Transcripts For CNBC Power Lunch 20170413

Power lunch starts right now. And welcome to power lunch, im michelle carusocabrera. Stocks are in the red this hour, giving up modest gains they had earlier. The three major averages are posting losses for the shortened trading week. Thats right, no trading tomorrow. That would mean a second straight weekly drop the third out of the last four weeks. The big sectors in focus, the financials. Jpmorgan, citi, all beating estimates. Mixed results for wells fargo. Thank you. Im tyler mathisen. Heres what else is happening at this hour on a very busy news day. Seems like there havent been any yet lately. Yext the latest tech company to go public. They soared 30 on the first day of trading. Uber had a secret operation to track lyft drivers according to the information the ride sharing Giants Program called hell spoofed lyft accounts and tracked drivers. And samsung says preorders for its new galaxy s8 are better than the previous s7 which had to be recalled because of exploding batteries. We begin with President Trumps stunning 180 degree turn on chinas currency. On janet yellen. On the dollar. On nato. John harwood live at the white house with what hes said in the past 24 hours. Leslie picker with a big call from one of the biggest hedge funds and dominic chu on the key signs in the market to watch for. First to john harwood with some headlines crossing moments ago on the fight against isis. John . Tyler, we have seen how unpredictable and flexible President Trump is up to the moment that this show came on the air. Remember, donald trump ran as someone last year who was not going to be an interventionist candidate. Yes, he said hed go after isis, but he said Hillary Clinton is the one whose approach could lead to world war iii and now we have the news that hes just dropped or ordered the dropping of the most powerful nonnuclear bomb in the United States military arsenal. A bomb that neither president bush nor president obama during the long fight against al qaeda, against the taliban saw fit to use. We do not know the consequences of that. And what the next steps will be. Well be watching, but we have seen in the last 24 hours as you alluded to a number of places where he has outright reversed previous positions. Take nato for example. He said during the campaign that nato was obsolete. Yesterday, he had a meeting with the head of nato and came out and said this about their turn toward addressing terrorism which of course they has been addressing before. Take a listen. I complained about that a long time ago and they made a change. And now they do fight terrorism. I said it was obsolete. Its no longer obsolete. Now we have seen a whole raft of other issues where hes turned around. China currency manipulation, he said hed go after china for this on day one of his presidency. Yesterday, he told the wall street journal theyre not currency manipulators. Of course, that was true before given what they were doing with their currency before the election. Nothing really has changed there. On the dollar he said during the campaign that a strong dollar was in the interest of the United States. Yesterday, he said the dollar is too strong. Its hurting our exporters. And he blamed he blamed himself because people have confidence in me. On janet yellen he said she should be ashamed of herself and yesterday he said i respect her. And donald trump went after in the campaign, he said, well, if instinctively it sounded like a ridiculous idea, but actually, the more i have learned about it, the more i think its a good idea and what that tells us, a president , because hes not rooted in the party system or in prior experience, we dont know what hes going to do day to day. Depends often on the last person he talked to, guys. All right. John harwood. Thank you. Lets get to leslie picker with a call from one of biggest hedge funds out there. Lee cooperman out with a letter to investors saying its time for the u. S. Equity market to rest. We are in for six months of little action in the markets he says. As he put it, u. S. Shares could be quote trendless and uninteresting. And s p 500 may be at the same level in late summer or early fall as today. He expects the index to lift moderately and to continue higher in 2018. For the naysayers who point to the length of the 96 month bull market, cooperman said quote, rather than old age or extent of advance, bull markets die of excess and or are murdered by the federal reserve. He does not see a case for either of those. The biggest risks to his thesis he says are political and geopolitical. He cited areas like north korea and iran as well as brexit and how u. S. Immigration policy might strain relations with mexico. His firm omega added several new names in the First Quarter including allied financial, footlocker, netflix and wpx energy. His portfolio is all in equities or equity equivalence with 96 in the u. S. And the rest in euro shares and he plans to add euro equity exposure. The letter showed that omegas return for the quarter was more than 6. 5 , surpassing the s p, guys. Leslie, thank you. Now lets get to dominic chu with a key market warning to watch for. Theres a whole bunch out there, but lets put up five on the board because thats all the real estate ive got up there. If you look at the warning signs they have been developing for the last few weeks know. Well start with gold prices first of all. Always viewed as a safe haven trade. People go there in times of distress. Theyre wavering today, but maybe we see a bit of a safety trade coming on that front here. Also treasury yields moving lower. We have said that people are buying up the safety of longer term u. S. Government debt. The japanese yen, strengthening, the dollar losing steam against the yen. So thats something to watch too. It could be a risk proxy out there. People are looking at that. Also the volatility index for the u. S. Stock market on the rise and trending higher. See if it stays that way. It has been low for quite some time. Tech stocks overall. Theyre hovering around some Technical Support levels. Some traders are watching that closely. These are all warning signs. For more on that story we have the full details here on cnbc. Com. We have got another take. We have an investment strategist talking about why you should buy a dip in the market. I have tweeted out links to both of the stories. We have both sides represented. I saw it go by. Thanks so much. President donald trump changing his message on Economic Issues ranging from the strong dollar to the chair of the federal reserve. How is this going to impact the trump agenda . Lets bring in an Economic Policy analyst with the American Enterprise institute, and its good to have you here. Thank you. Theres a lot of criticism, guffawing, listen to the president shifting his position. He said this on the campaign trail, now hes saying this. Heres the thing, a lot of the changes are moves to more conventional positions. As a result, does that get us any closer to Corporate Tax reform as we see these shifts . The way i look at it, you have three camps in the white house. You have sort of team populist, people like bannon and miller. You have sort of team conservative, reince priebus, and the Vice President pence. Then you have more of the team ceo, team goldman led by gary cohn. Its obvious that team ceo goldman is an ascendant. Thats pro Corporate Tax cut and the republicans are more in control. But what i think it means that if youre expecting a giant Corporate Tax cut long, if youre for the replace reflation trade i think its less likely you get budget busting fiscal stimulus. But on the other hand i think were looking at a looser fed. Easier fed potentially and also less concern about trade. That is always really the last point is the big concern is trade. I think you need to be less worried about that right now. So when it comes to actually passing legislation, when you have to do the math of oh, he likes the import export bank and the Freedom Caucus hates that, but is there enough on the other side we like that, so therefore its easier for him to get other stuff done . Listen, i think ideally, you have the president be bipartisan. A lot of democrats are under pressure not to cooperate with this president on very much. They might be for infrastructure if it was all for direct spending. On Corporate Tax cuts its hard to get democrats and hard to get republicans if its not a deep cuts and some dont want a big budget buster. So its a narrow path they have to travel. But well see. Can i just ask one quick question before we go, jim. The president s rhetoric on the campaign trail was rigid and absolutist. Those are my words but it would seem to me that the flexibility, the change that we have seen over the last ten days on a variety of things could be a good thing. It shows that hes really tackling his job and diving in and looking at things in a more nuanced way. Am i taking it a leap too far or not . Listen, i think one big criticism youre right hes rigid. He doesnt read, he cant learn. But i think particularly on the china currency issue its obvious that hes been talking to experts. Hes been talking to ceos. He has taken a radically different position and he basically said, you know, i have learned something here. And if that continues i mean, i think thats a good sign. Yeah. Jim, thank you. Appreciate it. A warning from bill gross today. He tells the investors that equity markets are priced for too much hope and all asset prices are elevated to artificial levels. Bill gross joins us now. Welcome. Good to have you with us. Hey, tyler, thank you. Its good to have you here. What have you seen recently that leads you to these conclusions about stocks, about high yield bonds and about other asset prices . Well, in general, and this is in general, you know, stocks and risk assets are priced on growth assumptions. You know, trump and his administration suggest 3 is a possibility. The problem being that over the past five years growth which is a function of productivity growth for the most part, you know, has been abysmal. Been about 2 and