Transcripts For CNBC Power Lunch 20170822

Groups for the First Time Ever so whos getting liked or not . Power lunch starts right now welcome back a nice rally this hour major averages on deck the nasdaq 100 is up more than 1 its led by apple, amazon, microsoft and facebook apple also helping to drive the dow higher you can see more than 1 gains across the board there materials also a winner today. Fr freeportmcmoran helping to fuel the gains. D Discount Shoe dealer dsw soorg about 20 . Coty is down 14 after the company missed 15 on the bottom line thank you. Lets begin with your money. As michelle just laid out, the bulls are back in charge fear is down stocks are up. Technology leading the way lets find out why the optimism is popping back up i think this is mostly about tax policy talk about tax policy finally coming together. Maybe a few other things thrown in as well it was quitely opened and we opened really strong 5 to 1 advancing the stocks. More buyers than sellers the buyers being very aggressive they got to raise the prices take a look at the sectors see this risk on they have fnot done well this month. They are back again. The more defensive names just a consumer staple Real Estate Investment trust they are all slightly to the downside you can see this with the dow. Apple and caterpillar has been doing well today boeing has a contract out. Coke and proctor gambles there to the downside. Infrastructure has been a complete mess for most of the year rallied on trump election but they have gone no where. Today, havent seen them up a few Percentage Points for a long time another interesting thing is norway reported sovereign wealth funds where it was doing today they are increasing their Stock Holdings they are now at 65 . They will go to 70 . This is a big story. This is the biggest fund in the world right now. Far ahead of everybody else. They own about 1. 3 of the global stock market. If you look at the next screen, they will increase the Stock Holdings to 60 . Thats a big one thats another 100 billion youre going to add into this. You can see right now the current state norway is far ahead of everybody else right now. My question is, i wonder if this will happen with some of the other funds. When you start dealing with 1. 3 of the glow ball stock market, youll increase another 16, 17, 18 , that gets passed around on trading desks and maybe thats a little factor today as well. Back to you. The markets are rallying pretty much across the board today. Growing Political Uncertainty are we in for a scary september. Also expressed concerns about President Trump. Trump in a linkedin post saying im watching how conflict is being handled as a guide and im not encouraged gentlemen, welcome to both of you. Michael, why dont i start by ask you how critical as a backdrop do you see the political environment being or are other things far more important as you look at stocks and bonds and other markets . Yeah. It makes up the tapestry its a big part of it. Its an important part of it im not wor rried about conflict resolution i think the market will Pay Attention to that. I think those are critical its not so much sort of whether you like the guy or not or whether hes effective as a president of leader of our country, its really about can he get stuff done. I think the market is getting worried about that james, september could be a month pregnant with possibilities both good and maybe not so good. Debt ceiling, budget, tax reform progress and more. How do you lock at that backdrop and how do you apply it to the portfol portfolio, the money you run what are you doing i would say the most important thing is the things that will drive stocks are the good news part of the story is it really is economic fundamentals from what were seeing the fundamentals and leading Economic Indicators are positive it is slow growth. At the same time it is growing the bad news is some of the political things that are happening in washington and the debt cellings sort of goe negotiationing be one example, that could derail. People become more concerned and more fearful we dont have the fiscal boost maybe investors arent going to like that. We are of weight equities. We continue to have that position at the same time we are rotating some of those equities into more defensive incomes. The dividends payers. The dividends payers that have sustainable dividends the one that can weather a storm effectively. Michael, how are you positioning or repositioning your portfolios . We have been taking our well overweight equities down to neutral. Were cautious neutral mean what is . Relative to a clients target inside and outside an equity sleeve were clearly becoming a little more conservative a little less aggressive with some of our names. Theres a lot of risk out there. The biggest risk and one thats more important than the political agenda is what the Federal Reserve is doing if you look at the Balance Sheet over the last seven years, its grown enormously as we have all known. Back in june they started saying we will shrink this Balance Sheet. How the markets will react is fairly clear the head wind is much stronger than it was before point well taken. Take lots of risks but its still an interesting environment to invest. Were not bailing out of our market positions i think were just becoming a little more sober. All right michael, thank you very much james, thanks to you as well thank you now to politics. The president delivering a Foreign Policy speech on afghanistan last night he was on point and also on a teleprompter could an off the cuff comment derail his message tonight looking at the Ripple Effect on his speech the president has left the white house. Hes on his way to arizona, as you point out. Hell be going to yuma, arizona where he will be touring a border facility and visiting a marine corps facility and onto phoenix tonight for a Campaign Style rally will be much different than the venue we saw him in last night where he was giving an address on the future of the Afghanistan War strategy. Before that the president was to call for national unity. The young men and women we send to fight our wars aboard deserve to return to a country that is not at war with itself at home. We cannot remain a force for peace in the world if we are not at peace with each other number of politically potentially divisive things that could you describe happen in this arizona trip including a trip to the border wall area where the president has called for an enormous wall and the possibility of pardoning Sheriff Joe Arpaio hes been accused of racial profiling with the use of the police force in arizona. The question about whether or not the president would make that decision today was unanswered by white house officials. They said they werent going to telegraph yes or no if the pardon was in the offering for this trip. The president is different rhetorically last week we saw a pattern one day he was on teleprompter and the next day much free willing and less measured in his remarks. Will we see that again well have to monitor all of this going into this evening back to you. Thank you President Trump calling out pakistan and india during his speech last night. We have a look at the significance and the potential fall out from that moment. Thats exactly right. President trump during his speech made a point to call on neighboring nations to step up their engagement in counterterrorism efforts he also singled out pakistan for not doing enough to stop terrorist activity we