. Were seeing that, you know, with health care, then tax reform, and some of the stuff, requires congress. I would be very loathe to make Huge Investment bets, maybe in the market, but anticipating there was master reform of doddfrank. That could take a long time if it happens at all. Quickly, a last question, ncaa bracket time. Lay odds. What are the odds, what are the odds we get tax reform before new years eve this new years eve. Whats the odds . Oh, id say maybe 4 10. Maybe 50 50, maybe a little less. If you were to tell me that we would be talking about this summer 2018, i wouldnt be shocked. We might be. Literally, you, i, michelle. It could happen. Thank you very much. Tyler . Brian, where do you go from here . What are investors watching now . Lets bring in to talk more about the deregulation press, mike ryan, chief investment strategist at ubs. Mike, welcome. Same question michelle asked gordon. How much of the rally in stocks that we have seen since the election is directly tied in your view . What percentage to the deregulation fever that is about . I think thats really hard to parse out. If you quantify which parts are related to hope or expectations about tax reform, how much is regulatory, how much infrastructure, i dont know you can do that. I would say if purely around speculation around deregulation, theres not validation in other markets. In other words, theres the u. S. Equity market moving solely, and thats not the case. Something more is happening. What you see is a broadening across equity markets. Largely, on expectations that the economic backdrop is improving. Back to the issue of deregulation. Its important. When you look at confidence measure, and thats important because essentially what happens is confidence feeds through and creates that sense of animal spirit. What you have seen is a material shift in terms of Business Sentiment and, also, importantly, their expectations for investment spending. This is the slowest kpa esest e this history with regards to investment spend spending. The regulatory overlays coincide with slowness in Business Investment spending. Expect, as you see some further easing of regulatory environment, expect to see corporate stewards having more confidence in the Business Outlook and reinvest. I think thats a really terrific nuance point there because what i sense is that the idea that a more businessfriendly environment is about to take place, and it already has in many areas is whats driving it. You said that the economic backdrop is better. Well, thats the economic backdrop, isnt it . Careful to go back to what gordon and jimmy touched on. It takes time. Right. Deliver in the next 3060 days, regulatory relief does not happen quickly. Which leads me to the followup question. In the last hour, i believe it was eric out at russell, he said that he was concerned that there was too much favorable anticipation built in the stock prices. Are you worry about that . That anticipation goes to the question of deregulation, to the question of potentially Corporate Tax reform that would include repatriation and infrastructure. Those are the big three issues that are out there. Is there too much anticipation in prices . Look, there could well be a temporary setback if we see the markets reacting to what ill call execution risk. In other words, if the administration has difficulty getting all this done, you mentioned before there, theres a lot on the plate to address at once issue and sequencing matter is a great deal. Get the sequencing wrong, spend too much too early on things less a priority, it makes it harder to get some of the key initiatives like tax reform through. Theres a risk of that. I think what well see, however, is a better regulatory environment, i do expect to see over the course of, lets say, between the this year and beginning of next year, comprehensive tax reform, especially on the corporate side. I expect to see, at least some moderate infrastructure spending. Those progrowth elements are likely to be fulfilled over the course of the next six to 12 months. Terrific. Appreciate it. Thank you. Mike ryan, ubs. Shares of snap hitting a fresh new low in todays session, 1980fuls the low, off of that right now, but more importantly, its sub 20, the 11th day this newly minted ipo has been public, 11th day new low here in shares of snap. All right. Billionaire weighs in today on his take on how deregulation could impact the market. Remember, a big Hillary Clinton backer. Cnbc caught up with him in vegas. What now . Thats right. He says hes capitalizing on the runup in the current market environment. Thats result of the prospect of deregulation, he says. When it comes to the execution of deregulation, hes skeptical. You want deregulation coming in, seeing the effects, and hopefully thatll end up being positive. I just dont see how its going to be as much as everybody thinks it is. Its the current market environment that has him the most bullish saying theres little cash on the sidelines. Were probably, today, more invested than weve ever been, merely because we think, again, short term is all positive. I asked him about whether the actual implementation of policies such as tax cuts and deregulation present a selling opportunity, and he told me it does, guys. Back to you. All right. Just to clarify, leslie, more in invested weve ever been, long u. S. Equities, or whats it mean. Correct. He said, all in all, more invested than ever, with very little cash on the sidelines. Distressed debt investor. Thats the specialty, but hes riding the wave and benefitting from the equity increases as well at this time. All right, leslie, thank. Leslie in las vegas. Heres whats coming up on power lunch, dialing for delivery or asking alexa. Dominos hoping for a slam dunk. The ceo joining us. Tesla rallying now adding to the years genes. Whats driving the stock . What are speed bumps ahead . Why this successful facebook alum always, always tips 100 . All that and much more on power lunch. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. All while reducing americas emissions. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade clean basketball tournament month is a busy time for Dominos Pizza. Last year, they sold 2 million pizzas in the 2016 semifinals and championship games alone. The proof is in the dough. 10. 9 billion in retail sales total last year and 40 stock pop over the same period. Check out the chart of 3,000 gain since the market bottomed. So, whats dominos doing right when other restaurants struggled . Exclusive with patrick doyle, great to see you always. You as well. How do you think this nrgs caa championship will do this year for dominos . How many pizzas, you think . Oh, well do very well, and its a wide open tournament. I dont think youve got a clear favorite coming in, and that helps to drive viewership, and as long as my michigan wolverines win at the end of it, im happy. All right. Well keep that in mind. Patrick, curious. Theres a lot of fast food chains now that are are employing technology as a way to cut costs. You announced you can order pizza with google home, other ways including the smart phone. How many pizzas do you sell or what percentage of revenue come in through devices . 60 of the sale s in the u. S are digital now. Pushing twothirds of those are coming off mobile devices, and so that just continues to be a powerful part of the equation for us. Now, ill tell you, you talk about kind of cost efficiencies around that. It is more than anything about the customer experience. Its easier. Its a more accurate order. They can see the whole menu. Thats really whats created the most value for us. I hear more than half now are on the other handed digitally. Wow. Astounding. They dont pick up the phone anymore, and twothirds of that are mobile devices. Right. Digging deeper, curious how many pizzas alexa orders for you or google home. Yeah. Well, you know, that numbers still small. They are getting the installed base up, but its growing. Theres usage continuing to go up on that, and over time, were convinced that voice is going to become a bigger and bigger part how people interact with technology. Give us an idea of how much costs came down thanks to your move to digital, certain forms of digital more Cost Effective for you than others . No. Any order placed digitally is just as Cost Effective for us. It helps at the margin on cost, but, really, big value add is more on the sales side, revenue growing side. Thats really where its driven most of it. There might be a small labor savings in that, but that is a very small percentage in the value creation. Whats the next surprise that youre going to deliver, both either to customers or shareholders . Whats the next thing . We are looking at delivery, where we play in the space, but in terms of the next platform we roll out, well hold that until we are ready to go with it. I think what you need to fundamentally, you know, accept is, and what weve decided is that every platform coming out we think will have real scale, were going to play there. But, but, let me just probe a little bit more. Without asking you to just open your playbook, what would the kinds of things that are going to change be . Among them could possibly be . I think voice is critical within that, and i think what youre going to see is voi shows up in platforms. Thinks of vehicles, cars, whats happening there. You look at your home and how youre interacting with alexa, google home, more and more away from the physical device and ordering, and so were looking at that and kind of how, you know, not needing to have your phone in your hand and summing in the order opens a lot of other ways to interact with technology, and so were spending a lot of time looking at that. Patrick, on a separate note here, a couple years ago, health was the rage in restaurants, right . Mcdonalds roasted chicken, it did not talk out. Your chain avoided this. You have cheese inside of cheese inside of dough. You guys feel like eventually theres going to be a backlash to this for dominos and the industry . You guys walked your own walk on this. Yeah. You have not seen us doing those things. We have not done the kind of stunt marketing and more gimmicky foods. We released the last thing released nationally on television was salad, and so what youre seeing with pizza is, number one, from dominos, you can have it be as healthy or as indulgent as you want. We help you with that. I like indulgence. Youre going to order pizza, you do indulgence. Exactly. And people can get that or they can put vegetables on it, have a couple slices of hand tossed, and its a great meal. At the end of the day when people play hard against the health scene, it works if its okay. If its within the expectations of what youre doing, and were pizza. At the end of the day, people mr. Doyle, we