productivity growth has been about half a percent for the last five years so whether or not trump policies, whether they be deregulation or tax cuts or repatriation of funds from abroad, et cetera, et cetera, can generate a 3 rate of growth which i think markets up until the last week or so have been anticipating, you know, the problem becomes where does it come from and what stimulates productivity growth over the next several years . I think other institutions other than the fed like the imf and Robert Gordon at northwestern have said that its the low hanging fruit thats already been picked and the financial crisis itself has lowered productivity and its not likely to return. So these are the questions that even trump reversals like you just talked about in the last few minutes, you know, continue to be addressed. So theres so much to talk about today, bill. If im a person who buys your thesis as millions of investors have over the years, what do i do with my money right now . Well, thats the question, you know, over at the country club across the street from me, basically say what else are you going to do . Thats sort of your question. Although you havent answered it. What do you do . What else are you going to do besides putting it in the stock market . You know, i think you simply derisk in terms of bonds instead of extending duration. You hunker down and take low duration, short duration vehicles that basically dont return as much. In terms of high yield bonds yeah, you reduce some of them. You reduce your return because the spreads are tight. In terms of stocks, you know, if theyre really based on a 3 growth assumption which leads to 5 to 10 corporate growth, then you reduce your equity holdings. So its reducing risk as opposed to anything else. So the ten year Government Bond has gone down from 260 or thereabouts a couple of weeks ago to 220 today. What happened, daddy . Well, you know, perhaps the markets are beginning to anticipate a lower growth as well. But todays global bond market yields represents severe policy distortions that present an obvious risk reward imbalance. You know, central banks, the bank of japan, the bank of england theyre all extending quantitative easing programs. Heres an example. 0 ten year yields in japan and 0. 9 returns in the uk. 2. 25 in the u. S. You know, theres nothing there for an investor basically in terms of return. Relative to the risk. So what happened, you know, perhaps theyre derisking so to speak. But they take additional risk in terms of buying bonds that can go down in price as well as up. Im going to end with a two for one question. Question one of two, what did you make of the president s remarks about chair yellen yesterday . And what did you make of the article in the wall street journal, the study indicating that active management simply doesnt sustain over the long term. Well, addressed the last one first, i think thats true. That was a Standard Poors survey over a ten year period of time. Other institutions, active managers have suggested over short periods of time they do outperform. I would be the first to admit they do. But for the most part, they do not outperform indices and their fees are higher so the jack vogel vanguard thesis comes into play from my standpoint. In terms of yellen i think its interesting that hes reversed there as well. He likes yellen now. He thinks that maybe hell reappoint her. Hes got three to five appointments Going Forward in terms of the fed. You know, i would expect him to appoint dovish types of governors and president s so expect a dovish fed Going Forward and easing money policy as well. Thanks a lot, appreciate it. Bill gross. Burger kings new commercial not exactly playing out as planned. Thats because google wont let it. We have that story ahead. But first, the big banks kicking off earnings with mixed results. A closer look at who did well, who missed the mark and whether the sector is a good bet for you, next. [and her new business i do, to jeanetgo. Jeanette was excellent at marrying people. But had trouble getting paid. Not a good time, jeanette. Even worse. Now im uncomfortable. But heres the good news, jeanette got quickbooks. Send that invoice, jeanette. Looks like they viewed it. 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Joining us now is jason goldberg, analyst. Good to have you with us. In particular for jpmorgan and citi why do you think the stocks are trading lower . Three reasons that the stocks have been under pressure with the group off about 10 . One was fear that the quarter would not live up to expectations i meant today. Because the quarter met expectations and then some and theyre not gaining any traction. Because the other two factors are still with us. One was a more challenging than expected rates. And the fed cut it down to 25 basis points and then the other reason is lack of traction in washington and you havent made much Progress Given the agenda that the administration has laid out. The results we thought were fine, in line with a better than expected in soeveral areas. If we had this conversation yesterday, we both would have said that the yield curve was flattening. We both would have said that things in washington arent going as smoothly as expected and yet, theres a surprise here. Why do you think the onus is on the bulls here for the banks at this point . You have a strong buy on jpmorgan as well as citi, so whats the thesis at this point . It posted as good of a result as they could, so whats next here . Are we waiting for the yield curve to improve and for policy to happen in washington . I think those are two pieces of it. You know, First Quarter is always the toughest quarter of the year for the group. You know, owing to seasonality and we expect improved growth loan growth has been a factor. We think the rate hikes should be a bigger benefit in the next three quarters so i would say this quarter is kind of mixed results. You know, we are looking out and doing not only a result to improve, but we think theres potential for the administration to make progress on some of the stuff. What if it doesnt what happen . It would be the same environment we have seen in the last three or four years where the group grinds it on the expense side as well as, you know, trading capital i guess as a shareholder, is there Downside Risk or just flat from here . If those two things if we dont get Corporate Tax reform, if we dont see the yields curve improve, if we dont start to see loan growth improve, do they just i mean, what is my potential loss . Yeah, i think as long as the u. S. Economy continues to expand, you know, we think the downsize is fairly limited. Then your upside is quite a bit both, if the economy accelerates. Then if some of the financial roll back gets done. But this group has had a challenging environment and eked it out each year to the expense side and through capital return and then Going Forward, you hope to see an acceleration in revenue growth. One from the Interest Rate environment and then secondly from more pro growth agenda from the administration. Jason, well leave it there. Jason goldberg, barclays. Google not a fan of burger kings latest commercial and its doing something about it. Thats not eating a whopper. That story is straight ahead. We in the middle of the night. Hold on dad. Liberty did what . Yeah, Liberty Mutual 24hour roadside assistance helped him to fix his flat so he could get home safely. My dad says our insurance doesnt have that. Dont worry i know what a lug wrench is, dad. Is this a lug wrench . Maybe . You can leave worry behind when liberty stands with you™. Liberty stands with you™. Liberty mutual insurance. To err is human. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. Im vern, the orange money retirement rabbit, from voya. Im the money you save for retirement. Whos he . Hes green money, for spending today. Makes it easy to tell you apart. That, and i am better looking. I heard that. When its time to get organized for retirement, its time to get voya. Youre watching a 15 second burger king ad which is not enough time to explain all the fresh ingredients in the whopper sandwich. But i have an idea. Okay, google what is the whopper burger . That is burger kings new okay google ad. But it was not okay with google. It prompted them to read the wikipedia entry for the whop earn, but google disabled the function. They did they three hours after the commercial was released. Does he look a little like jimmy pethacougos. A fine looking young man there. Do you see yourself coaching for the indefinite future or retirement does not beckon apparently . The answer to that question and a closer look at Bill Belichick off the football field. In a rare and exclusive interview with the patriots head coach. Suzy welch will bring it to you next. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. New data on retail sales. To courtney reagan. Hi there. First data has given cnbc exclusive information on Consumer Spending in march. The credit card processor said Consumer Spending increased 5. 8 in march a reacceleration from trends. Food service, hotel and travel saw the biggest increases. That makes sense because of spring break even year over year. But retail saw sales improve 2. 1 as well. Electronics and Appliance Store sales up 11 . Building and Garden Supply up 6. 