Transcripts For CNBC Power Lunch 20170815

Vegan nail treatments, taking the Retail Experience, and we do mean experience to a whole new level. Well take you for a tour. Pass the avocado juice, everybody, because power lunch starts now im brian sullivan, none of the major indexes are moving that much. The dow tufrned negative but the dow would be higher if it wasnt for home depot, shaving 45 points off the dow this despite an earnings beat and raise the outlook. Investors looking for a little more from home depot outside of that store pretty of an empty parking lot for Retail Stocks and investors in Advance Auto Parts losing 20 of the money both retailers missing profit fimts and giving weak guidance Energy Stocks under pressure crude oil back down to the lowest level since mid july. We begin here in new york President Trump will be focusing on infrastructure today and his arrival come as mid large protests at trump tower. Heres the latest on those stories. Reporter the president is continuing his working vacation at trump tower today we dont know exactly whats been on the schedule so far this morning but one of the things hes doing, firing off tweets, including this one, referencing some of the ceos who departed from his Manufacturing Council in protest over the way the prds handled the racest violence over the weekend, tweeting for every ceo that drops out i have many to take their place, grandstanders should not have gone on. Jobs, exclamation point. Among those people are the ceos of merck and under armour and intel. One critical of the way the president handled the situation in charlottesville, virginia take a look at the list that we put together the Manufacturing Council is a Large Organization not all ceos have issued statements a number said they are stepping off and number who indicated they will be staying but look at the list of ce ooxts who not issued in he comment whatsoever. The representatives of a number of different sectors here like Johnson Johnson and Lockheed Martin imagine being a Defense Company executive and being confronted with the decision today. It would be difficult for a defense ceo to step away or put any distance between themselves and the president of the United States thats the political moment that a lot of ceos find themselves in today and board walks are faced with this decision, do we align ourselves and step closely to the white house or do we issue separation between ourselves and donald trump the president clearly frustrated with those threatening to leave saying he could get replacements any time no replacements have been announced. Were look at the live shot we know there were protesters there last night whats it there today . I see all of those huge dump trucks obviously meant to be a barricade huge barricade against trump tower, right thats the security perimeter. You can see the white trucks, all Sanitation Department trucks and that is the reality of the world that we live in today. Those are for bomb proofing trump tower, absorbing any blast that might happen in this area they have secured this area pretty tightly there are barricades up all around and its pouring down rain right now that puts a damper on the protesters i expect might see more tonight but as of right now, very quiet out here, people going about their business everyone is trying to get on with the day as usual here at trump tower. Thank you lets bring in larry kudlow. Ceos were his biggest defenders and now leaving this council. Actually, can i say ceos were never his biggest defenders, some hes always been a controversial president. A lot came in to work with him when he took office. I guess for whatever reason, what is it, two were at three now. Plus two from the climate accord issue as well. And elon musk. From the climate accord. The climate accord thing was always controversial can i just say, trump has done whatever he can do maybe he was not as complete and specific with his first pass at the charlottesville catastrophe. Maybe i dont know i know the guy for many years, theres not a hate bone in his body and the white house issued a second statement that covered everything, then a third statement. Then he made his own Statement People are just trying to put a noose around his neck. I really think its wrong larry fair to say that yes, i think so i think sully i think your choice of words, larry, choice of words in the context of a rally involving the ku klux klan was unfortunate just there. I take that back then what im saying is, liberal side of the spectrum i take that back apologize. Theres not a mean bone in your body either. I can attest to that too. Im just saying i think people are going after him who are being too hard on him. Most of the the ceos have to do what they have to do, its up to their conscious, they have customers. I understand that perfectly well i think trump is getting a bad rap but i apologize. Why larry does President Trump 30 minutes after ken frazier quit the council, i know you cant speak for ken himself, why does he send out the tweet which can be perceived easily as mean spirited. Why do that . Youre the president of the United States. Nobody politically is above you. What do they say, dont punch down why do that . It just its a hard thing to know. Im sorry for my language right there. I get it. He expresses himself the way he expresses himself. Sometimes motto, if you will, if you attack me, im going to attack you. Yep. Hes really never left that sometimes it comes out very unfortunately and honestly what he could have said, i respect the guys decision well talk later i dont know sometimes these stories but thats not in his dna. Sometimes these stories break and youre the president and got to Say Something on pt spot and it may not come out the way you wanted it to come out. I just feel come back to this knowing him and knowing his family, theres not a hate bone in their body. I think he could have been more articulate for example, i think your interview yesterday with larry of university of virginia, two virnlg vrnginia guys was fantasc unfortunately president s dont always have that leisure to do well thought out interviewed my hunch is that some someone interviewed him. He would have gotten it out better im going to say lets move on because i dont think i think the president has done what he needs to do. He said what he needs to do. If he was holding back, you know, on tuesday, that might be different or but he didnt. He moved right in and so did his staff. Ceos have been pushing so hard for tax reform. Is that in trouble in any way because of this or can that still . No, i dont think it has anything to do with it i thought the fred smith, ups through an oped coming together even though they are competitors, on the same page with tax reform. I think thats the issue here to me, you have Business Executives like smith and ups, competitors. A lot of people in the Business Community share a lot of the thrusts of the trump economic agen agenda were attracted to the kbrd of coming together and working with the white house to get things done what a change from the Prior Administration which did not have that kind of relationship. Issues are behavioral and retore cal. Many of the ceos to come back to your point, many of the ceos were not natural Trump Supporters a lot of democrats are ceos and business round table, i moderate events i get that, thats fine. This is america, youre free to choose they like the policy as you suggested. Its fascinating, they want lower tax rates, Corporate Tax rates and they are saying, you know what, if you can knock down ten points just ten, they believe it would increase growth by 1 to 2 . If you get it to 25 , we who are informally advise trump, take it down to 15, youll get even better they agree heres the key point those two rivals agree that lower Corporate Tax rates will in fact pay for themselves, they said that in the article and will generate faster growth and then they are saying, were the biggest users of infrastructure, were the transportation