Transcripts For CNBC Power Lunch 20170411

The dow was down about 145 earlier. Technology and financials have chip makers suffering. Transports down 1 . United continental the biggest looser and they have been a looser on a lot of fronts in the past 48 hours. Gold up more than 1 , on track for its biggest gain in three weeks. Thank you. Here is what else is happening at this hour. Starbucks is moving beyond coffee wi coffee. A new lunch menu at more than 100 stores in chicago. A management selling hostess brands. Small Business Optimism falling off the post election highs we saw. Running out of steam. We begin with the nations top ceos back at the white house today. Live at the white house with the latest. Reporter it was the president s 13th meeting with American Business leaders, his 15th meeting if you count Business Executives from germany and canada, all of this within 12 weeks of office. Todays meeting was the second such meeting. The largest multi nationals in the u. S. Were here visiting with the president , visiting with the relevant cabinet secretaries discussing budget, infrastructure, education and a host of topics. The president did tout the u. S. Economy and companies willing to bring jobs back to the United States, but when the press pool was in the room there was little substance that was provided about the meeting, about what was discussed exactly what the cabinet leaders are knocking heads with these ceos about and whether theyre making any new progress. These meetings are somewhere between brainstorming sessions and legislative drafting and it will be interesting to see how long it takes for them to bear fruit or if there is any fruit borne on things like tax reform, infrastructure and trade. They have been discussing for months. The ceo and co founder of blackstone was at the white house today. We sat down with him following the meetings and he says he believes tax reform on that topic that the white house might be once spurnd around twice shy what happened with health care, but health care will happen first. On the tax side thats being discussed. I think it will be slower because no one wants to make a mistake and have something not go forward. Theyll probably end up going back to health care because discussions in that area arent really over. People still know that needs to happen. Reporter he denied the idea that economic nationalism seeped into the conversation despite the fact that bannon and miller, advisors to the president who have been touting protectionism and tariffs and more balanced trade with other companies, that was on the company, but the risk in the market is Political Risk and that hasnt been the case for much of his career so far as hes seen it. Its a whole new environment. Thank you. Talk about the trump agenda as we approach the first 100. Here is cnbc contributor. Thank you. Its not looking good at this point to come out with a victorious message for the first 100 when it comes to tax reform and Health Care Reform. Whats the message . Its not as bad as its been written. Its not as good as they want. Hes the chief. He rolled back a lot of regulations and he established a very strong message on draining the swamp and overturning the washington establishment, which i like a lot. He didnt get the health care. Steve is a friend of mine, but i dont think theyre going back to health care. I think theyre going to focus on tax reform and if im wrong about that it will be tragic if you ask me. When it comes to the u. S. Economy, when we hear ceo after ceo tell us now four years that we are in such an uncompetitive position compared to the rest of the world, that will be a tragedy and yet i cant tell who is in charge anymore of tax reform. Thats one of the issues i think. Sometimes process helps policy and im somewhat befuddled. Ive been in the expect branch process as a deputy and i helped out in past administrations also. You need a quarterback to get this done and you need to be an honest broker to get this done. Typically thats the job of the National Economic council. Im not sure that jobs being done properly. Gary cohens job. A lot of things we dont need to talk about dodd frank right now. We just dont. But the president brought it up today thinking about rolling it back. I was surprised. The bank index did not react because i dont think anybody believes him. It paired his losses. Not as much as in the past, absolute. It may take future losses, but i dare you to tell me what it is. Nobody knows. What is the dodd frank reform . I dont know what it is. We dont know. Mr. Cole mentioned it on bloomberg news. I dont know what it is. I dont see a big grassroots movement. You shouldnt believe anything over there. Weve seen the tax has been thrown out there and buried by the press office. The carbon tax has been thrown out there. I have a thought, just focus on the Corporate Tax reform, which is the best way to raise wages and incentivize businesses to have 3 growth. Just focus. I dont care what the timing is. It doesnt have to be in the next 100 days. Reagan signed his tax cuts, which in those days it was a personal tax cut, it was signed in august. It was a huge victory. He got what he want. It gave him political capital. He also handled the air Traffic Controllers brilliantly. You dont need a thousand things. You need to prioritize a few things. My concern with this white house is they dont have the priority. President trump said it. It was quoted in the wall street journal, i need priorities. The stories yesterday were that the white house was prepared to sort of start over on tax reform and you worked on that plan. Yeah. You were a big part of it. Do you give credence to those reports. I hope not, but i dont know. I worked on that plan. It was terrific. Its a pretty good plan. Its not perfect. It has glitches. It needs some buttoning down. The essentials were there. Lower tax rate. Investment expensing. The repat could possibly across rough to a private infrastructure fund. That might work. Its been on the table for a while. Thats your bread and potatoes. Wait for the larger tax reform for next year, which is more complicated. The individual side. This is not a rich mans Corporate Tax cut. This is a wage earners Corporate Tax cut. The work has been done by kevin hacitt who is terrific. He has shown if you want to raise wages, cut the Corporate Tax rate. Not only that, we put in not just for the ckocorps and lls. It is fair and ekabquitable. Wage earners, better jobs around the country. Just focus on one thing. Spell out the nexus between that kind of Corporate Tax cut and good news for wage earns. What has been noticed through the years is if you raise the Corporate Tax corporations dont pay taxes. They collect taxes. It comes out of wages and benefits for the workforce and that spills over for the rest of the workforce around the country. Next, Consumer Prices go up if taxes go up and shareholders would be engaged too. If the tax rates are lower and they get to keep more of their profits it will be passed along. You know what the opponents will say. The opponents will say it will end up in the pockets of the ceos. We were on here one afternoon with my pal jarod bernstein. He didnt agree with kevin. Kevin said 70 of the Corporate Tax cut will pass on to the wage earne earne earners. Jar jarod didnt disagree. Thats what they need. If you want to raise wages, cut Corporate Tax rates for large and Small Business. You have to just focus on that laser light and then youll have yourself a great message. I dont care if its 100 days or 200 days. The other point about mr. Trump, he should take credit for this. His Foreign Policy team, this comes out of the left field, his Foreign Policy team is doing a great job. So is he. Things change. The syrian story has changed. The russian story has changed. Theyre getting w here that the media dont want to give him credit for. When you have confidence in foreign affairs, i saw this with reag reagan, it leads to confidence at home and every chance you get. You have to say that. You have to say that. The russians know were stronger. The chinese know were stronger. This is the importance of a good Foreign Policy team who would have thought it wasnt a major part of the campaign and now it is. Give trump credit on that. Thank you. Thank you. A news alert in the bond market. Ten year notes up for auction. Those yields have been moving. Yeah. Big day today. Dow was unchanged. While you were doing your interview and 232. 232 is the low close for the year a week ago monday. 20 billion. This is the last reopening yield 2. 332. About a full point higher than where the one issue was trading. Thats not good. We saw that. We had a pricing issue, but Everything Else was pretty much average when you look at 2. 4 and cover 65. 2 on a percentage and 5. 