7 . Furniture and home stores up and Specialty Sales are up 2 . General merchandise, clothing, Sporting Goods saw their samestore sales fall year over year. Thank you, courtney. Lets a get to Contessa Brewer for the news update. Heres whats happening right now. Jason dalton the uber driver who was accused of opening fire on eight people at three locations in the kalamazoo area in february of 2016 was back in court this morning for an evidentiary hearing. He faces 16 criminal counts in the shooting rampage including six counts of murder. The National Park service says its getting close to making a final decision on the jefferson memorial. Last august they announced they were testing several different cleaning solutions for it. Type i and type ii diabetes are rising sharply among kids and teens in the United States according to the cdc. The former increasing by about 2 each year from 2002 to 2012 in teens and increased nearly 5 each year. A pair of ripe mangoes fetched 3,600 at the first auction of the season in japan. About 1500 cases of the pears and triplets were auctioned off. Theyre prized for the high sugar content. But maybe the people who buy them have more money than sense. Thats a lot for a mango, wow. I mean i like them themselves i never tasted in a day it will be rotten. Eat it fast. I want toed a dress the slime on the to address the slime on the jefferson memorial. I think all fingers point to the hamilton backer. We have been teasing ahead to this moment. Cnbc contributor and New York Times best selling author suzy welch joins us for the exclusive interview with patriots head coach Bill Belichick. Thank you, tyler. After a nail biting super bowl li with one of the most epic come backs in history, i sat down with Bill Belichick for a cnbc exclusive. Lets take a look at what the five time super bowl winning coach has to say about legacy, leadership and life lessons. Go pats how lucky are we to have this guy . Were going to remember this one for the rest of our lives. Lets talk about the super bowl for a second. Its been two months and it was amazing. Are you still processing it . Yes, i have to go back and watch it every once in a while to make sure it came out the way i remembered. It was there any point that you thought you wouldnt win . This was one of the games we didnt have control of the score but i didnt feel like we had lost control of the game. We could move the ball. We were able to stop them on third down. We were able to do things but the scoreboard was very much against us. It all fell in place for us at the end, which it had to. If one thing had gone wrong we would have come up short. What did it feel like . Close to a miracle. We had one of those great catches going in our favor. We had seen them go the other way in other games. So that was kind of a miracle. Whats fascinating about your job and what the world watches you do is you make decisions and you have plays before the game. But then you get out there on the field and the entire game is making decision after decision in the moment. I mean, this is sort of like leadership on steroids. Thats the way it is in football. You have a game plan, you go into the game. My job as a coach is to make good decisions. Not to go out there and block or tackle, thank god. That wouldnt be very good. Take the information, calculate it and put it through a process and figure out whats the next thing to do. So that happens from really the first play of the game. People talk about halftime decisions and all that. The halftime at halftime the game is twothirds over. So you have to start figuring out way before then and thats thats what we try to do. Start to make the in game adjustments as soon as we can see that the game has started to declare a certain way. You have had a long and unbelievable partnership with tom brady. What are your thoughts on him . On tom brady. Really a special player to coach. Works very hard. Hes very smart. Hes trained hard. Hes worked hard on his throwing mechanics. Hes worked hard on his mental understanding of the game and process. Hes earned everything that hes achieved. But hes not a great natural athlete, hes a very smart instinctive football player. But he may end up being the greatest of all time. Right. Its not all about talent, but about dependability and being able to improve. Again, if you work hard and youre coachable and you understand what you need to do, you can improve. Well, you have been called the chief economist of football. You were the person who saw the undervalued players. Its considered one of your great skills and you had great financial discipline as a coach. Right, but none of us got into football to be a professional football player. And none of us got into football to manage the cap or manage the team. All of us that got into football got into football because of the game, because we love to go to practice. We love to play the game when we were 8, 9, 10 years old. Its hard to even think about your story of about without thinking about your dad. Although he was never the head coach, but he was an assistant coach. He was enormously respected. Wrote a book about football. Your dad taught you a ton about football, but what did your dad teach you about life . I learned a lot from my dad. He was the youngest of five, grew up kind of in a poor environment. His big break was football. He worked his way through college. Lived in the gym, in a closet, summer jobs. Made a career out of football and came here to the Naval Academy. He was destined to be because he loved this country and the quality of people that come here because of their toughness, their work ethic and their devotion to the country and their duty. So thats really what hes about or what he was about. So many of those lessons i learned either from him or from my association with the academy or from my association with the people at the Naval Academy which represented the same values. I have heard you say its not what you know, its who you know. So true. Yeah. So true. In life, its so much, you know, the opportunities that you get from people that you know, the opportunities that those relationships give you as opposed to, you know, whats in a book or, you know, what youve studied. You have three children and they are following in your footsteps. Two of your boys are working with the Patriots Organization and your daughter is a womans lacros lacrosse coach. How do you feel . I told them the same thing my father told me, follow your heart. If thats your passion when youre young, do it. Let Everything Else take care of itself. Dont do it for money or some other motivation. Do it because its what you want to do. Do you foresee yourself coaching for the indefinite future or retirement does not beckon apparently . Yeah, again, im sort of shortsighted here. Im good, you know, certainly good here for, you know, this year. Good for a while. I like what im doing. I enjoy all parts of the game. The Team Building. The training camp. Game days. Its still fun. It really is. It beats working. I would say hes good for as long as he wants to be there. And brady has said he wants to play until hes 45, which is another four, five, six years i think. Im curious, he is not known to be a ger alouse dude. Hes taciturn and serious. He was forthcoming, why is that . I have known him for a while, we were in the relaxed atmosphere, mission barbecue, and we knew wed take about his life and his family and he was ready to talk. Very forth coming. Im very interested as i think about the sports coaches. I think of them probably more than i should. A guy like belichick or Geno Auriemma or krzyzewski, what they do is produce sustainable excellence over time. Its not just leadership. Theres no winning it in the Patriots Organization. They are hyper prepared. He started to look at film when he was 7 years old and hes never stopped. He wants his players to look at film. They have a scenario for everything that could happen in the game. And the Team Building that goes on is not that theyre sort of buddies so that when something changes on the field they can wordlessly and seamlessly adjust. This is his strategy and it does not change. And depending on the consistent, reliable people he has no time for the stars. Do you think that real life managers at Companies Across america dont look at tape enough. The postmortems, reviewing what went wrong . I think you hit it on the hail. He said its so applicable to businesses and management. And the idea of Building Team work so that you can adjust as quickly as you need to in 2017 when the markets change, the strategy changes. If you have got a foundation, this is why he hates social media so much. He rails against it. Its not because of things that are said about him on social media. He does not care. He hates social media because youre making friends with people who are in you know, the ether. He wants you making friends with your teammates and coaches so you can adjust and read each others minds. A waste of time. Yeah. You have interviewed many ceos when you were at the Harvard Business school. How does he compare in the pantheon . Very well. He has a cogent theory of management. He has a collection of ideas. As i said when i asked him about the defining moments he knew what they were. He has given so much thought to this. You know, sometimes some people think its instinctive. I asked him are you a genius and he tossed it back at me. Thats for people curing cancer. He sees himself as a leader and a ceo really. Thats why the general manager title works so well for him. Hes got a book in him . A big one. Not until he finishes. I think he would be intrigued to do so at some point. I think he has a lot to say. He has a story to tell. He wants to tell it. I would read it. Yeah, everybody would read it. Everybody would read it. Everybody would read it. Youll be back though. See you in the second hour of power with more of the exclusive interview with coach belichick. Still ahead for First Time Since the united incident, a Family Member speaks out. First, Rick Santelli has todays bond report. Yeah, what a great day to give a bond report. Lets look at a 101 start to the different ten year sovereigns across the globe. Lets look at our ten year. We have given up some key ground. Boons, very similar pattern, a lot lower yield. Its the buy side of the nervous spreads being put on with regard whats going on in europe. Guilds that gave you a clue, that maybe things werent more to the downside in the yield. Lets look at france. Kind of the epicenter of the vote. Look at the chart. Its firm but at 92 basis points. Heres the one you really want to Pay Attention to, italy. The highest of the yields 231. Much different look than the rest of the charts. Theres a little nervousness there. Whos going to pick up the ball as mario draghi reportedly winds down some of the quantitative easing. Heres the chart i like, since november, the dow versus