can no longer be silent about pakistan safe havens for terrorist organizations. The taliban and other groups that pose a threat to the region and beyond many experts have taken issue with trumps broader Foreign Policy, most agree that trump is right to call out pakistan for not doing enough to crack down on terrorism seen as a safe haven and breeding ground. While the same time receiving billions of dollars in Financial Aid from the u. S. Which trump could potentially cut off if islamabad does not step up to the plate. Pakistan has another economic partner that may fill the void china has invested 46 billion in total in pakistans economy infrastructure, like railroads, dams and roads chinas deep pockets are not incentivizing pakistan to Counter Terrorism and a peaceful relationship where tensions are high its making matters worse. Remember, indian and pakistan had four wars. To drum up support experts say washington needs to focus not just on pakistan and india but ch chinas role in that specific region they come up over and over again. Yet they stay quiet we have a news alert dow jones reporting that chevron ceo john watson is planning to step down from the Company Transition is expected to be announced next month the wall street journal out saying they could not reach the chevron ceo and Company Officials declined to kplents. Im going to make some calls as well hes been at the helm a long time hell be stepping down from chevron. No timetable was given stock market likes it see the stock is going positive with this news hes been well regarded. He has been chevron has out performed some of its big name rivals if you look at the big names out there, chevron has held up well. Remember we asked over and over is the 6 dividend safe were going back to pakistan and india, correct were joined by former deputy. Good to have you here. My pleasure we start with something barv basic. Why does pakistan support the talib taliban . Its a complicated equation dating back to the division of india and pakistan where they are still fighting over the area they are each supporting militants to try to get that territory back and it feeds into the support for the militants. Its a very dangerous tendency of the pakistanins to support those. It feels very analogous to the situation were dealing with china and north korea. We have an ally or partner or someone over there that could have a big influence it feels like we need to work on then almost more than we need to work on the underlying issue that we could solve a lot of afghanistans issues if pakistan could go along what levers do we have to make pakistan not harbor terrorists would taking away the money we give them work or is china going to step in first of all, afghanistan and pakistan are two sides of the same coin. Youre not going to solve one without the other. You need to do both. The president s speech laid out a strategy that ramps up our military involvement in there and the rest of the details are still to be determined with the fact hes focusing on these issues is a good thing with respect to pakistan, president bush, president obama and now President Trump will look at trying to pull back on the military with pakistan in the end, previous president s have chosen not to do that because trying to work with pakistan advistenadvisetend s tr well see where President Trump ends up on that point. Pushing them harder is a good thing. The other piece of this was interesting on india and between india and pakistan they look at themselves as the zero sum game. It will create some tension there. Not overwhelming but it will ratchet up some of the tensions. He wants india to invest more on the Economic Development of afghanistan. We heard nothing from that angle on President Trump and what we will do to entice india to do that as well i dont think they will do it unless we ratchet it up as well. Lots of questions out there. A good first step with the president focusing on these very important issues he talked last night about approaching this issue on three front, the military, diplomatic and economic as you look at those three i assume youre going to say he needs to do all three of those things which one of the three is the most important in pushing the situation towards a better position right now the taliban are making a comeback. A strategy that focuses on denying them ability to come back and gain more territory is crucial. Weve been there for 16 years. Its not just a military strategy what people are asking about the speech last night is what is the diplomatic strategy. The office at the state department that deals with hafrg and pakistan and we dont know i think president will have to come back and address what is the goal here. We didnt hear any goals we dont know what the strategy is killing terrorists in afghanistan has been our policy for 16 years its not winning whats the Winning Strategy here we still havent heard that. He made clear what his goal is not it is not nation building. He suggested afghanistan should have a stable and not corrupt government we have been working that for 16 years. It hasnt happened right its a good line honestly, they asked india to do the state building for us. Come and build the roads and bridges. Thats also two sides of the same coin. Were not going to end up getting an end to this war until we get at the root cause theres not a military solution in the end thats a good sign that hes listening to the generals. He also needs to listen to the diplomats and come up with a strategy that deals with the root causes of the terrorism and the threat all right thank you so much, nancy my pleasure a new report out says that this one user group is bailing on facebook. Who they are and whether facebook and some investors should be worried. First, macys has a new president. Can he stop the bleeding for investors who have watched macys stock sink . Well hit that angle next. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Shares of macys are higher by more than 4 after appointing a new ly 15 is it going to help the retailer turn things around she joins us now with the highlights courtney good afternoon. He currently holds the title of president but hooe passi ihes off september 8th. He joins macys after two years at ebay. He is joining at a time when the retailer is consolidating its merchandising operations from three silos into one Organization Also cutting 100 more jobs thats not all hes doing. Take a look behind me at this Customer Service area. This is going to be many macys stores where you can pick up your online order inside the stores busiest door not only is it more convenient for shoppers, they tend to buy more when its located here. Perhaps because of all that time they are saving. Macys will be adding lockers to make online ordering pick up easier if you dont feel the need to interact with a human associate. The changes we have made this the Shopping Experience and the assortments is lifting the building we believe we have the right strategy with yesterdays announcement and with this new leadership with hal, we believe we will have the team to take us forward, faster. Investors are hoping that macys can turn around ten straight quarters of lower comparable sales in shoes they are working on an open sale format where shoppers can choose the sizes themselves, see the availability or get the help of an associate fine jewelry is also getting a makeover thats lifting sales hes adding more backstage locations in macys stores those are the outlet part of the