3 direct. I gave it a c minus backtoback. Tomorrow is the last of supply with 30 year bonds. Back to you. Thank you. Still ahead, outrage over a passenger being dragged off an overbooked united flight catching up with stock today. A look at how big of a problem the backlash could be in china for the carrier next. Policy. Outrage over a passenger dragged off an overbooked united flight. United down 2 , but could this outrage this has sparked in china become a bigger problem. One reason for that outrage in china is because the passenger who was bumped from that flight is a chineseamerican. He is dr. David dow. Hes a doctor in the louisville area. Almost everybody has seen this around the country. The d. O. T. Is investigating the bumping of the doctor and one of the officers has been put on leave pending the investigation in chicago. Why is this a big deal in china . As i mentioned, david dow, the doctor who is bumped is a chineseamerican, but in china there are reports of people cutting up their mileage plus cards saying i dont want to fly united anymore. Its the number one story on the twitter of china. China is critical for uniteds business and it has been for years. Theyve been flying there for more than 30 years. 96 departures per week into china on united. Its 20 of the United Stateschina flights out there. More than american and more than delta. Its partner is air china. The Chinese Market has been critical for united. As you look at shares of united, keep this in mind, you may look at this and say there are only so many seats people will continue to fly united, but when youre talking about flying to china, those are highprofit tickets and those are people who do have other choices. United is not the only flying to china so they want to be careful about how this plays out overseas. The question is united handling this controversy in the right way. Joining is the chairman of travelers united. Thank you for being with us. We will start off with you. You im sure can relate to what oscar is going through right now. Do you think he is handling it in right way because what rub people the wrong way is he stood by his staff and called the passenger belligerent. Im loathe to criticize how hes handling it. Obviously theres many approaches you could take. I think you need to stand behind your employees all the time, but it is so unfortunate. My preference would be to be more apologetic to the public, but every pilot thinks hes the best pilot. Charlie, its michelle here. I spell perhaps regulatory capture, which is economic smackdown for the independent rye has brought off the regulators. I dont know any other industry that says a contract isnt a contract, i bought something, and yet i can deny it from you at the last minute or whatever i choose. That makes no sense to me. How can a regulator approve that kind of situation . You have to realize that this deny boarding goes back many years. In the old days everybody bought Airline Tickets which were refundable. They could get on the plane or they couldnt get on the plane. The deny boarding compensation sort of cuts two ways. It gives consumers a lower price, but on the other hand it means every so often somebody gets bumped. A lot of people like getting bur bumped. They like the extra money or a free hotel night and some people work to do that. I think the real question here is not about the bumping procedures, its whether or not united followed their own rules. United has a specific what they call boarding priority, which is listed in their contract of carriage and thats a contract we all sign when we buy our Airline Ticket even though none of us have read it probably, but in there it tells you who gets bumped first. Theres no such thing as a random choice or there shouldnt be. If this was random it could be a problem. Do you know anything about the policies. There are certain people who almost will never get bumped. An unaccompanied minor. First class and business class, if youre paying 1,500 for that seat relative to somebody who is paying 300, i know this is going to sound elitesist but no business is going to bump the 1,500 ticket instead of the 300 ticket. There are certain people they try not to bump families. You have four people going together, theyre not going to go to the dad and say why dont you take a different flight and they look at things of priority, who is a member of the frequent Flyer Program and those who have more status relative to those who dont have status. The people at the low end are likely the ones who are the first to get bumped. Two questions for you. They did this to accommodate crew members of Republic Airlines, the affiliate of united. They needed to get from ohare to louisville. Thats a four hour drive. Why didnt they get them a car and drive them there. They would have gotten there sooner. We had a conversation last night on another program where you explained in response to my question why didnt the united gate crew just keep upping the amount of money they were willing to offer . If they had offered 5,000 or 10,000 to somebody, somebody would have raised their hand and the stock is off 500 million today. On the first question, i think in hindsight that would have been a better thing because they were two hours late in any case, but the normal is a dead head crew is a must ride and you get them to their destination. Unfortunately they were not identified as a must ride until the plane was filled and boarded, which made it difficult to extract. Usually you just deny the boarding. On the second point, the law prescribes the formula for the reimbursement where youve kind of honored your deal with the customer as was mentioned under the contract of carriage. If you go into open warfare, youve let open all kind of pricing auctionhouse kind of behavior at the gate which is not in your best interests. Not in the airlines best interest. Why not let price clear the market . That makes no sense. This is a regulated industry. Its not like an open house and you do what you want. You follow the rules and the d. O. T. Makes the rules. Would it be smarter to allow an auction system. Its not about being smarter. Its what the d. O. T. Has written. It doesnt comply with the regulations. If we look at the regulations, the regulations say you will get up to 1,350 for any delay past two hours. I dont think that was offered. It needs to be offered in cash. You dont have to take airline script. Nobody yet has talked about cash. This is something that the American Public just doesnt know. They dont understand that in denied boarding you get a lot of money in cash. You dont have to take script from airlines. If they had told people that, i bet you there would be four people banding together and renting a car and driving down to louisville themselves because they would make a lot of money. Right. They would have pocketed the change. Exactly. There are a lot of people who do know that. Thats true. They volunteer early. They scramble to get that denied boarding because they have flexible travel plans. Listen, theyre traveling millions of people a day in this world and this is going to happen. I dont think it was handled properly. I dont agree with it. But it happens. From an Airline Perspective though if you were the ceo how concerned would you be about the impact on one of the Fastest Growing markets out there, china. When you have the founder of jud jd. Com calling for a boycott of United Airlines it would have you worried. It would worry me considerly and i would spend time on that today. By what. By making amends and making sure everyone understands it wasnt president ial to a race or person and it was unfortunate and maybe it could have been handled better, but under no circumstances was he singled out because he was chinese. Got it. Terrific discussion. We appreciate it. Dont go anywhere. Todays trade is straight ahead. Opportunities arent always obvious. Sometimes they just drop in. 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. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. And the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back to power lurnc. Good, argan stock is higher by 8 after the plant beat Fourth Quarter revenue expectations. The hub Group Management company missed First Quarter earnings forecast and then an ugly day for amtrust. Secret recordings are part of an fbi and scc investigation. Its off 21 . Dont move. Power lunch is back in two minutes. Whether its connecting one of the worlds most innovative campuses. Or bringing wifi to 65,000 fans. Businesses count on communication, and communication counts on centurylink. 