Transcripts For CNBC Power Lunch 20170807

Faceoff what that means for you and the media landscape. A slamdunk edition of power lunch starts right now good afternoon, everybody. Welcome to power lunch. Im Tyler Mathisen stoc stocks trading in a narrow range. We could have our ninth Straight Record closing high. Boeing, apple, walmart, the biggest winners. Check out some of the other movers Rockwell Collins trading at an alltime high. Dom chew just reported a little bit about it de deere also at alltime highs and mylan going lower, hitting levels not seen in four years. I am Michelle Carusocabrera north korea vowing to teach the u. S. A severe lesson if they launch an attack against pyongyang. Security council vote was unanimous. A strong statement against north korea. New sanctions are in response to north koreas two intercontinental ballistic test in july. It could slash our 3 billion annual export revenue by a third. The intention which bans u. S. Members from banning coal, iron, iron ore and seafood are to force them to sit down and negotiate an end to their Nuclear Program. North korea still in the spotlight as the president starts a week of a working vacation Kayla Tausche i live reporter the focal point of many of the president s conversations. He had a roughly hourlong briefing with secretary of state Rex Tillerson traveling overseas in asia as well as general john kelly, his new chief of staff. The white house hasnt provided any details from the call. A readout from the call looked much like the call he had last week with japans abe. We will wait and see what the white house and the senior policy advisers to the president have decided on how to proceed with regard to north korea he does have many members of his National Security team on his working vacation in bedminster senior counselor, kellyanne conway, as well as mike pence, will be joining him. In terms of what they will be expected to discuss, north korea, National Security, top of the list the white house staff says tax reform and health care will be discussed later on ahead of his trip to new york for the beginning portion of next week as you can tell from behind me, guys, it is very much indoor weather on this working vacation we see the rain coming down, kayla. Thank you very much. Lets bring in fred kemp, president and ceo of the Atlantic Council north korea, unanimous vote for punishing sanctions against them and what could bring in far less revenue for the country how significant a step was this on saturday . Its a huge step diplomatically potentially, a very big step economically this is the biggest diplomatic victory of the Trump Administration lets give credit where it is due. It was brought about partly because the chinese are worried and increasingly worried about the North Koreans from the two icbm tests of the last month and nuclear tests. The russians are worried about them breaking out and they are worried about donald trump, that President Trump could do something a little bit less predictable than his predecessors in that way, the very famous mad man theory, gee, he might just do this. They also wanted to preempt financials sanctions by the u. S. Which would hit them, even if they were unilateral thats been forestalled as well from this standpoint the manman theory isnt about the leader of north korea it is a reference to the unpredictability of donald trump. The theory and this goes back to Richard Nixon and others and if you are unpredictable and if your adversary doesnt quite know what you are going to do, they cannot deal with certainty against you. In this case, because there is all the sabre rattling about potential u. S. Military actions which i think are unlikely, there could be much harsher unilateral sanctions from the u. S. , which could come along, than the chinese and russians have to act in unity with the you nated befo United Nations how do these sanctions get enforced who enforce them what happens if they find ways around them . What is the mechanism there . That is the problem you have isolated it there have been sanctions before on north korea half a dozen times. The chinese, russians and african countries alike have danced around them the realtest is going to be to what extent particularly the chinese enforce these sanctions. The greater certainty for that is they are troubled as well the chinese always care more about the stability of north korea than their Nuclear Weapons. Russians have cared more about this Nuclear Weapons now, you have had an uncle of kim jongun killed, executed by his nephew, kim jongun, and the uncle was the liaison to the chinese. You had the brother being assassinated he was under the protection of the chinese. There is lots of reason for the chai nose to ha chinese to have lost patience. At what point do you say the sanctions work this is a regime that is willing to let their citizens starve and they say they are never willing to put this on the negotiation table as long as the u. S. Has a hostile policy the whole meaning of his state rests on Nuclear Weapons capability they have even changed the constitution so it is being described and described themselves as a Nuclear Weapons state. The problem is, can he keep his regime together . He has to have enough foreign currency to pay off the people around him to keep the economy going. At what point does someone around him decide, this is really too much . It looks like a very stable situation, particularly as he has purged so many other people. I think the first test will be, do we see more icbm tests . If he stops testing, that will already show some progress if he then comes to sixparty talks that the u. N. Is calling for, that will be the ultimate test dont expect him to stop access rating h accelerating his path to a Nuclear Weapon there has been almost no market reaction. We have to wonder when and if there will be. Prediction, north korea will be a state, a country with Nuclear Weapons and the world is going to be forced to live with it i think if you had to bet at this point, you would say over time, they would become a state with Nuclear Weapons in 1964, there was a chinese leader and the soviets wanted to combine with the u. S. To stop him from going into a nuclear direction. Kim jongun and north korea argue that libya is their best argument for Going Nuclear it is not whether they hang on to the Nuclear Weapons they have or develop a missile over time, which they probably will but will we be able to deter them, contain them and hold them in place so they are not a danger to their neighbors or us i think my prediction would be they will get there i thought they already had a nuclear capable. They do but they cant deliver it anywhere near us. Fred, thanks very much. The battle of the billionaires, leon cooperman on cnbc and fast monefast money, in on the health of this recordbreaking rally. Scott is joining us. Lee cooperman nor afor all ou that dont know has served on the board for 20 years he calls his activist Campaign Just now on the Halftime Report inappropriate and foolish. I know and respect bill acorman. I consider his behavior in this instance somewhere between foolish, inappropriate and irresponsible. I feel it is my job to speak out. I dont think he appreciates that their Business Model is hightouch, high Customer Service which costs money. I dont know where he is coming from he says adp can improve by 50 , hasnt laid out his entire plan yet he plans to hold an investor day to do just that. We spoke about the market with lee on cooperman he said he thought it was fairly and fully valued we asked mr. Cooperman, the legendary investor, where are stocks today i think the market is fully valued on a fundamental basis. I think we are heading to normal zatio ization, 4 nominal. I think the fed fund will be 2, not 1. The tenyear government ought to be 4, not 2. 