stores back over to you thank you very much what do all these changes mean for the company and its investors . Lets bring in retail expert he joins us now by phone the stocks down 48 . I know youre not a stock analyst but this is trading at. 25 times sales. Investors are effectively valuing its Retail Business as zero do you think the sell off has been overdone . Yeah. I think thats probably unfair the changes are important. In a world where women dont need to be told what to wear anymore because they get so much stimulus and information about this from so many places the departments have to be more of a participant in that conversation rather than their job of merchandising and almost leading or dictating that. What does that mean i would say what that means is probably being instead of place to get stuff, really starting to play a role in helping women identify fashion trends really amplifying those. Being much more trend forward in your departmental areas rather than relying on the big classic brand thats driven the economics of the department. The market cap of macys is about 7 billion the location is worth billion and a half, maybe. Lets be cheap thats 6 billion in value only across 750 some other stores some they lease. Some they own. Why do you think the market is valuing so many of these retailers at zero . The value of macys business is zero, maybe less than zero i think the valuation is based on expectation of future performance. If you expect its going to deteriorate the current value would be really low. I think its the amazon factor which is probably overplayed in apparel. I think the apparel retailers have bigger problems that being said those are fantastic problems that need to be addressed i think the more you can start to talk about macys and their Business Model changing, the happier an investor would be thanks. Theres a war brewing in miami beach over minimum wage. Welcome wback we have a news quote on china this all coming from an Embassy Spokesperson this morning the u. S. Government sanctioned several chinese firms that buy coal from north korea and Front Companies located in china that are believed to help north korea sell arms. Miami is the hottest start up city in the country according to a recent survey but in miami beach theres a war brewing between city officials and Business Owners the minimum wage kate rogers is live in miami beach with whats at stake hi, kate. Reporter hey, there. Earlier this year local judge struck down an ordinance raising the minimum wage to 13. 31 by the year 2021. Thats about 5 higher than the state minimum wage of 8. 10 an hour the Business Community here is really divided over where this should be. For example, at panther coffee employees starting at the lowest pay level are paid 10 an hour husband and wife team joel and latisha say they are making 15 an hour and lower wages are not an option. For our business Social Security important that people take home a living wage because we want the team to feel respected. We want people to stay long term we want to build a culture where they know that they are coming to work somewhere where we understand that you can live with less than that. Reporter adam at the Daily Creative Food Company starts his workers at 10 an hour since he doesnt believe wages should go above 13 they might run into some problems where we would have to decrease the amount of hours minimum wage employees work. We also might have to raise menu prices that would affect customers and the overall business as a whole. Reporter arguments in the appeals phase of this case will begin in october we also talked to the citys democratic mayor he says this could go all the way to the Florida State Supreme Court but he believes the higher wage will prevail. We know those entrepreneurs will be watching us very closely as they make decisions about hiring and expanding here in miami beach. Thanks. Good to see you. Why facebook is having a people problem well tell you the group a new report says is starting to like facebook less. Thanks very mump here is whats happening at this hour President Trump is on his way to arizona. He is scheduled to meet with Border Patrol officials before attending a Campaign Rally in phoenix. Last week mr. Trump hinted he may pardon joe arpaio. Hazmat teams called to the Green Bay Police Department Headquarters something inside an envelope made two employees sick. No word on what it was but the opioid norcan was given. Seven muslim women petitioned the court next the government will need to ame amend sections of the law that allows that practice lots of damage but so far no word on any injuries that is the news update this hour nus me itwred mp is backn o miteti welcome back take a look at the market. Stocks are at session highs on pace for their second best day of the month the s p is up 20 the nasdaq when it comes to percentage gains, the biggest mover with a gain of 75 points tech and materials are leading the way. Real estate is a drag. Cisco caterpillar and apple are your dough leaders macys and foot locker are topping the s p 500 right now. Its definitely a fickle crowd out there. Facebook is losing teens and tweens to snapchat and instagram. For the first time in its forecast, emarketers says facebook will see a drop in users in the 12 to 17 age group. Theres two things that are interesting. Number one is instagram which is owned by facebook. Its kind of like facebook is losing to itself you report that 14. 5 Million People in the 12 to 17 age bracket will use it. I thought no tweens were on facebook it wasnt cool its grandmas network thats true my tween daughters, grandmother is on facebook are they . They are. They both are. Honestly, i think the older the teen is, the more likely it is that theyre going to still be a facebook user. Snapchat is relatively new really popular with the younger teens and tweens i think thats where were seeing a lot of growth going its taking things away from facebook thats pretty exciting as they get older, would they end up going to facebook as they get older just like people complain only elderly people go to the symphony in. Its possible once you start using a social network, youll keep gravitatin towards it as long as your friends are there. Thats whats happening with snapchat with facebook, maybe your friends arent there you have to remember that for teens and tweens, commune indicating this fast paced action, things that disappear in 24 hours, thats what they want to do. It doesnt necessarily align with the way that facebook is typically used no. Because your parents and your friends can see what you write on facebook and instagram and snapchat are used for dispyrie i disappearing messages. Snapchat is no parents allowed because they cant figure out how to use it. Very true that is very true. Snapchat intentionally makes things harder to figure out and teens and tweens love that they love that something a bit secret a little bit they know that maybe their parents dont know how to use i think youre right about that. Looking at the impact of the changing face, literally, of social media well see you again. I like the aging out thing its like well, son, youre 18 now. I got you facebook account i got you facebook account. And a drivers license. Will this changing shape and face of social media impact media in general are they one in the same andrew, were kind of making fun of it but it matters facebook rolling out original c content. They reported 29 Million People watched that newscast. Is this permanently