ten year note yields. Thats the chart thats going to reintroduce potentially gravity to the equity markets. Now, power lunch will return in two minutes. Dear predictable, theres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia welcome back. It is day four in the United Airlines drama. The daughter of dr. David dao holding a press conference just a short while ago. Lets get you caught up on the very latest. Phil lebeau has more in chicago. It was an hour long press conference and during that hour the attorney for dr. Dao made it very clear theyre not only extremely upset with United Airlines but theyre planning to take some legal action. The attorney said theyre in the process of collecting evidence, other information and that they do plan to sue united. The discovery hearing regarding some of the requests for retauning documents retaining documents and video that will be held here in chicago on monday and the apology was staged. He does not believe it was sincere. Here is that attorney talking earlier this morning here in chicago. I would say there is a culture of disrespect, of rudeness. But whats unfortunate occurred here in dr. Daos case is rudeness, bullying customers, has gone the next step now. To physical injury. And there were injuries for dr. Dao according to his attorney. He was released from the hospital last night. His Attorney Says he suffered a broken nose, a concussion. He lost two teeth. And then a bunch of bumps and scrapes as you can see from being dragged off the plane on sunday night. Following the press conference, united issued a statement refuting some of the allegations from the attorney. Well talk about that a little bit more in a bit. They wrote this horrible situation has provided a what are fsh learning experience a harsh learning experience to which well take immediate and corrective answer. It will not ask the Law Enforcement officers to remove passengers from our flights unless its a matter of safety and security. As you take a look at shares of united, one other point they made, Ceo Oscar Munoz did call dr. David dao, they called his phone to apologize numerous times. They say, look, we have got call records that show we tried to reach out to the doctor because that was a big part of todays press conference, guys. Where the attorney said, look, we never heard from united. They talk about being feeling bad about what happened but they never called dr. Dao or his family. United said thats not true, we did. Needless to say, if you thought this story might start dying down, its not any time soon. Not at all. In fact, congress is getting involved. Because the incident at united raised concerns in washington, President Trump called it horrible. Now the senate is taking action up. Joining us is Chris Van Holland of maryland. You just introduced the customers not cargo act. Its supposed to prohibit airlines from forcibly passengers due to overbooking or to accommodate staff. I get why you might want to do this, but does it happen that often that there needs to be a law . Oh, i think that this incident exposed the need for this to be a back stop in law. Obviously wed like to see the airlines do this on a voluntary basis. But even the ceos comment, the ceo of the airlines said he wouldnt get the police to forcibly remove passengers from the plane. The root of the problem here is that currently airlines, most people dont realize this, i didnt, but airlines have the right to remove someone forcibly from an airplane for reasons that have nothing to do with safety. But have to do with overbooking. And its my view that the airlines should bear the Financial Risks of their own overbooking. And in this kind of situation, they should be required to make an offer to the passengers on the plane such that some passenger accepts the offer to voluntary get off the airplane. Heres what i dont understand. Theres cap you know, the regulation is so tough to read when we go to the website for the faa we cant tell if this 1,350 that youre entitled to is that what they have to pay you, thats what you can demand, is that a ceiling, is that a cap . We had a former ceo on, who says thats a cap. You read it, maybe its a minimum. They can offer you more. To what degree had the regulators been part of the problem here . Well, all i know is that there appears to be a very perverse incentive. My understanding is that the airline is an industry, lobbied very hard at some point in time to make the 1,350 a cap which creates all the wrong incentives because theres no limit on the amount an airline can offer a passenger to get them to voluntary voluntarily get off the airplane and yet if they forcibly remove a passenger from the airline the most they can apparently pay under the regulations is 1,350. Why did that happen, do you think . Why do the regulators bow to that . Economists have a theory, its calledcapture. You have a very consolidating industry, only a few big players, and they can focus all their lobbying power in one place, and then what happens . The regulate serves the industry, itself, and not the actual consumer. That may have happened here. I mean, i think all of us were very surprised to, first of all learn, i was, that the airlines have, first of all, the right to throw you out of your seat when ro when youre already on the airplane to make room for somebody else when they overbooked, number one. And number two, to discover that they were actually better off financially from throwing you off the airplane rather than trying to reach a bargain with you. Now, in most cases at the gates, what airlines will do is offer people incentives and usually they are able to offer people an incentive worth less than 1,350 for people to voluntarily change their change their flight. But if they dont get that volunteer, theyre apparently capped at this 1,350. I find it extraordinary. Can i so im tyler has a question so we want to get him in here. Yeah. Senator, i talked before, and i want to put your hat on as chair of the Democratic Senatorial Campaign committee for 2018. I think a lot of people would say if the democrats want to do something, or they want to have strength back, you guys got to win some ball games here. How are you going to do it . Oh you got to win some elections not just at the National Level but in statehouses where the districts are drawn. Oh, theres no doubt about it that democrats have to work at every level, local, state and federal, as you well know, theres a whole lot of Political Energy now throughout the country. We just saw in the state of kansas what turned out to be an unexpectedly close congressional election. I mean, this was a congressional seat that donald trump won by over 30 . In this case, the republican won by just 54 56 against a professor whose main constituency started out as the kids in his classroom. So, youre seeing a whole lot of energy from around the country and i think that bodes very well for democrats and if you look at what the Trump Administrations been doing in washington, most of their proposals thats put on the table are a total betrayal of the working people that donald trump, candidate trump, said he wanted to support. Well, you got about 18 months to figure it out. Good luck on all of that stuff. Thank you for that. Senator van hollen. Thank you so much. Onlying up, can President Trump make the Steel Industry great again . We are live in steel country where workers are feeling bullish, next. Most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. [ [ screams ] ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] welcome back to power lunch. The Trump Administration wants steel for companies at home. Live in mt. Iron, minnesota, with more. Hi, jackie. Reporter good afternoon to you, melissa. Thats right. You could say this is the heart of steel. Check out this mine. This is where the iron ore blast occurs every day. We actually just saw one. And after that, the product is taken and processed into pellets that eventually turn into steel. Now, u. S. Steel is one of the oldest, largest steel producers in the country and its workers represent generations of american steelworkers taking pride and ownership in what they do but also facing challenges along way from foreign competitors. They face their share of downturns as well. But here in minnesota theres a lot of optimism that President Trumps orders are turning the tide, leveling the Playing Field so that more steel can be american made. These miners and workers believe that trump will implement the policy and plan the projects to bring business back home. Now, the range of this Natural Resource mine is over 100 miles long. The mine that you just saw is about ten miles long, itself, but you can see, after staying here a couple of days talking to the work erpers, themselves, tog the facilities, can tell you, theyre ready, willing and able to take the steel and make products, not just pipelines anymore but other products that you use, household products, even as large as these trucks that actually are in the mines, themselves. Back to you. All right. Thanks very much, jackie. Coming up, were talking to a ceo with an innovative idea on how to engage kids, boost retail and maybe save the malls. Well tell you how straight ahead on power. All right. Welcome, everybody. The second hour of power. Our last programs of the week, were going to make it a good final hour, arent we . Oh, yeah. Last program of the week. Two hours until the closing bell. The last one of the week. Heres what were watching at this hour. Road blocks to the trump rally, how confusion in washington is stalling the stock market. Were going to hear from the head of the biggest publicly traded hedge fund. And what can malls do to get shoppers off their couches . Thats a nice way of putting it, and away from amazon. Well talk to the head of one of the biggest mall operators. Part two of suze welchs conversation with the biggest guy in funnew England Patriots coach Bill Belichick. Shares the two things he tries to do every day. A news alert on tesla. Phil lebeau is in chicago with details and this via tweet from elon musk tweets. When elon musk tweets, people