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. President trump and some of his cabinet met with more than a dozen ceos in washington this morning. He says his top priority is bringing highpaying jobs to the american workforce. Weve seen the numbers. Weve created over 600,000 jobs already in a very short period of time and its going to really start catching on now because some of the things that weve done are big and they are catching on. North koreas parliament is meeting in pyongyang. The meeting coincidence with his fifth anniversary as the supreme leader. The parliament meets twice a year, but this one amid tense pressure from the United States. Pope francis opened a new laundromat in rome. Whirlpool provided the washer and dryers. They plan to add showers and medical assistance in the next few months. Thats the news update at this hour. Send it back to you. Thank you. So stocks are well off their session lows. Remember the dow was down 145 points earlier and now down 16. Investors getting ready for earning season. Looking at what could given the season a boost. Off the lows, but a lot of flight to safety trades going off today and a lot of people look at these trades here. The dollar yen below 110. That was a problem earlier on. The ten year note has been moving down. These are flight to safety trades. You see in the sectors here banks have been weak. These what are you call the reflash trade. You get a chinese menu. We have geopolitical worries rising and the white house has been walking tax reform. Bond yields have been rising. The banks are down 3 this month. Pnc is down 3 . Theyre down again today. That goes for the earning situation that michelle was talking about. A lot was expected and the banks are going to start here. Were expecting earnings to be up 15 . Rates are up for the banks, but theyve been trending down. They were up over a year ago, but theyre trending down the last month. Thats not good. Growth has been weaker than expected. Thats a surprise. Were seeing cracks in credit particularly with auto in the last couple of weeks weve been talking about that. Bottom line is getting a little trepidation into earnings season, and yet look at the market. We had problems earlier on with the flight to safety trades, particularly with the yen dollar relationship and yet its been coming back. This is a characteristic of the market for several weeks. We dont do much, but every time you start a serious crack in the market, somehow it quietly lifts late in the day. There is an underlying bid in the market. I dont think hope for the trump trade is dead and a lot of people would like the market to drop lower so they can buy more and that is definitely not a change in the sentiment. That has been around for a whilened a thats why were only about 1. 5 below the historic highs. Thank you. Will overseas profits help drive the u. S. Market higher . Lets bring in the chief Investment Officer and chief Investment Officer at atlantaic trust. You both differ a little bit, but i would say at the margins of your forecast going forward, but dave i want to start with you because one of the things in my notes caught my eye and that was you think it might be time given valuations to judiciously take profits. How do you identify them . Our strategy has been to look through the portfolio and look for names that have performed very well where valuations are at the top end and do some pruning and recycle those proceeds into areas that didnt perform as well in the First Quarter. Things like Energy Companies would be a good example. Technology names particularly in the recurring revenue stream portion of the tech sector and some industrial names that were touched up in the face of what looks like better Global Demand fundamentals. Where would i be likely in my portfolio to find those prunable names . I think you look at a lot of what we use to call ruler stocks, companies with very not the highest growth rates, but above average growth rates that are trading at multiple well above their historical means. Growth is good, but you dont want to overpay for it. Kevin, you like you say the u. S. Market can continue to move forward if earnings come in the way we expect, about 9 in the First Quarter and moving forward. But you also Like International for fresh capital. Why . I think if you look at year to date performance you seen International Develop markets and emerging markets outperform u. S. Markets, but i dont discount the potential for u. S. Markets to move higher and earnings could be the catalyst. The estimates in the First Quarter is 8. 9 . If we hit that number, thats the highest rate of growth since the First Quarter of 2014. I think theres a chance we can get a double digits earning rate in the First Quarter and that could propel caps. Does that include europe and is there concern about the election. Whats being telegraphed to the markets is different at the spread between french bonds and when you look at all what the research coming out of European Investment banks is that it will be a proeurope candidate that will win. Two different stories. I think what weve heard the ecb is going to be accommodating and if i use a baseball analogy where the u. S. Is in the eighth or ninth inning i think europe is in the third inning. You have to look overseas to compliment a global growth. Is that why you think u. S. Companies can profit because theyll make more money off of foreign growth. If the dollar doesnt get stronger and it hasnt yet, that wont serve as a head wind to that type of earning momentum. Does all of that overtake what if we dont get Corporate Tax reform, is earnings enough or do we deflate here . If we get a 10 plus rate for the First Quarter, thats enough, but theres a trump expectati expectati expectation syndrome where we anticipate that the items are going to come to fruition. Tes. Yes. There will be a drug for that. Dave, your view is small cap over large cap and u. S. Over international so you differ from kevin. Why . They agree the Economic Trends look better in europe and japan, but we have seen so many economic false dawns in that region over time. We have a higher degree of confidence in the growth trajectory and think its worth paying up for that. In terms of small cap versus large cap, small cap und underperformed. Thanks. Appreciate it. My pleasure. Next, the five questions you should ask yourself before shopping for a mortgage. Power lunch is back in two minutes. With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Start trading today at etrade. Com welcome back. U. S. Attorney general Jeff Sessions says he will make Immigration Enforcement a key priority for the Justice Department and he is touring the u. S. mexico boarder, but building a physical wall is half the battle. Live in arizona with the look at the Technology Behind the wall. Reporter thats right. Just moments ago sessions was speaking about five minutes from here and he said this at the nations southwest boarder is ground zero for the fight to protect our boarders. Hes here visiting the physical wall, but we wanted to take the tubts opportunity to look at the technology that experts say will have to be involved in that vision for President Trumps great, great wall. Take this part of the existing wall. You can see its about 25 feet tall. But even within this stretch in arizona it can look dramatically different. A few miles down the road it is concrete. A few miles down the road the other way it is a fence that is easily jumped over and there is nothing at all. Two companies are working with the u. S. Government to develop high tech surveillance along the boarders. If you look at their stock prices, they have outperformed the broader markets since trump was elected. They use video kecensors that c detect people miles away. Thats something a physical wall cannot do. For the president s vision of a new wall the agency has received some 415 proposals from different companies. 20 of which will be selected to build prototypes near san diego. Some of the high tech proposals include plans to embed the wall with censors that would notify boarder agents in real time of any tampering and another solution that calls for drones to 3d map this terrain. The new Administration Made clear that technology alone will not meet its rekwierquirements that could eliminate some of those proposals. Sessions got a look at how hard this task will be. The more you use technology, talk to us about cost. Does that make a wall cheaper or does more Technology Make it more expensive or is it just different kind of spending . If y reporter if you think about the sheer amount of cement that need to be shipped here to built this wall, thats not easy and there are huge costs associated with that. If you can reduce those Construction Costs and use technology such as drones that are getting cheaper, you can see those would technically be a lot cheaper than created a physical wall. It depends on what you use, but already the government has developed a system. Theyre called integrated fixed towers filled with technology and they can monitor someone from up to seven miles away. Think about what you would need to do for a physical barrier that would prevent someone from seven miles away. Thanks. Shopping for a mortgage can be a confusing process especially for first time home buyers. Here are five question questike should i get a fixed or adjustable rate. Fixed rate morningatgages will you into a rate over time. Make sure youre comfortable with what your payment could become. Should i pay for points . A point is an upfront fee if you plan on keeping the loan for a long time and then the fees may save you money in the end. How much will my Closing Costs p. Usually about 3 of the Purchase Price and youre allowed to shop around for the Services Required by your lender. Do i qualify for any special programs . There are plenty of programs that can save you money. Va, fha and usda loans offer low or no down payments and are forgiving of low Credit Scores so browse around. Number one, how much can and should i put down . A lower down payment usually means higher rates. Many lenders will accept less than the recommended 20 of the Purchase Price, but beware, a lower down payment requires private mortgage insurance which will add to the cost. Lets get more details on what you need to know before you go shopping for a mortgage. To do that lets bring in tim many a mortgage expert. Kate asked the questions, youre going