going to alter the landscape or, will, to our point, the tweens of today become the grown ups of tomorrow and their Consumption Habits resort to normal im low to call this permanent. I think this is still early days when youre referencing these video programs that facebook and snapchat are just beginning to embark on, i think those he be critical this terms of keeping a young demographic on the platform do the network s have a lot t gain by working with these the Networks Like nbc thats part of our company, abc, cnn and others or in the News Business is this sort of a question for them we can sit and make fun of the demographics all we want but its possibly even more geriatric. Thats the whole point that youre seeing snap chat getting so much traction with networks who dont feel they are reaching millenials on television not only are they coming to these platforms and seeking the fountain of youth but doing it in interesting new ways with shows that dont look anything like they do on cnn or nbc what does this mean when you Start Talking about investing in these sector sns. You have to look at the media, all the networks and Cable Networks even those existing today on the internet they could be history except for one thing. Somebodys got to create the content that twitter and facebook and google and instagram and snap chat all have theres a reduced role for content producers and we are the producers. The way i describe maybe this is the right way to describe it if michelle is driving along and sees a forest fire and takes a video and posts it to her instagra instagram. Instagram owns that video. Theyre the store. Were the roduct yes also premium con tent like cnn are an important part of the mix as well. I think theres room for both. Its a key to the future and its happening almost instantly now. Its really impossible to predict and keep up with it. Think video first and global second short Attention Span six seconds is about the limit on tv or on the phone thats on tv. It will come down to internet and across the whole digital are people who are in legacy meeting going to trade dollars for dimes here thats unfortunately the inevitable truth its other fellow who is above 60 at the table here we all held you talked about some of these companies as if they were facing a threat is the Cable Company facing a threat happy news for cable owners the largest Internet Service providers as well as pay tv providers. What they lose on cable will make up. Andrew before you go maybe im just cockeyed optimist. I hate to be Glass Half Full but i dont care how people watch. They watch cnbc on their smart phone shouldnt we be happy. You should but i bring it back to point about dollars and dimes. Dimes are whats available on digital platforms. I think that gap will close. The gap will close in time and you got to start somewhere youre going to to be quick you were distracted. Thank you. Nice to have you in the house. Thats next. Hes a private wealth investor this is her cnbc debut. A lot more fun than we see. Im happy to hear that. I need some fun. You like equities here . We love equities. We are delighted with what the market has done this year. Were happy. Clients are happy. We think these horses can still run. We think theres gas in tank and were preparing clients for a normal Market Correction how much . 5 to 10 . I dont want to predict the future because i cant i think in general the market is going higher and somewhere along the way sooner rather than later it will have some sort of correction when you say youre preparing your clients does that mean youre changing anything in their portfolios does it mean youre doing anything or you just sort of calling them and stroking them and telling them to be ready and dont worry. Were right where we want to be. Theres a lot of talking about what this is supposed to do for you related to the goal. Reminding clients that there is volatility in the market its not a problem its something that happens in the market in order to get a 12 gain you have to have some volatility thats normal. You like tech and finals. Which tech i like a lot of technology. We think technology is still growing. Its up 20 this year. We think theres still more growth there we think that financials will do well we think higher Interest Rates will do well wouldnt the higher Interest Rates hurt the fang stocks its such big multiples. Just do discounted Cash Flow Technology is everywhere. Theres so Much Technology theres two things i wanted to get to. Number is have you had any clients called to say i dont trust the president. Congress is freaking me the pre congress is freaking me out, go to cash. Are they bringing it up . Washington is one concern for clients. We are concerned of inflations and still concerned of bonds and you know duration risks. We are concerned of single issue concentration risks. If you have a txdset stock thats a nice run up, maybe trim it back another stock that we are having conversations with is expectations of what you can expect for returns we are preparing them of a 12 market maybe high. Lets be happy and joyful that we have this and be prepare that it will correct and the need to go up be joyful and prepare kimberley, well leave you i think thats fine of a note onto apart as any i could imagine. Thank you come back again, that was a debut. Well be here. All right, coming up. Street talk including one name doleignalysts see a ub dit return in stocks coming up. Cameras. Introducing the newly redesigned gla suv. At a price thatll make you feel like youve gotten away with something. The 2018 gla. Lease the gla250 for 359 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Time now for street talk. What you need to know about. Burger king and popeyes in april, they launched fruit loop shakes and burger king brought back their mac and cheetos. All right, stock number two, estee lauder, a double boost todays not helping the stock. Research upgrades to a buy for a whole fume of reasons. They like retail store especially heavy presence at airports travel retails yeah, when you are stuck and captive. You walk around and you run out. Ecommerce is a nice mix and high end beauty have a strong deband. 125, stocks down about 1. 3 next up, tempur sealy, price started to go from 80 to 60. The company is recapturing a market share at what they call a mattress firm. Tem they had a decline in market share. There it is. Analysts are saying they are getting the share back because the companys Consumer Market is growing faster than they expected finally a small cap call of the day is innospec. The Company Works with oil refining and cosmetics, odd enough it is upgraded to a buy to a neutral. Core business is okay and earnings are achievable. Iosp, thats about 15 upside. It turns out to be a fake company. You made it up. It is a real company. Getting an upgrade today got it folks, thank you. Still ahead in the next hour of power lunch. Looks like the white houses tax plan is taking shape there could be some deductions shark tanks kevin oleary is joining us and the big business in jerky, it is a 3 billion business and the second best selling snack food behind potato chips the ceo and the cofounder behind chefs cup wl iniljo us, all chefs cup wl iniljo us, all that and more 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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Well have details value plays or traps should you hold your noise o some of the beaten up oil and gas right now. Even jayz and beyonce getting