Pay Attention. He tweeted teslas semi truck unveil in september. Team has done an amazing job. Seriously next level. Theyve talked about this for some time. This is not a surprise for those who follow tesla that they will eventually show us some type of a semitruck. Whether or not we get details about actually manufacturing that truck and going into the semi market, thats a whole different question. Well get that in september. One other note, guys, as you take a look at shares of tesla, mark the calendars, wednesday may 3rd after the bell, thats when the company will be reporting its quarterly earnings. Back to you. Im sure there will be a lot of questions about the truck, phil, the number one question for people will be what sort of body will this truck use, will it be able to use what is being used for any of the cars they have in production right now or complicate their Assembly Line . Right. Semi production is completely different than passenger vehicle production. So, its a completely different beast. So the question comes up, where would this be built . Do you really want to go into competition with the semitruck makers in the United States . Thats a completely different market. So im sure over time, well get a number of these questions answered but i think the main thing people will want to know is are they truly going to go into manufacturing and try and sell and compete with the semi truck makers . Do they have capacity at the plants they have right now . Is there space there even . Theres well, there probably is space, but melissa, youre talking about a completely different Assembly Line process. Its not like, lets make a couple model ss not an f150 theyre talking about. No, theyre talking about a semitruck. Semi, 18 bheel whewheeler th ship a lot of stuff. Is it going to be a class eight competitor . What type of truck are you talking youre going to build to compete with . A lot of questions here still. Fast forward ten, i dont know how many years, 10 years, 20 years, this is when we have no truck drivers, right . These are selfdriving trucks. Right. That are doing shipping for us. Start to stress about all those jobs being lost and a lot of people are going to say this is evidence of all the automation thats going to eliminate a lot of jobs. You will always have somebody behind the wheel. They may not be holding the wheel, they might be doing Something Else. Right. I guarantee you regulators will always require theres somebody behind the wheel in our lifetimes. Well be dead and gone by the time we see jetson like cars driving around the highway with nobody behind the wheel. Whos the natural customer for these trucks and what could the trucking companies. Trucking companies. I get that. Whats going to persuade them to pay the what i suspect at first is going to be a premium for a truck that you have to plug in every two hours, 50, 300 miles it comes down to the financial metrics. Fuel is the number one expense that these guys are competing thats the biggest weight on them right now. Its the fuel, its the expense wib when theyre shipping, lets say, from houston to los angeles, how much is it going to cost them . How much of that can they pass on to the customer . If elon musk and his team demonstrate, look, by doing electric, we can make it far more inexpensive to economical to operate. Point a to point b, yeah, economical, theyll catch some attention there. This really feeds into what some analysts are putting out there as sort of the tesla logistics line of business thats not actually factored into the share price. Right. Is an underpinning for the prime yul valuation. Tesla mobility could be a 1 trillion opportunity that is not yet factored into anything, price target, estimates, nothing in tesla right now. Right. But whats interesting is when you look at the idea of tesla mobility, most people have said the ecosystem would be the average person, whether its ride sharing or buying an electric vehicle, et cetera. In this case with tesla semitruck, youre talking about going into the corporate realm which is a different animal completely. Doesnt mean it cant be done, but it is a stretch compared to what people are imagined for teslas future. If youre going to put everything in the hyper loop, what do you need a semi for . She asks as a joke. Good point. Phil, thanks for bringing that to us. You bet. Keep us posted. With us on the cnbc newsline, james albertine, i hear this going on, all i can think of is tesla is going to need a lot more cash. What do you make of this move into semis . What dont they need more cash for . I mean, now its semitrucks, going to to a pickup truck in a few years. No, clearly theyve been very good at sort of cherry picking opportunities to raise ball for certain projects, but not going beyond that. Look, semitrucks, i think this is also maybe an announcement that might have to do more with their autonomousdriven technology. Were familiar very broadly with auto and other companies that are working on autonomous, you know, longhaul truckers, longhaul vehicles and so forth t. This plays into that theme as well. But clearly, you know, they are idea rich and theyre going to need to be cash rich to execute. We always go back to this whole idea, is this i remember when amazon said it was going to move beyond books and cds, thats never going to work. Books and cds are easy, packaging is so simple, youre never going to be able to make that bigger yet here we are still fighting about whether or not amazon deserves its valuation. Thats always this question with tesla, right, you sit here and think, wow, are these guys is this crazy youre going to pay more than you pay for gm or are they really the next amazon . Yeah. Its a great point. Tell me about it, we get toothpaste delivered on some level from our amazon prime. Right. I know that well. Look, what weve talked about, why this is next level stuff, just to steal elons quote here from earlier, theres vertically integrated manufacturing that leads into super sort of automated production, right, and theres so many things that tesla is doing that quite frankly i think gm and ford and others would do if they had the chance. Right . But they have 100 years of capital structure im sorry, of physical sort of plant structure in place, they got union relationships. Thats very cumbersome for them to kind of go back and say we want to reinvent kind of the model, but tesla is able to do that and theyre also doing it at a time when consumers are thinking about car ownership in different ways. When theyre looking at spending money on mobility in different ways when its sort of not keeping up with the joneses for vehicle brand, being smart on spending on experiences, vehicles being part of your life and not your entire spend within your life. Tesla scratches a lot of itches, as well from a retail. Perspective, right, direct consumer model. This is another part of that. Theyre branding as a tech company, centering around autonomy, centering around vertical integration. A lot of reasons to like that and theres a lot of sort of sorry to be longwinded but theres a lot of dynamics there that i think the Traditional Companies would have a hard time executing on and thats why all right. The sentiments so strong. Jamie, thanks. Appreciate it. Jamie albertinet. The dow is down almost 100 points. President trump doing an about face on a number of key issues including the fed and dollar. Today omega adviser saying this market is not going anywhere in the months ahead. What does this mean for the trump rally and how is the socalled smartmoney positioning itself . Lets get 80 billion worth of advice, with us now, luke el sisi lis, ceo of man group. Good afternoon. After the elections once the shock passed, everything seemed to be correlated. Everybody was on the same train, the same thought that shes policies would impact these seconders across the board in all the same ways. Everybody positioned themselves the same way. We started seeing those correlations come off. Whats going on right now . What are we see . We had individual stock correlations, were really very low after the election. We all sat there going, okay, this is a president whos about winners and losers, overall well see what happens but theres going to be some big change. So market repositioned itself for the big change, we got a good period for the market and got really good period. It was really easy to pick good stocks and get rid of bad stocks and lots of output generated then with the health care question, everythings basically run out of steam as an output trade. Are we going to get change, are we not going to get change . You have to look at actions rather than words. So your headline is about a whole lot of uturns. Who knows, right, theyre just statements, theyre words. I think the market is now starting to wait to see, lets see some actions, lets see some actual deregulation, lets see some actual change in whats going on for the banks and then maybe you can price some stuff in again. Why do you think volatility has remained so incredibly low . I mean, yes, were practically at because nothings happening. I mean, you have to individual stock volatility has not been that low. Sure. The reality is the stock correlations have been incredibly low so the Index Volatility has been very low. But the individual stocks have been bouncing around basically at normal sorts of volatility. The trouble is sort of not much is happening. It feels weve gone back into an environment like it was last year where sort of i mean, the sort of nothing march is happening. In the meantime, some yield and wait until we actually get some change. Why are you publicly traded when most hedge funds are not . Because you can be . Because you wanted to . Because you want the capital . The reality is its a set of history. I mean, the company was floated well before i got there, it was floated when i did other things. Is that advantageous . It has its values, it has complications. I run a private business, a public business. You spend as much time running shareholder of a private kpecompany than a publi company. Really . What about