guys. So we need to get this through and thats where everybody has to focus you know you know this more than anybody up here, the way to get what you want in d. C. Is make some friends out of maybe enemies. Yes, i agree. Part of doing that is watching your language, saying the right things, giving somebody something for a little bit back, what i dont understand about the president is that we are all on this set what we say. Right . The viewer doesnt know what were like at home dont know our individual lives. They know what we say. I Say Something inflammatory, suddenly im a jerk. Hes a jerk because he said this dont know how i live my life. The president has this massive platform and becoming his words. Why not send out some conciliatory language once in a while so that maybe those on the fence on the legislative side say you know what, he gave me a little, im going to give back a little. Well, look inflaming i said something that im taking back, very unfortunate. Your generaler point is right. The president is not always adept at taking situations and turning it to his best advantage. I will say this, watching him fight through the Health Care Reform and john mccain, they couldnt get it through, he really worked with individual congressmen and women in the oval office, i happen to know this, he would call them hes learning the game down there. This is charlottesville is an unfortunate incident not becaus he believes hes a hater i dont think the two issues are separate issues and i do think this, so far as i know, and i was in to speak with him for almost an hour two and a half weeks ago, they are going to go full scale ahead on messaging and marketing. Tax reform. Yes and tax reform and trump has always tried to link infrastructure with tax reform a deal was out there several years ago, it was paul ryan and chuck schumer, to somehow link repatriation at the certain rate to infrastructure. That deal may or may not be on the table but thats a possibility. I must say this, i dont want to turn partisan on this. It is not a partisan day, i get that but the democrats are not helping. They are issuing ult matimatums it makes it difficult for republicans to reach across the aisle when nobody across the aisle wants to play ball right. Heres fred smith and ups i apologize for not remembering his name i nknow fredis a republican david i would love if he were a democrat because theres a example. What are they saying infrastructure for transportation, lower the Corporate Tax rate thats what they are saying. And you know, thats what we need thats what kudlow has been saying for several years maybe longer so we got it. Lets move on and do the nations business, honest to god. Wed all love that. Thank you. I appreciate it very much. To the markets we go and stocks trading in a narrow range. Bank of america and Merrill Lynch with a new survey showing equity markets are overvalued. That is a new record on the other hand david tepper still loves stocks, saying were nowhere near an overheated market jason wair, chief investment officer, which is it, overvalued, kate, or a loveable market i think its closer to a loveable market but i dont think anybody would say stocks are inexpensive at this point. Almost every measure of valuation, whichever one you like says stocks are above their longterm average and i think the real question is what is that compared to and what does it mean . It doesnt mean the market drops and doesnt mean that things are bad. It doesnt mean you should be out of equities because weve been in the situation for a while. Even if the percent who believe it has increased i think it means we should have lower expectations for long term returns, which is what historically has been the result of high market valuations. Jason, over to you. My notes reflect that you say market mood remains somewhere on the scale between outright gloomy, i dont know where i see that and restive participation what do you mean here . How did that trans light into an action plan . First of aill, the good news this level of skepticism is a healthy signal for the market what we mean by outright gloomy, when we look around what Retail Investors are doing, they are still pulling money out of the market despite were at record highs. The small invster hasnt been participating and mean whi while, my industry peers wanted to tick off the list of what go wrong and things we should be worried about. The bull market is too old and valuations are too high. Volatility is too low. We need to worry about the fed and we have rising geopolitical tensions now. Famous wall of worry. Thats right. Maybe stocks deserve to be at these prices because there sure dont seem to be alternatives that look better. Interest rates where they are, for sure. You tell me. Thats exactly right. When we look at valuation from the lens where valuation is sub2 and 2. 5 tenyear treasury yield and loose conditions in general, were in the david teper camp that looks at things differently and sees a Pretty Healthy market. Thanks very much. We appreciate your time today. Jason ware and kate worn wair and worn, not too far off. Retail therapy, what sakz is doing to make sure its customers literally feel good. Coming up, the Technology Stocks one analyst says are the most likely to get bought out get your pens ready. The analyst who made that call names names, coming up nothing brightens an investinvest ers day than finding out a stock you bought get bought at the big premium. Were trying to improve your odds, out with a new note listing his top five take outcandidates in the semiconductor space. Chris, thank you for joining us. Thank you. We love the note, i want to walk backwards, marvel, hot stock. Four is microsemi and number three, kavium. Why them all of the stocks come from a screen that we do we essentially look at the amount of accretion an acquirer can unlock by buying what we think are subscale Semiconductor Companies and these five names and those three that you mentioned floated to the top. Okay, number two, a name ive never heard of, max linear was this known by another name or popped out of nowhere. Always known as max linear. A lot of these are subxral so they are small a larger buyer can benefit from the scale. Okay, your number one most likely takeout candidate, integrated device technology, what would make them so attractive to somebody else and who would that somebody else be . We think financially the accretion that were talking about, this is one of the most akreetive names weve come across, the earnings could be 45 higher than what they can do on their own secondly, they are a play on wireless charging, which is expected to be in the next line of apple phones and also a play on intels next server product thats coming out starting to ramp right now chris, great note top five ill post them on the website as well chris, we appreciate you coming on the show. Thank you. Thank you. Still ahead, boeings stock has been flying high and now the company is ramping up production r meet the demand wee live at the boeing plant straight ahead 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. Welcome back, everybody, boeing boosting production in the hopes of easing the companys backlog of orders, phil lebeau live at the boeing 737 plant in washington. Hi, phil reporter i dont know if youve had a chance to look at the percentage of the dow move this year that is responsible for coming from boeing, its 560 points of a little over 2200 points that the dow has gained, 25 of the gain this year has come because of boeing we talk about the increase in production you can see it right here on the line in renton, washington thgs the 737 line. They did make 42 a month earlier this year. Theyve just converted up to 47 per month. Thats where they are at right now. Next year they go up to 52 per month and then in 2019 they go all the way up to 57 per month so a huge increase in production, part of the reason they are able to do that is because they are moving through much more efficiently. One of the