over bid until they find their dream home folks, wait until you hear what they paid for it power lunch starts right now i want to check the markets. They are nice to look at right now. All of them. The dow and s p 500 is at sessions high. The nasdaq is breaking a four pay losing streak. Almost 20 points and the nasdaq is up more than 4 lam research and micron and coty Toll Brothers are falling. Foot locker in the green after a couple of rough days the worse performer for the s p for the year is down 53 so far this year. It appears we maybe starting to see some progress on tax reform. One of the reasons why we see the markets are higher today plans are being discussed may mean taking on some called the sacr sacr sacred cloud in the tax cut. Ylan mui has the details political reporting today that there is new consensus to get rid of some of the most popular deductions mortgage interests and deductions for state and local taxes. Facing in full expensing these are all deeply in trenched of the tax codes and hearing a lot of push back from capitol hill on the idea that these are the battles that they have definitely taken to fight. There are still a lot of skep c skeptics taken over. You see ways and means chairman brady visiting a facility in kentucky today and Speaker Paul Ryan will be talking taxes at a west coast in boeing later on this week. Some conservatives are pressuring republicans to take the easy way out here. Pete king tweeted the gop must go first with tax cuts and not get bogged down with tax reform. This is why tax reform has its own hag on twitter tax reform is hard thank you ylan. Is the mortgage interest deconductid deduction really in play diana olick has those details. Michelle, what . Deductions discuss absent from the recently released white house principles on tax reform yesterday, Mitch Mcconnell says if you are worried of deducti s deductions, quote, you can breathe easy. One industrys insider says he was asset tt the meeting and he it is on the table theyre not going to get rid of it is not the same assaying they wont touch it interest paid on 500,000 of mortgage debt for individuals and 1 million for mortgage debts for couples enjoying it. That could be lower than 600,000 of mortgage debt. Keep in mind the median home value of america is about 200,000 who does that really hit in 2016, it was estimated to cost the government 77 billion but only about 20 of taxpayers benefited from deductions and those are not the most cost burden homeowners. If the cap below to say 500,000, that would affect 4 of borrowers but 15 of the dollar volume because the deduction is skewed towards income taxpayers we did contact senator mcconnells office but no answer yet. Back to you guys thank you very much, guys. Congress returning from its summer work. Lets bring in our larry cutler, i know this is near and dear to your heart lets talk about the deductions there are a lot of them. I dont have to pay taxes on the value of my healthcare premiums. I dont have to pay taxes on my donations into my 401k plan all of this have their own little constituents. Why not just cap the value of deductions at 10 or 12 which i think romney proposed. You could it is possible and plausible i have not heard that of a uniform cap. Lets backup for a second the market is up 160 points. Trump gave the best speech of presidency last night and it was a unifying speech and that was very important after the event of last week, you know what i am talking about. It was a healing speech and it was a unified speech and a also speech not that it laid out a different idea for how to handle afghanistan and some is calling a trumps doctrine but also he changed his mind he followed his instincts and in this case one can do this basically this was too globalists and steve bannon hes got a rally tonight in arizona, are you worried that he may out do it. Good trump bad trump. Teleprompter. It is like he went back to monday where he gave the good state. Look, it is not guilthe end. A unifying speech with rave review tax reforms and Everything Else is looking easy. Thats what the market is telling you. You may get infrastructure and tax reform and fullblown tax reform or you may get skinny tax reform markets are connected to washington and this is the perfect example. Come back to the question of deductions here. Because you know from long experience that everyone of these deductions have a constituen constituents the realtors take away the mortgage can you imagine the lobbiestyis going to come down. Yeah. I can. Thats the way the game work all the blue states that have those high state taxes i am so much totally so much of in favor of abolishing those Tax Deductions United States government should not subsidize a certain bond of high spending in blue states i am so r are i. Thats taxpayers and other states have to pay for that. That means theyll have a taxpayers revolt. I cannot wait or well have a massive migration. Thats absolutely correct but, look, political reporting today of the tax reform is likely come on, we have been talking. Exactly no point of political the these guys have the need of so called gang of six groups or four of many weeks, they are navor natu narrowing down the possibilities. I know paul ryan has jumped back on the growth span wagon and the senate maybe behind. And i have got to tell thu before this thing does not have to be revenue neutral. There was no law and constitutional amendment, it is just tradition from the cbo or whatnot, this can all be changed. Deficit neutral would be nice and the store card can be out in 20 years one of the best of the wall street journalism by fed smith of fedex. This is last week or so mr. Smith gives to republicans. Look at what they say . For heavens sake 2 is unacceptable if you a, simplify taxes and lower the rates and thats your postcard affect invest in infrastructure and free and fair trade, you can increase growth by 1 to 2 . Thats 3 to 4 , lets call it the kudlows zone. I am in favor of getting rid of these deductions dont get me wrong just simplifying the personal code is a terrific thing amen. If you double the deduction which is in our campaign and still alive in the west wing you double down the deductions for people of 60,000, most of them dont need a deduction at all. You can Index Capital gains tax which is an old idea that i think should be looked at once again. Matt scha maybe you dont have to fiddle with that. The poll, American Action network. No one can get more for you in a time, kudlow. I wish i can do this i saw sloppy thinking on this network before not you sully. Are you pointing at me . I am not pointing at you guys the guests are as guilty here, 60 of respond dents say they would raise taxes on rich people. 