did a segment we looked at netflix right. And the rise of netflix seemed to rise on par with the pizza stocks. There was some kind of relationship between the ability to stay home and see good stuff on tvpgs, and then ordering pizza. Do you see any causality in your, you know, people buying pizza because they stay at home more . Yeah. Connection is convenience. I dont know that its because they are home for netflix they order more pizza, but i think what is seen across the category is a split. People who win are people who make it convenient or give a r terrific experience in the restaurant. Fine dining is doing well in the Restaurant Industry over the last few years, if people are going to go in, sit down, commit an hour and a half or two hours to eat, they want a special experience. If they want convenience, were it. Its great pizza. Its coming quickly. Easy to order it. Where you have seen restaurants getting squeezed are those in the middle. Youre going to have to go in. Youre going to sit down. Its not going to be particularly fast. Its not going to be a special experience. Those are the people who really struggled. Some of the restaurants squeezed in terms of stock price, patrick are burger chains, shake shack, underperforming dome knows and papa johns at the same timement do you think there is a trend or is there some sort of change in american tastes where they move away from burgers . I dont know that thats right. Burgers are still very, very popular. Most popular food is pizza, second popular are burgers. Shake shack has done just fine. They have a terrific burger. You know, the valuation may have gotten pretty excited after they first went out, but, you know, i think youre continuing to see the people are getting the quality right, doing very, very well. If its a better experience, better food, you know, in a better environment, thats going to continue to drive results for people. Overall, i dont think theres a big secular shift from, you know, burgers into pizza. I think theres flat growth maybe a little bit negative in some of the categories. Okay. I think its more about who is taking share and who is winning within the categories. All right. Patrick, good to see you. Thank you. Patrick boyle, dominos ceo. Thank you, melissa. Booming dollar and sagging jeans. I dont know. Here we go, the good, the bad, and the ugly. Sagging jeans. G goes with the burger trend. That College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. 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So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. i moved upstate because i was interested in building a career. I came to ibm to manage global clients and big data. But i found so much more. its really a melting pot of activities and people. applause, cheering new york state is filled with bright minds like victorias. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Hi, everybody, the cnnbc news update. A senior opened high school in the south of france today sparking a terrorist alert. Eight injured. The Student Armed with a rifle, two handguns, and two grenades arrest. Police say he acted alone. Scottish leader facing opposition from other Party Leaders when questioned about her plans for a second independence referendum. Scottish conservative leader davidson challenged her at a parliamentary meeting. A referendum cannot happen with the people of scotland have not been given opportunity to see new relationships with the European Union is working, and should to the take place when theres no clear political or public consent for it to happen. And after nine seasons, Indiana University basketball coach, tom crean, fire. Announcement made minutes were the n clrkscaa tournament actio tipped off. Thats the cnbc news update this hour. Back to you, brian. Thank you very much, sue. The oil markets closing for the day, so lets get down to jackie. Good afternoon, brian. One of the seesaw sessions, pretty much ending up slightly lower, flat on the day, down just about 16 cents, but what took us higher this morning news out there, reports that the chinese are talking to the saudis about investing in the corporation, idea that they try to continue to boost the price of oil higher. Downside, at the inventory report yesterday, look into that, production for the United States, 9. 1 billion barrels roughly and climbing, bringing us back to the core problem, supply and demand. Fishi finish at 48 today. Thank you very much. Investors watching tea, elections over in europe, rate hikes, and big meeting with the german chancellor tomorrow at the white house. We have a closer look. Tyler, a lot of International Developments starting with china following the footsteps of the fed and raising short term Interest Rates to curb capital outflows and a sign the second largest economy is managing the ballooning debt. Meantime, bank of japan leaving rates up changed continuing to grapple with slowing inflation, and in europe, the focus is politics. Dutch election showing that Prime Minister who won the election holding back that popular tide and securing a win in response to european stock rallying, in fact, the european stock index seeing the best day since march 1st. You see stocks in the netherlands ending higher. Ditch decision behind us, focus turns to key elections in france, and germany, and speaking of germany, chancellor Angela Merkel and President Trump have the first facetoface