to give us answers. Adjustable for fixed rate mortgage. Theres a couple of considerations that buyers need to take into account. Are you willing to risk that stable rate for a rate that could adjust in the future and how long do you plan on being in your home. If you are going to be in the home for a few years, arm may be better. Arm looks better when rates are falling. Rates are rising. Thats the opposite. When rates are rising arm can give you a chance for a lower initial rate. You have to reset. You have to hedge your bets. Someone in 2011, they rate reset lower in 2016 and they were happy. Pay the points or take a higher rate . People typically pay points when rates are higher or when were in a rising rate environment and people pay points when they know theyre going to be in their home for a long time. Let that low rate work for you. If you need to qualify for a larger loan amount what other way can you do it if your salary and Interest Rate is locking you a lower interest rating do that. The points on the original mortgage are deductible. Yes. Lets go to the question of down payment. Should i put as much down as i can or as little down as i can and use more of somebodys money . I always advise dont always gravitate towards the lowest down payment programs. If you can save more, youll give yourself additional options. Your mortgage insurance cost will be lower and it might not have an effect your Interest Rate. When we bought our home we had 10 down and we were thrilled we came up with 10 but reality struck that this home needs repairs and the seller is not willing to pay for it. We went down to 6 down. Each time for your down payment. Yeah. In this day and age. Absolutely. I thought that was over. Its easy. Here is the point. Each time we decided to lower what banking crisis. Each time we decided to lower our down payment, we called our lender and said will this have an effect on the Interest Rate. The answer was no. Maybe if we went from 6 to 5 it might have. You general do have to pay private mortgage insurance if you go below 20 on a down payment. Absolutely. Were paying pmi but were banking on the fact its going to go away. If youre able to should you take a 15 year or shorter te mortgage rather than 30 years. It depends on your time line and how much money you want to dedicate each month. Surely its going to save you. You pay less over the life of the loan. True. How much do you have each month to dedicate to your mortgage payment. I think whats shocking is when somebody pulls up the table to see how much interest you pay. Look at that table because you are paying so much interest over the lifetime of that loan and you have little equity in your home. The first several years is mostly interest. Yes. So you sit there and you look at that i look at that and im like why would i do that. Im taking out a 500,000 loan, but im paying 1 million. Its crazy. Why would you do that . The bank has to make money. Come on. Thats why the banks that mu . Come on. Thats why the banks always win, man. Like my exwife. [ laughter ] tmi for you, tim. Dont get me started here, tim. I wont, i wont, can you bargain down Closing Costs . You can negotiate, certainly. In my personal situation we had the seller pay some of the Closing Costs, you can call your lender, ask which fees theyre willing to negotiate on and thats why we encourage people, dont just shop for an Interest Rate, shop for a lender, see what you can negotiate, see what calls you can save. And the seller can pick up taxes, too, thats not just Closing Costs you can bargain on. Spoken like a woman who knows. Dont forget about your real estate agent. They might not be happy but they can work with you. Tim, thank you, nerd wallet. No nerd he. Speaking of homes, homebuilding stocks on the move. Lets keep this thing going, shares of Toll Brothers, a big home producer, a builder, up near 3 today. Rbc capital upgraded from outperform to prior sector perform, also boosted the price to 43 bucks a share. It was 37. Now the analysts there United States Toll Brothers meeting with management for the upgrade. The rise in the share is helping to lift spiders home builder, the etf is up about. 5 and 16 since donald trump was elected president but looking at these Home Building stocks, ones to watch if youre bullish. The four big wall street calls you need to hear about today, including a company thats facebook and googleproof. Your daily deeose of street tal is next. You do all this research on a perfect car, then smash it into a tree. Your Insurance Company raises your rates. Maybe you shouldve done more research on them. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Time for street talk, what recommendations on the stocks do you need to know about. First stock . Oh, i thought this was yours, western digital. Its being upgraded to overweight. J. P. Morgan is boosting the selling price significantly because of shortages which are expected to last until late this year. Those shortages could also boost hdd or hard disk drive demand as well as pricing. Also helping western digital, the pc market is improving. Stocks up 1. 5 . Its up 96 on the year so wow. Those commodity stocks move so much. Second stock is disney. Goldman sachs is adding disney to its americas conviction list. That doesnt mean it committed a crime, that means its a conviction, they reiterate their buying target, they have a 12month price target of 138, its at 113 right now. Success of beauty and the beast increases their confidence that the forecast 13 earnings per share growth and they they the studio slate will be the best one ever, four marvel films, two star wars films, three animated films and all those worries about espn, they say listen, the subscriber world is declining but not as much as it used to be, you can get them in other places and they think that will help them with their revenue growth. Thats a luge slahuge slate. Yelp being upgraded saying the franchise is overweight and healthy from insulated from competitors like facebook and google. Thats always been the knock on yelp. Based on checks with local ad customers, concerns about yelps relevants are overdone, there are 60 billion in off line local ad shifting right now to online. Stocks higher by more than 2 on that. The fourth stock is hess, bank of america and Merrill Lynch adding hess to its u. S. Best ideas list. They maintain their buy with a price target of 80. Right now its 50 bucks. They think the company is reaching an inflection point. They forecast an oil and Gas Production rebound in the Second Quarter of the year. They think oil is going to 70 bucks. Thats what underlines this call and they think theyll have an extended period of growth in 2018 and 2019. There will be a turnaround from the three month decline of 18 . And oil is looking good. Tyler . Ladies, thank you very much. Still ahead, they used to be hot and now theyre not. A look at the momentum stocks have that lost their mojo and whats driving them. The second hour of power starts in two minutes. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Oh, there you are. Welcome to the second hour of power lunch. I almost forgot which camera to look at. Im tyler madison, two hours until the closing bell. Heres what were watching at this hour. Shares of United Airlines dropping more than 2 , turbulence on the back of its pr debacle of more than after a half billion dollars in market value has been wiped out. Uniteds ceo doubling down. What management needs to know and do to turn it around. President trump meeting with americas top ceos, big company folks about tax reform and other topics, how soon will it get done . And snap shares getting hit, Facebooks Instagram unveiling a rival photo sharing feature. What now for snap . Tylers all over that new feature. Check out the movers. Indexes well off their lows. Technology and financials are dragging the markets downward. Apple, yahoo and facebook are down nearly 1 . On the financial side, bank of america, Morgan Stanley, wells fargo, those are the big names in the red and the financials all off roughly 1. 