25 it may take another year to get the fed funds raised. We asked him where are opportunities in the market, if there are any left some very notable investors have been speaking out about where they think the markets are howard mark is included. Lee said there is still value to be had he has a long list he showed us a list of stocks that he ani that he thinks is ripe for the taking the point of his appearance today was to take issue with what bill ackman is trying to do in adp even though we dont have the full plan laid out before our eyes maybe we will find out more later today when the actual 13d is filed with the s. E. C. The inside is extra fascinating. He was probably on the board when bill ackman initially had his stake and tried to agitate for change back in 09 to 2011 and thats why he takes this a little bit personally. He said they spoke on the phone and Lee Cooperman sent him an email while i am praising of you as a person or intellect, if i agree to Say Something about this adp position, it will be supportive of the company and critical of you. When you serve on a board for 20 years, you have a distinct opinion about what the company is all about Lee Cooperman knows many of them and knows theformer ceos as well that he has spoken to as well there is a lot ahead simply, we dont know much of what bill ackman has planned we havent seen the 13d he hasnt laid out his whole investor case. Still, a new battle of the billionaires thank you, scott. Still ahead, a big week for retail, nordstroms, kohls, jcpenney, all due with earnings this week. Plus, another recordsetting day for the dow on track for its tenth straight day of gains. Leon cooperman thinks the market is still valued but where can you find value we have that next. Most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Thank you so much. Thank you so were a go . Yes we got a yes what does that mean for purchasing . Purchase. Lets do this. Got it. Book the flights hai si si ya ya ya what does that mean for us . We can get stuff. Whats it mean for shipping . Ship the goods. Youre a go you got the green light. That means go oh, yeah. Start saying yes to your companys best ideas. Were gonna hit our launch date scream thank you goodbye let us help with money and knowhow, so you can get business done. American express open. The dow once again over the moon you heard the words from leon cooperman weighing in on the state. He thinks the market is still fully valued but where can you still find value its something he says he can find we have joe and mustaka here. Welcome to both of you let me begin by asking you, do you expect the second five months of this year are going to be as positive for equities as the first seven months were . I wish i could say yes. Nothing would make me happier than to be wrong here. I suspect that the gains this year have really been front loaded any time you have double digit returns from Global Equities in the First Six Months you have to sort of faketake a step back ank yourself, is this sustainable . The earnings have been driving the bulk of the games. I have a hard time believing this pace will be sustained. Mustafa, how about you . Is that a pocket where you can still find good value . I believe so. When you look at the small caps on an absolute basis, they look to be more expensive they provide much higher growth expectations, about 18 Earnings Growth compared to 11 12 s p given their superior Earnings Growth prospects, i believe small caps is a better place to be why havent they participated to the same degree as the Big Companies . In regards to the u. S. Small caps, look at it i think earlier on after the trump rally, they participated with the expectation of a lot of tax benefits and bigger beneficiaries of trump thats why small caps rallied quite a lot. When expectation starts to come down, small caps significantly started to lag right now, there is not much expectation of what the trump train will do. Still, they have good earnings and evaluations. Joe, why do you want to stick with technology . Joe, joe im cautious in the back half of the year, because volatility has been incredibly low. You have a Federal Reserve tightening monetary policy, a shift in what we have seen over the past ten years in addition, you have val weighing evaluations which are a little bit stretched. Volatility is likely to creep up, specially when you think about what we have in store from september. The underlying economy is still in a good place. You look at a lot of data points here in the u. S. And abroad. We think the odds of a recession occurring within the next 12 months are still quite low does this mean if you think the market has a stumble because of higher volatility, that technology will still outperform even though it is the best performing sector this year . If you think about what technology is and the opportunity it creates for investors is continuously disrupting the world, yes. I do think technology can do that thats not the only sector when we look at u. S. Financials, they are in a good place given higher Interest Rates and strong Balance Sheets and you have the Consumer Sectors on the discretionary and the staple side when you think of how healthy the Balance Sheet is today. You are essentially saying, you and tyler were talking about the small caps you are also saying stick with what is working in technology as well as health care. What would be the bear case you are concerned about for these two sectors, though . I would be also concerned about some of the evaluations we are paying for granted, at this part of the market cycle, usually valuations dont matter Earnings Growth matter when the growth stops, you have to focus on valuations, because that will determine the extent of the market. We have to be very data driven whenever we see Earnings Growth is starting to come down and become negligent thif, that watn the stock. We need to look beyond fang stocks there is a lot of good Earnings Growth specially in the i. T. Services sector. You can buy them at relatively attractive valuations. Superior, more growth than the average. S p, you can buy it at even lower pes. Those are the type of things we need to be a little bit more disciplined about, not to overpay for that growth out there. Joe, mustafa, thank you very much for being with us today appreciate it. A big week for retail. A slew of names getting ready to report p earnings how amazon and google and facebook could soon be ting akon the Major Networks for sports tv whats up for grabs and whats at stake next. But it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they pick up some of what medicare doesnt pay and could save you in outofpocket medical costs. 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And there are virtually no referrals needed. So dont wait. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. This easytounderstand guide will answer some of your questions and help you find the aarp Medicare Supplement plan thats right for you. Welcome back the profit is back tomorrow. Marcus limonus goes to california and looks at businesses looking to capitalize on the legalization of marijuana. Reporter do i call it a pot store or Marijuana Store you can call it whatever you want this is the future reporter it was open, airy and modern, nothing seedy about it there are no bars on the windows, no guy at the front you are walking in we are open to the Community Reporter i liked the design. There were ipads everywhere loaded with information, right next to gizmos that let you see, and smell before you buy for more, be sure to watch the profit, marijuana millions tomorrow on cnbc at 10 00 p. M. Eastern. The profit will join us live at 1 00 p. M. Tomorrow didnt it look like a setup in an apple store . Yes it worked looked good shares of Rockwell Collins hitting new alltime highs mna reports fueling that stock what investors need to watch for in the retails earnings. To Rick Santelli with the bond report. Thanks, tyler. If you look at the intraday, we have come down in yield, only a couple of basis points a twoday chart gives us the reality. We