77 respondents believe we got growth and wagers and getting rid of deductions and better scoring or we can just keep going this is the time. We have to take a break larry kudlow. He opened the door. You missed your falling. I cannot read a word on you. You should have been a physician. [ laughter ] larry kudlow i appreciate it. Here is whats coming up at power lunch. Mr. Wonderful says you got to ignore all the dc drama. When it comes to your investment, it does not matter by enter, stay away, should you buy some of the beaten up oil and gas as many of them interfering the market rk aotortoo,tio talk about beef jey, l me d sck around livestream your favorite sport at the airport. Binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv on every screen is awesome. The Xfinity Stream app. All your tv at home. The most on demand your entire dvr. Top networks. And live sports on the go. Included with xfinity tv. Xfinity, the future of awesome. Stocks are in the green today, take a look the dow industrial the nasdaq is in the lead. Apple and boeing, a couple of names are leading. Joining us, kevin oleary. His two stocks for the 2017 cnbc stocks were boeing and apple both have something coming. Whats changing and whats different from ten years ago, every time when you buy from them or any equipment whether it is military or aircraft, you are buying a Prescription Service that you pay for now, it is growing and it is going to be just like the environment around apple changing, the prescription platform services. What i love about boeing is every time you buy something, you pay for ever to get something. Thats why it is top choices. Boeing, we are showing people on the screen right now of a 53 year to date thats tremendous. Thats why you are doing so well is there a price in your head that says now it is gotten too expensive. I dont think investors looking at this new business platforms that boeing has. The margins we are seeing are obscene and practically 100 they keep on selling the iron and the software i will sell boeing when everybody knows. It is absolutely a software prescription company the defense going on and president s speech and use of all the products they make the Prescription Service thats practically ignored and i think when that gets discovered it is going to get changed kevin oleary, you just told them now is it going to sell . No, i all rigready own it now, lets talk about stocks you hate how about this whats the last stock you sold i think you said ge. Have you had any regrets or second thoughts about that ge is where money went to die for 15 years i think the reason that maybe interesting to look at again and i have been doing some work on it, i think the activists are going to tear into this thing and tearing it apart again its got a lot of pieces that are not growing but it has some interesting businesses it is a huge Portfolio Holding for many people. They regret only because it is done for nothing for so long i am betting it will be worth more than 25 and january of 2019 because i bought some calls on it. I am still not there owning the equity and i am not willing to commit the capitals yet. I want to see some activists vo involved is that the catalyst that you wait for before you get back in . No, i hope he does a great job. It reminds me of a classic comedy moment when lucy says to rick rickey, you got a lot of explaining to do at the end of the day, this stock is a dog and a lot of money have died there. I am interested in new management and new board and start to push them towards breaking it apart. I think there is more values in the pieces i want investors looking at that way. It is rickey ricky lecardo tt says you got a lot of explaining to do. I have my own impersonation at him can i throw it at him . Are you ready when ace number not a number . When it is not a number. You got the food and you got the ten years with a two handle and you get a total eclipse of the sun. Thats what i am talking about pretty good kervin. A little more hands. Jump up and down. I am going to meet the guy in the pit in a minute. Le liesman, you just dont get it we are talking about numbers well talk about volvos electric push in the u. D. San chinas push on jeep brand whats driving the autonews today. Chances are, the last time you got a home loan, you got robbed. I know i got a loan 20 years ago, and i got robbed. Thats why i started lendingtree the only place you can compare up to 5 real offers side by side, for free. Its like shopping for hotels online, but our average customer can save twenty thousand dollars. At lendingtree, you know youre getting the best deal. So take the power back and come to lendingtree. Com, because at lendingtree when banks compete, you win. 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. It is a popular crossed over utility vehicle. It is one step of having basically an all electric lineup here is the ceo talking of the transition to go electric, Lex Kerssemakers we have said by 2025, we want to have 1 million electrified cars in the world take a look at this this is when the chinese automaker bought volvo from ford it is up about 500 since then over that period of time, guys, shares of ford dropped to 18 . So another story, chinas great wall motor apparently is going after chryslers jeep brand. What are you hearing of a possible chinese deals for jeep . Great wall have said on the record, they are interested in Fiat Chrysler. And so what you have is a situation where chinese automaker understandable that they would want to buy all of Fiat Chrysler and they make suvs over in china. Fiat chrysler says look, we have not been approached and by the way, we have talked to some experts toincluding one person thats apart of cfius review yes, this would need cfius review i also have people asking me, well, whos great wall and why do they think they canby Fiat Chrysler they are among the big automakers over there. Their sales went up 44 last year they are being encouraged by the Central Government there to expand beyond china. Take a look at shares of Fiat Chrysler and General Motors. He wants to make a deal if the price is right thats why shares of fiat have moved higher relative to General Motors in the last year. Phil lebeau, thank you queen b has a new hive. Power lunch back in two. Whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if. There was a single site. Where you could find the. Right hotel for you at the best price . There is. Because tripadvisor now compares. Prices from over 200 booking. Sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Of the iman that was killed as the master mind of the attack. 15 people were killed. Firefighters had their word cut out for them along the crotia coast fire villages have been evacuated as that fire inches closer to homes and buildings. More than 100 soldiers had been called into help plans for people to visit russia are in the works. High ranking vatican Officials Say there is momentum in that idea that was no angel in the out field last night in los angeles. It was a pigeon Holding Things up unfazed of what was going on eventually, the umpire ejected the bird for its own safety. Thats the news update at this hour ty, back to you. Sue, thank you. Here is a quick check of your mar markets right now. Nasdaq is in the lead. Real estate and utilities are the only ones in the red these days the so called fear index, vix. Lets go to Jackie Deangelis crude is getting a bounce today. Looks like a little more than half a percent here. September rolling out to october after todays close. A little volatility in this trade. On the inventory side, expectations from plat drawing crude and gasoline of 3. 6 and 1. 3 milli 1. 