planes here and they are in seven positions when they come in, they attach the wings to it. Within a week it will be out of here this is a moving Assembly Line doesnt look like it but it is greater efficiency, theyve been able to trim the payroll a little bit and add auto mason, driving higher margins and greater productivity and thats why so many investors say they want to get in on boeing right now. Back to you. Phil lebeau in renton, Washington Well see you soon, thank you. One overlooked area in the economy that could be the answer to higher growth that answer is next. 3w4r57. Hi, everybody, a suspected islamist militant was killed in an explosion inside a hotel in bangladeshs capital during a raid on a alleged highout. Bangladesh has been experiencing a rise in islamic militantly in the past couple of years. Uber has settled allegations that it made deceptive prifgs and Data Security claims as part of the settlement it cannot misrepresent its access to consumers personal information or how it secures that data. It must implement a Privacy Program and submit to audits of that program a jury has found four teamsters not guilty on all charges in connection with accusations they intimidated the staff and crew of the chef reality tv show. The shows host testified that she was petrified when she was confronted by a teamster member. And overseas an enormous tree that fell during a popular religious festival in the portuguese island killed up to 12 people. That tree fell while a large crowd was gathered as part of that celebration thats the news update this hour, michele, back to you. There must have been so many people that couldnt move out of the way zwl. It injured 52. Holy smookz, its unfortunate. How to jump start the economy and move beyond 2 growth. Theres a recent report that argues the answer may lie in the countrys growing latino population which has a gdp of 2. 13 trillion the gdp of the latino population is growing 70 faster than the rest of the country. Its projected to act for 25 of total u. S. Gdp by 2020 joining us, the chairman of the group and the latino collaborative, one of the sponsors of this study findings. Good to have you here again. Good to see you. We want to talk about this report, but first, its interesting were talking about this week in light of whats happened with charlottesville and in light of watching the merck ceo leave. If you were still a ceo, youve been a Major Telecom ceo in the United States would you have left the president s council if you were on . Absolutely. I think what happened saturday for our country was so bad, so disappointing and to see the president s reaction in not wanting to deal with it appropriately, like prior president s and prior president ial candidates have, i think was just something that as a leader you have to demonstrate leadership and moral compass and you cant ignore those kinds of issues when youre talking about our country as americans the argument weve heard that you need to stay on whatever plan council you happen to be on because theres several of them, to make sure you can voice those things directly to him, you dont buy that well, i think that the council has been in place, not clear that the president currently listens or does anything other than theres photo ops but the more important issue michelle is theres real growth occurring in our economy in spite of what he is doing at this stablg stage. Restructuring with reform on taxes, i like it for all businesses, not just Corporate Tax rates but Small Businesses something we need to remind ourselves of, this economy is driven by small medium size businesses and yes Large Businesses are important and yes we want them to be competitively successful but lets not forget the rest when we talk about this whole issue. Thats why this report is so critical there are elements of our Economy Today growing, growing fast and essentially going to be sustainable for decades, which is really as a strategy where we ought to be thinking and focused. The u. S. Latino portion of our population, the cohort of our population is dramatic think about it it could be the seventh largest economy in the world if were stand alone, bigger than the country of india and its gdp tyler wants to ask you a question. Let me i was going to ask you one final question about the president s Manufacturing Council but now ill get two in. The first one, do you think as a matter of basic practice its wise for Business Executives to sit on these kinds of ongoing consultive councils other are they better off saying, you know, look, i dont want to put my company in a position based on the company i keep politically. Well, i do think that thats an interesting question. I never really thought about it in that context. I think providing input is a good thing, i think if a president is soliciting input, its a good thing. When youre meeting regularly and you have to stand next to other policies, other decisions, i think your question is appropriate, in terms of is that in the best interest of your shareholders and customers and all of your employees. Right. You have many constituents. Let me pivot if i might a little bit to the question which is certainly an important one for the country and around the world. President a couple of weeks ago announced an immigration plan that would reduce the number of green cards available to basically relatives of current legal residents in this country. I think i expressed it correctly. Cut that in half from where we are today. Is that a wise move in light of the fact that we have basically full employment in the country of 4. 3 , weve got, were adding jobs, got 6 million unfilled jobs in the country and demographically because of the aging of the population, we could stand to gain from having more people of working age in the country. Your thoughts . Your question is a Perfect Question you ticked off everything that a president whoever is in charge of the economy, you know, the advisers, et cetera, should be thinking about we do need workforce if you do look at the calculation of gdp, gross domestic product, its a function of population and workforce. They need to be growing. You need productivity and you need consumption as our population is aging, we have a choice which the president s policies lead towards for declining growth if you want to restrict immigration and want to restrict label force growth and restrict population growth, we need all of the above in order to grow. Theres a reason why china, india and indonesia and other countries are viewed as growth economies. Because they have youth and Labor Force Growth and starting to become very consultive economies. We have that in our country today. Thats been the sustainable competitive advantage. Ive lived around the world. Ive operated around the world and i can tell you that the advantage has been about our immigration and been about the right kind of values we have in our country, great constitution, great bill of rights and great capitalist market based society. Those are things that are true for everyone in the United States, right, saul . I ask that in this vein. When i look at this report and the latino economy, i wonder even by doing these reports or segments, do we help contribute to this whole issue of identity politics right now which feels like its actually dividing the country when we focus so deeply into one Community Versus another, when all of the things you talked about are true for all americans . Michelle, im glad you asked that question. I think these reports are educational. We need if anybody has run a company and think about customers, you have to segment, not all customers are the same, not everybody is growing the same you do look at buying characteristics by age and buying characteristics by geography and buying characteristics in a lot of ways, which is why you segment and we have to understand in our Economy Today, where growth is coming from. We shouldnt just assume that we have this mass that everybody is the same we do have our baby