had a big number friday we are Still Holding on to some of the gains it looks like it is drifting a bit, close to unchanged, down a smidge a twoday chart. It is still only the bulk of its gains. Hyg, the etf for highyield. As the price starts to turn, doesthat mean rates grg to are to go up my cubs are back in first place. You like to watch sports does tv have an issue in sports . Youll find out after the break 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 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Hello, everybody im sue herera today is the deadline for retired nfl players to register for the concussion settlement with the nfl the settlement is expected to cost the nfl more than 1 billion. The best advice i could give them is make sure you go ahead and register for this settlement we fought hard for it in the courtroom. We played the game of football we are all on that field and in the same locker room the most important thing is to make sure we take care of each other. Repairs and renovations continuing at the white house. Crews are working feverishly to complete a long list of Construction Projects as the president vacations at his new Jersey Golf Club contrary to popular belief, apparently, having a pet does not improve the mental or physical health of children. That is according to a large new study from the rand corporation. It looked at thousands of households with and without pets and after considering other v variables there were no health advantages. You dont get them for the kids you get them for yourself. I have to tell you, after a stressful day, you go home and pet the dog and your Blood Pressure goes down they love you no matter what. You didnt do the dishes you didnt make the dinner the dog always loves you the dog loves you the kid ignores you. The dog is like, im so glad you are home thanks, sue you got it, guys. Stocks trading in a narrow range. The dow did hit another record high boeing and walmart the biggest gainers. Rockwell collins, the biggest winner in the s p 500,the stoc hitting alltime highs, reports that United Technologies may be weighing a bid for the aircraft components maker phil lebeau is live in chicago we heard that the dow jones was reporting there was a bid for less than 140 a share from United Technologies to Rockwell Collins. Here what is we know there have been a couple of reports that started late on friday and over the weekend that there may be a bid for rockwell from United Technologies we do know that both companies have hired banksers to advise them take a look at the portfolios. They fit together very nicely. They would be very strong in avionics and Aircraft Interiors and in a stronger position for negotiations with airplane manufacturers, airbus and boeing they may say they are a little too strong Regulatory Approval could be a hurdle as well as the rich price for Rockwell Collins if the bid is only 140 or less than 140, some have said that may not be enough to make it happen rbc capital says it is a 50 50 chance of a deal they think it is closer to 145 being the price point at which Rockwell Collins would make a deal, shares of Rockwell Collins getting a nice surge we are aways away from this being announced as a formal merger or a buyout at this point, just reports of talks. Lets switch to tesla whats going on with tesla and its model x suv, the pricing cutting the base price by 3,000 thats going to bring it down to 7905 a lot of people are saying, this is proof you have to cut the price because people will order the model 3 instead of the model x there is less interest in that story line what they are focuses on, if you go above 75,000, it is a very saturated market for luxury suvs no shortage. Model x is running into a bit of a saturation if you will in terms of that market and how many suvs might be bought. It has less to do with the 3 than it does the saturation. The audis and the mer scedes ar up there some will speculate this elon musk has said, we want the 3 to stand alone in that more lower priced mass market we dont want it to take away business from the model s and the model x. What im pointing out is simply if you are going to spend over 75,000 for a vehicle, the average transaction price is over 100,000 on the model x, you have a number of options if you are going to spend 100,000 on an suv, are you going to say, i wont spend that instead, im just going to spend 50,000 on a model 3 it is a different type of vehicle. Totally different category. Phil, thanks retail in focus. Nordstrom, kohls, macys, jcpenneys all set to report earnings. We have 85 reporting retail is always at the end. We havent heard from some of the biggest guys, michael kors, ralph lauren, they report on tuesday and a handful of others on wednesday macys, kohls, nordstrom and jcpenneys finish out the week on friday they have confidence that nordstrom, jc p jcpenneys and k could should prize us. Any delay from the tax refunds should have faded. The weather was more seasonally appropriate. They expect mothers day, fathers day and the fourth of july should have driven the typical reasons to get out and shop jpmorgan Analyst Thinks each month of the quarter was better than the month prior and is raising his estimates for nordstrom and kohls but lowering for jcpenneys. All of the Department Stores, only nordstrom is expected to see their sales increase year offer year analysts are expecting profit to fall for all of them kevin manziel did tell me several weeks ago that the spring under armour launch is still logging aboveplanned results and lifting sales of other athletic merchandise in his sales. We will hear from walmart, home depot, target and more target has had a choppy earnings performance. Last month, the Big Box Store did guide us a little higher maybe things are looking a little bit better. Joining us now simeon segal. We have seen a bit of a renaissance in the stocks in the past month or so the xrt is up about 5 is this reflected in the shares price . The easiest answer is yes courtneys point about look at all that positivity, how many k are going to grow sales . She said one. Every single one is supposed to have the profits down. Sales, yes. Profits it depends on what list we are looking at for the most part, that is going to be the theme. The interesting thing here is 2q at reteail analysts, we dont gt summer vacation. We are talking about back to school leading into the next half of the year, that is. Are there sustainable inflexes or is th inflexions the stories that have not worked the concerns around Department Store are more structural. This year is going to be a huge iphone launch in years past, does that suck up some of the discretionary dollars that might have been spent otherwise on clothing and other things this is the tenth anniversary iphone the biggest deal is totally hyped. They are talking about 1,000 apparel has been roughly flat over 15 years or so. You are seeing this piece where other technology and experiences, it is all growing the last time i was on with you guys, it was the 30th anniversary of nik can e air ma. Thats been selling through the roof retail versus apple, it is a little dangerous whats working and whatnot, the theme is brands over box brands over the retailers and those that can control their own destiny and survive in the amazon ecosystem what do you think about nike goes to amazon people who in the past finally got into walmart, thought, oh, my god, i got into walmart and may margins went to hell, are we going to see that similar evolution with people that finally ase finally go to the amazon platform walmart is the perfect example. They came in and said, we are going to own this. You saw brand line haines do well in that environment if you operate well and your brand does matter, you can grow pretty nicely. We approach this from an analyst perspective. Go on amazon, there are 17,000 ni nike skews to them, there is no difference. The reality is, we take a step away from wall