dregulatory you spend less on regulatory stuff in a private company . God, no. One of the great advantages being public, the regulators understand we have to run ourselves to a very High Standard and in many ways worry less about you than as a private company where theyre all worrying youre going to do lets talk about the biusines that youre in. In the last couple weeks blackrock has sort of stepped back from having human beings manage a lot of portfolios th. They seem to be for obvious reasons, a big index fund company, but theyre going that way. More and more stupgsinstitution investors seem to be puts more and more of their dollars into indexed products. And today the wall street journal reports that active fund managers, mutual fund managers, not you guys necessarily, have a hell of a hard time beating their benchmarks not only short periods but over long periods. How do you compete, how do you sell . So, look, im a significant believer, a true believer in active management but you have to actually take real active risk. Take that wall street journal article, basically what theyre looking at is the vast majority of the funds in that survey are mutual funds who run with very small tracking errors to the indeki ind index, maybe 50 basis points. Theyre not really taking risk. Theyre not really taking risk. Theyre not concentrated positions. Youd have to be a genius of a fund manager with 50 basis points of tracking error to off yn set your fees. Clients dont mind paying fees for you to take active risk, assuming you can add active value over time. You can prove that to your customers . Were happy to sit with our customers, they understand it. Theyre very happy to pay fees as long as youre adding value over time. Clients dont mind that. Fees are a bit like a tax, right . You pay a tax if you got an income. You dont want to pay a tax if you got no income. So, the reality is dcan you generate active returns . You have to take active risk. So for us, a longonly fund runs with 10 of active risk. 10 tracking error to the index. Not 50 basis points or something. Right . Humans are very good at picking a few individual stories that they can really understand. Thats where human stock picking can work very well, worked today, will work for the next 20 30rks ye , 30 years. When it comes to very diversified portfolios, computers are much better an that but have different margins on that type. You said youre not competing against Credit Suisse or point 72, another hedge fund out there but youre competing against google. Does that mean youre competing against a machine . So, what i was talking about there is competing for 60 of our business is quantitative is machines in one point or the other. The machines are built by humans. The question is, how do you find the smartest, brigblgtest human to come and do that . Thats where were competing with a google, with tesla, or about how do we find the talent . By the wary, ill take that bet about whether cars will be driving without humans anywhere near the driving wheel in our lifetime. You think they will . Absolutely. Yay. Were very close. One of the ways we have of encouraging smart people to come theyre not drifven by they want an interesting challenge. We have a partnership with a university where they can are you adding, very quickly, yes or no, are you more Machine Business . The answer is it takes people to build machines. Were investing in the quant part of our business because the more you have to keep innovating and creating in order to keep ahead. Commoditization is the reality of the world we all live in. Things what used to be really clever five years ago is now standardized. In order to keep generating outflow, you got to keep ahead of that. Its like a game of pacman, you know, the commoditization, the standard index stuff is like the big jumper. You have to keep running away faster than they can catch withdreyou, having smart people doing creative research. Luke, thank you. Pleasure, thank you all. The jeans i wore five years ago seemed really clever at the time. Large cap tech stops outperforming the Broader Market so far this year. A look at whos leading the pack and which names you might want to consider when power lunch returns in two minutes. You have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com tbut with lightning fast shifts instant. And dynamic tracktuned suspension, what the road demands, the gs delivers. Experience High Performance through high technology, in the lexus gs 350 and gs turbo. Experience amazing. [ [ screams ] ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] Large Cap Technology stocks outperforming year to date, facebook, amazon, alphabet, trading within 12 of their alltime highs. Which names are in the top of their buy list . Joining us now is mark mahaney with rbc capital markets. Mark, good to see you. Hey, michelle. All right. As we head into this earnings season, who do you think are the best performers . Yeah, you know, youre right, the setup is correct. The sentiment on the large cap, high quality large cap internet stocks has never, more positive in the last 20 years since ive been looking at this seblgctor. We still like some names. Not back up the truck prices here. Maybe back up the golf cart prices. Continue to like net politics, contin netflix, continue to like google. Facebook, slightly this year its trading in line with the market. We like the outlook for goog. Ing. Net politics, no concerns about the valuation, cost of content, the subscriber growth, enough to offset whatever it is theyre spending to try to retain those people . Yeah, i think so. The one thing you didnt mention which comes up a lot when i talk with clients and investors is that risk from amazon, but i think the markets still underappreciates how many subscribers threat nix c subscribers netflix can have. We think theres 8 plus in earnings by 2020. A 200 stock here which is pretty decent return from current levels within two years. What about facebook and its attempt to shut down snap . Is that part of why you like that stock or is that in addition to the other reasons you might like it . So, you know, i do have a buy on snap that facebook and instagrams efforts make me awfully nervous about that buy on snap. Thats right, im going to be patient with it. Facebook, look, that multiple got derisked last year. The estimates earlier this year got kderisked. I think this is one of the most attractive entry points on a name like facebook. A stock trading at 20 to 25 times earning on gap thats very attracti attractive. They have a series of new initiatives under way, they can still monetize some of the me messaging applications they have well over a billion users each. Thats whats happening. Facebook messenger. This instagram property, they got a lot of innovation going on there, i think theres some great opportunities to better monetize that. The core business is doing well based on advertiser surveys that weve run. Google, reason why you like it more lately, is this every time we talk about google for so many things, right, the ad today with burger king, yet i open up the earnings report, this is a search company, they make their money from advertising. Is that it . Is there anything else to this company . Is that good enough . Thats good enough. The sentiment is the market and investors are bearish on googles ability to maintain margins, maintain traffic acquisition cost to show growth out of what they call other bets areas like autonomous vehicles. I thouknow you were talking abo that. The market is overly bearish what theyre going to do with their cash. Theyre going to show more financial discipline than the market was hoping for last year and got disappointed by at the end of last year. That was the whole point of the new cfo at the time. I think shes got the chops. I think youre going so see most quarters, not every quarter, three out of four quarters youre going to see the financial discipline show through and possibly surprise investors. Got it. Mark, thanks so much. Thanks, michelle. Mark mahaney. Still aherd part two of the intervi interview with Bill Belichick. And uniteds next move, how will they buns bounce back from their pr nightmare . Thats next. Heres to breaking more glass ceilings. In golf and everywhere else. Kpmg, continuing our commitment to the next generation of women leaders. You totanobodys hurt, new car. But there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do . Drive threequarters of a car . Now if you had Liberty Mutual new car replacement™, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. With Liberty Mutual new car replacement™, well replace the full value of your car. Liberty stands with you™. Liberty mutual insurance. Its day four in the United Airlines drama. The attorney of the passenger who was forcibly dragged from the united flight held a press conference earlier today saying a lawsuit is probably on the way. United releasing a new statement. They will not ask Law Enforcement officers to remove passengers from flights unless it is a matter of safety and security. How can united get past all this without hurting its brand . Or repairing its brand in joining us, cnbc contributor, mike jackson, principal of 2015 marketing. Good to have is you here. Grate eat to be here. What they need to do right now . Amazing. This week has been tough on the brand. They need to settle, figure out a way, i dont acare what it costs to get in a room with an attorney, settle this, take care of the family and move on and do that really, really fast. You dont care what it costs . So millions and millions of dollars and its better than a lawsuit . The lawsuit is going to continue to be that drip, drip, drip, damage to the brand and ultimately its going to really seep into the culture and its going to cost them more than its cost them so far. Tylers got a great question. Can they tyler . Can they ever use the phrase, fly the friendly skies of united again . Pmy point is, once they settle, sebcond thing, they hav to do a deep look at their culture and really understand whats kind of motivating this type of behavior. Now, policies are