5 . Disney, after that upgrade we told you about, mcdonalds and boeing are holding on to their gains in the dow but none are moving by much more than a half percent. President trump hosting an Economic Advisory group at the white house today. The cia round tables are a favorite of the new administration but how much do they accomplish . Kayla tausche is live at the white house with that story. Kayla . Reporter these have become a weekly occurrence for the trump white house. Each from the Trucking Industry to the Retail Industry to the pharmaceutical industry has made a trip down here for a listening session with the president and today it was the turn of the strategic and policy forum which now is housed under the newly created office of American Innovation thats being run by the president s soninlaw and adviser Jared Kushner spearheaded by Steve Schwartzman who we spoke to about what is going on and what the white house is pursuing but its clear the purpose and what is accomplished in these meetings for the president from the outset is an ability for him to talk about the confidence that he has infused in the American Economy and he took an opportunity to do that again tod tod today. At the top of our agenda is the creation of great highpaying joobs for American Workers and weve made a lot of progress. You see the numbers, weve created over 600,000 jobs in a period of time and it will start catching on. Schwartzman to the president s left chairs this forum and the an investor with 367 billion under management at blacksto blackstone. Very valuable for him to have access to the president to get insight on what policies he expects. He says tax reform will be something that the president prioritizes but it will happen slower than expected. He said health care discussions are not over but he expects they will happen before taxes. He said infrastructure is something republicans and democrats signals they could get behind and he said the approach of the white house and companies behinded closed doors is not characterized by economic nationalism that gets covered so widely. Thats one of the worries ceos have in these meetings and i reported on it on cnbc, this idea that job wants to hire american and buy american. The companies in that room have four million employees worldwide but less than half of those are in the u. S. And while they want to share their ideas with the president , theyre not sure which are going to end up on the cutting room floor or which will be translated into policy. Back to you. Kayla, thank you very much. Lets bring in the Public Policy strategist at Morgan Stanley and the former ceo of office depot and autozone. How product sieve the question are are these meetings for the variety of things on the trump agenda. Gentlemen, michael, let me start with you, we were musing in the last hour that it seems like maybe, just maybe, there are too many balls in the air in terms of mr. Trumps domestic agenda and that he hasnt focused and concentrated. He tried to focus on Health Care Reform and it didnt go very well. Would he benefit from more focus on discipline and prioritizing . It couldnt hurt but the larger problem when youre talking about the major initiatives he talked about in todays meeting, whether it be renegotiating nafta or softening dodd frank or tax reform is that these are processes that just take a lot of time, theyre very complicated and i dont know if theres any degree of focus that can speed up the process to give a tax reform in particular where the Affordable Care act process laid bare the fact that there are meaningful decisions on key issues within the republican party. Someone like chairman kevin brady from the ways and Means Committee is telling you those divisions can be fixed through any number of phase in provisions and grandfatherings and other carveouts. All that underscores that it takes time to negotiate those outcomes and when it ultimately happens it probably doesnt pack the same kind of punch thats going to sort of live up to whats been advertised by the administration. So steve would you very interesting and very intelligent answer there. Would you take comfort if there were more focus . Michael just mentioned a whole host of things, renegotiating nafta, trade, job creation security, and lay on top the international stuff thats come up in the last ten days or so. Would you think the president might be Getting Better results if he had a little more prioritizing going on . I think you have to go back to the objective. If you look at the amount of debt we have today, over 20 trillion, its 76 of gdp, its the big kahuna and it takes a set of policy changes in order to get at that weve said as a country we dont want to touch entitlements so therefore in order to get to dealing with this debt which is going to be over 100 and consume our Discretionary Spending we have to drive growth so therefore the ceos are telling the president and the president agrees that weve got to put in place policies that drive growth and hence the focus on taxation, health care, regulation. Michael is right, there are big, big problems and big issues to deal with but you have to deal with the underlying policy issues to grow out of debt and thats what the ceos are telling him. So in other words youve got to get growth in order to get this by i sure dont hear many people in the administration or for that matter on capitol hill, steve, fretting about the debt right now. They dont talk about it publicly but if you look at the policy changes theyre talking about it goes to growth. Again, theyve carved out entitlements which you can argue is right or wrong but its the growth that is required to grow our way out of the debt. So they dont want to scare people but this is the underlying objective that doesnt get discussed and why im trying to put it on the table. Ceos as business statesmen need to stand up and park their petty tax differences or whatever carveouts they have and i think you see that. Thats the reason. We need to fundamentally change these policies to grow the economy again because of the underlying debt. Michael, john whether your boss has been in any of these meetings or not, its really immaterial. Do you think these meetings are a constructive thing . There have been a lot of them and this is kind of a working group thats been reassembled here so i understand why the same folks are in the room. Are they productive . Its impossible for me to tell you whats going on. The larger issue is probably in any administration or writing of policy this big, like tax poll soy these vases will be heard so that just makes taxry form more complicated. It doesnt make it impossible. It doesnt mean it wont be better policy than what you have in place but it probably doesnt mean it will pack the punch for companies in 2017 that they might have been expecting after the election. Your best guess is at least Corporate Tax reform done by the end of this year . Michael, quickly. We dont think theyll do it by itself. We think theyll do it together with the Fourth Quarter with risks to the long side. So you think it will be both individual and Corporate Tax reform . You dont separate them . I think its hard to decouple corporate from personal tax reform because of the issue with how you tax pastors and if you do Corporate Tax reform only and you ignore the pass through issue the Small Business lobby will be unhappy. I would register as a pass through under those terms. Gentlemen, thank you very much. Michael zezas and steve odland, appreciate it. Youve probably seen this video but well show it to you again, a passenger being dragged off a united flight yesterday. United not backing down. In a letter to employees oscar muniz, the ceo, says he stands by how officials handled the situation and called the passenger belligerent. Is that the right move for muniz . Lets bring in the former president and ceo of spirit airlines. Good to have you here. Great to be with you, thanks. Another former airline ceo was on earlier, gordon bethune, he was loathe to have any criticism of oscar munoz . What can you tell us about what you would have done in this position . I learned a lot from gordon and certainly as ceo of spirit i had my own issues being thought of frequently. Thats right but the reality is this is an issue that was largely caused by united. Somebody at Republic Airlines knew they were sending that crew to the gate and that they just notified the gate in advance theyd reason is able to take care of this problem before they boarded the plane and that was the genesis of the problem so to come back afterwards, theyd have done a better job if they said we made mistakes and well fix this. Why didnt they let price clear the markets . Why didnt they just say why didnt they go to a thousand . Why didnt they go higher . That could be a second issue and im speculating because i dont know uniteds rules but i guess they have an internal policy that limits how high the case can go and maybe its possible the gate agents felt they couldnt go any higher. I will tell you the get agents and airport workers in the Airline Industry tend to do a very good job with overbook situations when they can plan in advance and this wasnt a case where the flight was overbooked. Crews needed to get on and somebody knew those crews were going the gate but nobody told the gate. So i understand united was within its right to forcefully eject passengers in order to make their way for some crew members to fly on the plane instead but should it be that way . Should it be that when consumers buy a ticket the money clears, they go on the plane, sit in their seat that its not their ticket . Its not their seat until the plane takes off from the runway . Whether its legal or not doesnt mean its the right thing to do and the reality is they may have been within their legal right based on their contract of carriage, im not a lawyer. Did you have that at spirit . Is this an industrywide convention or is it by airline . Every airline has a contract of carriage. They file it individually so they can say Different Things what i will say is that the decision to pull people off the plane didnt need to happen had they known in advance. Once they decided to pull people off the plane the reality is the decision to Call Security in was probably because they felt constrained on how much they could give to customers. Clearly somebody it sounds like you think its not right to pull people off the plane. Its legal, part of the contract of carriage