meeting tomorrow where defends and frtrade domine the conversation. They awe kused ge accused them exploitation, but merkel will take the argument that the weaker euro is beyond her control. Right. The difference between the administrations is notable. The relationship between the u. S. And germany was a warm one under president obama, and, in fact, in one of the last trips, went to germany, encouraged the countrys leader, merkel, to run for office again and would vote for her if he could. Things are different under President Trump. His trade adviser told us he thinks germany is, quote, sticking it to us. Are they . Bring in michael and alexis with pricewaterhousecoopers. Peter says germany exploits a grossly undervalued euro, and that hurts us. Is that right . Well, the euro is a function of whats going on throughout all of europe. Germany had its own currency, the deutsche mark, would be strornger than the euro, but germany does not control the European Central bank. In fact, germany is pushing for the ecb to have a tighter monetary policy, not a looser one. Germany pushes for a stronger euro, not a weaker one. Does that come up tomorrow . Well, i think this is a first face to face meeting of merkel and trump, and i think they are going to try to have a working relationship, so there might not be too many contentious things that come up tomorrow, so if trump brings this up, merkel can counter with the fact that the euro is not controlled by germany, and, importantly, germany does a lot of investment in the United States to the benefit of the United States. Yeah. The auto makers, for one, is one that i think a lot of people are familiar with. Ale alexis, the other issue, President Trump complained about the financing the nato. All of these countries in the European Union are to dedicate a certain percentage to the budget, matching 2 of the gdp for their defense. Germany has not done that in a long time, but now they say they will do that. Is there a change coming from germany because of what President Trump talked about . Not necessarily reaction to President Trump. Germans said by 2024 they spend 2 of gdp on the nato defense budget. Very, very important and integral to the Transatlantic Alliance that they do so, and we have to think about whats going on in germany and domestically, theres a pension crisis as well. This is one of the reasons why they are saving. Angela merkel is running for office again. Shes weak, right . Everybody talks about shes the strongest leader in germany yet faces vulnerability on the immigration issue. Theres talk and leftist parties in germany that want to leave the euro. Never think id see such a thing. Walking a delicate position, not just the refugee crisis, but russia, energy security, visavis the european countries, tens of thousands of people on the streets in berlin last year protesting the agreement with the United States, and those are meaningful numbers, however, looking at the rest of the countries within the European Union, i believe her voice is amplified in france, and, you know, strong Election Results today in the netherlands, still, shes do you think they were strong . The place is fractured, right . The conservative leader, managed to hold on to power, lost seats, and other party, poof, gone, right . I mean, they are fracturing there. Everybodys relieved, quoteonquote, but doesnt what happened reflect when we saw here in the United States . What we saw with brexit . That antiestablishment voice is still very strong. It is strong. Amidst all of that, i believe that merkel has a very, very strong amplified voice in remitting europe as the spokesman. We like to believe we are similar countries, Third Largest economy in the world, we have a working relationship with them, and many of us drive german cars, believe they are the saim, but yet we are not. The German Economy is more than onethird exports. We are 8 exports. Do you believe that the economic goals of germany and the United States given very different underlying economies can both have mutually beneficial outcomes . Economic goals of the country shouldnt be for one industry or one sector. Its to make the people in the economy better off. Germany historically had more exports, but germany is a smaller country, and its more integrated with europe. The United States is a larger country. So, you know, the focus on exporting or manufacturing, i think, moves the view from what it should really be, how do we make the people in the economy have stable good jobs that pay well . Is it a reasonable goal for the United States to drive 20 , professor, of its economy for manufacturing . Which is suggested to parallel the rough percentage that is truly germany . Well, right now, germany has about 20 of the workers in manufacturing. The United States has about 10 . 25 years ago, germany had 30 of the workers in manufacturing, and the United States had is 16 . This is a pattern we see all over industrial countries. Its not that manufacturing output fell as much as manufacturing employment has fallen. A lot of that has to do with automation. The pattern that we see in germany as well as in the United States of automation leading to lower manufacturing employment is something that i think will not be reversed. Thank you for examination of the visits tomorrow. Appreciate it. Thank you. One group of stocks not performing with the rally, is it a onehit wonder or a real opportunity for you . Plus, tesla getting new competition. Will it hurt that red hot stock . Stick around. Yes . Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade time for the good, the bad, the ugly. The good, dollar general. Beating estimates on earnings and revenue. The discount retailer showed resilience against online competition and higher end stores. It is up about 2 . Biogen lower after going from overweight to equal weight, ugly day for guess shares. They are down more than 10 , actually, more than 11 after the Company Announced quarterly profits three cents below estimates. Brian . Thank you. Regional banks are surerging today. As financials have done well, this group lagged the market. Talk about a potential turn around with the trading team. Matt, first to you. Is this the start of manager beautiful over oneday onehit wonder and banks continue to slide . They could continue to slide on a near term basis. Like them longer term, but we have to worry about short term rates are up, the yield curve flattened out over the last two months or so, and with the way the position ive talked about the positioning in the bond market, and jeff mention it yesterday as well. If the bond market rallies, rates come down, that yield curve flattens out more, causing a problem. The key right now that ill will watching in the kre, Regional Bank etf is the 50day moving average. Thats rock solid. Not just this year, but in the second half of last year as well. Rates below that level, could get players to knock the group down a little bit. Yeah. Again, with deregulation coming, that provides a floor under the thing, but could see more weakness. Deregulation there, which is a topic all day for us. Dennis, what do you think on the options and volatility side . On the options and volatility side, im not seeing much, which is not what you want to hear. Prior to right after electionings there was enormous call buying in all banks and financials for the coming deregulation that was going to happen. Im more bullish on the Regional Banks than on big banks because earnings from big banks, a lot comes from used to come from proprietary trading, not around them, hard to turn the switch back on. Theres increased academic activity to help both banks, but whole in the big banks and Regional Banks will be priced inexpensively now relative to where the big banks are, up 51 over the last year. Its a bit of a pause, but i think that the Regional Banks outperform and go higher. Sounds like an opportunity for us, dennis, mat, thank you very much. Folks, lot more of this, online tradi tradingnation. Cnbc. Com. Melissa . Tesla 3 today after announcing a 1 billion capital. Own the stock up 20 this year . Thats straight ahead. Stay with us here on power lunch. Now the latest from tradingnation. Tradingnation. Tradingnation. Cnbc. Com. Different sectors of the market do well in the different periods of the cycle. When the economy is expanding, industrial and Technology Stocks historically outperform the broader market. When contracting, sectors like utilities and Consumer Staples outperform. Choosing to invest in particular sector . Consider where we are in the economic cycle. Its our little differences, that can make a world of difference. Expedia, everything in one place, so you can travel the world better. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Tesla up big after raising a billion dollars in stock fund and convertibles to fund model 3. On a tear, up 20 this year. If you buy the stock, good to see you, rob, starting with you. You like the stock. Buy rating on the stock, raised the price target to 300. You say its really expensive, though. Theres a lot of near term risk. Capital remove risks risks. Does this remove one of the biggest risks in your view . I think this helps because pretty much everyone knew this was coming up. Having it now done is a plus. I mean, the stock is expensive i think on near term metrics. You really have to, and i do value it more on kind of 2019, 2020 type numbers. While that may in some ways sound silly, that is the point. This is still a company thats just getting going. Theyre still spending a lot to build the infrastructure to build more cars. I do believe in looking out to 2018, 19, 20 could be pretty huge. Just so i understand this, normally when a Company Raises money. Its selling stocks. It dilutes the other shareholders. The other shareholders get mad but instead the stock is higher today. Thats a relief because everybody knew it was coming and now they can actually Start Building cars . Right. I think near term its just a relief. Its the fact that they had eluded to doing another Capital Raise. Now doing that is a plus. I also think the Capital Raise is probably at the lower end of what people thought it might be so i mean, the Capital Raise is pretty darn small when it comes to dilution. Sure. I dont think that in and of itself its a big deal. Phil, i want to get to this whole notion of deregulation. You talked about cafe standards. How could that impact the industry and tesla in your view. If they no longer have to comply, they might no longer produce as many low emission or evs out there. What does that do to the marketplace . Well, it depends on one big wild card, melissa, and thats the state of california. Remember, california has an epa waiver which theres been some discussion that the Trump Administration may ultimately fight. That means that