3 million respectively. Other headlines talking about opec compliance with its cut and continuing to boost the market along. We got the weak dollar as well consensus of trades, it will stay over 45 and heading into labor day on seasonally after that after that, it is necessary to reevaluate to see how the supply and demand situation looks back in the fall. Thank you very much. Oil bounce today bringid today a little bit of a lead take a look at a one year charge of wtis crude oil it is a huge energy latent of oil etf. The xle have just dropped and dropped and now down 10 on the years. You under performed the dow by 30 . How do you invest in oil if at all if you think that oil is going to recover lets bring in rob at tortoise. How do you invest given this kind of Energy Environment here is what you have to think about. There are a lot of opportunities in the Energy Sector thats beyond oil we see that at Tortoise Capital in a lot of ways Energy Infrastructure is great to look at there is a starvation for yield right now because the tenure is barely over and you can buy infrastructure stocks that have yields thats growing. Thats a great place to look when you are battle through this environment. You focus on the Natural Gas Company and natural gas have been weak but fairly consistent. Talk to us about eqt Midstream Partners and eqm i know you are going to highlight the yield. Michelle will remind me this as well yee yields are only good until they go away. Why are you so comfortable in eqt. Thats one thing we are looking at tortoise closely. It actually not only paying dividends but it is going to grow its dividends double digits for several years for the years to come. When you look at eqt midstream, it is more of a natural Gas Midstream Company and Pipeline Company whose revenues derive from the transportation of natural gas fch if you look at whats happening, natural gas is cheap and abundant and so well continue to see demands for natural gas rise over the next several years as we export more natural gas out of the u. S epd pipelines there you got to make sure that the contract upheld and that they long last. Enterprise product is another great example. Enterprise Product Management have grown the dividends in this particular case every single quarter for the last ten years it is a s6. 5 dividend yield in this environment diversify it is a Great Company to own especially in this environment rob thummel, well watch those. E thank you. Thats right, johnson and johnsons are joining a number of healthcare. The healthcare giant is taking a stand ahead of a planned execution of prisoner in florida. The first of t the company say it never distributed the drugs in the u. S. And last year die vested the product in the rest of the world still said in a statement quote, jansen discovers and develops medical innovations. The association for assessable medicines of the trade group for manufactures of genetic drugs opposes Capital Punishment we make products to promote health, we dont want them to be used to kill people. Do they have the ability to enforce that if the state has access to the product. Can the state use it as they see fit . Companies can try to restrict the distribution in this case, they dont sell this drug, they discovered it years and years ago. They can try to work for make sure they are not sold let me turn into another topic and thats johnson and johns johnsons of the 400 million verdict. The california case involving baby powder that was found by this jury to at least cause a womans cancer thos this is not the first but the biggest. So far. It brings in billions and billions of dollars every year 417 million from a jury is not financial these things are mounting up. There will probably be more j j told me today they are planning to appeal this specific case and they lost four in st. Louis. They have one there and gotten two tops down in new jersey. Theyre in 700 million in damages and awards here. Si science says this does not cause cancer the product was so well known and now, it is made of corn starch but there was a time it is so popular that you would think the number of lawsuits that could face could be quite large. It does seem like a number of lawsuits out there this has of course, been used for decades and decades and this is a specific use of feminine hygienes that theyre talking about in these cases that this caused owe valerivarian cancer. Beyonce and jay z is taking out a 52 billion mortgage on their new home joining us again the total price tag and what the house looks like, 52 million rtge [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. Duncan just protected his family with a 500,000 Life Insurance policy. How much do you think it cost him . 100 a month . 75 . 50 . Actually, duncan got his 500,000 for under 28 a month. Less than 1 a day his secret . Selectquote. In just minutes a selectquote agent will comparison shop nearly a dozen highly rated Life Insurance companies, and give you a choice of your five best rates. Duncans wife cassie got a 750,000 policy for under 21 per month. Give your family the security it needs, at a price you can afford. Since 1985, selectquote has saved over a million families millions of dollars on Life Insurance. It is hard to believe and there are billionaires that out bid beyonce and jay z. The couple paid 88 billion home it totals of 30,000 square feet and its got six buildings and not one or two but four swimming pools and bullet proof windows and doors and a 15 car garage. This follows three years of houses which they were repeatedly out bid they tried to buy this house in 2014 before they had a deal. The founder of mind craft stepped in and offered 70 million and they got the house. They were out bid, designer tom ford bought it for 50. They toured a 250 home and a lot of property but they could never get the right price. They are getting a mortgage for 52 million. That works out if they got a 30 year mortgage around 4 of monit monit Monthly Payments of 50,000. They are saving 150,0 150,000 ah this is all about the cash flow they are smart consumers. When you get to these prices. Does the Real Estate Agents still get the Standard Commission no, smaller percentage. Usually like a percent or a little bit less but i am told still 70 million. You go to a lot of big homes. I live in a nice home of three pools, right it is hard to find my daughter sometimes hey, it is not that big of a house, how do you locate your family members if you are calling out your kids. Gps what room are you in . People lose their phones a lot in these homes and family members and some people have segways to get around in these home they have 99 problems [ laughter ] rich peoples problems. 30,000. Seriously, intercom, where are you and come down and talk to me. A lot of homes have locaters that you can put on and locate all your family members. You bring out your ipad and you say where is daughter and you can find her tyler is in the study with a candle stick it is like the magic map in harry potter and you know where everyone is at any moment. Robert, thank you copper i want to continue to that story. Copper is rising to its highest level nearly three years these stocks and copper prices surge. Mark, are you a believer in the Copper Company no, we are not. These commodity exposed stocks related to Infrastructure Spending a really dependent on china. Copper is up 18 today chinas fixed level have been decelerating from 11. 4 all the way down to 8. 