boomer generation of which im a member of that tended to be very predominantly 95, 97 Anglo American population. They are getting older what happens when you retire incomes go down and Consumption Patterns change and at the same time in the United States we have the benefit of the u. S. Latinos who are young, they are entering the workforce 70 of the workforce Labor Force Growth in the last decade have been due to u. S. Latinos entering the workforce so its not about divisive and identity politics, its about being smart and understanding how our economy works and how you think about policies that enable us to sustain growth, not try to recreate the past but to sustain growth into the future. Saul, thanks so much for coming on. If people are interested in reading the report, latino donor collaborative. Google it, you can find it. Ive heard about these things called salt rooms but never been to one i was recommended to go to one for reasons i wont elaborate on meditations and manicures, salt rooms. Is this what the future of retail looks like . Saks is betting on it. First, to rick san telly, the always salty man for the bond report. No truer words were ever spoken look at the 10year note yields, up several base points weve moderated. We had strong data this morning but always caution one set of numbers doesnt necessarily make for a trend and look at nonseasonally adjusted with respect to retail sales and seasonally adjusted was way better your easy barometer on nervousness, it did uptick a bit and that means equities are close to negative, close to unchanged and market is feeling okay foreign change, one week of the dollar index we definitely toyed with 94 and it seems were trying to turn, slowly and one area were doing better on, the right side of 1 at the time 10, the dollar yen power lunch will return in two minutes. You know the expression, shop until you drop. But if you feel youre about to drop while youre shopping, dont worry youre in luck they dead indicated a health and wellness area that will get you back up on your feet and running and spending in knno time. We have Courtney Reagan with the toughest assignment. Are you in a yoga pose im in a salt room. Do you need me to get back to work now im on the second floor of saks and this is a salt room. Hi him lay yan salt, its supposed to make me detoxified and skin might clear up and thats good news because i want to feel well rested and good when i go to the golf course. But my golf clubs are stuck in my parents garage in ohio but thats okay because they are going to fit me for golf clubs brandon will demonstrate we have a nice swing and figure out my speed and spin rate and determine exactly what kind of clubs might be best to improve my game. I know ive got a wicked slice but got to make sure night nails look good if im going to play golf ive got to stop here and sun gaze this is the nail salon but everything is nontoxic i can get a vegan manicure while im at it, guided meditation, theres some light therapy. I understand that i can also be involved with. Once my nails look good, i have to make sure the rest of my body looks good if i want to be olympic quality shape, ive got to go to te technogym, use this equipment, this is the supplier of olympic fitness equipment. We have folks demonstrating. Its an italian company. If you want to have it in your home, you can come to saks and try it out this is temporary, only available between may and october but its a nice experiment that we want to talk to with a man who came up with this whole idea. Mark, the president of saks, inviting us here to the wellery. Why do this temporarily or at all . Well, this really serves two purposes first, were under a very big redevelopment from the new york city flagship and this floor was on deck to be next, our beauty floor which opens next spring. It was going to be empty and that moves into our strategy, right now were uber focused on whats happening with the Luxury Consumer and wellness is a key tenant to that it did two things for us. I understand that concept but this floor certainly hasnt seen heavy traffic as what i saw on first floor or walked in i know thats right off fifth avenue is the productivity here what are you getting out of this financially . We dont discuss the financials by floor but were getting a lot of were learning a lot, innovating and seeing whats portable, what we can take to other stores and put online and services and were doing really what we want to do, creating a connection with our consumer in a different way than retailers had to do before. What have you learned here we may see another saks locations in the future or longterm future i think weve been weve affirmed what we learned from research, its all about feeling better the consumer is interested in it like a lot of fashion and trend, it will take more time to take hold but we have a lot of momentum, so we continue to learn whats important. It doesnt seem this was advertised heavily i know a lot of folks have said they found it accidentally by coming into saks, was that done on purpose, by design . I think what we wanted to do here, we wanted it to be a little organic we had a successful launch and a lot of activity and launched a partnership with stacey griffith, the ambassador the wellery, part of the new luxury is all about sharing. Retail sales are very strong. The biggest jump weve seen in seven months, is saks seeing strong trends in other floors or even at the wellery . Well be reporting on the store sales later this week. Were very excited to be delivering this experience to the consumer. Any one booth or vendor you feel is really a standout that we should look forward to seeing more of. If you have a guts or gut, take the con body, all about cross fit. Tell us about that. Its basically almost like a cross fit but its an exconvict came up with the program of what a work outwould be like in prison and he took it and studios downtown and hes opened up one here its super fun and hard. It sounds pretty hard weve seen it down there they have the chain links up its a whole experience and that you sign up online, 30 i believe for that class. Yes. Thank you so much, mark, really appreciate you having us here at saks fifth avenue on the second floor you want to check this out, you have to get here before the end of october after that, its gone. Back to you. Thank you very much lets get reaction to the new Retail Experience as well as the big jump in retail sales today largest in seven months here onset is steve, the former chairman and ceo of saks, what do you think what do you make of all this, con fitness . He was talking about building a connection with his consumers and creating a buzz if you think about it, they took an unproductive floor that was going to be closed down and now on cnbc for five minutes on the ttd today show. Its a great marketing pr in a way of building a connection i think its consistent with the idea of building experiences i dont think they were looking for commerce from it in terms of big numbers. I do think that in a world where experience matters and people want to know who is the one who has a buzz around them, that they are the luxury player creating a buzz. To simplify, people will come to experience this it will bring more people than otherwise would have been at the store and then maybe spend money while they are there. Absolutely. Sure, but theyll say, they are the company thats out there they are the ones trying things and innovators id like to see them doing other things. Ithere. You got the juice bar and you can buy some work out gear now, seems like they are flipping the reason that equinox has a closing shot on it because it is getting values on it this is one example. So is it permanent . Absolutely not. Whats permanent is they can take some ideas here and disperse them through other floors this is the tenth anniversary they are taulking about of the shoe floor that we created that has its own zip code i love it when experiences are product space. I love the Companies