california can continue pushing for these higher fuel efficiency standards, these lower pollution, low emission vehicles to be manufactured and california is the biggest auto market, the most influential auto market in the company. So as california goes, so goes the industry. While the lower fuel economy standards may have an impact in terms of the costs that are borne by automakers when youre talking about trucks, suvs, internal combustion engines, for the ev market you want to see what california does. Thats the driver. I want to unpack that in case people arent familiar. California has a waiver given to them in 2013, correct, rob . Right. To have stricter standards and create a program where Companies Like tesla could sell their emissions credits to other companies. Right. Now nine states have this same waiver. In your view, rob, is there the possibility that the Trump Administration could rescind that waiver and therefore tesla would not be able to sell the emission credits, the zevs from which they made 302 million in revenue last year . I think anything is possible, for sure, but if you look at it, yeah, teslas made money from zev credits in the past. Its been nice but frankly it is minute in terms of what im looking for them to earn over the next several years. I think its already going to become a pretty immaterial part of their business. The broader question is are people really buying electric vehicles because of tax credits and because of government helpers . I dont think so. I mean, obviously it helps, it doesnt hurt but i think people want to buy electric vehicles because they want to buy electric vehicles whether they get tax credits or not. Does the change in cafe standards, if a gm or ford is less incentivized about how much mile age a car gets, it seems to me thats less incentive to actually produce electric cars, which would help and, therefore, you kind of lose that National Infrastructure that everybodys thinking youre going to need in terms of being able to recharge cars at different parts along the highway, phil. I would agree. Look, youre hitting on a key point there and at the end of the day this is discussion that this country needs to have in terms of how much help does the government want to provide for the development and adoption of electric vehicles or is it going to be leave it on the high end of the market, people who can afford a 75,000 vehicle or do you want to push electric vehicles in that 30 to 35,000 price range because if the government doesnt want too do that, that makes it much more difficult, whether its the model 3, now you have the chevy bolt thats out there. Thats only being sold in california and oregon. Supposed to go nationwide relatively soon. If youre not going to have that federal tax credit or states take away their tax incentives, i think youll have a lot of people who say, kind of like it. What the heck, im going to buy this toyota with an internal combustion engine. Thank you. Thanks very much. Our final thoughts of the day. I know youre dying for those. Check, please, is straight ahead. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Check, please. My check please is more evidence that people in Silicon Valley are crazy. Palatia was on squawk box. He tips 100 . Im a huge tipper. I love it. Its so great. Okay. All right. All right. You dont do 100 . Yeah, minimum. 100 . Look, i got lucky. You. I got lucky. I feel like i should pay it forward. You do 100 when you tip. Yeah. Every time . Theyre going to watch you. If its bad service, no. Most of the time because they just have such a joy on their face and its wonderful. What do you think, guys. 100 tippers. If you can do that, why not do that. Very generous. Waiter and waitress, fantastic. And if the persons bad you tip them only 75 . You stink, heres 75 , im out. I like the fact that he acknowledged he was lucky, not brilliant in his investments that made him so much money in Silicon Valley. Very humble. We are watching shares of snap. It set a new low. 19. 80 was a low. Its now sitting at 19. 90. This is the 11th day since the ipo, 11th day of trading down more than 4 . This have been so many analysts coming out very, very negative on snap including yesterday canter fitzgerald. Theyre piling on. Mine is on the tesla conversation, no one talks about competition. Yet another all electric car coming out the lucid air. Looks like a tesla. Good looking car. Nice. Nice. Gets a couple hundred miles on the charge. Who makes it . Lucid. By the way, im not im just going to say if you score more points than the other team you have a chance of winning. Tonight i think this team, nations greatest college will Beat University of wisconsin. We have the two virginia guys here. Wellesley in my bracket. I have wellesley in my bracket. Thats very charming. They have been watching the game on the whole show. Virginia did win. Were very happy. Beat the seahawks. Lets look at the ipo, one of the hottest among the cold weather stocks today. Thanks for watching. Closing bell starts now. Hi, everybody. Welcome to the closing bell. Im kelly evans at the new york stock exchange. Im scott wapner. Were going to talk to renowned investor howard marks in a cnbc exclusive interview whether hes more focused on fed or fiscal policy. Investors love the pricey winter coats. Shares of canada goose are soaring up 28 . Could it go the way of newly public snap chat which just dropped below 20