but it may not be right. Should there be protection for consumers put in place so this doesnt happen so when a consumer buys a ticket it is their ticket . Its a slippery slope because if someone is thought of as a Security Risk or as being belligerent for a reason not related to something the airline did or something, i think the airline needs to have that ability and the contract of carriage gives them that. Thats a security issue. But this is a situation where it got to that point when it didnt need to. Thats why im most uncomfortable with it in this case. All right. Thanks very much, ben. Thank you all very much. I wonder how many lawyers have called that doctor today i wonder how many. And the rest are wishing they could. The rest are wishing they could get his number. Heres whats coming up on power lunch these former momentum stocks may be to blame if the market is losing its mojo. And new guidelines are out on getting tested for Prostate Cancer but they may create more questions than answers. Plus, big Beer Companies blurring the lines of craft brewing, all that and much more on power lunch. You always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Stocks were higher today but there is no doubt the trump rally has slowed over the past month. Where has the markets momentum gone . Don is here with some of the numbers and stocks that may be missing that momentum. So we decided to take a more quantityive the approach to find things where where weve seen momentum in the past and fall over the wayside in the last few weeks and months. We took a broader view of the markets overall with the russell 1000 index. Larger cap, midcap larger cap stocks but a thousand versus the s p 500. We then looked at the screen, take that universe of stocks and said lets look at those stocks and screen for only the ones whove had positive oneyear performance so weve seen momentum here in and longer term then out of those which have 10 corrections or worse from their recent 52week highs. That nerios down to 200. Still too many to talk about but there are interesting themes, look at these stocks. First of all, martinmarietta materials, weve seen that rise up over the past few months and tail off now. 12 below its 52week high. Jacobs engineering down about 15 from its recent highs. On the banking side of things, weve talked about it, cy i dont thinks bancorp. Nvidia on the semiconductor side and qualcomm. Both stocks at or near bear market territory so as we talk about tech, financials, infrastructure, those are the big themes, those are the stocks that are indicative of the slowing trends. Thank you very much. Lets bring in Herb Greenberg of Pacific Square research as well as a cnbc contributor. We started thinking about this segment with this tesla upgrade. Im sure you laughed because thats the kind of guy you are but there is a line that said we have considerable uncertainty about our estimates for earnings, for revenues and cash flow. And yet this analyst felt emboldened to upgrade the stock and have a 360 price target. Momentum stocks work until they dont so how do you figure out whether or not to jump on that train . Theres discipline momentum which i think some people who probably follow look at multiple metrics, right . And then there are a freeforall momentum and in this case youre seeing a freeforall momentum in some of these names that continue to rise, remember with tesla this analyst said tesla plays by its own rules. Thats what people are want to hop on, they want to think its the next amazon. And were looking at a stock by stock by stock situation. So we see the fundamentals, we see the numbers, we see whats going on in the field through Field Research and you say wait a second, this doesnt reflect reality, this doesnt reflect the risk we see. And people forget that. Now that were going into the earnings season, lets not forget, the earnings season will have disappointments and if the stock has been moving up youre going to see who is swimming naked because thats when the things come down in the vacuum. And weve seen that from time to time when it comes to great momentum and former storied stocks like a chipotle or an underarmour. But in the process of them having momentum they made some investors great fortunes so thats the lure, right, herb . Of course, of course. Of course, look, you can look at a company we took to task a number of years ago, we meaning when i was at cnbc and we looked at Intuitive Surgical which i took to task years and years ago. It went way up, its still going way up. It had some big dips, it got itself back on track. Everyones afraid. Human nature is youre afraid youll miss out on the next great thing. Afraid youll miss out on the next amazon. Those of us who lived through the dotcom era and you look at tesla speeding past General Motors and ford you say to yourself, ive seen this before, it feels familiar. But some of us said the same thing about amazon. This is a little different, i believe than amazon. You have to get back to fundamentals who are playing this, many people know how to trade them but theyre not paying attention to whats going on beneath the surface and when the company says it isnt working, boom, and they wonder why didnt we see that coming, why didnt they see that coming . Why do you say this is different from amazon . You could have made the case four years ago this was going to be the next amazon and here it is at record highs, et cetera, et cetera. Has it proven itself . Has amazon proven itself . There are doubters today about the valuation of amazon yet it goes higher. Absolutely. But sales has proven itself from the perspective of being a great retailer and people want to cut it slack. On the other side it has aws which has been a brilliant strategy so you can argue about the fundamentals or valuations of those companies. When it comes to tesla we havent done it, i know smart people on both sides of that battle, some of whom think youll see record earnings when they come out, others who think this is absolutely nuts. You dont ever know. It depends on what the market psychology is going to be toward that company over time and you cant fight the psychology until, of course, theres aedes appointment and i keep coming back to that because thats what would trick all of these things up. Psychology overwhelmingly positive right now. Herb, thank you. Herb greenberg. Few nnew guidelines on testf for Prostate Cancer. Do the benefits of early screening outweigh the dangers of false positives . Well walk you through it on power lunch. A simple blood test can tell men whether they are at risk for Prostate Cancer. But there are very few real dangers associated with there are very real dangers, excuse me, not few associated with a false positive. New guidelines are out to help patients decide if the test if is right for them. Megatirrell has been following the story. She joins us. Meg . Reporter the updated guidelines concern the psa test, prostate specific antigen. The recommendations are for men between 55 and 69. The basic gist, talk to your doctor about whether the piece say test is right for you. The lied guynns are from the u. S. Preventative ssk task force. Its the first update since 2012 when the Group Recommended against routine psa testing for men. That i still recommend against the psa test for men over age 70. Its a controversial area and heres why. While a simple test for cancer risk may sound like a no brainer, the test isnt foolproof. There are other reasons the psa could be high, an increased screening can lead to more invasive tests and treatments. It also happens that a cancer that is detect is slow growing and its better responded to with watchful waiting, treatment can be associated with harmful side effects as well and a group today says for men between 55 and 69 it should be a consideration between patient and doctor. So this goes back to the old debate which has been there forever. My doctor says its not so much the level of psa antigen but any change you see. Thats right. So some drrs recommend taking the psa levels at earlier ages, you can get a baseline level. That became a well known thing when ben stiller the actor did that at the end of last year and he credits getting that test in his 40s with early detection. I have a Family History of it so its mindful of this. As you pointed out it can be elevated for a variety of vns that have nothing to do with Prostate Cancer. It can prostatites and other issues. Theres a risk of false issues further testing, doctors warn that can be invasive so they worry about the risks that come with this screening weighed against the benefits but for this age group and people at higher risk including africanamericans and folks with a history, they say you should talk to your doctor. Lets go to Contessa Brewer with your cnbc headlines. Charles schumer, the senates top democrat says it will be hard to pass a tax overhaul unless President Trump releases his tax returns. The new york senator told reporters without the returns there will be lots of second guessing about trumps motives. A robbery in florida and a gun score caught on camera. A blue toyota barrelling through a store in zephyr hills. It backs out, three men rush into the store, smash cases and grab weapons and ammo. The suspects still at