policies but theres Something Else going on there that they need to get their hands around. I grant you that, but can they or is that can they get rid of it . Thats been one of the longest running ad slogans. Its been around as long as ive been aware of airplanes. Exactly. I think theyre going to have to rebrand themselves. I mean, i just think that the damage to the core equity that they own for all these years and the ad slogan, again, theyre going to have to understand what it is that we do now . What is it that we own . What is it that we can take forward and give the consumer some confidence . The friendly skies is not it. Definitely not. I have to tell you, its not true of every airline, but there but for the grace of god go a lot of other airlines for the way they treat people who sit in economy. It is like those people didnt pay for the seat. As if they were flying for free. It is amazing the way people get treated when they fly. I mean, the whole industry has a problem. You know, they do, but southwest and jetblue, they figured out a balance, right . Obviously jetblue, they had their real issues and i think they did, obviously they didnt have the visibility of he apologized, like, 17 times in the first 24 hours or so. Clearly if you fly jetblue now, you can tell theyre trying hard to make that Customer Experience a more pleasant journey and then obviously southwest is kind of up here as it relates to the brand and their ability to communicate to consumers. Uniteds going to have to start all over. Im sorry. From a branding standpoint, the equity that they had, its lost. Wow. Mike, good to you on the set. Really appreciate it. Usually have him remote. Coming up, the head of a big mall operator shares his plans to get customers off of amazon and back into stores. Plus Bill Belichick as youve never seen him before. Normally you see him as press conferences speaking in cliches or mono syllables but suze welch brought the best out of him. The rest of that big interview coming up. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. 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. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance hitting the Retail Sector lately and with more people doing their shopping online malls are feeling the pinch. Our next guest has a plan to boost struggling malls and starts with the kids. Here for a power lunch excu exclusive and krns debut, ceo of gdp, second largest mall operator in the u. S. , 120 Retail Centers. You know these malls, sandip, theyre all over the place from new york to oregon and beyond, but youre facing challenges. A lot of the Big Department stores pulling out. And you have come up with an idea to put in kid zones, basically. What do you call them . Kidzania. In these places. How big are they . What do they do . What does it do to your insurance cost, by the way . So kidzania is a concept i first encountered when i was at a mall in dubai called dubai mall. Dubai mall i think is actually one of the best Retail Centers in the world. It has a great combination of entertainment, retail, food, apparel. What i found fascinating about kidzania, when children were allowed to go into the environment with counselors, children stayed there for an average after two, three hours, parents were allowed to wander the mall, shop, dine and be entertained. Day prefetended to be doctor lawyers, news broadcasters. All of the above. And you can drop them off. What ages . From 4 to 12. I think the crutch of the age is about 7 to 9 as sort of the median age of that group, but 4 to 12. How many of your malls have these right now . So kidzania is a mexican concept, its actually coming to america for the first time. Were putting them in two Shopping Centers. One in chicago, one in the dallas metro area. They usually going into Shopping Centers that are thriving so theyre not going into Shopping Centers that are not thriving. Good concepts go into the best Shopping Centers. Both the Shopping Centers are 99 occupied and as a matter of fact, were creating space to incokorcorporate kidzania. Why go to the best performing p malls . Let me give you quick background. America has 8 billion square feet of Retail Real Estate in america, 24 square feet per person. 1. 2 billion is considered to be high quality. We own ggp owns 100 million square feet of the 1. 2 billion. You own about 9 . Thats correct. And so the Higher Quality centers are going to continue to thrive. Theyre actually growing. This is not a preventative measure. Theyre winning every day. Retail sales are climbing. Performance is actually quite god. 93 of all retail sales happens in bricks and mortar today. Only 7 happens in ecommerce. Rewind back to 1994, 10 of all retail sales happened in catalogs. If things are are so good, why are you setting up kidzania . Are there metrics, expect traffic will go up, stay the same, lead to nr samore sales . Have to continue to evolve. You bring in food users, bring in entertainment users, you bring in theaters. Its what we do. We continue to curate with what connects with the customer. The reason we continue to perform is were ability to curate our Shopping Centers. Curate means you buy out the leases of underperforming retailers. Done it, right, with macys leases, Sears Holding leases. How do you decide what to metri decision . Which tenants have an emotional connection with the customer. You want to put in, for example, if youre putting in a tesla showroom, tesla has an emotional connection with the customer, you ask the question, why is tesla Opening Stores in regional shopping seventh e inping cente . Not to be sort of ironic, but thats where the traffic is, the large Shopping Centers and i think off camera we were talking about new jersey, look at Garden State Plaza, one of the biggest issues you have at Garden State Plaza is traffic, you cant find a parking space. Look at willowbrook, new jersey, which, tyler, you mentioned you go shopping. On the weekend, we cant find parking spaces. So we continue to curate them with retailers that have a connection with the customer. And so times, if the retailer is not doing well, well replace them and put up the retailers that have a connection. You know, with the customer. We could talk on and on and on. I hope well get another chance to do so. Come back soon. Sandeep. Good luck with kidzania. Thank you. Coming up, the second part of our exclusive interview with patriots coach Bill Belichick. If you were to describe yourself, what words would you use . When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Welcome back to power lunch. Time for the second part of usesuzy welchs exclusive interview with coach Bill Belichick. More than four decades of coaching experience and five super bowl championships, Bill Belichick is widely considered one of the best coaches in football history. In this piece, we discuss life lessons and play a little Word Association game. If you have to describe the tenets, principles of your leadership style, approach, what would they be . Four things that we look at every day when we walk into the building, do your job, be attentive, Pay Attention to details, team has to come first, even though we all have individual goals and preferences. We dont talk about last year, we dont talk about next week, we dont talk about next year. We talk about today and the next game. And thats all we can really control. The rest will take care of itself. What would you call your most defining moments of your career, where you learned the most . Where i probably learned the most, first year in 1975, i was given a job with the colts and didnt have any experience and they were very understaffed. I wasnt getting paid anything but i had a lot of responsibility for that position. Right. And so i was able to learn a lot. It was like having two or three graduate courses in one year. After that year when i went to the patriots who were 41. They had a great team. I went back to an experience i had in baltimore. I kind of talked to our offensive coordinator at that time, said, look, i know we havent used this formation, but i studied this formation when i was in baltimore last year,is r give the patriots a problem. Can we take a look at this . We used it and we con twon the by three touchdowns. It was a huge upset. It was one of those moments, okays, i can coach in this league. Dont be afraid to use a good idea just because its unconvention unconventional, because somebody else hasnt done it. If you believe its a good idea then, you know, dont be afraid to use it. So fast guard,forward i take th with the patriots in 2000. The first meeting we have in the spring, this is back in the old foxborough stadium. Its a small room. Squeezing a whole team in there. Here comes in the guys, firstround draft pick from a prior year, walks into the front of the meeting, not into the back, walks into the front and kind of sits down and im already ive already started the meeting. I was three, four minutes into it. And i just look at him mike what are you doing . He said, you know, sorry, coach. Like, sorry . Get out of here. Were not going to start this program with you walking in wherever you feel like walking in, i dont care if the guy is a number one draft choice or not. Were just not going to run a team like this. Lets talk about mistakes, okay . Leadership mistakes. Your career mistakes. Any stick out . After every game, i look at the mistakes that were made in that game by me, by the coaching staff, and, you know, we need to address those and correct those. Great players cant overcome bad coaching. Its impossible. On a personal level, lets say, you know, the one thing that i definitely learned is youve got to count on your most dependable people. Might not be your most talented person, you count on your most dependable people, so there have been times when i put i would say too much responsibility on people that werent dependable and they didnt come through and so whose fault is that . Mine. When youre a head coach, you can only do so many details and i would say at times i was too detail oriented in some of the tasks i was on and didnt have enough breadth or