street if you are nike, wouldnt you rather control some of it even if it is incremental even if it is changing your Business Model so bottom line me here, as we look at the big Department Stores and i would include in there target, walmart, kohls, all of them, which one do you like best . Can we include off price. They are becoming a new version of the Department Store. All the checks seem to say 2q is going to be better for Department Stores. That might not be a good thing for off price. If you think about who has been benefit frg t benefiting from the Department Store donation, off price has. Department stores doing better in a blip, it is a good thing. The one thing we know in fashion is that brands will overorder and overmake there will be clearance. Thats where t. J. And ross will continue t. J. And ross hasnt done well from the stock perspective, stocks have sold out comp sales have been you think thats unjustified. Right now, in the shortterm, i understand it is fair to assume there are reasons why the immediate term you may have Department Stores taking back some of that shares. Looking longer term if you can take that, take advantage. What about when macys scales up its own version of off price, do you see that being a meaningful hit it is important to keep in mind how many are in store it is different than an offprice store. Are you selling through goods . It is good backstage. I went to one backstage in philadelphia and it was horrendous it was a bunch of junk it was sloppy. Im not saying every single backstage is like that thats my only experience with backstage after it being hyped and hyped. I was looking forward to finally getting to see one it was just terrible the beauty of off price, each store should be different in both vision and product and assortment you would want to see a better view and have a good experience. One of the appeals and the same you had with outlets forever, they dont need to spend a lot you are going in because you want the experience of finding something. These are expensive clothing cheap. To get there, maybe the sgna, the expenses attached go by the wayside and thats the price of entry. Macys has said it has lifted the sales in the stores where the backstage exists. There is nothing to buy so you go to the front and buy something at fuller price. The ceo acknowledged as far as he can tell it hasnt grabbed a new customer the off price serves a certain role it serves a role the companies dont want to acknowledge or own up to. You cant see brands on t. J. This is viewed as an obscure way to get rid of product that otherwise wouldnt go. That doesnt work on amazon. If i can see there is a designer item on discount, it cheapens that does tv have a sports problem . Amazon, facebook and google headed for a faceoff with the Major Networks over Big League Sports what thamet ans for you and media landscapes and the stocks next what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at td ameritrade. A big week of media earning. Disney and 21st century fox also in the wings the cover story is tvs sports problem. It highlights how amazon, facebook and google could soon challenge the networks for bigtime sports. Should the Major Networks really be worried about the threat from the tech giants . Could this fuel even higher sports rights fees for the major leagues . Pat tri Patrick Rische director of the Sports Program and david abberton is partner with sports capital. I want to get to the effects on the networks second. First, if i could, david, ask you is this going to be great for the leagues . You are going to have morbiders in nair. Who is going to come out on top here who is in the sweet spot is it gary betman or goodell they have created a window of time where there will be experimentation. If you are property, you are excited about the prospects for the future given the changing Media Consumption habits that are going to give you some real alternatives as the sports leagues have always done, when there is more than one bidder, typically, they tend to end up in a very good economic condition they are going to be in a good place if you have all of these companies that have more money than the world bidding for the nfl rights, thats going to push up prices. The nfl has treated it very smart an the othd the others tey attention to what the leaders do they have been testing with thursday night football. The rest of the cycle for major league baseball, the National Hockey league and national football, in 2021, we will see who has great vision. How will the networks respond . Is this the point of such pain that it becomes that way for them they are all starting to provide some form of digital cbs has cbs all access and fox, fox sports go and espn it providing a new streaming service. If you compare last years thursday night football rights, network tv is still a powerful fire hose. You had an average audience per minute of 300,000 viewers on twitter versus 15 million on cbs. That still illustrates the powerful reach there is no question with a changing dem graeographic and ae cord cutters out there, they have to be nimble and have to respond. These dot comcomes have so muchr to spend amazon spend 50 million for nonexclusive rights. Cow watch that game on television and other platforms they spent that kind of money. At some point, dont the networks have to say, because networks have Share Holders that are far less tolerant than Amazon Amazon Share Holders dont care if amazon makes a profit they dont mind reinvesting in the business at what point is it too much pain how much will amazon and facebook be willing to go to the plate . More. If those ratings, those comparisons, those ratings that you are getting on the streaming from facebook and amazon arent eclipsing or approach whag you are seeing from the networks, they may not be willing to bid as much. They have to worry about rate of return as well we are looking at this as a kind of either or. It is going to be the digital guys as the Main Property owners or the networks as the Main Property owners here remember, years ago, when cbs and turner got together and jointly put bid to own the naacp tournament whats going to happen is nbc joining forces with amazon and cbs joining forces with google and there will be partnership bidding with these rights we are in the media revolution in the sense that todays existing partner may end up having to get married in the longterm. I dont know in the end is going to be an either or proposition the challenges and viewer ship that you see, 44 of the top 50 programs that you see were Sport Television programs. What were the sixth the bachelor or bacheloret bachelorette. Amazon through their purchase of the tour rights internationally and here in the United States through their thursday night football package theyre putting their foot firmly in the ground and establishing themselves as a player over the next several years when the big rights cycles come up, thats when you will see how this landscape is going to change and all properties are going to Pay Attention of the audience and interest in sports is going to drive the end out come is he starting to believe that the Court Cutting is going to keep going and preferring to watch online, it starts to build to a point where oh, maybe twitter does get bought by cbs or nbc to be the other platform to amortize the cost of the content. They have the cash flow to get into this in a big meaningful way. They have the technology to deliver the way that people want to view it and 24 years old is dropping significantly over the years and it is streaming all the time you put the scale and technology and reach together you will be able to create other revenue stream beyond the broadcast and sports and licensing and all other things and that makes for fascinating time to be in the business patrick, appreciate you joining us in st. Louis today. Wall street calls of a higher pricing of volatile social media and daily dose of street talk is next. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. The first stock is grub hub. Thats up from 43. The firm says the company got a growing scale advantage. Goldman sachs resumed recovery of blackberry sales. Analysts think the street is way too optimistic how their revenue is going to grow in the second half of the year new competition and enterprise and mobility space the autosegment is interesting but yes, it is plateauing, too khem chemours is raising the price from 50 bucks to 36. And mkm raises from 16 to 18 a share. More users, mean more revenues you gate highet a higher price. Tyler over to you. It is the d word Silicon Companies cannot seem to get a grip on. We are talking about diversities. Wesendouad in the co hr ofpor. Welcome to the second hour of power lunch, i am Michelle Caruso could the push for diversity in Silicon Valley be another form of discrimination. Plus, live by the hot ipo and drive by the not so hot ipo. Blue apron continues to struggle while going public and it maybe a little lead game but one home run by 13yearold baseball player is anything but batter up. Well show you this incredible video, coming up power lunch starts right now lets get a check on the markets right now. The dow is hitting another record high. We got the dow up by 21 points and s p 500 of 2. 3 and a point for the d for the nasdaq take a look at mylan trending at a four year lows and bit coin is crossing at 3,400 an explosive memo of a google employee writing a tenpage document claiming of gender pay gaps due to men and women. The heated reactions, josh is joining us now, josh lipton. Thats right, the Google Engineer who was not identified made series claims of women that led to a lot of anger here the lack of women working in tech is saying differences in distributions of traits between men and women may in part explain why we dont have 50 of rep presentations in women in tech and leadership. It is 19 for facebook and 23 for apple of women representing. All these traits which manifesto describes at females are the core traits which makes someone successful as engineering. Daniel brown response, i found that it advanced incorrect assumptions about gender, it is not a viewpoint that i or this company endorses, promotes or encourages. Michelle, back tow thank you very much, josh. Lets talk more about this tech gender problem joining us now, the professor of the North Eastern university and the professor that have written on issues of gender in tech. Ladies and gentlemen, it is great to have you here it would be very easy to dump on these memos in a number of reason there is a lot of statements and etcetera and etcetera, what i thought is interesting is the writer says when the core arguments is if you assume that the reason there are so few women in tech is exclusively because of discrimination, maybe thats not correct and maybe all the governance processes that are in place trying to fix google and etcetera are not going to work and there are questions that need to be asked. Of course, nothing is due to one promise exclusively. Gender bias comes in a lot of ways and there are a lot of reasons why a number of womens jobs gone down because of rin crea increasing when tech was started, it was considered a womans profession. Why has the number gone down . There is a whole host of reasons. Yes, women are stronger in certain fields than others, however, about 25 of women of graduates in stem in all fields of stem including Computer Engineering have been women even now and yet the number of women that go into the tech sector are far less in the field, there are a lot of women that are trained on their own including myself, i am a Software Engineer the vast majority of women actually leaves and there are a whole host of reasons. People dont stay in job where is they are not happy and dont feel comfortable and do you think women are uncomfortable because they are treated poorly at these places well, i think it is a little more complicated than that the primary problem with this argument is of course, the author under cuts any attempt to trigger a meaningful conversations because of the feedba factual and accuracies if the author taken a little bit of time to google the assertions before making them, he would have discovered a host of literature from Harvard Business reviews to a series of International Peer review publications that demonstratiess his assertions thats not accurate. And in fact, if you look at the numbers of women entering Technology Professions in russia and china and other countries with different social sturucturs and different culture dynamics at play, the critique of some sort of inherit you know what they say . Silicon valley is way more successful in their tech situation and operations than any of those countries well, i dont think thats accurate of Information Security f you look at the Russian Security sector, those are the best of greed professionals. They are at least on par. What do you think i agree with a lot of what andrea said. You know we need to look at this memo carefully because it tells you the problem of Silicon Valley the problem is ignorance if you go this get to the heart of the problem of this ignorance and sexism, that lies beneath. Do you disagree that a lot of times the message is the reason that you dont see advancement of all the groups that you mentioned is exclusively institutional racism and biasse and theories that we dont see ourselves. Because of that, we end up excluding a lot of issues and discussion points thats brought up i would actually flip the conversation a little bit if you dont mind and say this person is an employee and engineer who spoke out and has had a few colleagues that agreed with him. I think his attitude is actually apart of the problem i dont believe when google comes out publicly, i have no reason to believe this is googles opinion and the company, try to take that stance, there is plenty of programmers that have gender biassed including the author of this article the programmer culture and alexa and those are things that make women uncomfortable. Hes simply highlighting those biases and stating hes the problem. These programs that he talked about at google which are designed to be fast track for all of the groups that you mentioned today. At some point, do they actually work against the company because it is perceived that people are getting advantages, maybe . The problem is deeper than google think it is by having the policies and doing things it is doing. These men that theyre on and you have to show of the diversities and empathy of the keys to innovation and education problem and has to start from the bottom because when you put this in the hiring committee and adventure capitol firm and sex cy est like this guy is so you are saying of the Corporate Culture google overall because of this one guy writes the blog sorry . Google is better than most country. Look at uber, thats an example of the worst e of the worse give management credit and now you have this uprising of angry men who are not happy with what management are doing we need google to do more. Andrea, you get the last words the lawyers at google are drawing straws of who needs to clean up this mess google are in multiple investigatio investigations of gender pay despa despa despairti despairties. Thank you andrea. Steve liesman is here we have conversations of this of the industry and athletics and all kinds of things, favoring one gender over another or ethnicity over another sure, we keep on saying demographics is domesticiestiny. This conversation in some way is irrelevant in the following way. Should you be more diverse the answer is in the sense that more female graduates and more non white graduates of the level a of bachelors and masters level if you are not making your workplace one thats suitable for women or suitable for non whit whites, you are limiting the pool of available candidates the diversity question as far as