large. Researchers at Johns Hopkins say people who have multiple risk factors for Heart Disease in middle age may also be at risk of alzheimers disease later in life. They say those people have higher levels of brain proteins linked to the disease 25 years later. Hows this for a fun day . Queen elizabeth and her husband Prince Philip opened a special Elephant Care Center at a zoo outside london. The highlight here was the royals feeding the elephants bananas. And watch the elephant, donna, she goes in, grabs the elephant, she says how about more . You got more . What about you . Give me that banana. And when the queen and the prince have no more the elephant just said yeah, see ya. How thats for gratitude . I thought you werent supposed to touch the queen . Thats what i thought, too. They didnt inform the elephant. But the elephant walked backwards and didnt turn its back to the royals. It should have kneel it had way they do sometimes. Contessa, thank you. The oil market closing for the day. Well bring you the numbers, plus chip stocks are taking a hit. Well talk about why up next in power lunch. So i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Stocks are rebounding from session lows. U. S. Equities cutting losses after President Trump talked about an elimination of dodd frank. The dow down only 33 points, nasdaq falling 21, s p down six, the russell 2001 in the green by six points. Lets take you to the oil market which is closing for the day. Crude turning positive on reports that saudi arabia has told opec officials that it wants to continue cuts for an additional six months and there you see west texas crude up about 27 cents. Semis now. Ismh below a 50 Day Moving Average for the first time in quite some time. Joining us on the phone is the Senior Analyst of susquehanna financial group. Great to have you with us. Hi, melissa, how are you . Good. In terms of the outperformance of semis, theyre up more than 40 for the semiconductor index. So where are evaluations right now . Valuations are at cycle peak right now but there is a very, very solid demand backdrop there, global gdp is just fine right now so industrial and broadbased demand is healthy. Also pc units look to be better than feared as well so a decent backdrop from that perspective. Looking across your coverage universe and seeing the dip across the board, are there buying opportunities . You say, you know what . This is your chance . Yeah, i think there are. Were probably twothirds the way through the cycle here so i would look to buy broadbased. Some of our favorites are t. I. Texas instruments as well as microchip, those are some of our broadbased phase. Who is going to buy whom . Thats been a major thesis of chips. Yeah, much more to go, i would look for virtually any subscale semiconductor company. Theres many, many, many more synergies that you can realize from a Small Company versus a large one so some of our top ones weve talked about are max linear, microsemi and even lattice if the approval is reje rejected to be bought owth out by the chinese. Today for dialogue semi being bought up by apple is a bad thing. They said essentially apple will cut ties with the company that gets more than 70 of the revenue in 2016 from apple. Aredly suppliers at risk in terms of having those is chips they make being taken inhouse to apple or suppliers that look strong because of what they make and apples reliance on them for the next iphone . So there is actually quite a bit of concern oemp the next apple iphone 8 and the bomb content there, it may carry a retail price of a thousand dollars apiece and so apple is trying to cut content and bomb any way that it can here. Obviously its focused on qualcomm. Id look for perhaps more quality come sockets to be lost out of the next iphone 8 but even more in that iphone 9 or 8s. There could be other players as well. We saw what happened to imagination last week and looks like dialogue this week. Chris, great to speak with you, thank you, chris rollan of susquehanna. More pain may be ahead for the tech sector overall, dom chu is here with the details. Whats the problem . The problem is some traders are looking at the momentum side of things we spoke about a few moments ago. If you look at the biggest players out there, theyre watching the Technology Stocks and the reason why is because of these charts here. Thats the xlk, tispyder technology etf. This etf is showing perhaps signs of slowing down to a point where it could be moving below its longterm trend line. That follows what weve been talking about with regard to bank stock, financials overall, with theed where they breached that level and are turning lower. Talking about the two biggest sectors in the s p 500 rolling over. Technology the biggest financial. If you put those sectors together, youre talking about 36 of the overall s p 500 which is one of the reasons why youre watching this kind of no movement here tracking along these lines so the issue becomes whether or not if tech can hold up that becomes a big harbinger for the market. We speak about transportation and small cap indicators but if you have over a third of the s p 500 moving to the down side, that will be a big anchor, a big weight around your ankle as they move around so a lot of guys watching tech. On mouse signs, dom thank you very much. There could be a 40 billion shopping spree this year. Amazon, microsoft, facebook alone could see a growth rate in cap x spending on 2017 on everything from server farms to data centers. Power lunch exclusive with paul silverstein, thank you for joining us. This is the first time youve been on cnbc in 15 years . Probably longer. What took you so long . Youve missed a lot. Well catch up here. Whos doing what in 17 and how does 17s growth rate compare with 16 . This study is in connection with the Network Equipment center. But if you look at cloud titans youre just isolating the big guys. Insped of 41 billion were spending 18. By comparison it was 24 billion spe spending 13 and can four cloud titans, we have some novice viewers, amazon, facebook, google and microsoft, right . That is correct. Because they are users and also providers of cloud services. Thats correct, theyre users of the equipment, the networking storage. So who are they buying this equipment from . Its both the data center switching players like cisco and juniper as well as the october kuala lumpur transreceiver and other component pliers suppliers. What do they do . Forgive me for not knowing. They supply the transceivers, the interconnect into which data flows go in and out of servers and aggravation switches within data centers. If these four titans are going to spend this money, does that mean the companies who apply stuff to help them do it are a buy . In our business its about change on the margin and if you look at those top four players, that 14 growth compares to 30 percentage growth last year so the growth rate isnt impressive but if you look at u. S. Cloud spend all in, not just the big four but everybody below them including the netflixes and uber, et cetera, youre looking at healthy growth, about 12 , down in percentage terms but if you look at absolute dollars youre talking about on the higher end of the 5. 5 billion preyear growth, to be act, 6. 9 billion. It looks like theres a big step up to 10 billion of incremental spend in 18. That would be 15 off that much larger base. One other thing i would note as it translates into networking equipment and computing storage. If you look at china, the actual dollars dont matter in the sense that historically the big players, alibaba, the rest of the chinese for those optical components especially that relied on local chinese suppliers, that supply chain when it comes to 100 gigabit per second, the line rate at which you pulse the laser, transmit data, video and voice down the optical fibers, theyre going to have to turn to western suppliers. Theres a debate about which ones but you have to turn to suppliers. Is there anything the Chinese Government can do . They listed previous suppliers of equipment i want to paraphrase but Something Like enemies of the state. Security risks because of snowden. Exactly. Is there a disadvantage or something that would prevent u. S. Companies from selling the equipment into china . The political environment. Its a risk on both sides of the pond both in the u. S. And over in china but for 100 Gig Technology, theyll have no choice. The chinese will have to buy. Because they dont make them over there. Not yet, it will happen but where do the suppliers manufacture their western supply goods . Here . No, for the most part its not binary but theyre manufactured overseas where you would expect in asiapacific regions, whether thailand or taiwan, china, et cetera. Well but china also . So there Manufacturing Capabilities they just dont own them . They dont have the 100 Gig Technology yet. Paul, thank you very much for being with us. Paul silversteine, come back in another 15 years. Craft beers, now giant brewers are pouring into the market blurring the lines of what can be considered a craft beer. If a big Company Makes it, is it a craft beer . Power lunch is back in two minutes. Cmon in, pop pop happy birthday i survived a heart attack. Im doing all i can to keep from having another