Like sacs putting in hot Internet Brands Luxury Brands that dont have footprint in stores and bringing them into a luxury brand and consistent with sacs. I loo i cike to see that kind o appearance experience as well some of them do bars. Is there anything that steve helps with housing you look at the numbers you talk about this last year, with home and car sales, so good, why would anything else be good no matter what you put in it retail is good. Overall, Home Improvement. Furniture or the action every single earnings of a major retailer, saw decline sales and even the Company Whose stocks went up is amazon a retailer okay. Not anything to do with housing. Or anything to do with housing or furniture or best buy or anything like that theyre all off. I will give you others that are up 3 , they are growing and kos costco is growing. It is more question of consumers getting the value. The price brand is demonstrating. Thats the bigger factor just being internet versing morgan. Let me ask you a final question i was at a party i am more fun than i appear to be we had a conversation of the future of retail half of the conversations was all about turning retail into an experience and that makes a lot of sense that can be expressed in a lot of way the other has to do with the size of the retail footprint i love sacs, i love that 5th avenue store they all seem too large. Are they going to be smaller in ten years . Certainly less of them. Will the stores be smaller they may be. Some of them are existing footprints and it is going to be hard to close them down. Some maybe bigger or smaller the one on 5th avenue, thats the store thats highly productive i have said this to you before my favorite thing to do is to walk the first floor of sacs. You smell very nice thats an experience. Stwh when i go into a typical apartment store thats name less, there is so much extra stuff. I want somebody to curate it for me we didnt get to the presence of the ceo council do toupt ayou want to ask it i am glad i am not a ceo. Would you have resigned or stay on it . Pass on that. It is a tough one. I can see both sides on the issue. The problem is that what was done was i feel strongly that they should not have been doing this i love to take a stand steve, since we are four minutes over, i am going to ask you this is there any benefits staying on the couch . In theory half the country, you know what, if you on that council, that means you are complacent in your own way oh, why would you shop at x, y, z because theyre not dropping off. You get the mentality that the more and more that starts building, it makes it easier to drop it off. The ceo taking the position that he did because he was the first one to do it it becomes easier to be the fifth or seventh to do it. There is a point to be said and having a voice on the table and thats the counter argument that fundamental changes that are fle needed you want to have a voice there i probably would step off, i will get myself in trouble thats it. Thank you, steve, appreciate it power lunch is back at 4 00, maybe at 4 00 if we keep on adding to the segment [ laughter ] we actually filed a claim with usaa to replace that spoiled food. And we really appreciated that. Were the webber family and we are usaa members for life. 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. Going somewhere and whoooo. Save you up to 30 . Trust this birds words. Tripadvisor. Welcome to the second hour of power lunch. Brands are leading the lead. Lessons in leadership. The ceos discovery gives you his key to success and why you keep your ego in check how much information is too much information . Is this the 1984 scenario creeping up on us. We know you are watching, power lunch starts radight now lets get ya check on the markets now. The dow jones are lower than 11 points s p 500 is lower than 2 and nasdaq is lower than 7. 5 Energy Stocks, mattels decline continuing they are at a ten year low today. Carnival and Royal Caribbean stocks are trading at an all time high. And synchrony financial, it has taken a new state in the continent. Well, about an hour from now, President Trump will have a meeting where he will discuss infrastructure ames is live in new york city where the president has returned from a long absence from his home thats right, this is the first time the president has woken up in trump tower since the inauguration back in january. This is something for new york city to deal with how to handle a president right here in manhattan. Hes going to be talking about infrastructure today well hear from him in front of cameras and talking about streamlining environmental reviews. Thats the theme of the event the president wants to talk about. The two story lines thats dominating the day is ceos from the president s council handline in charlottesville and including scarramucci saying that he thinks steve bannon should be removed from the white house questions whether well see further shake up of the president s staff here as the president continues to work here at midtown manhattan thank you so much we appreciate it dominique is joining us right now. There is a handful of stocks there. They include steel stocks. We picked out a handful of them to show you kind of a sense of it and how it is changed if you take a look at one of them, this is construction aggregates the stock rose by 20 . Since then you can see by the chart, we have lost about 15 . That sentiment is a realtime gauge of what expectations are for infrastructure plan being put in place those shares are up of a huge amount and doubling in price and lost about 43 since then. Another company and that infrastructure an Engineering Service company, this is Jacobs Engineering of 25 and after the election and having lost 15 since then one of the other etfs out there t that tracks the igf. Be careful, many of the stocks and that particular etf more global in nature and all of them are strictly concrete steel for engineering place and a lot of Power Infrastructure and pipeline as well, guys, back to you. Dominique, thank you very much retail price posted their biggest jumps in seven months. Dicks Sporting Good is down nearly 20 advance autoparts down more than 20 and also missing the earning estimates. Expecting same store sales will be lower than last year. Coach is down 13 . Coach beats the estimate of earnings but the revenue missed the forecast in guidance as housing and Home Improvement boom, home depot is one of the years retail spots it is often time to pay attention. Peter keys and scott peter, i am going to start with you. A pretty good quarter for home depot. Why do you think the stock is reacting the way it is today terrific quarter for home depot. As mentioned earlier of dicks Sporting Goods and other names there were High Expectations on high depot going in you did not have the flow through the bottom line that you would expect and making up for the second half of the year, that maybe one point of disappointment you know scott, we look at some of the home related companies. In the last six months, home depot is up 6 ethan allan is up 30 . I low lowes is down a bit the home related company has done well. Do you think this retail is finally coming to a slow down . We dont. Housing is one of the few bright spo spots, amazon rolling through all of retail. The one industry thats some what protected or in front of what amazon are doing are home depot and lowes investment is well below 40 years average. Good Income Growth the one thing that came up on the home depot earning is called, the Housing Stock is really aging in this country and a couple of segments ago. Are these guys . Yeah, i dont think anybodys amazon proof we downgraded cbs. But, if you look at home depot business and if you look at their customers, especially the pro customers, home depot brings a lot to the table from terms to being able to deliver in a couple of hours and lumber and from the stores. The idea that home depot is going to roll over and die from amazon is wrong. They obviously have