i am concerned is not a matter of personal or political choice, it is a Business Choice. Obviously, it could be a personal choice but it is a Business Choice in the following way. It is dispute inside the following sense. You do not see in some places of the effects to make the business and environment more friendly. We see women organized and group themselves in to industries where women canorganize the group themselves the way they want you see things like veterinarian medicines and things like that where this is the environment we want to create it is a little hard to argue there that there is not a male oriented gender biassed in the structure of a lot of the way where a lot of businesses are formed the thing is, women have babies and men dont, you may have noticed, right . Right women have babies and the question is are you going to come back to work and after the second or third baby it gets harder and harder for women to come back to work and it is not harder and harder form formfo for men to come back to work there are other issues that men and women are different. I am looking at seven reasons women make better Money Managers than men we talk about behavior economics of the difference between men and women. If we cannot acknowledge there are differences between men and women, which is one of the points i dont think anybody is disputing that the question is what are the standards . Is the standard the one where a woman may or may not leave because of pregnancy or childbirth having the same opportunity of childbirth that a man does not have to thats a good point thats the first time in 15 years that i have said it. I have been talking about this fair enough you are right. I am just saying there are two things you have to make your business ready for women and two, another thing that people are thinking about is more and more work force is older so you have to for profitable reasons get yourself ready these are long arc issues to me i think back to when i was growing up and the number of physicians were men as opposed to women and today the number of women graduating from med schools is higher than men graduating it is only 38 years that women have out numbered men at universities it may sound like a long time but it is only a couple of generations. Right not much time when i started at cnbc, when i started working at cnbc, the vast majority of the dial was white men. All day long think back. Look how much it is still not. It used to be all men with hair as well [ laughter ] increase for diversity. Steve, we spend so much time of what we are talking about that your head is dead. It will come back tomorrow. It will hold. You can have a bald guy two days in a row thats diversity should some Company Stays private. It is too late for blue apron. And a tank measure home run by a kid so young that hes never used a tape measure. All that and much more is coming up on power lunch. We want to hear from you, visit us at powerlunch cnbc. Com or visit us on im the one cloc facebook. Com powerlunch, much more of power lunch right here on cnbc, first business, worldwide. There. I can also help with this. Does your bed do that . Oh. I dont actually talk. Though im smart enough to. Im the new sleep number 360 smart bed. Lets meet at a sleep number store. Theyve changed and how we meet. Our phones have evolved, isnt time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Xfinity mobile. Call or go to xfinitymobile. Com. Welcome back to power lunch. Sales of blue apron are down should this company have gone politic in the first place you know, once blue apron got out the door and they sold the most as they could at the time and Mission Accomplished the ducks are quacking, feed the ducks, thats what they used to say fch if the window is there, you take the money if you can get it. If you look at the perspective of how will this do, the one question you have to ask, should blue apron have gone public . They can go public you can argue the pricing got excessive to what you really saw when you saw a business that had so much competition. I went back and read stories thats written back in seattle and long before this people raising red flags on this one well before the national spotlight. Yeah, thats what so curious of blue apron when you read through the perspectives and we are talking about it prior of it going public the amazon threat or the threat of a bigger player entering space quickly and easily was out there. It was really when the amazon whole foods deal announced when the stock took the huge hit. Why was that deal had to crystallized the investors mind of the real threat, the mode is not as deep as one have thought. Thats how wall street works, melissa. Peoplelike to follow others into things that are hot remember lets not forget the circus atmosphere it was going on there was a lot of Energy Around it because people knew the name. It was not something hard to get your arms around who have not seen blue apron add t advertisement. I thought it was before amazon and whole foods thing of this became unglued look at that wall, herb, i dont know if you can see it i can it is 15 and 20 of these remarkables. There they all are. Most of these are going to be separate brands in two years and let alone six years. This world is ultimately going to belong some very large players, not these guys. Assuming that world exists. We dont know if it is a proven concept thats sustainable or a proven concept thats sustainable as a Public Company which is where all of this is, right . It could have been and somebody else to take blue apron and fold it in and whatever that business is will be apart of it and they can do the delivery assuming there is a segment of the population that wants that thats the issue that we deal with here. I think you are right, when i think it is sustainable in the food business, i think of Italian Restaurant delivering pizzas thats sustainable they do it in five minutes in my town and thats sustainable. I will go there any day in the week no. Dominos did and papa johns did, they were able to take the concept and do something with it because they were seizing on great well, i am not going to say, i have not eaten those pizzas for a long time it was a great concept yeah. Herb greenberg, thank you a late downgrade coming up of the good and bad and ugly. And a home run that you got to see to believe or may not even believe it thats next on power lunch. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. Welcome back on power lu p lunch for the good and the bad and the ugly first is myokardia and onto the bad, teva pharma. It is an ugly day for geo group. Revenues fell short. That stock is off nearly 8 . I have not seen it either from the Little League world series by chase blaylock of georgia. Wha watch. What a swing look how far it goes it goes up over the hill there it may have gone 200 feet beyond that chase is 13yearold and look at the bat speed here boom oh my goodness thats a good hit. Maybe well see chase. I was watching the mets game last night and Cody Bellinger have hit home runs in the series watch chase. Which state is most effective inth trade world of cha. Well discuss that when power lunch returns when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. A used car, hi everybody, i am sue herrera. Here is your cnbc news update at this hour. The city of chicago filing a lawsuit alleging it is illegal for the federal government to withhold safety grant fs from s called sanctuary cities. We believe well prevail and vindicating the rights of chicago residents and getting a declaration from the court that this actions by the Justice Department and the Trump Administration are unlawful. Frightening moment for a person stranded on a roof of the suv in texas the vehicle became fasten in the water. Firefighters had to tie an extra ladder extend the ladder in order to reach the driver. Ncp don baylor has come cancer he played in the major league for 19 years he was 68 earliyearold. Thats the news update at this hour, melissa back to you thank you very much, sue herrera. The dow is hitting a record high of todays sessions the dow is up 21. 