one. And im taking brilinta. For people whove been hospitalized for a heart attack. I take brilinta with a baby aspirin. No more than one hundred milligrams as it affects how well it works. Brilinta helps keep my platelets from sticking together and forming a clot. Brilinta reduced the chance of another heart attack. Or dying from one. It worked better than plavix. Dont stop taking brilinta without talking to your doctor since stopping it too soon increases your risk of clots in your stent, heart attack, stroke, and even death. Brilinta may cause bruising or bleeding more easily, or serious, sometimes fatal bleeding. Dont take brilinta if you have bleeding, like stomach ulcers, a history of bleeding in the brain, or severe liver problems. Tell your doctor about bleeding, new or unexpected shortness of breath, any planned surgery, and all medicines you take. Talk to your doctor about brilinta. Im doing all i can. That includes brilinta. If you cant afford your medication, astra zeneca may be able to help. Megabrewers like anheuserbusch and miller coa e are piling into the craft beer market, blurring the lines if you had a few beers the lines are usually blurred of what it means to be craft. Landon dowdy is in washington. Hi there, landon. Reporter good afternoon. Overall beer sales are flat but craft beer remains a continuous growth spot for the opportunity in this space, in fact, in 2016 kraft posted a 6 volume growth according to the association and big beer is taking notice. Case in point, ab inbev brought in nine million rivals and miller coors are doing the same. So whats in it for the craft brewers. When a company like inbev purchases a brewery it gives them additional advantages in the marketplace, access to distribution that they wouldnt have as an independent brewer so it creates challenges for regional craft brewers going head to head in the same scale channels as the larger ones. Reporter but how does the consumer feel when one of their once small, independent and local craft brands crashes in by selling to a macrobrewer. It would hurt in my opinion it would hurt their image as a Craft Brewery that has sold out to a larger brewery. Butover all if the beer still speaks volumes to what theyre doing its still good beer. Thats the challenge facing attendees at this conference as the lines between what is and is not craft continued to blur because as long as craft continues to be the industrys both have spot the battle between krafts david and the megabrewers goliath will continue. Only you could find a craft beer drinker with that name. I do my best. Do raiders see a rocky road for stocks. Lets ask craig, piper and dennis. Dennis, ill kick it off to you. You follow volatility very closely so what are you seeing in terms of the curve . We see volatility spiking now. Where is it a couple months down the line . Well, the real interesting thing to look at, we can boil it down, its like a chicken or the egg. Is it going higher because its higher or are stocks moving because vols are going higher. If you look at the vix of the euro stocks, that has gone from 11 to 23 so in the u. S. Were looking at in what time frame . Over the last two and a half weeks. Wow. Its exploded higher so a lot of people are short volatility in europe and they try to hedge it by buying volatility in the u. S. And you have the knock on effects of that where a lot of vix etfs are coming into play. So its a fun day to be in volatility right know, europe is going crazy but in the u. S. When we saw the market turn around we saw sellers of vix options. So sellers of call, people getting short to victim on the low of the market today so a great indicator. What are you seeing in terms of the s p 500 and does this jibe with what dennis is saying. It sounds like the spike were seeing on the cboe vix is in part due to positioning because people are Short Covering european vix or getting long. Causing it to go higher. We look at the chart of the vix, to us over the last year its been a chart of we should buy this fear, we should buy this volatility because the last four times weve seen the vix index move over its average we have seen the market higher, those four times about 2. 6 over four weeks and 6. 7 over the 13 following weeks for us so vix moving higher is an indication that the primary trend of the market is up, we want to buy this move up as the primary trend of the market is higher. Thank you craig and dennis. For more trading nation, head to our web site, tradingnation. Cnbc. Com. Facebook has announced a photo sharing feature for instagram and it set off another battle with snapchat. Which social media giant has the edge . Well discuss it straight ahead on power lunch. Test test snap shares down 3 after Facebooks Instagram announced new features to make that photo sharing app a more direct rival to snapchat. What does that mean for snaps growth . Victor anthony covers the space with agents capital. Great to have you here. Thank for having me. They added disappearing photos and videos, very snaplike, but this is facebooks effort to try to replicate everything snap does to get users. Shares down on snap. Do you agree with the move . Investments getting this right . I do agree with that stock price reaction. The more and more facebook reply kates snaps features in the ecosystem, the more and more it puts pressure on snaps ability to grow user growth outside of this core demographic in particular. Also, it causes a risk of core demographic of 1324yearolds. They will migrate over to instagram if they find that more appealing. Not saying that will happen, but it is a risk. If it happens, then i think snap has a growing concern as a stand alone company in that risk as well. Wow, thats a big call. 3 sounds light considering what you talk about there. Yeah. Like i said, i dont think 1325yearolds are migrating over soon, but theres a risk for more facebook reply kating features. I attended panel of High School Students in new york, and they talked about snap preferring snap as the platform versus instagram or facebook because of the fact those photos and videos disappear, and they dont have have that legacy of social media trail, particularly as they apply to colleges. Yeah, that would be my question, i mean, these things have a kind of cool factor, right . I would guess that in the 1324yearolds, the cool factor appeals to snap, and they would see facebook as old school. Yeah. So what i heard from the students was that, you know, parents are coming on to facebook and so, you know, as a result, they migrated off facebook to move over to snap, moving over to instagram a little bit, and parents are moving over from instagram as well. Thats some of the risk. The issue is, as they get older, get 24, snap or they get over to facebook, they migrate to instagram, which has a little more skill across the globe, and so those are issues im concerned with. Less concerned about snaps ability to garner advertising dollars because all the checks over the past two months pointed to the fact that advertisers still view it as expermital and they allocate dollars to the platform. My concern is user growth. Which is what we watched with twitter. Thats why everybodys worried about that. Right. Thank you so much, victor anthony. Thank you very much. Final thoughts of the day, check, please, straight ahead. As a benchmark for average. 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Find out how American Express cards and services can help prepare you for growth at open. Com. Weighing in, potential outcomes, but clearly, watching another human being dragged down an aisle, watching blood come from their face after hitting an armrest, whatever, i dont think theres a circumstance you can sit back and say this could have been handled a little bit better. Yep, even the white house talking about the United Airlines he was asked the question, does the president see the video . We know how much he watches television. I have no doubt hes seen the video. Or at least heard about it if asked in the context does the white house or capitol hill have an appetite for stepping into this and regulating some sort of passengers civil rights. Outraged when you buy a ticket, you have the ticket. What are you getting . Youre getting a probable ticket. Yeah. Right. The privilege of maybe sitting down getting to where youre supposed to go. When youre supposed to go. I dont know why they didnt how many other situations come up . Right. Only came up because they left the people on the plane. Let him sit down. Exactly. When you got a seat, you expect to keep it. Possession is nine tenths of the law. Yes, yes, yes. Exactly. Address the china issue before it becomes a real problem. Absolutely. Yep. Thank you for watching power lunch, and closing bell starts right now. Welcome to the closing bell, everybody, im kelly evans at the new york stock exchange. Im bill griffeth. Another interesting day. As the postelection rally stalled here . President trump says hes going to get rid of doddfrank and financial stocks are still lower on the day. There was a time they would have rallied on that. Well talk about whether the market is looking for more action out of washington these days. The dow down much worse, only down 20 points right now. New developments in the united passenger