to be on their shows. Peter, what are we watching for from here on out i dont think whats going to happen both at a macro level and a a fundamental level. One thing we like from this quarter, the prosales growth out performance of its diy from a macro level, we want to look for accelerations and housing. We think of a steady state at a high level that will help home depot. Right now well continue at the same level Going Forward peter, scott, looking at home depot. Guys, thank you, appreciate it thank you some of the latest filings, most important investors out there who are required to let people know whats going on. Should you be falling those moves. Lets bring in your chief investor jerry, let me start with you we had david techron earlier, he does not think the market is over heated. It is august. People are not doing anything dramatic and there is not a lot of good fundamental data the conditions to bounce around. If you take the value of equities today relative to inflation, theyre at 40 and 70 year lows. The 50s and the 80s were the last time stocks were this cheap relatively to inflation. We dont see inflation ticking up any time soon these stocks and the ones in the high double digits those are attractive and given the lightly Growth Outlook that the company has here in five years christina, are you optimistic as jerry he does not say it explicitly but what he implies are of the levels of Interest Rates are so low. You dont think there is a lot of Interest Rate hikehikes i would argue they are stretched and if we were to deconstruct the Stock Movement over the last year, certainly some of the pricing increases have driven by earnings. Thats likely to con some of that really has been driven by sentiment. What we have seen is a lot of excitement over the progrowth agenda and i would argue that stocks largely, we have not yet seen that. Jerry, i was going to ask you, if you think stocks are not widely over valued or maybe under valued, is there anything we should do right now as individual investors the longest lead time earning stories is the best buy and hold for an individual. There is great themes going on forget politics. We talked earlier of tease that thought out for e me what are you talking about there. These things have powerful years and earning cycles sitting underneath the combination of those two things on top of what we think is attractive evaluations, a lot of people wanted to take shots at how expensive stocks are right now. Not in the context of where inflation and Interest Rates are. Thats what makes the markets so compelling here and it is why we have to look past these recent 15 years type and go back to the 80s and 50s to see really how in expensive equities are some of our viewers are not as optimistic as jerry are now what would you recommend they do with portfolio now i think it is all about insurance downside protection. We certainly want to participate and conditions are supportive of stocks we want to protect on the downside and emphasize dividends and that includes exposure to International Stocks and also broadly in the portfolio as well as having adequate exposures to alternatives it is not just political risk. Okay, ladies and gentlemen, thank you for joining us here is whats coming up on power lunch. Some companies are taking a strong stance on social issues and others are staying quiet whats the right way for a Major Company to handle controversies. Apple maybe making a big move in healthcare susie welsh sits down with a big name in business, that and much more is coming up on power lunch. [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade 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. Welcome back to power lunch. The congressional budget just put out a report on the economic effect for insurers to offset costs of offering Affordable Care act plans if that were to be the policy pursuit, premiums would rise by 20 next year and by about 25 after that the cbo finds that the federal deficit would rise because more people will qualify for tax credits and subsidies from the government deficits would increase of 1934 billion between 2017 and 2026 rising significantly over the course of the next ten years guys, interesting to see the ceo ceo the deficit would also widen. Back to you. Specifically, you highlighted, if you are a low income individual, you are likely to have qualified subsidies. Thats where the money coming from the hubs leading to the deficit. All right, thank you, cayla. Discovery network is getting bigger the network that focuses on automobiles and Lifestyle Brands susie welsh sat down to lunch with david zaslav. Hes a very interesting guy. Yeah. I think you are not alone in that he started off sort of al lawyer and then he became a cable guy here in this building yeah. We all know him exactly hes not a guy that strike you as someone whos trying to, you know, become a mobil mobile overtime he built this very large Cable Network and now it is larger than it was this deal is 15 billion what happened over your lunch . We had a great talk, we talked about his life, career and all the lessons and monkey bars in midtown and we talked about everything hes done you got to grab it thats really the under line thing. I had a moment at nbc, i have only been there maybe nine months and we had a window to get into the cable business. We john malone and he was going to carry cnbc. Sick around here, john malone is going to call and about 3 00, i fell asleep. In that morning, the ceo of nbc sees me sleeping and he says to me, what are you doing here . I said, you said i should wait for john malone to call so i did he got jack welch. This guy stayed all night. Can you believe this guy years later, bob says to me, thats your nbc guy. You have moments where your life has these moments. What do you mean by this there are moments in your life and we come back and say quantifiably these are the moments did i go through it or did i give them a plan and take advantage of that. Lets talk about the time you really screwed up and want to learn from it. The idea of categorized and failure and success really does not work if you blew the whistle at a moment in time would be a fail i am a believer and i am a o optimist i have a lot of ideas and many of them dont work like oprah, we launched with all the great spirit. Right people looked at it and mostly they said, it feels like vegetables it is not entertaining enough or exciting enough. For two or three years the channel was really struggling. We put on one show of the africanamerican space and it was number one on saturday night. From that, we say okay, if thats working, lets keep going. Thats the Number One Network for africanamerican women we brought in tyler perry. It is not what we thought it i going to be. The audience told us what they wanted to be it is so true that you come up with an idea and a strategy in a Conference Room and you go out and take it outside into the real world and you got to be adgilant you have to recognize maybe you are wrong with everything. What would you tell at a 20yearold person forget about how much money you are making and who you are working with and you are still learning i had three or four times at nbc where i was going to leave or i was getting passed over. I had a big ego and you had to shake it off suck it off and put in your happy face and you are going to have your time it is not show friends, it is show business. You can see more of davids lunch and including how he made oprahs dreams come true he got taken 50 pay cut at cnbc. Com i hope nobody gets any idea from that. [ laughter ] i thought that you regreat what you dont do more than what you try to do that did not work out. You always learn something that did not pan out. He has a great line the door was opened. Did i go through it. Thats a great way to visualize all the opportunities that presents itself. You will allude it to they went away and he looks back on zaslavs ability and those been around for a long time recognizing it and remembering