6 quite frankly we dont think demand from china is going grow fast enough. So we actually like a Market Neutral way to play this this ongoing equity over shoot as well as commodities over Long Energy Stocks and while shorting the global gold miners. The sell off have propelled gold prices we do expect the Global Growth is going to continue to accelerate while the central bank as are tightening we think growth is going to trump liquidity. Mark, is not a believer, are yo you, boris copper is up for two reasons. Fundamentally i agree with him china is not growing for the level of companies the bubble that you start to see in the copper miners is probably going to abate as prices begin to ease at the oechend of the y. You will see the amount of copper and same things of those stocks copper haters, both of you. Boris, both of you, thank you. For more, go on our website on cnbctrading nation. Com a lot more power lunch ahead here on cnbc and now your trading nation stats of the day and a word from our sponsor. In a losing trade, avoid letting your emotions get the best of you. Too often traders want to add to a losing position. Experienced trader will say your first lost is your best lost in other words, take a small lost and move on before it becomes too big. This is chefs cut real jerky. The company was founded in 1929. They started selling jerky long then and were just named of inc. s Fastest Growing 500 companies. Dennis is here, cofounder and Bart Silvestro is the companys ceo. Gentlemen, welcome. Thank you. You were caddying at bayonne golf club. I was, splitting my time there down in naples, florida, where i met blair who is who is my cofounder behind chefs cut. Is he a chef at that golf course no, no. He had moved down to florida after having some health issues, was caddying we became friends. You were both cadeying. We were caddying. Took me about two years to get the recipe from him and told him if we can make it in new york we can make it anywhere. Caddying making 80 bucks a bag. Maybe 100 on a good day. And now 100 million in retail sales expected well do over 100 million. Fantastic congratulations, first of all. Thank you, appreciate it. Its a really crowded business i buy chefs cut jerky and i like it and two other brands that i like but i wont mention them right now it feels like youre coming out of the woodwork. They are coming from everywhere as every growing category, as soon as people see growth and a few acquisitions in the category everybody floods everybody wants to get in thinking they can make a fast dollar. How do you stay ahead of them well, you saw ahead of the curve by being fast and nimble giving the consumer and what they want, better tasting product with the health attribute. We start with great test hence chefs cut only jerky out thereto with a chef at the helm creating great recipes from quality ingredients. Same way you cook for friends. Blair was making jerky for friends. Got to get them to buy it first. Correct. If it tastes better they dont know until they buy it. How do you get them to skip by the big dog in the jerky world . Slim jim and come to your brand . I think a lot has to do with packaging. Packaging stands out off shelf, it pops. Everybody else has a window in their bag and you see a clear window where you see the dried meat and sometimes the little oxygen absorber that looks awful and we decided were going to go with a premium package, be opaque and stand out and make us look different and then transparency is overrated always felt that way. You have turkey, chicken, bacon, bacon, steak. What do you do you dry this beef and season it, thats what it is . Its seasoned its hand cut. Its marinated for at least 8 to 24 hours wet marinated and slow smoked process. Slow smoke. Thats how you make a jerky. True stories. Happened to me twice with jerky recently where the woman at the Cash Register says do you really want to buy that its very expensive because the prices how much do you charge for this bag retails between 5. 99 and 6. 99. The in new york city the premium is much im paying like 8 a bag. Its two and a half ounces in a bag. Thats still pretty expensive. But youre also getting 30 grams of protein in a bag, and to get lean protein like that you would have to buy two protein bars which are 2. 50 each anyway or three greek yogurts. And they taste as good. You probably wont answer this but im going to ask. Whats the cut of meat well, we use different cuts than everybody else. We try to say to an inside round, similar to a top round with the cap off and we use greated beef most of the other people use cows we use greated just like in a steakhouse. The reason im asking is not to have you tell us what part of the car, to know if this is driving up cattle demand if beef jerky is taking off is this the best of the rest of cattle that are already going to be exterminated, or is there more demand for cattle, cow, because its a new red meat category i think its a little bit driving the category, but you see most of the other brands are buying from oversees they are buying from uruguay, australia, new zealand all of our product is usd a and u. S. Beef. Den es, whats next for your business in the world of jerky i mean, what can you do . How did you top what youve done well, well continue to expand upon the space. When we created the brand its all about, you know, a presence we can have in the Grocery Store and supermarket. Why we came up with the name chefs cut and think they can overlap privately owned yes, privately owned. Do you have a lot of investors . How is that working . A couple of funds behind us who both came on in the last two or three years, and and they both have been huge for us. Von miller is an investor and big papa is an investor. Olivia munn. Do you ever dream of going public do you want to go public or sell or have you gotten that far . I dont think we think about that today my goal its all about the jerky. Its about building the jerky and building a brand thats sustainable for the next 20 years and good outcome will come, whether its an acquisition, public or we turn out great dividends. What did you do before jerk i was a Vice President of sales and operations for popcorn indiana. Popcorn indiana, cool. Im going to try some i had wisdom teeth out this weekend. I learn that we have a meat snack space. Thats a new space meat snacks. Thats a good spates. Thank you ounnis and bart, thank y. It was fun. Check, please is next. All right. Time for our check, please i have to say the food is thank you for coming on. This is a meat snack space weve learned that thats important to note. Thats a new thing. Old is new again. Beef jerky is an old thing sailors 200 ago had salt pork. Whale oil. Lewis clark, i bet. Travel by sail is going to come back. Yeah. I could be wrong. The other thing i learned today is you are actually a jerky fan. I love jerky. I eat so much jerky. The things i learn every day. She need to be called aficionado. I ate three different brands of jerky and what you learn during the commercial break. I said i like this other brand that brand is really good and appealing to women based on their flavors. We go with traditional flavors and just premium them. What flavors do women want . Theres a blend that does like a limb citrus lime citrus, very good. Cold beer, it would be great. Really, really dlirns. Do you have a check, please. That is my check, please. I dont other than how are your teeth, by the way. Seem just as wise as you used to be. Havent lost my wisdom, just the teeth. A real delicious power lunch. Find me some lunch in power lunch. Thanks for watching power lunch, everybody. Closing bell starts right now. Enjoy your jerky hi, everybody welcome to the closing bell. Im welly evans at the New York Stock Exchange do you like jerky . I was about to say i dont really, but im hungry now that they have talked about it. Made it look pretty appealing. I want it a little bit. Im wilfred frost in for Bill Griffeth stocks popping on reports that progress is being made on tax reform how close the lawmakers and the president are to some sort of agreement. Up 185 and the wall street journal says chevron ceo john