5 points and s p is higher than 2 quarters and nasdaq is up the market is closing for the day. Lets head back to Jackie Deangelis over there we are going to close well over 49 a barrel. There are some reasons that the markets are is cautious here and expecting prices to stay supported for the next few weeks but going lower than here. The opec meeting thats happening right now in abu dalbi. In the meantime, you have production in one of libyas Largest Oil Field ramping up the mark did not like that summer driving is going to pair back in the next few weeks or so add to that, the fact that we have seen u. S. Production going up a million barrel a day from last july. You have the perfect storm to take these prices a little bit lower, back to you the United Nations voted over the weekend to impose new ang s sanctions oconn north korea. Joining us, Allan Tolleson of reality check and dan atkinson allan, welcome i dont think the president has threaten to trade war per se he said he liked to be tougher with china have been on trade. Do you think the president has been tough enough . I dont think hes been tough enough i think and in fact, i dont think hes smart enough either and thats more important. Hes certainlily y on the right track when he pointed out repeatedly during the campaign that the United States faces major china related economic problems and china related National Security problems it seems to me that since the start, hes trying to develop responses that have not been tried in the past and already failed i give him a great deal of credit for that, although certainly the actual implementation has been lacking. Before i turn to you dan, allan, i want to follow up one question there is it wide to link in the trade issues had with china and the issues of the United States mad with north korea there is no question that china has substantial influence over north koreas economy in particular if the chinese view the prospect of the north korean weapon programs with all of the increase tensions and possibly worst that it could bring to northeast asia, it is after all its own neighborhood, if the chinese are not willing to take the kinds of step that is could reign in the Nuclear Program because it serves their own interests. Embark on this policy course in order to achieve better trade terms with americans dan, your turn. Why dont you react to what allan just said and historically give us some lessons when trade wars start. I want to emphasize that no one is really advocating that and no one would do that, i dont think. When trade were to start, they dont end well this is true. I would say that i agree with allan ant the linkage of chinas cooperation of north korea and trade and of separate issues and serious issues over the years i have advocated shedding lightly with china and a lot of complaints and fictions of the rinelationship. There are some legitimate issues that we have with china. There is a right way to deal with it and there is a wrong way. Thats a Market Access problem that we should have brought china up from the wt over from a long time ago. U. S. Companies are reluctant to be behind that we need to do something about that how is that any different thats what we have been hearing from wilbur ross and if those things dont happen, well bring in the wto and how is that any different being aggressive and starting trade war we have International Rules of law and trade trump can file the u. S. Identifies what the problem is and craft a solution and implement it that may set up a trade war because the United States would be abandoning its commitment and showing the rest of the world that wto is not worth anything but it really is worth quite a lot. And they dont stick with the commitment there i dont understand your big focus on wto when theyre supposed to increase and get rid of all the issues. We brought plenty of cases against china and some of those cases honored the rulings and the United States have been brought up more than anybody else for violating that tells you all you need to know about the World Trade Organization because by any series measures, the United States by far is the worlds most opened major economy to trade. The fact that the rest of the world is founded to be effective tools for the u. S. Open and market is wider. It speaks volume about how skewed the politics is of the World Trade Organization it is never a purely technical legal arrange theyre incredibly antiamerican. I am curious and it is not a win lose scenario. In the scenario of foxconn announced of a major investment in wisconsin, is that a win for the administration or a sign of weakness it could be what . It could be a big win for trumps trade policy because foxconns chairman specifically said that he decided to make this investment because he was worried about the threat hes not the only ceo to say this thats true. I think foxconn is trying to hedge against potential trade war and makes some sense and the cost of the products that apple and other sales are much higher because foxconn is an Assembly Operation and they produce very little and i think we heard louder protests from apple and we have not. No, because it is better for them it is better for them to produce these products some where. They can figure it out in terms of higher productivity and keeping costs down theyre very good of this. Sorry guys, well continue this conversation i am sure over the next month, allan and dan, appreciate it. Analysts think maybe this is the quarter that end the streaks. Plus, the xlf is trading at its highest. We debate and more here on power lunch. Theres nothing more important than your health. So if youre on medicare or will be soon, you may want more than parts a and b heres why. Medicare only covers about 80 of your part b medical expenses. The rest is up to you. You might want to consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like any Medicare Supplement insurance plan, these help pick up some of what medicare doesnt pay. And, these plans let you choose any doctor or hospital that accepts medicare patients. You could stay with the doctor or specialist you trust. Or go with someone new. Youre not stuck in a network. 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It can be a rough earning season for media stocks we have seen weak fundamentals for media owners now, ahead of its earnings tonight, Piper Jeffery says cbs is well positioned and could get a boost as well as the return of the nfl and the launch of star trek on its all access direct consumer app unlike cbs reported disney and fox over the next couple of days have exposure to the suffering u. S. Summer box office which is down from 11 with disneys sequels both under performing prior film in their franchises well have to see if there is any talk on the hills of discovery purchase guys, back over to you. Dont move. Andy, it is good to have you here this could be one of the first quarters of many that cbs misses because some of the concerns that julia laid out there and the Stock Performance maybe signaling that, andy hargreaves, what do you think . I do think that well see some signs in the ad market and thatll be a concern on a go forward basis . Longterm then . The problem that we have been talking about when it comes to core cutting etcetera even if they manage to beat this time around, there is still major issues yeah, definitely. It is not core cutting but just increasing competitions for peoples time and you are seeing that in rating they protected so far by a strong pricing environment but now that you are getting more and more video add in and online services, facebook and youtube, it is getting to scale that the likelihood that it is fwoigoingo see more weakness in tv pricing and if that happens, you will see some issues. Reporter cbs