it clearly there were people who thought at the time, thats what he did he kept on adding stuff that he could do to the point where now hes thought of a great strategist you did this interview before the hgtvs deal was announced. You had a communication with him today to follow up, what did he say . You know we were texting earlier and i asked him of this deal th it is a big deal and the number is not about the numbers this is about buying properties that women really love and passion. If you want to move a company forward, you have to have new deals and new ideas and new initiatives. Thats part of the way he works. I think my wife would agree you know my wife very well as much time as she spendes watching power lunch. She spends more time on hgtv yeah, those are great brands. Well see you later suzy breaking news, doug mcmilan says he will continue to serve we believe we should stay engaged and try to influence decision in a positive way and help bring people together he also said that the president missed an opportunity to help bring your country together. Something well discuss more about. In the meantime, why should you never make fun of a grown man who brinks a glove to a baseball game. Is taking a stand the right thing to do or could it backfire difficult decisions, coming up on power lunch. Hello everybody, i am sue herrera. Here is your update of the hour. Religious freedom is not protected, we know instability and human rights abuses and violent extremism has a greater opportunity to take root we cannot ignore these conditions the director of general of ukraine reject in claims that it was involved in shipping missiles to north orea he told reporters in kiev that ukraine only produce space rockets and not missiles former president obama tweeted, more than two and a half million likes, the most liked tweet is Ariana Grande after the terrorist attack where he was scheduled to perform. Michelle, back to you. Thank you, sue the oil market is closed for the day. Lets get to Jackie Deangelis we are critical of the 47 level. The data is very important this week the api is going to kick it off tonight, the eia tomorrow, expectations for crude oil flat inventories and gasoline. The gas can be a problem and causing the confusion of the close. There was a surprise of last week if that happens again, this market is not going to know which way it is going to go. Up only 2 for the month so far. Back over to you as more Business Leaders dropping out he does not need him back tweeting earlier from every ceo dropping out of manufacturing, i have many to take their place. Grand standers should not have gone on. Jobs what should Business Leaders do . What would you do if the president asked you to join the council . Thats next on power lunch. Whoooo. Looking for a hotel that fits. Your budget . Tripadvisor now searches over. 200 sites to find you the. Hotel you want at the lowest price. Grazi, gino find a price that fits. Tripadvisor. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. President trump is under attack for the left and the right for his handling of the violence this past weekend in charlottesville. Four Business Leaders have left one of the president s councils has a result of his response to the attack is it better for ceos right now to stick with him or if they are on the council or back off lets bring in suzy welsh that is tricky issue mien mike, if you have responded to the call from the president and it is hard to resist when the president calls. It is hard to say no to that tyler, the question is getting trickier every in the past suzy knows it is better than anyone in the past when you get an invite from the president , as President Trump entered into real challenging conversations around immigrations and climate and healthcare and north korea and now this whole conversation around White Nationalism it is Risky Business for the ceo. I can see why some are feeling the need to drop out and others are considering it and questions are getting tougher everyday what would you have done if you were on that council if i was on that council and running a consumer business, you know if i am running a Manufacturing Business like boeing, thats one thing where i am highly dependant on and government contracts if i am running a consumer business, i would have opted out of the council that sounds like you are doing it for optics and not anything you believe in i get it it is an okay position to take but thats basically about proquo thepr pro i do also believe if you are in a consumer process business like under armour, your business can be significantly hammered and not just with consumers but the Community Like baltimore that you live in it is a very tricky situation. Thats it mike, i am sorry, you hit it so importantly. You are able to stay coordinated and any group of people at any time the risk for a Consumer Company that someone says hey, these people have left the board, therefore, we need to go after that whether you agree with them or not. It leaves you vulnerable, do you think down the road, every ceo should say, no matter whos president in 20 years or 10 years. Stay away from politics at any level. I dont think up to this add minu administration, ceo had to deal with the issue of this gravity if you will. Trump kind of turned this to an apprentice if you look at all these councils, what have they done . I would hope our Business Leaders and political leaders could collaborate and make decisions that ultimately would make our country better. Now, it is a political issue let me bring in suzy welch whose husband sits on one of these councils what do you think and what does jack think theyre not necessarily the same thing what he says is that you need to stay in the room if you are a a ceo of a company stay at the white house, it is something that your company counts on you for. It is different. Hes in a different position, hes no longer ceo and these are different times. They are very highly politicized and i was jokining during a brek that friends dont like friends like trump it used to be where you can disagree of politics but you cannot anymore you want to do work and you want to buy companies and start projects instead you are hearing people all around and there is a fire storm on twitter about you and it is an echo chamber and you want to do real work and make the noise go away, you get off the council whether you believe it or not. There are so many of these meetings and you got to go out of the white house how often does this person go to the white house. They have a business to run at some point, maybe a nice excuse to get out of there and get back to work. Right. The distraction factors are not going to the meetings as much as the twitter war against you. We want you walk the council and when are you going to step off the council and you are hit from the other side and putting out that fire. Meanwhile, your employees and customers would like you to do the work you politicize yourself thats the point you quit, youre a coward there is no win. On that note. Mike, thank you very much. Suzy as well a group of over seas stocks of a funny name that you may not heard about. Thats next. Ech. All right, lets find time to make you some money. First up is snap. Cantor fitzgerald is upgrading snap at 1270 right now the risk reward ratio analysts say despite the disappointing daily active user results, engagement are still gr growing. The second stock is american eagle, fbr capital lower expectations for the year. The numbers have come down to 20 from the beginning of the Year American eagle should be able to take market share in the next few years. Not oa lot outside but somethin retail third stock, wynn resorts. Stronger vip Performance Firm believes the current level of the price target of 150 bucks of 136 also. Stratasys, it is a double push from citi group they love the evaluation, the stock trades they know at a discount appears, upgraded last week here. The company got a higher margins and evenly split between growth. Not