give enough leadership in other areas. I mean, look, every team has Young Players and they have wives and girlfriends and have babies and they have parents that are sick. All that somewhere or other, you know, all runs in together. So the more you can handle those, the more that you can help take care of those as an organization, as a head coach, then, you know, the smoother the ship runs on the football end. You are subject of fascination and yet youre still sort of an enigma to the world, right . Youve been described as everything from the greatest coach whos ever lived to a person whos obsessed with film and i know you dont listen to it, but you know its out there. But if you were to describe yourself, what words would you use . I think i know a little bit about competition. I think i know a little bit about leadership and i think i know a little bit about Team Building. And i think i know a little bit about football. I can handle football from a coaching standpoint, from an xs and os standpoint. Your dad was one of the most respected college coaches. You started looking at film with him when you were 7 or 9. Started going on scouting trips with him when you were preteen. Sort of semicoached your high school team. Was football a calling to you . Yeah. Absolutely. I learned coaching at an early age. How coaches think. How coaches, you know, what bothers them, what doesnt bother them. Kind of theres a lot of coaching styles. Right. You figure out what works for you. In the end, i think to me, in business, or in life, theres a just figure it out. You have a problem, whatever it is, theres a solution somewhere. You just have to figure out what it is. I want to play a little Word Association game. Okay. Okay . Im going to say word, just your immediate snap reaction. Okay . Sure. Football. More sport than business. But its a business. But i respect the game for the game and for the sport. The media. Its how a team connects to its fans. Winning. The goal. Theres no medals for trying. This isnt like eighth grade whether everybody gets a trophy. Were in a professional sport and its competitive to win. Thats what we do. Deflategate. Ridiculous. Aaron hernandez. Tragedy. Heartbreaking. Yes. That will be another word. Next year. Is this year. Perfect day. Nantucket. Last one. Legacy. For another day. Dont think about it . No. Right now, 2017. Tryinging to have a good team this year. There will be another day to talk about it. Just another day at the office for you . No. I mean, look, im aware of it but i cant sit and think about it. I know. This year is going to be part of it, so try to have a good year this year and figure out the rest of it later. Okay. You just did something i thought was impossible. You made me like him. Hes very likable. Because, man, new yorkers have lost a lot of games to him over the years and but i found in there the very interesting distinction where he said you rely on your most dependable people. They may not be your best people, they may not be your most talented people but those are the people you rely on. This is one of the most surprising things he said to me. I mean, i keep saying that everything i learned in Harvard Business school is wrong if you listen to Bill Belichick. One of them is he just doesnt care about high pose. He doesnt care about people who are wildly talented and you cant count on them. He says hes learned the hard way that you count on these consistent, reliable, people who sort of every day deliver for you and may be the tradeoff for talent. He also sort of poohpoohs talent, said tom brady wasnt that naturally talented but worked harder than everybody else, had the selfawareness to keep on working. These are surprising leadership tenets if you ask me. Theres hope. Keep trying. One of the other things he is known for is for being an unsparing unsentimental evaluator of football players. He will take the guy who was their best running back this past year and say, im not going to pay you what you think youre worth. I know what i think youre worth. Yeah. And so what if you who aere star last year, youre gone. He did it this year. Hes absolutely an economist when he looks at players, looks for undervalue thed assets. People fall in loch wive with t players but theyre not dependab dependable. He has no sentimentality. I have a price in mind. That works. How many more years if you had to guess do you think he would coach . I actually said to him, you know, you could go out in glory right now, you would be remembered, you know, he looked at me like i had two heads. He has no plans to retire. He loves the game. It is the passion and enjoyment of his life. Hes going to keep coaching i think as long as he can. Does he think about succession management . You know, i didnt ask. Thats a great question. You know, the way it is in finafina football if he goes someplace, its not his problem. Deflategate when you asked him that, is that the only time that came up . We talked longer. He summed it up in one word. He thinks its absurd. He referred to it later when we were talking about the business of football, he said when they try to take away from the game on the field, theyre wrecking the game. Thats the main thing. He has complete disdain for what happened to the team and the sport and the league. He may not be a control freak but hes a process freak. He has a process that he follows and yet he is in a game where the bounce of a ball can undo all of the work. How does he deal with that . That is the whole key to the whole preparation. Hes a preparation freak. If theres a funky bounce of the ball, were prepared for that also. Theres not a scenario they dont think about. Very cool, suzy, thanks. Made me like him. Shares of disney up 25 over the past month hitting an alltime high today. Is there still a reason to buy the stock even if apple doesnt buy the company . Trading nation is next. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. Disney rise to a 16 month high today after greater than zero chance report that apple with fire the entertainment chiem giant. Lets assess. Guys, good to have you with us. Aar this is not a ringing endorsement. No. I mean, what do you think potential combination . Look, i think buying one Large Company by another Large Company thats run at even a Slower Growth rate really doesnt make business sense r so though you might be able to expand apples pe by having it classified as a media and entertainment company, it doesnt make sense because disney grows at 9 . A lot of the revenues are coming from their entertainment part. They are really theres not a reason they could see a perfect fit for apple. Its just a way to spend tax, but generally, if youre going to spend, you want to get a higher growing company that really adds something greater than sum of the parts, and this does not seem to be one of those companies. Zblou ha you hate the idea. Mark, going to you, if they join together, content would be improved for apple and they improve services business. You see any merit in that . Is it an off the wall proposal . I see the merit, but its off the wall as well. Theres not much going on herement again, were talking about a better than 0 chance, that doesnt mean a lot. Yeah, apple has a lot of cash they could put to work, especially cash thats overseas that could be repatriated. Yes, apple could benefit from the content that disney provides. However, you know, disney actually is a good Quality Company on its own, and its reaching 52week highs for reasons of its own, including having the best franchises out there when you look at star wars, marvel, beauty and the beast, pixar. Thats a great company. Im interested opening it on my own ab sent apple interest and face it, investors are really attracted to Quality Companies right now, and disneys a Quality Company. All right, guys, thank you. Erin and mark, appreciate it. For more, go to tradingnati tradingnation. Cnbc. Com. And now, the latest from trading nation. Cnbc. Com and a word from our sponsor. When trading this group, its important to explore and consider a companys pipeline of drugs as well as the schedules for research and developments. Those results can often have a dramatic effect on price action. Will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. Check please. Eye popping stats released of how much Square Footage there is per person in the United States. President united kingdom, 5 feet, australia, 11, the United States . 24. Which says we are shoppers. That is part of the culture, and we are overstored. Way. Way. Way overstored. Interesting talking about culling and cure rating the property. Bought out the lease in holdings, no surprise given what weve seen with their plans for their own stores there. The other piece of news in the last hour or so, tez sla on pla for semi truck unveil set for september. Of course it was done by a tweet. Musk writes seriously next level. The fate of the truckers out there, whether we need truckers, whether or not logistics are more efficient. Wonder what amazon thinks as well. They invest a lot in logistics and distribution, and this could be a major step when it comes tot efficiency. Investors like it. Higher on that. Up around 3 . Always confusing him. Talk about the markets which if they close at these levels would be a two bhomonth low. What happened to the trump bump . Its a plateau. This is a two month low for the industrials. In part because of news the United States brought apparently successfully the largest nonnuclear bomb in our arsenal, the moab bomb, known as the mother of all bombs, and that gave a little chill into the market. Yep. Thank you for watching power lunch, have a great week. Closing bell starts right now. Have a happy easter, everybody, and a good, good friday. Hi, everybody, im kelly evidence evens. Who are you . Andrew ross sorkin in for the great bill griffeths for the day. We have the latest developments on the greatest of all bombs in a bit. A mixed bag on wall street. Citi and jpmorgan, they blew the roof off, but it was a revenue miss at wells fargo. The companys cfo talks about the pin points and first on cnbc interview with john