announced theyre going to have their core channels as well as cw i think there is going to be a lot of focus on cbs calls as well as on disney tomorrow of the new digital bundles. There is a lot concerns of core cutting and a lot of the numbers that have not included growth in the new skinny bundles investors want to hear how much these will boost companies are they going to compensate for the decline and traditional video describers are they going to compensate right now or it will happen overtime thatll be a focus across the media landscape. Andy, who would you rather be in this environment . Would you be a cbs that has, you know, the power of network and valuable content properties that they have but they dont have a studio or own pipes or supply broad band and a couple of properties or would you rather be a different kind of Companies Like a disney that at least has different ways to make money they got studios and theme park or comcast which our parents, of course, and have a lot of properties who would you rather be . I think if i am looking, if i can be anything, i would be facebook or netflix. If i am loaded to those three, yeah, i would rather be the other guys and i do think that the network and the Business Model and cbs among the network is better position than many the middleman, Value Proposition is intermeimmediate so this is a secular change in the industry, are the best days of cbs and both the company and stocks are behind it yeah. It is a big question sorry, i took a pause. I think so, yes, i think the issue that you have is you have had a very limited competitive set inside the bundle and cbs. Those things are going away and the values that they break advertising and in terms of aggregating environment and done effectively by an internet platform we see more and more growth there of the value like i said in the middle is going to decrease just to extrapolate within your coverage of universe of amc and via con, would they fall in the same category . They would. We only have one over rate rating among the tv networks thats being covered i think you have to be cautious of this secoular risk here that over weight fox andy hargreaves, thank you for your time. Hes pause and thinking, are they going to let me on the Conference Call if i answered this question. Thank you [ laughter ] marriott and alibaba, it is at a nearly ten year high, can it go higher from here walter . Hmm . Is that the rest of our food . What . No. How come you have cheese in your beard . Because switching to geico could save you 15 or more on Car Insurance. Oh ok. Geico. Because saving 15 or more on Car Insurance is always a great answer. Whoa gross i thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Marriott and alibaba teaming up deirdre bosa has more on that partnership. Reporter want to take a look at shares of both Companies Getting a nice pop on the news today. The chinese travel market. Can you see it right there alibaba up more than 3 adding to an already stellar year the chinese travel market is booming, so it makes sense that marriott would want a bigger piece of it and that ally bapa would want to grow its own footprint. The hotel chain and ecommerce giant are teaming up to better serve Chinese Tourists through the deal alibaba users will be able to use its travel Service Website and apps to book rooms in marriott in more than 600 hotel rooms worldwide. This Partnership Goes beyond booking reservations they have more than half a billion mobile active users and a vast trove of data on the Chinese Consumer marriott says this insight was a major factor deciding to team up in that it will help Loyalty Programs and help better inform service tailored to travelers. Its a chance to grow its travel division for a market expected to grow more than 100 billion this year from just about 25 billion five years ago guys back over to you. All right thanks so much, deirdre bosa mayor yolt reports after the bell today time now for trading nation. Xlf trading at its highest level since 2007 and is now the time to invest . Time to ask the team larry, youre bullish on the financials what do you see in the charts . First off, theres the intermarket clues here since early may when had the tenyear peaked at 10. 2 and has since moved low tore 2. 75, falling rates were usually underperformed, they have been the best performing s p sector this is very telling it shows that the strong players have been reluctant to sell. The bad news is likely discounted and we think the sector is poised to rally. First chart is the sector relative to the s p 500, and we can see this major base forming. I think it argues for additional outperformances. That line starts to tick higher. Also been a very broadbased move its been the banks and brokers, asset managers, security exchanges and one stock in particular were bullish on here is Goldman Sachs goldman carving out a near term bottom, breaking higher through the 230 level i think that projects the higher prices we could be talking about new alltime highs for Goldman Sachs looking out the next six months. A tall order considering the past two quarters have been disappointing for investors. Where do you stand on goldman or financials in general i think ari is exactly right. From the chart, the sector has been dead money for so long and suddenly its waking up. A couple things going on in june when the stress test, when that went very well for the banks, i really think that sent a strong message to investors. Also recently i think were going to see regulatory relief theres been a lot of talk about this now we easterly actually seeing this go in the process i would as far as the sector. I would stay away from some of the larger names two stocks that i owned in my fund that i like right now are aflac, the duck stock, just had a very good Earnings Report and another, a Regional Bank is a signature bank, thats sbny also looks very good here. All right, guys thanks, guys head to tradingnation. Cnbc. Com for more i think i can do this. Its four words. Check, please is next. And now the late forest tradingnation. Cnbc. Com and a word from our sponsor. One way to manage a winning trade is to place a trailing stop order when your target price has been reached the trailing stop order is an order type that automatically moves your stop loss higher as a stock moves up but when the stock starts moving down, the stop order remains at highest level keeping you in control of your trade check, please. Welcome back i found our whole discussion on gender and diversity fairly dissatisfying. Why is that michelle . Three guests who all said the very obvious things and made all the obvious negative comments about the memo without trying to get to what was the more interesting question about why are there few women in tech . And they wanted to blame almost exclusively racism and sexism, et cetera. I think theres more to it than that. You wanted to get to the question of perhaps there is Something Else that contributes. Yeah. I think theres a whole melage mela melage of stuff. Ill go back and say these are longarc issues. Because the opportunities are going to be in programming and Silicon Valley, women will have come in there chasing the opportunity in a big way. Absolutely. Overcoming whatever biasses there are or whatever predispositions. I agree. There mar or may not be, culturally. We mentioned bitcoin hitting a new record why is bitcoin hitting the new record highs where is Brian Sullivan you know where Brian Sullivan is his native state hell be there tomorrow, wisconsin. The profit Marcus Lemonis will be spending tomorrow with us closing bell right now and welcome to closing bell. Im sara eisen here for kelly evans at the new york stock exchange. Im Bill Griffeth im still trying to figure out what melange means ty just used it right now. Happy birth dawe to you. Happy birthday to us. Different years, just so you know. We can still celebrate together. And we are. Its deja vu again for th