an upgrade but got some of the double bulk if you will for the ratasys from citi he says. What about the stock market who are looking at fang verses bats explain tyler, what you need to know first is there is no question. What is bats it is an answer to fang these are the Biggest Tech Companies in the country and all of them except for tencent is listed in hong kong. Even though over a 12 month period, bats are coming out on top. They have been riding high for tencent gaming empire high exatiopectations theyll have to deliver when they both report Quarterly Earnings this week both alibaba and tencent have been making more you will want to be on the look out on how those bats fit in larger strategies, guys. Thank you with that in mind, whats the best way to trade the chinese internet giant i guess when i say best way, that implies best way, is there any good way to trade . Yes, it continues to stay long and they all worked out in general, the opportunity is much greater than the u. S. Market luke you look at china and just as a comparable and you look at alibaba and amazon, alibaba ships 12 millions a day and a city in china, there is cities in china has more population you look at the opportunity and investment there there is a real massive upside for alibaba. I think baba is a home run i cannot tell you whats going to happen but i think it is going to be fine i think u. S. Market again, i love amazon, i hear it is a longterm bet in my book stacey, do you agree . Yes, i think david brings up some really good point here. From a fundamental standpoint, it is incredibly popular so there is a lot of sentiment thats out there and a lot of different sentiment that can be out there. This is above whats typically post baba. It is in line of what we see ahead of baba earnings the mark et is not pricing additional risks here. If i had to guess which direction to set up for, there is a lot of investors suggesting of pull backs. They like this outside exposure. I had one potential play off baba here. And this comes with our analyst joe strauss. This is an interesting name. If baba mentions of anything of minority here. This is a name that we like to watch off the baba report as well thank you very much, for more trading nation, go to our website. Apple maybe set to make a big push into healthcare reportedly and talks with aetna what can a deal like that do to the Healthcare Industry . Next on power lunch. Now, the latest from trading nation from cnbc. Com and a word from our sponsor sometimes it is called a w formation because it looks like a w. Double bond is when prices form two distinct low oon as chart the same level well, this is a story that you first heard right here on cnbc aetna and apple have reportedly held secret meet that is would bring apple watches to millions of aetna customers and given that apple watches track things Like Movement and heart rate it makes some people think that aetna may know a little bit too much about us if this happens. Your next guest is a longtime veteran of the Health Care Business and sold his company to aetna and then opened up this, his new business, wines, which is a lot more phone. Joe anderson, a former ceo and current ceo of benovia winery. It was reported yesterday but our own christine farr, great reporting, if it happens, makes people think, eh, they will know too much about me, but should Health Insurance Companies Know how much youre waking and how much your heart rate is at a standing moment, what . Theres two uses for this piece of equipment from a Clinical Management side, being able to have a piece of equipment like this that can transmit important medical information, ie, heart rate or if somebody has arrhythmia or a heart condition or the new applications may be able to check your blood sugar without a, prick to let the care worker know or Doctors Office know that theres a problem so they can intervene to avoid you having a crisis, going to the emergency room or hospital so it will reduce costs and then improve care and the prevention and wellness side i think aetna will has all kinds of requirements for confidentiality and how that is used, and those are things they will have to work out, but i see this as a real opportunity to, again, help reduce costs in health care. Could the aggregate, could an insurer aggregate data in a way . I would think one of the values of being able to collect this data is they would be able to adjust the pricing of their products based on what they find from this information. Whether they find it about mow personally. They could aggregate it and it could be very valuable to them. They have that information right now through the claims data and whats going on in your pharmacy they know pretty much whats going on with everybody. We used to be able to categorize people and rate them as high risk or not so we could have medical interventions for them so they have that data right now. I view this as an opportunity to intervene before they have a crisis. They may not know if i have three classes of wine. I was just going to say that. Or just one. Well, remember, red wine is good for your heart, but, anyway, i i think that the benefits of this, they will have to clear through the confidentiality issues as all insurers do. They know everything about you. We love people who reinvent themselves you sell your company to aetna we hope you made a ton of money, hope it made you a very wealthy man and we like heros of capitalism and instead decided to go into the wine business why . We started this transition even before i was going to sell my company we bought a winery benovia winery, my wife grew up in a dairy farm in wisconsin and we bought a winery at a great price and all of a sudden youre in the business and having been in business before, youve got to use those skills of hiring the best people to make shower that you have a great product, and so we now have vineyards that we use for our wine, but were able to sell to people like costa brown and gary farrell and we buy our high quality wines but its a great business. These are gifts, right . Gifts. Great having you on. What is the business of pot meant to your business out in california are they competing with you for land for labor. For labor. Pickers. Pickers they will actually get in a pickup truck and drive into your fields and say how much are you making, and they will give them a couple, 3 more so its really creating with the immigration issues and things like that, the the farm worker, labor market has really tightened out. Well go have a few drinks. Have a few bevinoas. Up next, check, please. Well show you a baseball fan with very quick hands. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Going somewhere . Whoooo. Heres some advice. Tripadvisor now searches more. Than 200 booking sites to find the hotel you want and save you up to 30 . Trust this birds words. Tripadvisor. All right. Folks. This is why you need to be alert at all times while attending a baseball game. Steve pearce of the blue jays swings the bat goes flying. Watch, and one alert fan with a glove. Oh, what a catch. Look at that. Holy crow. With the bat, saved someone behind him from possible injury, so the next time dont make fun of the grownup fan with the glove. See the name on the back of that shirt cabrera. No relation. Thats pretty good. Check, please our previous guest who once had a medicaid Management Company says privacy concerns if they give you an apple watch and insurance company, they already know a lot of stuff but already. Get over it. All righty. Thanks for watching power lunch. Closing bell starts right now. You know what im going to try here to make the pen bend. To make the pen bend. Im suddenly getting email from the amazing kreskin hes still around. Im still learning something. Welcome to the closing bell. Im kelly evans at the new york stock exchange. And im bill griffin. Panic mode, how the ceo of dicks sporting gods described the Retail Sector today. His stock is certainly in panic mode getting slammed